Fintech firm One97 Communications, the owner of Paytm brand, has received the government’s approval for downstream investment in wholly owned subsidiary Paytm Payments Services.
Paytm has been under scrutiny after the RBI ordered it to wind down its payments bank in January.
With the latest approval, the company will resubmit an application with the ministry to regain a licence for its payments services business, Paytm said in a regulatory filing on Wednesday.
Also Read : Cash Deposit Limit In Savings Account: Know How Much Money Can Be Kept In A Savings Account
In the meantime, Paytm Payment Services will continue to provide online payment aggregation services to existing partners, the company said.
“This is in furtherance to our letter dated February 12, 2024, regarding the application of Paytm Payments Services Limited (PPSL), a wholly owned subsidiary of One 97 Communications Limited (OCL or the Company), for a payment aggregator (PA) licence,” the company informed in a regulatory filing.
“We would like to inform you that PPSL has received approval from the Government of India, Ministry of Finance, Department of Financial Services, vide its letter dated August 27, 2024, for downstream investment from the Company into PPSL. With this approval in place, PPSL will proceed to resubmit its PA application. In the meantime, PPSL will continue to provide online payment aggregation services to existing partners.”
Also Read : UPI Transaction Failed and Money Is Debited? Here’s How To Get a Refund
Why Re-submit of PA Licence Application?
The Reserve Bank of India (RBI) had rejected Paytm’s PA licence permit application in November 2022 and instructed the company to reapply with Press Note 3 compliance under foreign direct investment norms.
As per Press Note 3, the government had made its prior approval mandatory for investments from nations that share land borders with India.
At the time of application rejection, China’s Alibaba Group was the biggest stakeholder in the company.
The RBI’s PA guidelines also state that a single entity cannot continue to provide an e-commerce marketplace along with payment aggregator services and such payment aggregator services must be separated from the e-commerce marketplace business.
