Paytm secures govt panel approval to invest in payment arm

10 Jul 2024 , 01:58 PM

A government panel overseeing Chinese investments has approved Paytm’s investment of ₹500 million ($6 million) in a major subsidiary, according to three sources with direct knowledge of the matter.

The license, which is still being reviewed by the finance ministry, will remove the biggest impediment to the entity, Paytm Payment Services, resuming normal business 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.

A different company, Paytm Payments Bank, was shut down this year by the central bank due to continuous compliance concerns, causing a drop in Paytm’s stock.

The government panel had earlier withheld clearance due to worries about China’s Ant Group’s 9.88% holding in Paytm. India has increased its surveillance of Chinese enterprises after the two countries 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 approval is finalised, it will be allowed to apply for a “payment aggregator” license from the Reserve Bank of India.

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