Government panel approves Paytm's investment in the payments arm: Report

Paytm has reportedly received approval from a government panel overseeing investments tied to China to inject 500 million rupees ($6 million) into its crucial subsidiary, Paytm Payment Services, according to three sources familiar with the matter.

This approval, although pending final vetting by the finance ministry, is expected to resolve the primary obstacle for Paytm Payment Services to resume its normal business operations.

Paytm Payment Services plays a significant role within Paytm's business, contributing about a quarter of the company's consolidated revenue for the fiscal year ending March 2023.

Earlier this year, Paytm's separate entity, Paytm Payments Bank, was directed to cease operations by India's central bank due to persistent compliance issues, which adversely affected Paytm's stock performance.

The delay in approval by the government panel was linked to concerns over the 9.88% ownership stake held in Paytm by China's Ant Group. Since a 2020 border conflict between India and China, India has heightened its scrutiny of Chinese investments in its businesses.

Paytm has been awaiting this clearance from the government panel for nearly two years. Without it, the company faced the prospect of winding down its payment services division, which has been under restrictions from acquiring new customers since March 2023.

Upon formal approval, Paytm Payment Services will be eligible to apply for a "payment aggregator" license from the Reserve Bank of India (RBI).

The sources, including two government officials, spoke on condition of anonymity as the decision has not been officially announced.

Requests for comments from India's foreign, home, finance, and industries ministries, all of which have representatives on the panel, did not elicit responses to emails seeking clarification.

A spokesperson for Paytm declined to comment specifically on market speculations but affirmed the company's commitment to fulfilling disclosure obligations under SEBI regulations, pledging to inform the exchanges promptly of any material developments.

At present, Reuters has not obtained immediate clarification regarding the rationale behind the panel's revised decision.

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