Agile methodology has played a vital role in recent days for software development by overcoming the drawbacks of other popular SDLC (Software Development Life Cycle) models like Waterfall, Iterative and Spiral, etc. The Agile methodology was initially developed for small co-located teams, by being flexible and responding quickly to the customer requirements. This success story was also observed in several reports like Standish Group Chaos Report 2020. Following this trend, agile practices had also caught interest in larger organizations, as well as to large-scale software development projects. However, there still seemed to be some challenges in incorporating and practicing Agile to explore benefits as it was defined in the Agile Manifesto in 2001. It was also very well observed in the Standish Group 2020 Chaos Report, which mentioned that big organizations were not as successful in practicing Agile for larger projects as compared to smaller projects (19% success in large size projects vs 59% success in small size projects). On the other hand, another survey done by Scott Ambler + Associates mentioned that the success ratio of the co-located agile team was higher than a distributed agile team. Despite such variation in success ratio, organizations still intended to do huge investment in implementing distributed agile software development model, was surprising and exploratory. In this master thesis, I have tried to evaluate and explore all factors and characteristics associated with distributed agile software development with the help of the literature and thereafter, intended to find an answer about the impact of distributed agile software development on team performance. This was done by conducting a case study within a major Bank, where, at one end I used maturity assessment model to derive the current maturity of the Payment domain,and on other hand, the maturity score also helped to identify the gaps when a single model is used for evaluation. As my research aimed to identify the team performance of a distributed agile software development team, I used data statistics to do a comparison of the co-located agile team and distributed agile team within the Payment domain to derive to the conclusion. The outcome of my research did find a direct co-relation between distributed agile software development and team performance but in addition to this, it also unboxed various factors attributing to the usage of maturity models and challenges within the distributed agile model which might have been given less importance by organization thus negatively impacting team performance.