Paytm shares jump 4% as Vijay Sekhar Sharma firm ends inter-company agreements with PPBL

March 04,2024

Shares of One 97 Communications Ltd (Paytm) jumped over 4 per cent in Friday's session as the Vijay Sekhar Sharma-led firm said it has, in a move to strengthen independent operations of Paytm Payments Bank (PPBL), discontinued inter-company agreements with the associate, a few days after Sharma stepped down as part-time non-executive Chairman and board member of the payments bank. Paytm had also withdraw its nominee from the Paytm Payments Bank. Following the development, Paytm shares limbed 4.39 per cent to hit a high of Rs 423 on BSE. 

Paytm said the fintech company as its associate mutually agreed to discontinue various inter-company agreements suggested that shareholders of PPBL have agreed to simplify the Shareholders Agreement (SHA) to support PPBL’s governance, independent of its shareholders. The board of Paym approved the termination of agreements and amendment of SHA on March 1, Paytm said.

Paytm had earlier suggested that PPBL's future business would be led by a reconstituted board, which would be led by ex-Central Bank of India Chairman Srinivasan Sridhar, retired IAS Debendranath Sarangi, former Executive Director of Bank of Baroda Shri Ashok Kumar Garg, and retired IAS Rajni Sekhri Sibal.

Recently, YES Bank's  managing director and chief executive officer Prashant Kumar while addressing a press meet reportedly said his bank was open to taking over the merchants acquired by PPBL. There were also reports that YES Bank was among four banks that Paytm was looking to partner with for enabling UPI transactions. Out of them, Paytm may move majority merchant accounts to YES Bank, a report suggested.

The RBI's recently suggested that non-Paytm Payments Bank Limited (PPBL) linked merchants, (85 per cent of total) can continue to function as normal and its 15-day extension till March 15 for most PPBL-linked activities. The apex bank further suggested that clarified customers @paytm UPI handles can be migrated to banks post approval from NPCI.

"This implies key linkages between Paytm and PPBL will be transferred to other banks via Paytm. This also clears the way for Paytm to function as Third Party App Provider (TPAP), similar to its competitors PhonePe and Google Pay, once NPCI provides approval for the same," UBS said.