India-based Paytm has agreed a potentially life-saving deal with Axis Bank. Specifically, Axis will replace Paytm Payments Bank as the cornerstone of the Paytm payments settlement business.

The local central bank gave Paytm and its customers a degree of breathing space by on 16 February. It extended the 29 February deadline to 15 March for Paytm to sort out its banking arrangements.

Paytm said in a statement: “We want to confirm that Paytm QR, Soundbox, and Card Machine will continue to operate seamlessly for all our merchant partners. This was confirmed today [16 February] by the Reserve Bank of India (RBI).

“We have shifted our nodal account to Axis (by opening an Escrow Account) to continue seamless merchant settlements as before. This arrangement is expected to seamlessly replace the nodal account that our parent company was using with Paytm Payments Bank. Paytm Payment Services Ltd (PPSL), OCL’s wholly owned subsidiary, has already been using the Axis Bank services, since its inception.”

On 31 January, the regulator prevented the PayPal style company from accepting new deposits in its customer accounts or mobile wallets after 29 February.

The Paytm share price has tumbled by 54% since the Reserve Bank announcement on 31 January.

The Paytm payments bank operates with a restricted license. That means that it is allowed to accept deposits but is prevented from lending.