Business information: The central authorities is examining foreign direct investment from China in Paytm Payments Services Ltd (PPSL), the fee aggregator subsidiary of One97 Communications Ltd, sources stated on Sunday (February 11). In November 2020, PPSL had utilized for a licence with the Reserve Bank of India (RBI) to function as a fee aggregator underneath the rules on Regulation of Payment Aggregators and Payment Gateways. However, in November 2022, RBI rejected PPSL’s utility and requested the corporate to resubmit it, in order to adjust to Press Note 3 underneath FDI guidelines.
One97 Communications Ltd (OCL) has investment from Chinese agency Ant Group Co.
Subsequently, the corporate filed the required utility on December 14, 2022 with Government of India for previous downward investment from OCL into the corporate in order to adjust to Press Note 3 prescribed underneath FDI pointers.
An inter-ministerial committee is examining investments from China in PPSL and determination could be taken on the FDI problem after due consideration and complete examination, sources stated.
Under Press Note 3, the federal government had made its prior approval obligatory for foreign investments in any sector from international locations that share land border with India to curb opportunistic takeovers of home companies 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 stated PPSL utilized for a web-based Payment Aggregator (PA) utility for on-line retailers and the regulator subsequently requested PPSL to hunt vital approvals for previous downward investment and resubmit the applying.
“This is part of the regular process where everybody applying for a payment aggregator licence has to get FDI approval,” the spokesperson stated.
The spokesperson stated PPSL adopted the related pointers and submitted all related paperwork to the regulator inside the stipulated time.
During the pending course of, PPSL was allowed to proceed with its on-line fee aggregation enterprise for current companions with out onboarding any new retailers.
“Since then the possession construction has modified. The Paytm founder stays the biggest stakeholder in the corporate. Ant Financial decreased its stake in OCL to lower than 10 per cent in July 2023. Subsequently, it doesn’t qualify for useful firm possession.
OCL founding promoter now holds a 24.3 per cent stake. Therefore, your understanding of FDI from China in PPSL is wrong and deceptive,” the spokesperson stated.
RBI motion
The Reserve Bank final month barred Paytm Payments Bank Ltd (PPBL), an affiliate firm of OCL, from accepting deposits or top-ups in any buyer account, pay as you go devices, wallets, and FASTags, amongst others after February 29, 2024.
The Reserve Bank’s motion in opposition to PPBL follows a complete system audit report and subsequent compliance validation report of exterior auditors.
RBI had stated that these reviews revealed persistent non-compliances and continued materials supervisory considerations in PPBL, warranting additional supervisory motion. On March 11, 2022, RBI had barred PPBL from onboarding new prospects with fast impact.
(With PTI inputs)
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