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Indian digital-payments provider Paytm said it is cutting back business ties with its banking affiliate, seeking to appease regulators who are pursuing a cleaner distinction between the two. 

The listed company said Friday that owners of Paytm Payments Bank Ltd. agreed to simplify the shareholders agreement to support its governance. Both Paytm and Paytm Payments Bank are part of billionaire Vijay Shekhar Sharma’s fintech empire, but the bank isn’t controlled by the publicly traded mobile wallet pioneer.

The moves are part of Sharma’s effort to create an arm’s length between Paytm and its tightly regulated affiliate. India’s regulators this year barred the bank from accepting fresh deposits in its customer accounts from March 15. The strictures effectively made the bank — the backbone for much of Paytm’s financial and payments services — redundant, disrupting Paytm’s business and sending its shares cratering.

Shares of Paytm, publicly traded as One97 Communications Ltd., rose 3.6% early on Friday. Still, the stock is down about 45% since the regulators imposed the prohibitions on the bank on Jan. 31.

Sharma owns 51% of the bank, while Paytm holds the rest. Earlier this week, Paytm Payments Bank reconstituted its board, appointing four new directors. As part of that move, Sharma resigned from Paytm Payments Bank board and also stepped down as a part-time non-executive chairman. He continues to lead fintech pioneer Paytm, which he founded and has run for more than a decade.

It’s not immediately clear whether the moves will placate the regulator, the Reserve Bank of India, which has previously said the action on Paytm Payments Bank was taken after it didn’t correct course despite having been given enough time.

Sharma has tried to meet with RBI and government officials to seek support, and is working to forge new bank partnerships to keep his fintech running.

(Updates with shares in fourth paragraph)

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