Fintech giant Paytm announced on August 28 that it has secured approval from the Finance Ministry to invest in its payment services business. This development marks a significant step for the company, which has faced regulatory scrutiny over the past year.
While Paytm did not disclose specific details regarding the approved investment, it emphasized its commitment to maintaining strict compliance with regulatory standards. The approval paves the way for Paytm to reapply for a license for its financial services arm, Paytm Payment Services.
The parent company, One 97 Communications, has been under close watch by the Reserve Bank of India (RBI) and the Enforcement Directorate since January 2024, when the RBI ordered the winding down of its payments bank operations. Despite these challenges, Paytm Payment Services will continue to offer online payment aggregation services to its existing partners.
In July 2024, reports indicated that Paytm had received approval for a ₹500 crore ($6 million) investment in its payments business. Paytm Payment Services remains a crucial component of the company’s operations, contributing a quarter of its consolidated revenue for the fiscal year ending March 2023.
The approval also comes after India’s financial services secretary, Vivek Joshi, hinted that Paytm could approach the RBI for a payment aggregator license, subject to evaluation by the central bank.
Despite the recent approval, Paytm’s shares dipped 1.3% on August 28, continuing a downward trend that has seen the stock fall over 29% since January 2024, following the RBI’s directive to gradually shut down Paytm Payment Services. The RBI had initially rejected Paytm’s application nearly two years ago, citing non-compliance with foreign direct investment regulations under Press Note 3, particularly concerning investments from China’s Ant Group.
