India’s Paytm gets government nod for investment in payments arm

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India’s Paytm has received approval from the country’s finance ministry to invest in its payment services business. Meanwhile, Paytm Payment Services will continue to provide online payment aggregation services to its existing partners. OUR TAKE Paytm payment services are one of the fintech company’s largest remaining businesses, accounting for a quarter of its consolidated revenue in the financial year ending March 2023. Vivek Joshi, India’s financial services secretary, had said in July that the company can approach India’s central bank to seek a payment aggregator license, which the bank will evaluate.

–Zora Lin, BTW reporter What happened India’s Paytm has received approval from the country’s finance ministry to invest in its payment services business, the fintech firm said on Wednesday. The company has been under scrutiny from India’s banking regulator and financial crime-fighting agency after the RBI ordered One 97 Communications to shut down its payments banking business in January this year. Paytm said with the latest approval, the company will resubmit an application to the ministry to regain a licence for its payment services business.

In the meantime, Paytm Payment Services will continue to provide online payment aggregation services to existing partners, the company said. Paytm shares closed down 1.3% on the day. Since the central bank ordered the closure of the payments bank in January this year, the stock has fallen by more than 29%.

Also read: Paytm’s loss widens as regulatory action continues to bite Also read: Paytm gains crucial approval for investment in key subsidiary Why it’s important Paytm, India’s leading fintech company, getting investment approval from the government for its payment services after a period of regulatory scrutiny and business restructuring is a positive development, but the future growth of its payment services business will still have to face regulatory compliance challenges. Notably, Paytm’s payment services were barred from accepting new customers in March 2023 due to ongoing compliance issues identified by the RBI.

This approval from the government will allow Paytm to address these regulatory issues. However, the continued decline in Paytm’s share price suggests that restoring market confidence in Paytm will also require the company to show more positive changes in its business operations and profitability model.