Govt. reviewing FDI flow from China in Paytm Payments Services
government is examining foreign direct investment from China in Paytm Payments
Services Ltd (PPSL), the payment aggregator subsidiary of One97 Communications
Ltd, sources said.
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.
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.
Communications Ltd (OCL) has investment from Chinese firm Ant Group Co.
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.
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.
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
which share land borders with India are China, Bangladesh, Pakistan, Bhutan,
Nepal, Myanmar and Afghanistan.
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.
is part of the regular process where everybody applying for a payment
aggregator licence has to get FDI approval," the spokesperson
spokesperson said PPSL followed the relevant guidelines and submitted all
relevant documents to the regulator within the stipulated time.
the pending process, PPSL was allowed to continue with its online payment
aggregation business for existing partners without onboarding any new
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.
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,
Reserve Bank's action against PPBL follows a comprehensive system audit report
and subsequent compliance validation report of external auditors.
had said that these reports revealed persistent non-compliances and continued
material supervisory concerns in PPBL, warranting further supervisory action.
March 11, 2022, RBI had barred PPBL from on boarding new customers with
www.business-standard.com dt. 12.02.2024