Centre probes Chinese investments in Paytm Payments Services
The Indian government is examining foreign direct investment (FDI) from China in Paytm Payments Services Ltd. (PPSL), a subsidiary of One97 Communications Ltd (OCL). An inter-ministerial committee is scrutinizing all the relevant aspects and will make a decision after the probe is over. PPSL had applied for a license in 2020 to operate as a payment aggregator. The RBI rejected it in November 2022 due to FDI non-compliance. PPSL then applied again in December 2022, revealing its investment sources.
Centre's probe in line with RBI's FDI rule
RBI's Press Note 3 rule requires prior approval for foreign investments from countries sharing a land border with India, including China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan. It aims to safeguard India's commercial interests and prevent opportunistic takeovers of domestic firms by neighboring countries. The rule was introduced in 2020 amid fears of foreign powers exploiting the pandemic situation to make inroads into Indian businesses. The inter-ministerial committee is probing PPBL in regards to this rule.
Paytm assures transparency and cooperation with RBI
According to a Paytm spokesperson, PPSL strictly followed relevant guidelines and provided all required documents within the specified timeframe. Per the spokesperson, Paytm founder Vijay Shekhar Sharma remains the largest stakeholder in the company. China's Ant Financial reduced its stake in OCL to less than 10% in July 2023. "Subsequently, it does not qualify for beneficial company ownership," the Paytm spokesperson. In January, RBI imposed restrictions on PPSL, barring it from accepting deposits or top-ups in customer accounts.
