Sunday, March 03, 2024
Advertisement
  1. You Are At:
  2. News
  3. Business
  4. Govt examining foreign direct investment flow from China in Paytm Payments Services: Sources

Govt examining foreign direct investment flow from China in Paytm Payments Services: Sources

In November 2020, PPSL had applied for a 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.

Ashesh Mallick Edited By: Ashesh Mallick @asheshmallick07 New Delhi Published on: February 11, 2024 19:14 IST
Paytm, Business, Business news, China, FDI
Image Source : ANI Representative Image

Business news: The central government is examining foreign direct investment from China in Paytm Payments Services Ltd (PPSL), the payment aggregator subsidiary of One97 Communications Ltd, sources said on Sunday (February 11).  In November 2020, PPSL had applied for a 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.

During the pending process, PPSL was allowed to continue with its online payment aggregation business for existing partners without onboarding any new merchants.

"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.

RBI action

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.

The Reserve Bank's action against PPBL follows a comprehensive system audit report and subsequent compliance validation report of external auditors.

RBI had said that these reports revealed persistent non-compliances and continued material supervisory concerns in PPBL, warranting further supervisory action. On March 11, 2022, RBI had barred PPBL from onboarding new customers with immediate effect.

(With PTI inputs)

ALSO READ | Paytm terms reports of ED probe, foreign exchange rule violation as ‘misleading and baseless’ | READ

Advertisement

Read all the Breaking News Live on indiatvnews.com and Get Latest English News & Updates from Business

Advertisement
Advertisement
Advertisement
Advertisement