Paytm has won approval from a government panel overseeing China-related investments to invest 500 million rupees ($6 million) in a key subsidiary, three sources with direct knowledge of the matter said.
The approval, which is still to be vetted by the Finance Ministry, will remove the main hurdle in resuming normal business operations for the entity, Paytm Payments Services.
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Paytm Payment Services is one of the largest remaining segments of the fintech firm’s business, accounting for a quarter of consolidated revenues in the financial year ending March 2023.
A separate entity, Paytm Payments Bank, was shut down this year on RBI orders due to persistent compliance issues, leading to a slump in Paytm’s stock.
The government panel had earlier withheld approval due to concerns about China’s Ant Group’s 9.88 percent stake in Paytm. India has stepped up scrutiny of Chinese businesses following border clashes between the two countries in 2020.
Overall, Paytm has been waiting for the government panel’s approval for almost two years and without it, it would have had to shut down its payments services business, which was prohibited from taking on new customers, in March 2023.
Once the approval is formalized, it will be able to obtain a so-called “payment aggregator” license from the Reserve Bank of India.
The sources, two of whom are government sources, declined to be identified because the decision has not been formally announced.
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The country’s foreign, home, finance and industry ministries, whose representatives sit on the panel, did not respond to an email seeking comment.
A Paytm spokesperson said the company does not comment on market speculation. “We will continue to make disclosures in compliance with our obligations under SEBI regulations, and will inform the exchanges if there is any new material information to share,” the spokesperson said.
Reuters could not immediately learn the reason for the change in the panel’s decision.
(TagstoTranslate)Paytm(T)Government Approval(T)Investment(T)Paytm Payment Services(T)Ant Group(T)Compliance Issues(T)Payment Aggregator License
