Shares of One 97 Communications Ltd (Paytm) jumped 4 per cent in Monday's trade after the fintech major clarified on a PTI report that suggested the government was inspecting Chinese investments into Paytm Payments Services Ltd.
Paytm said since its ownership structure has changed, with the Paytm founder now the largest stakeholder in the company and Ant Financial reducing its stake in Paytm to less than 10 per cent in July 2023, it does not qualify for beneficial company ownership.
Following the development, the Paytm stock rose 3.56 per cent to Rs 434.80 on BSE. A PTI report had suggested that an inter-ministerial committee was examining investments from China in PPSL and suggested a decision would be taken on the FDI issue after due consideration and comprehensive examination. Paytm's founding promoter Vijay Shekhar Sharma owns 24.3 per cent stake in the fintech.
The payments bank had in 2020 applied for a licence in November 2020 under the guidelines on regulation of payment aggregators and payment gateways but it was rejected by the RBI, which asked the company to resubmit the application and comply with the Press Note 3 under FDI rules.
"We would like to inform you that Paytm Payment Services Limited (PPSL) applied for an online Payment Aggregator (PA Application) for online merchants and the regulator subsequently asked PPSL to seek necessary approvals for past downward investment and resubmit the application. This is part of the regular process where everybody applying for a payment aggregator license has to get FDI approval," Paytm said.
As per the company’s filing dated March 26, 2023, the regulator gave PPSL an extension and asked to resubmit the application. PPSL followed the relevant guidelines and submitted all relevant documents to the regulator within the stipulated time.
During the pending process, PPSL was allowed to continue with its online payment aggregation business for existing partners without onboarding any new merchants.
The Paytm board, menawhile, announced 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.
The committee, as per Paytm, included veteran professionals like M.M. Chitale, former president of Institute of Chartered Accountants of India (ICAI) and a former governing Council Member of Banking Codes and Standards Board of India nominated by RBI. It also included banking experts like R Ramachandran, former Chairman and Managing Director of Andhra Bank.