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paytm: Paytm clarifies on status of govt approval for investment in payments gateway arm

Paytm on Monday clarified its current status amid speculation about investment in its payments gateway arm, Paytm Payments Services. In a recent exchange filing, the company stated that it is awaiting government approval for the investment and reassured its online merchant partners that it continues to serve them without interruption.

This clarification comes amid growing interest and scrutiny surrounding potential investments and partnerships within the Paytm ecosystem. Paytm emphasized its commitment to its existing merchant partners, affirming that its operations remain unaffected as it navigates the regulatory process.

“As part of the Application, PPSL had also applied to the Government of India for approval of downstream investment made by the Company in PPSL, which is currently awaited. We will update the stock exchanges as and when approval is received. Meanwhile, PPSL continues to serve its existing online merchant partners,” the company said.

A recent report by Bloomberg, published in ET, said that Paytm is close to winning the approval to invest in its key payments gateway arm, a decision that has been pending for two years and which would give the troubled fintech company some respite.

RBI’s take on Paytm crisis
RBI Governor Shaktikanta Das on Monday reiterated that all decisions taken by the Central bank are carefully considered. The RBI Governor was speaking in the context of certain restrictions placed against Paytm Payments bank. The RBI Chief was speaking at the 606th meeting of the Central Board of Directors of the Reserve Bank of India which was held today at New Delhi

When questioned as to whether the Central bank will review the decision on Paytm Payments Bank, the Governor said a firm no.

“There is no review of the decision (on Paytm Payments Bank)” the RBI Governor said.

“We will release the FAQ this week. I request you to wait until that FAQ is released, and the decisions we make at the Reserve Bank are carefully considered. Whether it’s a bank, payment bank, NBFC, cooperative bank, or any other entity, if we take action against them after months, a year, or two years, we do so after careful deliberation. I’m not specifically referring to Paytm, but in general, when we don’t see effective action being taken, we take necessary measures. We have clarified this before. Therefore, the action we have taken has been well thought out” RBI Governor Shaktikanta Das further said.

The RBI which has received several queries and clarifications on the issue of Paytm Payments Banks reiterated that it will issue a list of FAQs soon on this issue.

“I want to emphasize that you should wait for the FAQ we are issuing. In that FAQ, all the problems faced by customers will be addressed. Our priority is to ensure that customers and depositors do not face any inconvenience. That’s why we have given a one-month time frame. The action was taken on January 31st, and we have given time until February 29th. We have provided this time because the transition, customer interest, and depositor interest are always our top priorities. Hence, we have given a one-month period for customers to make informed decisions and proceed with the transition if they wish” RBI Governor Shaktikanta Das said.

New advisory committee
Earlier on February 9, the Board of One 97 Communications Limited, which operates Paytm, announced the formation of a Group Advisory Committee chaired by former SEBI Chairman M Damodaran, to work with the Board in further strengthening compliance, and regulatory matters.

In an official release, the company said that the Committee includes veteran professionals like MM Chitale, former president of the Institute of Chartered Accountants of India (ICAI) and a former governing Council Member of Banking Codes and Standards Board of India nominated by RBI.

The company’s management says it is committed to drive sustainable business growth while adhering to a regulatory and compliance framework.

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