Paytm Payments Services: Paytm, which is in trouble, has got relief from the government. The government has allowed Paytm to reduce its stake in its subsidiary Paytm Payments Services. This stake was coming in the way of it getting a payment aggregator license (PA Licence). The Reserve Bank of India (RBI) rejected its PA license application in November 2022. It also directed the company to apply again after fulfilling the conditions of Press Note 3.
One 97 Communications holds 100% stake in PPSL
One97 Communications, the company that owns the fintech brand Paytm, said in a regulatory filing on Wednesday that it has received approval from the Ministry of Finance to reduce its stake in Paytm Payments Services (PPSL). One97 Communications holds 100% stake in it. Now the company will re-apply for the PA license. During this time, Paytm Payments Services will continue to provide online payment aggregation service to its partners.
RBI had ordered to follow FDI rules
While rejecting the company’s PA license application, RBI (Reserve Bank of India) had said that it would have to follow the FDI rules under Press Note 3. Under Press Note 3, the government had made it mandatory to get prior approval for investments coming from countries sharing borders with India. This was done immediately after the Covid pandemic due to the fears of Chinese companies taking over the Indian market.
Alibaba Group had become the largest shareholder in Paytm
At the time of the application rejection, China’s Alibaba Group had become the largest shareholder in Paytm. RBI’s PA guidelines also state that a company cannot continue to provide payment aggregator services as well as e-commerce marketplace. Such payment aggregator services should be separated from the e-commerce marketplace business.
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