Fintech firm One97 Communications — the owner of Paytm brand — has received the government's approval for downstream investment in wholly owned subsidiary Paytm Payments Services Ltd, a regulatory filing said on Wednesday.
The company will reapply for a payment aggregator (PA) licence, it said.
"We would like to inform you that PPSL has received approval from the Government of India, Ministry of Finance, Department of Financial Services, vide its letter dated August 27, 2024, for downstream investment from the Company into PPSL. With this approval in place, PPSL will proceed to resubmit its PA application. In the meantime, PPSL will continue to provide online payment aggregation services to existing partners," Paytm filing said.
The Reserve Bank of India (RBI) had rejected Paytm's PA licence permit application in November 2022 and instructed the company to reapply with Press Note 3 compliance under foreign direct investment norms.
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As per Press Note 3, the government had made its prior approval mandatory for investments from nations that share land borders with India.
At the time of application rejection, China's Alibaba Group was the biggest stakeholder in the company.
The RBI's PA guidelines also state that a single entity cannot continue to provide an e-commerce marketplace along with payment aggregator services and such payment aggregator services must be separated from the e-commerce marketplace business.
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