According to a PTI report, government is inspecting Chinese investments into Paytm Payments Services Ltd (PPSL), which applied for a licence with RBI to operate as a payment aggregator.
PPSL is part of One97 Communications Ltd, which owns Paytm. One97 Communications Ltd (OCL) has investment from Chinese firm Ant Group Co.
The report said that PPSL had applied for a licence in November 2020 under the guidelines on Regulation of Payment Aggregators and Payment Gateways.
However, in November 2022, the apex bank rejected the application and asked the company to resubmit it, so as to comply with Press Note 3 under FDI rules.
In December 2022, the company filed application with the government for past downward investment from OCL into the company in order to comply with Press Note 3 prescribed under FDI guidelines.
Sources said that an inter-ministerial committee is now examining investments from China in PPSL and decision would be taken on the FDI issue after due consideration and comprehensive examination.
Under Press Note 3, the government had made its prior approval mandatory for foreign investments in any sector from countries that share land border with India to curb opportunistic takeovers of domestic firms following the Covid-19 pandemic.
Countries which share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.
Last month, in a big setback to the company, RBI barred Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024.
The Reserve Bank’s action against PPBL follows a comprehensive system audit report and subsequent compliance validation report of external auditors.
RBI had said that these reports revealed persistent non-compliances and continued material supervisory concerns in PPBL, warranting further supervisory action.
On March 11, 2022, RBI had barred PPBL from onboarding new customers with immediate effect.