Fully committed to building Paytm through regulatory compliance and prudent operational risk policies: Paytm’s Sharma

One97 Communications, the parent entity that operates the Paytm brand, is fully committed to building its business under regulatory compliance and prudent operational risk policies, its founder and CEO Vijay Shekhar Sharma said in a letter to shareholders, as part of annual financial files.

The company along with its group entities will focus on greater regulatory engagement and heightened focus on compliance, both in letter and spirit, the company said on Wednesday.

“We are fully committed to building our business under regulatory compliance and prudent operational risk policies,” Sharma said. “We are also taking various steps to strengthen the governance framework across our group entities (especially regulated entities) by appointing subject matter experts as independent advisors or directors, reviewing various processes, etc. focus on compliance, in letter and spirit.”

These experts will provide valuable insights and guidance to ensure that Paytm’s governance practices are sustainable and in line with the best industry standards. The company is also conducting independent verification to ensure transparency and fairness in its operations. This approach aims to create a compliance-first culture across all group entities, especially those that are regulated.

Over the past few months, Paytm has taken significant steps to strengthen its governance framework, emphasizing its commitment to compliance, risk management and regulatory engagement. To improve the governance structure across its group entities, Paytm had formed a Group Advisory Committee headed by a former SEBI chairman, M Damodaran. This committee was tasked with evaluating current governance practices and making recommendations to the board, which will decide on an implementation and validation plan for these recommendations.

Paytm’s commitment to improving its governance framework extends to its related entity, Paytm Payments Bank Limited (PPBL). On March 1, 2024, Paytm and PPBL unveiled additional measures to strengthen PPBL’s standalone operations. As part of this process, Paytm and PPBL have mutually agreed to terminate various inter-company agreements with Paytm and its group entities. This move is designed to reduce dependencies and support PPBL’s governance, independent of its shareholders. PPBL’s shareholders have agreed to simplify the Shareholders’ Agreement (SHA) to further improve PPBL’s governance framework.

Earlier, the board of One 97 Communications Ltd (Paytm) approved termination of inter-company agreements and change of JSC. This strategic decision underscores Paytm’s commitment to ensure strong governance and compliance across its operations.

These changes reflect the company’s unwavering commitment to growth, profitability and maintaining the highest standards of governance and compliance. By investing in risk and compliance functions and ensuring greater regulatory engagement, Paytm continues to position itself as a leader in the financial services industry, committed to innovation and excellence.

Paytm had earlier announced its intention to forge new partnerships with other banks to provide seamless services to its customers and merchants while maintaining the high standards of innovation and technology-enabled solutions that Paytm is known for.

It has partnered with – Axis Bank, HDFC Bank, State Bank of India (SBI) and Yes Bank and has started migrating its UPI users to these banks. In February, the company partnered with Axis Bank for nodal account and escrow account to continue seamless trade settlements.