Paytm Gets Government Approval to Invest in Key Subsidiary

2 mins read

Paytm has received approval from a government panel overseeing investments linked to China to invest 500 million rupees ($6 million) in its crucial subsidiary, Paytm Payment Services. This decision, which still requires vetting by the finance ministry, removes a major obstacle for the subsidiary to resume normal operations.

Paytm Payment Services is a significant part of the company’s business, contributing a quarter of the consolidated revenue for the financial year ending March 2023. The approval is essential for Paytm to seek a “payment aggregator” license from the Reserve Bank of India, allowing it to onboard new customers.

The approval had been delayed due to concerns over the 9.88% stake in Paytm held by China’s Ant Group. India has increased scrutiny of Chinese investments following a border clash in 2020. Without this clearance, Paytm Payment Services faced the risk of being shut down, similar to Paytm Payments Bank, which was closed earlier this year due to compliance issues, leading to a significant drop in Paytm’s stock value.

The government panel’s change of heart comes after nearly two years of Paytm waiting for the nod. The company’s spokesperson declined to comment on market speculation, stating, “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.”

The approval marks a crucial step for Paytm as it navigates regulatory hurdles and aims to stabilise its business operations amid heightened scrutiny of Chinese investments in India.