Paytm has reason to cheer! India’s struggling digital payments company, Paytm, has received the green light from a government panel overseeing China-linked investments to inject 500 million rupees ($6 million) into a crucial subsidiary, three sources directly familiar with the matter told Reuters.
While the approval still requires clearance from the finance ministry, it will eliminate the primary obstacle preventing Paytm Payment Services from resuming normal operations.
The government panel had previously withheld approval due to concerns regarding the 9.88% stake in Paytm owned by China’s Ant Group, as India has heightened its scrutiny of Chinese businesses following a border clash between the two nations in 2020.
Paytm has been awaiting the panel’s approval for approximately two years, and without it, the company would have been forced to shut down its payment services business, which was prohibited from accepting new customers in March 2023.
Also Read | ‘Paytm like a daughter who…’: Vijay Shekhar Sharma’s emotional view on Paytm Payments Bank crisis
Paytm Payment Services, which generates a quarter of the fintech company’s consolidated revenue for the fiscal year ending March 2023, is one of the most significant remaining components of Paytm’s business.
Earlier this year, another unit, Paytm Payments Bank, was shut down by order of the Reserve Bank of India due to ongoing compliance issues, leading to a significant decline in Paytm’s stock value.
Once the approval is formalized, Paytm will be eligible to apply for a “payment aggregator” license from the Reserve Bank of India. The sources, including two government officials, requested anonymity as the decision has not been officially announced.
India’s foreign, home, finance, and industries ministries, whose representatives are members of the panel, did not respond to emails seeking comment.
A Paytm spokesperson told Reuters, “We will continue to make disclosures in compliance with our obligations under the SEBI Regulations, and will inform the exchanges when there is any new material information to share.”
While the approval still requires clearance from the finance ministry, it will eliminate the primary obstacle preventing Paytm Payment Services from resuming normal operations.
The government panel had previously withheld approval due to concerns regarding the 9.88% stake in Paytm owned by China’s Ant Group, as India has heightened its scrutiny of Chinese businesses following a border clash between the two nations in 2020.
Paytm has been awaiting the panel’s approval for approximately two years, and without it, the company would have been forced to shut down its payment services business, which was prohibited from accepting new customers in March 2023.
Also Read | ‘Paytm like a daughter who…’: Vijay Shekhar Sharma’s emotional view on Paytm Payments Bank crisis
Paytm Payment Services, which generates a quarter of the fintech company’s consolidated revenue for the fiscal year ending March 2023, is one of the most significant remaining components of Paytm’s business.
Earlier this year, another unit, Paytm Payments Bank, was shut down by order of the Reserve Bank of India due to ongoing compliance issues, leading to a significant decline in Paytm’s stock value.
Once the approval is formalized, Paytm will be eligible to apply for a “payment aggregator” license from the Reserve Bank of India. The sources, including two government officials, requested anonymity as the decision has not been officially announced.
India’s foreign, home, finance, and industries ministries, whose representatives are members of the panel, did not respond to emails seeking comment.
A Paytm spokesperson told Reuters, “We will continue to make disclosures in compliance with our obligations under the SEBI Regulations, and will inform the exchanges when there is any new material information to share.”
