Latest Updates On Paytm: FAQs Answered And RBI's Strong Position Explained
Paytm , the leading player in mobile payments innovation, is aiming to enhance its service offerings through partnerships with various banks, as stated by a company spokesperson. However, One97 Communications , the parent company of Paytm, has not yet received government approval for downstream investment in its payment aggregator subsidiary, Paytm Payment Services Ltd ( PPSL ). In November 2020, PPSL applied for a license from the Reserve Bank of India ( RBI ) to operate as a payment aggregator, but their application was rejected in November 2022.
The RBI asked PPSL to resubmit the application to comply with Press Note 3 under Foreign Direct Investment (FDI) rules. Paytm has also applied to the government for approval of the downstream investment made by the company in PPSL, but the approval is still awaited. Despite this, PPSL continues to serve its existing online merchant partners.
The RBI has instructed PPSL to continue its operations but not onboard any new merchants until government approval is received. Under Press Note 3, foreign investments from countries sharing a land border with India, such as China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan, require prior approval from the Indian government. Paytm has received significant investments from Chinese companies. Additionally, Paytm has changed its ownership structure, with the founder, Mr Vijay Shekhar Sharma, now being the sole Significant Beneficial Owner.
Paytm announced in August 2023 that Sharma would acquire a 10.3% stake in Antfin, making him the largest stakeholder in the company. In return, Antfin reduced its stake in Paytm to 9.89%. The Reserve Bank of India (RBI) will issue a set of FAQs this week and has clarified that its actions are aimed at regulated entities after a comprehensive assessment. The RBI remains supportive of the fintech sector and is committed to protecting the interests of customers and ensuring financial stability.
Following the regulatory actions against Paytm Payments Bank Ltd, Paytm's shares dropped by 9% after Macquarie slashed its target price by 57%. The RBI directed Paytm Payments Bank to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after February 29. However, the regulatory action against Paytm Payments Bank Ltd does not affect the Paytm app, which remains fully operational and unaffected. The RBI's actions are in the best interest of systemic stability and the protection of depositors' or customers' interests.
The RBI asked PPSL to resubmit the application to comply with Press Note 3 under Foreign Direct Investment (FDI) rules. Paytm has also applied to the government for approval of the downstream investment made by the company in PPSL, but the approval is still awaited. Despite this, PPSL continues to serve its existing online merchant partners.
The RBI has instructed PPSL to continue its operations but not onboard any new merchants until government approval is received. Under Press Note 3, foreign investments from countries sharing a land border with India, such as China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan, require prior approval from the Indian government. Paytm has received significant investments from Chinese companies. Additionally, Paytm has changed its ownership structure, with the founder, Mr Vijay Shekhar Sharma, now being the sole Significant Beneficial Owner.
Paytm announced in August 2023 that Sharma would acquire a 10.3% stake in Antfin, making him the largest stakeholder in the company. In return, Antfin reduced its stake in Paytm to 9.89%. The Reserve Bank of India (RBI) will issue a set of FAQs this week and has clarified that its actions are aimed at regulated entities after a comprehensive assessment. The RBI remains supportive of the fintech sector and is committed to protecting the interests of customers and ensuring financial stability.
Following the regulatory actions against Paytm Payments Bank Ltd, Paytm's shares dropped by 9% after Macquarie slashed its target price by 57%. The RBI directed Paytm Payments Bank to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after February 29. However, the regulatory action against Paytm Payments Bank Ltd does not affect the Paytm app, which remains fully operational and unaffected. The RBI's actions are in the best interest of systemic stability and the protection of depositors' or customers' interests.
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