Government is investigating Chinese investment in Paytm’s payment aggregator subsidiary. india business news
New Delhi: A few days after the Reserve Bank of India (reserve Bank of India) big action on Paytm’s Payments BankSources said on Sunday that the government is now investigating foreign direct investment from China fintech companyPayment aggregator subsidiary of.
According to a PTI report, the government is examining Chinese investment in Paytm Payments Services Ltd (PPSL), which had applied for a license with the RBI to operate as a payment aggregator.
PPSL is part of One97 Communications Limited, which owns Paytm. Chinese firm Ant Group Company has an investment in One97 Communications Limited (OCL).
The report said PPSL had applied for the license in November 2020 under the guidelines on regulation of payment aggregators and payment gateways.
However, in November 2022, the apex bank rejected the application and asked the company to resubmit it, so as to comply with Press Note 3 under FDI rules.
In December 2022, the company filed an application with the government for the previous downward investment in the company from OCL to comply with Press Note 3 prescribed under the FDI guidelines.
Sources said an inter-ministerial committee is now examining investment from China in PPSL and a decision on the FDI issue will be taken after due consideration and comprehensive examination.
Under Press Note 3, the government had made its prior approval mandatory for foreign investment in any sector from countries sharing land borders with India to prevent opportunistic takeover of domestic companies following the COVID-19 pandemic.
The countries sharing land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.
When contacted by PTI, a Paytm spokesperson said that PPSL had applied for an online payment aggregator (PA) application for online merchants and the regulator subsequently directed PPSL to seek necessary approvals for the previous downward investment and submit the application. Was asked to resubmit.
“This is part of the regular process where every person applying for a payment aggregator license has to obtain FDI approval,” the spokesperson said.
The spokesperson said PPSL followed the relevant guidelines and submitted all relevant documents to the regulator within the stipulated time.
Pending the process, PPSL was allowed to continue its online payment aggregation business for existing partners without onboarding any new merchants.
“The ownership structure has changed since then. Paytm’s founders remain the largest stakeholders in the company. Ant Financial reduced its stake in OCL to less than 10 percent in July 2023. Following this, it will be eligible to own the profitable company. No. The founding promoter of OCL now holds 24.3 per cent stake. Therefore, your understanding of FDI from China in PPSL is wrong and misleading,” the spokesperson said.
Last month, in a major blow to the company, RBI had barred Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups into any customer accounts, prepaid instruments, wallets and FASTags after February 29, 2024 .
The Reserve Bank’s action against PPBL follows a comprehensive system audit report and compliance verification report from external auditors.
RBI had said that these reports revealed persistent non-compliance and continuing material supervisory concerns at PPBL, necessitating further supervisory action.
On March 11, 2022, RBI had barred PPBL from adding new customers with immediate effect.
According to a PTI report, the government is examining Chinese investment in Paytm Payments Services Ltd (PPSL), which had applied for a license with the RBI to operate as a payment aggregator.
PPSL is part of One97 Communications Limited, which owns Paytm. Chinese firm Ant Group Company has an investment in One97 Communications Limited (OCL).
The report said PPSL had applied for the license in November 2020 under the guidelines on regulation of payment aggregators and payment gateways.
However, in November 2022, the apex bank rejected the application and asked the company to resubmit it, so as to comply with Press Note 3 under FDI rules.
In December 2022, the company filed an application with the government for the previous downward investment in the company from OCL to comply with Press Note 3 prescribed under the FDI guidelines.
Sources said an inter-ministerial committee is now examining investment from China in PPSL and a decision on the FDI issue will be taken after due consideration and comprehensive examination.
Under Press Note 3, the government had made its prior approval mandatory for foreign investment in any sector from countries sharing land borders with India to prevent opportunistic takeover of domestic companies following the COVID-19 pandemic.
The countries sharing land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.
When contacted by PTI, a Paytm spokesperson said that PPSL had applied for an online payment aggregator (PA) application for online merchants and the regulator subsequently directed PPSL to seek necessary approvals for the previous downward investment and submit the application. Was asked to resubmit.
“This is part of the regular process where every person applying for a payment aggregator license has to obtain FDI approval,” the spokesperson said.
The spokesperson said PPSL followed the relevant guidelines and submitted all relevant documents to the regulator within the stipulated time.
Pending the process, PPSL was allowed to continue its online payment aggregation business for existing partners without onboarding any new merchants.
“The ownership structure has changed since then. Paytm’s founders remain the largest stakeholders in the company. Ant Financial reduced its stake in OCL to less than 10 percent in July 2023. Following this, it will be eligible to own the profitable company. No. The founding promoter of OCL now holds 24.3 per cent stake. Therefore, your understanding of FDI from China in PPSL is wrong and misleading,” the spokesperson said.
Last month, in a major blow to the company, RBI had barred Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups into any customer accounts, prepaid instruments, wallets and FASTags after February 29, 2024 .
The Reserve Bank’s action against PPBL follows a comprehensive system audit report and compliance verification report from external auditors.
RBI had said that these reports revealed persistent non-compliance and continuing material supervisory concerns at PPBL, necessitating further supervisory action.
On March 11, 2022, RBI had barred PPBL from adding new customers with immediate effect.
