The board of Axis Bank has entered into a share purchase agreement with Jaspers Infotech Private Limited which runs Snapdeal to buy 100 percent stake in its payments subsidiary Freecharge in an all-cash deal worth Rs 385 crore, Axis Bank informed the BSE in a statement.

Moneycontrol had reported on Wednesday that the two companies had agreed to a sale of Freecharge.

The Axis-Freecharge deal size (about USD 60 million in dollar terms) is significantly lower from the USD 400 million that Snapdeal had paid to acquire the payments firm in 2015.

Freecharge had raised close to USD 116 million before it got acquired by Snapdeal.

The deal will provide some cash flow for Snapdeal which is still in talks with rival Flipkart to conclude an all stock sale.

"This acquisition is expected to help the bank take a significant step towards digital distribution of financial products. The platform provides access to agile customer-facing technology, which will help the bank to serve its existing customers better and approach new digitally native customers in an efficient manner," the companies said in a joint statement.

The new entity is likely to absorb the 200-250 odd employees of the Freecharge.

The employees were offered retention bonuses in the last couple of months, according to multiple people privy to the development.

Founded in 2010 by Mumbai based entrepreneur Kunal Shah, FreeCharge started as a recharge deal coupons platform before turning into a full-scale mobile wallet.

(Funding in Freecharge before it merged in Snapdeal)

The acquisition marks the first such acquisition of a digital payments company by a bank in India.

Axis Bank that offers mobile banking, credit cards, debit cards, forex cards, UPI payments claims to have been driving digital acceptance and has established the second largest merchant network with over 4,33,000 POS machines.

"The acquisition of FreeCharge re-affirms Axis Bank’s determination to lead the journey of digitization of financial services. We expect FreeCharge to contribute significantly in our aspiration to serve the digital native and mobile-first young consumers of India," said Shikha Sharma, managing director and chief executive officer of Axis Bank.

"It is a win-win deal that allows Snapdeal to further focus on our core e-commerce business, while giving Axis some of the most agile and innovative technology capabilities in the financial services space in India," said Kunal Bahl, co-founder and chief executive officer of Snapdeal.

As per the statement, the deal was broadly spearheaded by Jason Kothari on behalf of Jaspers who was parachuted into the company post his stint at Housing in January.

Kothari will help with integration and then resume his position at Snapdeal.

The deal is expected to close in the next two months.

Freecharge competes with Softbank-backed Paytm and claims to be having 50 million registered wallet users and over 2,00,000 merchants.

It claims that nearly 75% of its users are under 30 years, with 85% of active users accessing their financial services from a mobile device.

Digital payments and online consumption of financial services are growing on the back of "digital India" initiatives.

Rising usage of smartphones and increasing penetration of low cost Internet are further expected to drive digital adoption.

New age customers are ‘digital-native, mobile-first’ who prefer one-click payments products and anywhere banking.

While J Sagar Associates assisted Freechage on this deal, Axis Bank was advised by Cyril Amarchand Mangaldas.

Evolution of India Stack (Jan Dhan, Aadhaar and mobile penetration) together with paperless presence less ways of authentication has created a tipping point towards greater digitization of financial services.