New Delhi: Fintech major Paytm on Tuesday clarified the status of its licensing process amid recent speculations, saying it has not received any communication suggesting a deferral or penalties and any notion to the contrary is “completely unfounded and misleading”.
Recent media reports speculated on the deferral of Paytm Payment Services Limited’s (PPSL) license application and potential penalties. A company spokesperson said that the information appears speculative as the government has consistently championed fintech initiatives. (Also Read: Tesla’s Senior Vice President Drew Baglino Resigns Amid Job Cuts)
“The ongoing application process has seen us promptly provide the requested information, with no indication of rejection or penalties involved. Aligning with the government’s vision, supporting Paytm as a homegrown entity is pivotal for empowering Indian companies to compete globally and drive technological advancements,” the company spokesperson said in a statement. (Also Read: Zomato Introduces India’s First ‘Large Order Fleet’ For Gathering Up To 50 People)
PPSL is a wholly-owned subsidiary of One 97 Communications Ltd (OCL) and it applied for an online Payment Aggregator (PA) license for online merchants. The formation of PPSL, transfer of online payments business from OCL to PPSL and investment of capital in PPSL was required by RBI’s guidelines, which mandated that the PA business should be housed in an independent legal entity.
Without such a requirement, the online payments business would have continued in OCL itself, according to the company. “Paytm, an Indian company founded by an Indian citizen, with our Founder CEO as the largest shareholder and sole SBO (significant beneficial owner) of One 97 Communications Limited (OCL), underscores its commitment to indigenous entrepreneurship and innovation,” said the spokesperson.
“All KMPs (key managerial personnel) and board members of OCL are of Indian origin, with Antfin having no Board representation or special rights. As clarified, the formation of PPSL, transfer of online payments business, and the investment of Rs 500 million were undertaken to comply with RBI’s regulations,” the spokesperson further said.
The regulator subsequently requested PPSL to obtain necessary approvals for the investment of Rs 500 million in PPSL and resubmit the application.
“To clarify, the investment of Rs 500 million was made from the OCL’s existing cash reserves and no Chinese capital was raised by OCL after the introduction of Press Note 3 of 2020. Further to add, the Rs 500 million was the capital required to comply with RBI’s minimum net worth rules and fund the cash requirements of PPSL,” according to the company.
As per the company’s stock exchange filing dated March 26, 2023, the regulator granted PPSL an extension and requested a resubmission, to which PPSL complied promptly. “During the pending process, PPSL was allowed to continue with its online payment aggregation business for existing partners without onboarding any new merchants,” it added.
