Paytm shares rise 5% after Board decides to sever ties with Payments Bank

Shares of One 97 Communications Ltd, the parent firm of Paytm, gained over 4% in morning trade on Friday after the fintech firm's Board announced that it has decided to sever inter-company agreements with embattled Paytm Payments Bank (PPBL).

The recovery in Paytm's stock on Friday followed the shares hitting the lower circuit for two consecutive days. Shares of Paytm surged as much as 4.99% to a high of ₹423.45 apiece on NSE. The fintech stock was trading at ₹421.1 apiece, up 4.41%, on NSE at 12:11 pm.

On Wednesday, shares of the online payments platform plunged 5% to hit its lower circuit after Vijay Shekhar Sharma's resignation from the board of PPBL failed to revive investor sentiment.

Vijay Shekhar Sharma-led Paytm believes that the move to snap ties with subsidiary Paytm Payments Bank will help in running independent operations at the beleaguered firm.

To reduce dependencies, Paytm and associate PPBL have mutually decided to break various inter-company agreements, the company said in a stock exchange filing.

"One 97 Communications Ltd would like to inform that the Company and its associate entity, Paytm Payments Bank Limited (PPBL), have introduced additional measures to strengthen their approach towards independent operations of PPBL," the fintech firm said.

Further, the Paytm Payments Bank shareholders have agreed to simplify the shareholder's agreement to support PPBL's governance, independent of its shareholders.

The board of Paytm approved the termination of agreements and amendment of shareholders' agreement on March 1, 2024.

Earlier, Paytm had said that it would enter into new partnerships with other banks and initiate other measures to offer seamless services to its customers and merchants.

In a statement earlier, Paytm parent One 97 Communications Limited (OCL) said that Paytm app, Paytm QR, Paytm soundbox and Paytm Card machines and other services will continue to work uninterrupted.