Fintech firm One97 Communications, which owns the Paytm brand, has got government approval for downstream investment in wholly owned subsidiary Paytm Payments Services Ltd, according to a regulatory filing on Wednesday. The company will reapply for a payment aggregator (PA) license, it stated.
"We would like to notify you that PPSL has got approval from the Government of India, Ministry of Finance, Department of Financial Services, via a letter dated August 27, 2024, for downstream investment by the Company in PPSL. With this approval in place, PPSL will resubmit its PA application. In the meanwhile, PPSL will continue to offer online payment aggregation services to existing partners, according to the Paytm filing.
The Reserve Bank of India (RBI) denied Paytm's PA license permission application in November 2022, instructing the business to reapply with Press Note 3 compliance under foreign direct investment standards.
According to Press Note 3, the government has made prior approval required for investments from countries that share land borders with India.
At the time of application rejection, China's Alibaba Group was the company's largest shareholder.
As per the RBI's PA rules, a single organization cannot continue to provide both an e-commerce marketplace and payment aggregator services, and such payment aggregator services must be independent from the e-commerce marketplace business.
