Government One97 is investigating foreign direct investment from China in Paytm Payments Services Limited (PPSL), a subsidiary of Communications Limited. PPSL had applied for a license with the Reserve Bank of India (RBI) to operate as a payment aggregator in November 2020. RBI, however, rejected PPSL’s application in November 2022 and asked the company to resubmit it, so as to comply with Press Note 3 under FDI rules.
Investment of Chinese firm Ant Group Company
Chinese firm Ant Group Company has an investment in One97 Communications Limited (OCL). Subsequently, the Company filed the necessary application on December 14, 2022 with the Government of India for the previous investment in the Company from OCL to comply with Press Note Three prescribed under the FDI Guidelines. Sources said an inter-ministerial committee is examining investment from China in PPSL and a decision on the FDI issue will be taken after due consideration and comprehensive investigation.
It is mandatory to take approval before investment
Under Press Note 3, the government had made it mandatory to seek approval from countries sharing land borders with India before foreign investment in any sector. The purpose of this move was to prevent opportunistic acquisitions of domestic companies after the Covid-19 pandemic. When contacted, a Paytm spokesperson said PPSL had applied to be an online payment aggregator (PA) for online merchants. The regulator had later asked PPSL to obtain necessary approvals for the previous investment and resubmit the application. “Every person applying for a payment aggregator license is required to obtain FDI approval, and this is part of the regular process,” the spokesperson said. The spokesperson said PPSL followed the relevant guidelines and received all FDI approvals within the stipulated time. Necessary documents were handed over to the regulator.
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