SUMMARY
- Paytm’s shares rose by 5% after receiving government approval for downstream investment in its subsidiary, Paytm Payments Services Ltd.
- The company plans to reapply for the payment aggregator (PA) license following this approval, while continuing existing online payment aggregation services.
- The approval addresses compliance issues related to Press Note 3, which requires government clearance for investments from countries sharing land borders with India.
Shares of One97 Communications, the parent company of Paytm, surged by 5% on Thursday after the fintech firm secured the Indian government’s approval for downstream investment in its wholly-owned subsidiary, Paytm Payments Services Ltd (PPSL). The stock climbed to ₹565 on the BSE, while it rose 4.98% to ₹564.80 on the NSE.
The approval, granted by the Ministry of Finance, Department of Financial Services, paves the way for Paytm Payments Services Ltd to reapply for a payment aggregator (PA) license. The regulatory filing issued by the company on Wednesday stated, “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.”
This development marks a significant step forward for Paytm, which faced a setback in November 2022 when the Reserve Bank of India (RBI) rejected its initial PA license application. The rejection was due to non-compliance with Press Note 3, which mandates prior government approval for investments from countries that share land borders with India. Paytm was instructed to reapply for the license with full compliance.
The government’s nod for downstream investment enables PPSL to continue its business operations without disruption while adhering to all regulatory guidelines. Paytm’s stock witnessed a notable gain in response to this positive news, reflecting renewed investor confidence.
