An ongoing scrutiny is underway concerning foreign investments into Paytm Payments Services Ltd (PPSL), a subsidiary of One97 Communications Ltd, as reported by PTI. The focal point of this investigation lies in the flow of funds from China into the Indian company, amidst regulatory concerns and guidelines.
The Reserve Bank of India’s denial of PPSL’s application to operate as a payment aggregator in November 2022 triggered a series of events. The apex bank mandated compliance with Press Note 3 under FDI rules, which led to One97 Communications Ltd seeking approval for altering the investment structure involving Chinese firm Ant Group Co.
This development underscores broader governmental efforts to monitor and regulate foreign investments, particularly from neighboring nations like China, in the wake of the COVID-19 pandemic. Stricter guidelines, such as Press Note 3, aim to prevent opportunistic takeovers of Indian firms.
In response, Paytm emphasized its adherence to regulatory protocols and clarified alterations in ownership structure that mitigated significant influence from the Chinese entity. As per information received from Paytm:
Paytm Payment Services Limited (PPSL) applied for an online Payment Aggregator (PA) license, but the regulator requested approvals for previous downward investments before resubmission, a standard procedure for FDI approval. PPSL received an extension to reapply, adhering to guidelines and submitting required documents. During the process, PPSL continued its online payment aggregation for existing partners, as per RBI’s guidelines. The company’s ownership structure has since changed, with the founder retaining the largest stake. Ant Financial’s stake in One 97 Communications Limited (OCL) reduced to below 10% in July 2023, altering beneficial ownership qualifications. Now, the founding promoter of One 97 Communications Ltd holds a 24.3% stake. All details are available in the public domain via regulatory filings.
However, the Reserve Bank’s recent measures against Paytm Payments Bank Ltd indicate broader concerns regarding compliance and supervision within the Paytm ecosystem.
