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Paytm, currently facing regulatory challenges, has reportedly received approval from a government panel overseeing investments related to China to invest 500 million rupees ($6 million) in a critical subsidiary, according to three sources familiar with the matter. This approval, which still requires scrutiny from the finance ministry, clears the path for Paytm Payment Services to resume normal operations.
This subsidiary is a significant component of Paytm's business, contributing a substantial portion of its consolidated revenue in the fiscal year ending March 2023. Earlier this year, Paytm's Paytm Payments Bank was shut down by the central bank due to ongoing compliance issues, causing a significant drop in Paytm's stock value.
The government panel had previously delayed approval due to concerns over China's Ant Group holding a 9.88% stake in Paytm, amid heightened scrutiny of Chinese investments following a border clash in 2020. Paytm has been awaiting this decision from the panel for approximately two years; without it, the company would have been forced to wind down its payment services, which were barred from acquiring new customers since March 2023.
Once formalized, Paytm plans to apply for a "payment aggregator" license from the Reserve Bank of India. The sources, including two from the government, chose not to disclose their identities as the decision has not been officially announced.
Requests for comments from various Indian ministries involved in the panel were unanswered. A Paytm spokesperson declined to comment on market speculation, affirming the company's commitment to regulatory compliance and timely disclosures as required by SEBI regulations.
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