Paytm denies government deferred approval of investment in payment services arm

A Reuters report has cited government officials, and said the government has 'deferred approval of Paytm’s investment in the payment services arm.

Paytm Payment Services has clarified over speculation around deferral of its license application and potential penalties, and said in a blog post on April 16 that the company has not received any communication in this regard.

A Paytm spokesperson said, "The ongoing application process has seen us promptly provide the requested information, with no indication of rejection or penalties involved. Aligning with the government’s vision, supporting Paytm as a homegrown entity is pivotal for empowering Indian companies to compete globally and drive technological advancements. Their backing ensures seamless payment services for SMEs, preserving trust and fostering digital growth for businesses and consumers."

This comes in response to a Reuters report that cited government officials, and said the government has 'deferred approval of Paytm’s Rs 50 crore ($6 million) investment in its Paytm Payment Services arm in part due to concerns about a Chinese shareholding in the parent company.'

Even though the Ministry of Home Affairs had approved the investment in January, the Reuters report says according to officials and a document seen by Reuters, the Foreign Ministry rejected it citing "political grounds".

Paytm responded to the news report through a blog post on April 16 and said, "All KMPs (Key Managerial Personnel) and Board members of OCL are of Indian origin, with Antfin having no Board representation or special rights. As clarified, the formation of PPSL, transfer of online payments business, and the investment of Rs 500 million were undertaken to comply with RBI’s regulations."

Paytm's parent One 97 Communications is under RBI scrutiny after the banking regulator ordered it to wind down its payments bank in January. The Reuters report indicated this as another reason for the deferral.

If approval of the investment is withheld, Paytm would have to withdraw the funds from Paytm Payment Services, Reuters said in the news report, citing sources.

On Februray 12, news agency PTI had reported citing sources that the Centre was reportedly examining foreign direct investment (FDI) originating from China in Paytm Payments Services Ltd (PPSL).

Recently, the Paytm Payments Bank managing director and chief executive Surinder Chawla had stepped down citing personal reasons and to explore better career prospects.

(This is a developing story, please come back for more)