SUMMARY
Previously, the RBI had sent Paytm’s application back, asking for details on shareholding in its wholly-owned subsidiary PPSL
The fintech giant said it had recently requested an extension of the 120-day deadline to resubmit its application for the licence
The Payments Aggregator licence is a way to bring all payment aggregators as regulated entities under the Payment and Settlement Systems Act (2007)
Listed payment major Paytm has received a time extension from the Reserve Bank of India (RBI) to resubmit its application for a payment aggregator (PA) licence. The company said this in an exchange filing on Sunday (March 26).
Inc42 had reported on November 26 that the RBI had sent Paytm’s application back, asking for details on shareholding in its wholly-owned subsidiary Paytm Payments Services Limited (PPSL).
In the filing, the fintech giant said it had recently requested an extension of the 120-day deadline to resubmit its application for the licence. For now, the RBI has green-lighted its request since it has yet to receive an answer from the government on One97 Communication Limited’s (OCL) investments into PPSL.
Paytm is backed by China’s Alibaba-backed Ant Group, which still holds more than a 25% stake in the fintech giant. The government is investigating whether the investments made by Paytm into PPSL were compliant with FDI norms.
The RBI letter, according to Paytm, said that once the federal bank receives approval from the government, it would give the fintech giant 15 more days to reapply for the payment aggregator licence.
Interestingly, Ant Group is looking to reduce its holding into Paytm, but the move would be more due to SEBI’s regulation of shareholding in a company than anything else.
The Chinese firm saw its shareholding cross SEBI’s threshold of 25% during Paytm’s recent share buyback and has a 90-day window to slash its stake in Paytm, beginning February 13 when the Paytm buyback was completed.
If the government takes any adverse decision, Paytm has to inform the RBI immediately. While Paytm Payments Bank can continue to operate during this process, it still can’t onboard any new merchants.
According to Paytm, this does not have any material impact on its business since the communication from the RBI only barred it from onboarding new users. “We can continue to provide payment services to our existing online merchants,” added the fintech major.
Meanwhile, the RBI has given in-principle approval to 32 payment aggregators, including entities competing with Paytm Payments Bank.
The Payments Aggregator licence, introduced by the central bank in 2020, is a way to bring all payment aggregators as regulated entities under the Payment and Settlement Systems Act (2007).
Paytm’s shares opened at INR 623.45 apiece on Monday (March 27), up slightly from the previous close of INR 619.45. However, the share price remains 71% lower than the IPO price of INR 2,150 apiece.
