The government is said to be examining the Chinese FDI in Paytm Payments Bank, the payment aggregator subsidiary of One97 Communications Ltd, sources said. In November 2020, PPSL had applied for licence with the Reserve Bank of India (RBI) to operate as a payment aggregator under the guidelines on Regulation of Payment Aggregators and Payment Gateways.
However, in November 2022, RBI rejected PPSL’s application and asked the company to resubmit it, so as to comply with Press Note 3 under FDI rules.
One97 Communications Ltd (OCL) has investment from Chinese firm Ant Group Co.
Subsequently, the company filed the required application on December 14, 2022 with Government of India for past downward investment from OCL into the company in order to comply with Press Note 3 prescribed under FDI guidelines.
An inter-ministerial committee is examining investments from China in PPSL and decision would be taken on the FDI issue after due consideration and comprehensive examination, sources said.
Under Press Note 3, the government had made its prior approval mandatory for foreign investments in any sector from countries that share land border with India to curb opportunistic takeovers of domestic firms following the COVID-19 pandemic.
Countries which share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.
When contacted, a Paytm spokesperson said PPSL applied for an online Payment Aggregator (PA) application for online merchants and the regulator subsequently asked PPSL to seek necessary approvals for past downward investment and resubmit the application.
“This is part of the regular process where everybody applying for a payment aggregator licence has to get 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.
“Since then the ownership structure has changed. The Paytm founder remains the largest stakeholder in the company. Ant Financial reduced its stake in OCL to less than 10 per cent in July 2023. Subsequently, it does not qualify for beneficial company ownership. OCL founding promoter now holds a 24.3 per cent stake. Therefore, your understanding of FDI from China in PPSL is incorrect and misleading,” the spokesperson said. The Reserve Bank last month barred Paytm Payments Bank Ltd (PPBL), an associate company of OCL, from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024.
Meanwhile, One97 Communications has received support from merchants, and it assured them of continuity of services without any disruption, the company said in a blog on Sunday.
“We assure our users and merchant partners that the Paytm app and services continue to operate at full capacity. In instances, where our associate Paytm Payments Bank acts as a back-end bank, we can seamlessly transition these services to other partner banks. This ensures that our merchant partners face no disruptions, no need to revisit existing setups, and no additional effort,” the blog said.
Paytm said its merchant partners can continue to benefit from solutions like Paytm QR codes, Soundbox, and card machines, just as before. “Leading industry players across retail, entertainment, and beyond, such as Arvind Limited, Smaaash, BIBA, and more’ stand testament to the strength of our partnerships, having experienced firsthand the benefits of our seamless payment solutions,” the blog said. Leading companies have expressed their satisfaction with their prolonged association with Paytm, it added. “We have been working with Paytm for two years, and they have always been at par when it comes to their innovative products and services. I strongly recommend everyone to continue using Paytm services as before,” the blog quoted Hotspot Retail Private Limited Chief Operating Officer Satya N Satyendra as saying.
The blog shared testaments from Advaith Hyundai, Smaash, BIBA Fashion, and Arvind Limited, which runs brands like Calvin Klein, Tommy Hilfiger etc, around the service being offered by Paytm.
“This endorsement underscores our significant contribution to advancing India’s fintech revolution. “The strong support from enterprise leaders underscores our key role in reshaping India’s digital payment sector and solidifies us as a reliable partner for businesses nationwide. Inspired by this support, our dedicated teams continue to work tirelessly, providing unparalleled service and support to our partners and customers,” the blog said. PTI
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