Noida: In a strategic move to reduce dependencies and navigate regulatory challenges, Paytm's parent company, One 97 Communications, has officially announced the termination of all inter-company agreements with Paytm Payments Bank Limited (PPBL). This decision, disclosed in a company filing on Friday, follows the Reserve Bank of India's (RBI) intensified scrutiny of PPBL in recent months.

The RBI, concerned about the operations of Paytm Payments Bank Limited, has set a deadline of March 15 for the firm to halt credit transactions and deposits, prompting Paytm's board to take proactive measures. One 97 Communications stated that the company and its associate entity, PPBL, have mutually agreed to discontinue various inter-company pacts as part of an effort to bolster the independent operations of the banking service.

"As part of this process to reduce dependencies, Paytm and PPBL have mutually agreed to discontinue various inter-company agreements with Paytm and its group entities," the company revealed in the filing submitted to the Bombay Stock Exchange (BSE).

Despite these developments, Paytm reassures its users that services provided by One 97 Communications, including the Paytm app, Paytm QR, Paytm soundbox, and Paytm Card machines, will continue to operate seamlessly. The company emphasized its commitment to maintaining high standards of market-leading innovation and technology-enabled solutions for its customers.

Having previously indicated potential financial impacts in a notification to stock exchanges on February 1, 2024, Paytm had outlined its strategy to forge new partnerships with other banks. The move aims to diversify its collaborations and ensure the provision of uninterrupted services for both customers and merchants.

Paytm's decision to sever ties with its payments bank subsidiary underscores the evolving landscape of digital financial services in India, where regulatory scrutiny and strategic adjustments are becoming increasingly commonplace. As Paytm navigates these challenges, the industry awaits further updates on the company's partnerships and measures to mitigate potential financial impacts.

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