Nikunj Ohri and Sarita Chaganty Singh
NEW DELHI (Reuters) – India’s struggling Paytm has received approval from a government committee that monitors China-related investments to invest 500 crore rupees ($6 million) in a key subsidiary, according to three sources with direct knowledge of the matter.
The approval, which has yet to be reviewed by the Ministry of Finance, removes the biggest obstacle to Paytm’s Payment Services unit resuming normal operations.
Paytm payments services is one of the largest remaining divisions of the fintech company’s business, accounting for a quarter of its consolidated revenue for the fiscal year ending March 2023.
Another unit, Paytm Payments Bank, was shut down this year by order of the central bank after continued compliance issues, causing Paytm’s share price to plummet.
A government committee had previously withheld approval over concerns about China’s Ant Group’s 9.88% stake in Paytm. India has stepped up scrutiny of Chinese companies since a 2020 border clash between the two countries.
After all, Paytm had been waiting for approval from the government committee for about two years, without which it would have had to scale back its payments business, which would have been barred from accepting new customers in March 2023.
Once the approval is formalized, the company will be able to apply for a so-called “payments aggregator” license from the Reserve Bank of India.
Two of the sources were government officials but declined to be identified because the decision has not been officially announced.
India’s ministries of external affairs, home affairs, finance and industry, which have representatives on the committee, did not respond to emails seeking comment.
A Paytm spokesperson said the company does not comment on market speculation. “We will continue to disclose information in accordance with our obligations under SEBI regulations and will inform the exchanges if we have any new material information to share,” the spokesperson said.
Reuters was not immediately able to learn the reasons for the committee’s change of decision.
(1 dollar = 83.4521 Indian rupees)
(Reporting by Nikunj Ohri and Sarita Chaganty Singh; Additional reporting by Shivangi Acharya in New Delhi; Editing by Edwina Gibbs)
