Paytm has strongly denied any major
FDI from China
in Paytm Payments Services Ltd (
PPSL
). There were reports that the government is examining foreign direct investment from China in Paytm Payments Services Ltd (PPSL), the payment aggregator subsidiary of
One97 Communications Ltd
.
Paytm spokesperson has refuted any
Chinese connection
or the company being under scanner for the same.
The spokesperson said that PPSL applied for an online Payment Aggregator (PA) application for online merchants and the regulator subsequently asked PPSL to seek necessary approvals for past downward investment and resubmit the application. "This is part of the regular process where everybody applying for a payment aggregator licence has to get FDI approval," the spokesperson added.
He further said that PPSL followed the relevant guidelines and submitted all relevant documents to the regulator within the stipulated time. During the pending process, PPSL was allowed to continue with its online payment aggregation business for existing partners without onboarding any new merchants.
"Since then the ownership structure has changed. The Paytm founder remains the largest stakeholder in the company. Ant Financial reduced its stake in OCL to less than 10 per cent in July 2023. Subsequently, it does not qualify for beneficial company ownership. OCL's founding promoter now holds a 24.3 per cent stake. Therefore, your understanding of FDI from China in PPSL is incorrect and misleading," the spokesperson said.
What the ‘Chinese connection’ report claimed
According to a report in news agency PTI, in November 2020, PPSL is said to have applied for a licence with the Reserve Bank of India (RBI) to operate as a payment aggregator under the guidelines on Regulation of Payment Aggregators and Payment Gateways. However, in November 2022, RBI rejected PPSL's application and asked the company to resubmit it, so as to comply with Press Note 3 under FDI rules.
The report added that this was as One97 Communications Ltd (OCL) has investment from Chinese firm Ant Group Co. Subsequently, the company is reported to have filed the required application on December 14, 2022 with Government of India for past downward investment from OCL into the company in order to comply with Press Note 3 prescribed under FDI guidelines. It further claimed that an inter-ministerial committee is examining investments from China in PPSL and decision would be taken on the FDI issue after due consideration and comprehensive examination, sources said.
Under Press Note 3, the government had made its prior approval mandatory for foreign investments in any sector from countries that share land border with India to curb opportunistic takeovers of domestic firms following the COVID-19 pandemic. Countries which share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.
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