In response to Paytm's initial application for a payment aggregator license, the Reserve Bank of India (RBI) requested that Paytm submit a new application within 120 days.
In response to Paytm's original application for a payment aggregator licence, the Reserve Bank of India (RBI) requested that Paytm submit a new application within 120 days. Paytm Payments Services Ltd (PPSL), a wholly owned subsidiary of One97 Communications that specialises in digital payments and financial services, has applied for the licence.
The central bank reportedly urged Paytm to "request requisite clearance for prior downward investment by the business into PPSL, to conform with FDI standards," according to a report from One97 Communications to the stock markets on Saturday. The RBI has also requested that the payments company suspend the onboarding of any new online retailers.
Since the RBI's notice primarily applies to new online merchants, the firm claims it will have no meaningful change in operations and income as a result. Paytm has restated its ability to get on board additional offline retailers and provide them with payment options including the All-in-One QR, Soundbox, and card machines.
Similarly, PPSL won't have any impact on the business of already established online merchants that use its services. After resubmitting the application, One97 stated it "hopes to get the required permissions in a timely way."
The RBI had recently denied competitor MobiKwik’s payment aggregator licencing application, following which it reapplied.
To resubmit in 120 days, the RBI did not reject our application, as claimed by One97. We are making every effort and expect to get the appropriate clearances very shortly.
In March, the RBI had stopped Paytm Payments Bank from taking on new clients.
The Reserve Bank of India (RBI) indicated in March that it will study the report of the IT auditors before granting explicit authorization for Paytm Payments Bank Ltd to onboard new users.
That prohibition is still in effect at this time. Paytm reported its quarterly profits for the three months ending in September, saying it still does not have a solid schedule on when it expects the banking authority to enable it to create new payments bank accounts.
The Payment Aggregator Framework was published by the RBI in March 2020; it stipulated that all payment gateways needed a licence to acquire merchants and provide services to them. At least 185 financial technology companies, including industry heavyweights like Cred, Razorpay, and PhonePe, have filed applications for regulatory approval.
At the start of this year, the RBI conducted presentations with payment gateway providers and other fintech businesses that have sought for the licence. ET was previously informed by sources that although it does review these petitions, it is quite selective.
Stock in Paytm fell to an all-time low of Rs 465 on Friday, down almost 70% from its IPO price one year ago.
It was noted earlier this week by Macquarie analysts lead by Suresh Ganapathy that Reliance's Jio Financial Services "may represent a major growth and market-share risk" to competitors like Paytm and Bajaj Finance Ltd.
Macquarie predicted a share price of Rs 450 in a study published in May. When Paytm went public in India in November of last year, the IPO issue price was Rs 2,150 per share.
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