An inter-ministerial committee is currently reviewing foreign direct investment (FDI) inflows from China into Paytm Payments Services Ltd (PPSL), a subsidiary of Paytm's parent company One97 Communications Ltd.
Paytm Payments Services had applied for a license with the Reserve Bank of India (RBI) in November 2020 to operate as a payment aggregator, but the application was rejected in November 2022. The RBI instructed the company to resubmit its application to comply with Press Note 3 under FDI rules.
One97 Communications Ltd (OCL), the parent company of Paytm Payments Services Ltd, has investments from Chinese firm Ant Group Co.
As a result, OCL applied to the Indian government on December 14, 2022, to rectify past downward investments from OCL into PPSL to comply with Press Note 3 prescribed under FDI guidelines.
The sources mentioned that the inter-ministerial committee is examining investments from China in PPSL, and a decision will be made on the FDI issue after thorough consideration and examination.
Press Note 3 mandates prior approval for foreign investments from countries sharing land borders with India to prevent opportunistic takeovers of domestic firms following the COVID-19 pandemic. Countries sharing land borders with India include China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.
In response to queries, a Paytm spokesperson stated that PPSL had applied for an online Payment Aggregator (PA) license for online merchants, and the regulator subsequently requested PPSL to obtain necessary approvals for past downward investment and resubmit the application.
The spokesperson clarified, "This is part of the regular process where everybody applying for a payment aggregator license has to get FDI approval."
During the pending process, PPSL was permitted to continue its online payment aggregation business for existing partners without onboarding new merchants.
Follow us
