Paytm Gets Government Nod to Invest Rs 500 Million in Paytm Payment Services: Report 

Fintech platform Paytm has received the go-ahead from a government committee that monitors China-related investments to put Rs 500 million ($6 million) into a key subsidiary, as reported by Reuters.  

However, this approval is yet to be reviewed by the finance ministry. Once the fintech firm receives the approval, it will reportedly eliminate the primary obstacle preventing Paytm Payment Services from resuming regular operations. 

According to the report, Paytm Payment Services, a noteworthy segment of the fintech enterprise, accounted for 25 per cent of the company's overall income in the fiscal year concluding in March 2023.   

While the home ministry had approved the fintech firm’s investment in Paytm Payments Services, the proposal for the same was rejected by the foreign ministry citing “political grounds”.  

The reason behind the denial of the investment was the investment held by China’s Ant Group (9.88 per cent) in the fintech company. Since the 2020 border clash between the two countries, India has intensified its scrutiny on China. The country also banned fifty-four Chinese apps in 2022 as they posed threat to the country.  

However, earlier this year, Paytm refuted any claim of the government deferring any payment. In a blog post, the fintech platform said, “To clarify, the investment of Rs 50 crore was made from OCL’s existing cash reserves, and no Chinese capital was raised by OCL after the introduction of Press Note 3 of 2020. Furthermore, Rs 50 crore was the capital required to comply with the Reserve Bank of India’s (RBI’s) minimum net worth rules and fund the cash requirements of PPSL.” 

Paytm Payment Services was made by the fintech platform to get the payment aggregator license. To comply with the central bank’s payment aggregator (PA) guidelines, the company proposed to transfer the payment aggregator services business it had been undertaking to Paytm Payments Services (PPSL) in December 2020. However, the banking regulator rejected its application in 2022.   

Once Paytm gets this license, it can apply for the payment aggregator license from the central bank of India. Declining to comment on market speculations, a spokesperson of Paytm told Reuters, "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.”