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Fintech major Paytm has received an approval from the Finance Ministry to invest in its payment services business, the troubled company said on August 28, as per a Reuters report.
Paytm did not share details of the investment that has been approved, the report added.
“We remain committed to a compliance-first approach and upholding the highest regulatory standards,” the company said.
Paytm’s parent company, One 97 Communications has been under scrutiny by the Reserve Bank of India (RBI) and Enforecement Directorate after the central bank ordered it to wind down its payments bank in January 2024.
With this latest approval, Paytm will resubmit an application with the Finance Ministry to regain a license for its financial services arm — Paytm Payment Services, it said.
Paytm Payments Services
In the meantime, Paytm Payment Services will continue to provide online payment aggregation services to existing partners, the company said.
In July 2024, Reuters had quoted a top Finance Ministry official, to report that Paytm had secured approval for a ₹500 crore (about $6 million) investment in its payments arm.
Paytm Payment Services is one of the biggest remaining parts of the fintech firm’s business and had accounted for a quarter of its consolidated revenue in the financial year ended March 2023.
Reconsideration Hinted Earlier
Vivek Joshi, India’s financial services secretary, had said in July that the company can approach RBI to seek a payment aggregator license, which the central bank and India’s banking sector regulator “will evaluate”.
Shares of Paytm closed 1.3 per cent lower on August 28. The stock has fallen over 29 per cent since January 2024, when the RBI directed Paytm Payment Services to gradually shut shop.
Rejected two years back
The RBI had rejected Paytm’s application nearly two years ago, asking the company to resubmit it in compliance with Press Note 3 under the foreign director investment rules.
These regulations mandate prior approval from the government for investments coming from countries sharing land borders with India. The unit was under the scanner because of investments from China’s Ant Group Co. Mint first reported that the Centre had rejected a post-facto approval for investments.
(With inputs from Reuters)
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