Paytm Granted Extension to Reapply for Payment Aggregator License
- ByStartupStory | March 27, 2023
Paytm, a leading payment platform in India, has been granted an extension by the Reserve Bank of India (RBI) to reapply for a payment aggregator (PA) license, as stated in an exchange filing on March 26. The RBI had previously returned Paytm’s application on November 26 and requested additional information on shareholding in its subsidiary, Paytm Payments Services Limited (PPSL). This extension provides Paytm with the opportunity to resubmit its application and potentially obtain a PA license from the RBI.
Paytm, a major fintech company in India, has revealed in an exchange filing that it has sought an extension on the 120-day deadline to resubmit its application for a payment aggregator (PA) license. The Reserve Bank of India (RBI) has granted the request due to a pending response from the government regarding One97 Communication Limited’s (OCL) investments into Paytm Payments Services Limited (PPSL). As Paytm is backed by Alibaba’s Ant Group, which holds over 25% of the company, the Indian government is investigating whether Paytm’s investments in PPSL comply with FDI norms.
Paytm has stated that the Reserve Bank of India (RBI) has informed the company that it will provide a 15-day extension to resubmit its application for a payment aggregator license once it receives approval from the government. Meanwhile, Ant Group, which holds over 25% of Paytm, is reportedly seeking to decrease its stake, likely due to SEBI’s regulations on shareholding in a company.
Following Paytm’s recent share buyback, Ant Group’s shareholding in the company has crossed SEBI’s threshold of 25%, and the Chinese firm now has 90 days, starting from February 13, to reduce its stake in Paytm. If the Indian government makes any unfavorable decisions, Paytm must inform the RBI promptly. Although Paytm Payments Bank can continue to function during this time, it is still not permitted to onboard new merchants.
Paytm has stated that the recent communication from the Reserve Bank of India (RBI) will not have a significant impact on its business as it has only been barred from onboarding new users. The company reassured that it can still provide payment services to existing online merchants. The RBI has granted in-principle approval to 32 payment aggregators, including Paytm’s competitors.
The introduction of the Payments Aggregator license by the RBI in 2020 aims to regulate all payment aggregators under the Payment and Settlement Systems Act (2007). Paytm’s shares opened at INR 623.45 per share, slightly up from the previous close of INR 619.45, but still significantly lower by 71% compared to the IPO price of INR 2,150 per share.
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