Paytm to reapply for RBI’s payment aggregator licence ‘in due course’

Paytm Founder and Chief Executive Vijay Shekhar Sharma announced on Thursday his company is committed to reapply for a payment aggregator (PA) licence from the Reserve Bank of India (RBI).

“We will apply for the payment aggregator licence to the RBI in due course,” Sharma asserted during the company’s Annual General Meeting, adding that Paytm would be going ahead with plans to expand payment services operations.

Preceding Sharma’s announcement, the Ministry of Finance granted approval to Paytm subsidiary Paytm Payments Services Limited to further invest in its payment services operations.

“PPSL has received approval from the Government of India, Ministry of Finance, Department of Financial Services, via its letter dated August 27, 2024, for downstream investment from the company into PPSL,” Paytm confirmed in a filing.

The FinMin approval lets PPSL initiate the process of resubmitting its PA licence application to the RBI.

Paytm had applied for a PA licence in November 2022 but the submission has been rejected by the RBI on ground that the company had not complied with Foreign Direct Investment (FDI) norms of Press Note 3.

Press Note 3 requires advance approval from the government for investments originating in countries with whom India shares land borders, and the RBI had asked Paytm to fulfil requirements of Press Note 3 before applying subsequently.

“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,” a statement from the company declared.

Paytm’s parent firm One97 Communications, has been the subject of regulatory scrutiny on numerous occasions in recent years.

In January 2024, the RBI raised questions over the company’s compliance policy as far as banking regulations were concerned and instructed Paytm Payments Bank to stop taking new customers till further notified. Paytm has also been probed by the Enforcement Directorate (ED) in the past for possible violation of the Foreign Exchange Management Act (FEMA). ED, however, did not find any breach on Paytm’s part.