According to three people with firsthand knowledge of the subject, India's troubled Paytm has received clearance from a government body that regulates Chinese investments to invest Rs 50 crore (USD 6 million) in a major subsidiary.
The license, which is still being reviewed by the finance ministry, will remove the biggest impediment to the entity, Paytm Payment Services, resuming normal commercial operations. Paytm Payment Services is one of the largest remaining segments of the fintech firm's operations, contributing for one-quarter of total revenue in the fiscal year ending March 2023.
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A different company, Paytm Payments Bank, was shut down this year by the central bank owing to continuous compliance concerns, causing a drop in Paytm's shares. The government panel had earlier withheld clearance owing to worries over China's Ant Group's 9.88% holding in Paytm. India has increased its surveillance of Chinese enterprises after the two nations clashed on the border in 2020.
Overall, Paytm has been waiting for approval from the government panel for over two years, and without it, it would have had to shut down its payment services company, which was prohibited from accepting new clients in March 2023.
Once the permission is finalized, it will be allowed to apply for a "payment aggregator" license from the Reserve Bank of India. The sources, two of whom are government officials, declined to be identified because the decision has not been officially announced. India's foreign, home, finance, and industries ministries, all of which have representation on the panel, did not respond to emails requesting comment.
A Paytm spokeswoman stated that the business does not comment on market speculation. "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," a spokeswoman said.
