The shares of One97 Communications Limited, the parent entity of Paytm, experienced a notable surge of nearly 4 percent during early trading on Friday, marking a significant rebound following a sustained period of decline in recent days. This uptick coincided with a pivotal announcement made by the company.
According to the disclosure filed by the company with the Bombay Stock Exchange (BSE), Paytm shares witnessed a robust increase of 3.72 percent, reaching Rs 418.30. This positive movement contrasts with the downward trajectory observed in Paytm's stock over the preceding trading sessions.
The catalyst behind this positive momentum was One97 Communications' declaration of its decision to terminate various inter-company agreements with its associated entity, Paytm Payments Bank Limited (PPBL). This strategic move aligns with the upcoming deadline mandated by the Reserve Bank of India (RBI) for PPBL to discontinue key operations, including deposit-taking and Wallet services, by March 15.
In its official statement, One97 Communications elucidated, "The Board of Directors of the Company, through circulation on March 01, 2024, at 07:28 A.M. (IST), approved the discontinuation of various inter-company agreements with its associate entity, Paytm Payments Bank Limited (PPBL), by Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015."
Furthermore, the statement highlighted that the shareholders of PPBL have reached an agreement to streamline the Shareholders Agreement (SHA), thereby reinforcing PPBL’s governance autonomy, independent of its shareholders. This decision was endorsed by the Board of One97 Communications on March 1, 2024.
Following the regulatory measures imposed by the RBI on PPBL, Paytm swiftly embarked on initiatives to collaborate with other banks and ensure uninterrupted services for its clientele of customers and merchants.
It is pertinent to note that PPBL was barred by the central bank from accepting fresh deposits or top-ups in customer accounts, wallets, FASTags, and other instruments after February 29, with the deadline subsequently extended to March 15.
In a significant organizational restructuring, Paytm founder Vijay Shekhar Sharma relinquished his role as chairman of PPBL on February 26, leading to the revamping of the bank's board.
The board of Paytm Payments Bank Limited underwent a transformation with the induction of notable figures such as Srinivasan Sridhar, former Chairman of Central Bank of India, retired IAS officer Debendranath Sarangi, former Executive Director of Bank of Baroda Ashok Kumar Garg, and former IAS officer Rajni Sekhri Sibal.
One97 Communications, as the parent company of Paytm, directly holds 49 percent of the paid-up share capital and, through its subsidiary, retains ownership of PPBL. Vijay Shekhar Sharma maintains a controlling stake of 51 percent in the bank.
