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New Delhi:
Paytm on Tuesday issued a clarification on reports that speculated on the deferral of Paytm Payment Services Limited's (PPSL) license application and potential penalties. In a blog published on its website, Paytm said that it had not received any communication suggesting a deferral or penalties.
"The source-based information appears speculative, as the government has consistently championed fintech initiatives. The ongoing application process has seen us promptly provide the requested information, with no indication of rejection or penalties involved. Aligning with the government's vision, supporting Paytm as a homegrown entity is pivotal for empowering Indian companies to compete globally and drive technological advancements. Their backing ensures seamless payment services for SMEs, preserving trust and fostering digital growth for businesses and consumers," a Paytm spokesperson said.
"Paytm, an Indian company founded by an Indian citizen, with our founder CEO as the largest shareholder and sole SBO (Significant Beneficial Owner) of One 97 Communications Limited (OCL), underscores its commitment to indigenous entrepreneurship and innovation. All KMPs (Key Managerial Personnel) and Board members of OCL are of Indian origin, with Antfin having no Board representation or special rights. As clarified, the formation of PPSL, transfer of online payments business, and the investment of ₹ 500 million were undertaken to comply with RBI's regulations," the spokesperson added. In its blog, Paytm said that Paytm Payment Services Limited (PPSL) is a wholly-owned subsidiary of One 97 Communications Ltd (OCL), and it applied for an online Payment Aggregator (PA) license for online merchants. The formation of PPSL, transfer of online payments business from OCL to PPSL and investment of capital in PPSL was required by RBI's guidelines, which mandated that the PA business should be housed in an independent legal entity. Without such a requirement, the online payments business would have continued in OCL itself.
The blog stated that the regulator subsequently requested PPSL to obtain necessary approvals for the investment of ₹ 500 million in PPSL and resubmit the application.
The statement further clarified that the investment of ₹ 500 million was made from the OCL's existing cash reserves and no Chinese capital was raised by OCL after the introduction of Press Note 3 of 2020. Further, the ₹ 500 million was the capital required to comply with RBI's minimum net worth rules and fund the cash requirements of PPSL. Paytm said that as per its stock exchange filing dated March 26, 2023, the regulator granted PPSL an extension and requested a resubmission, to which PPSL complied promptly. During the pending process, PPSL was allowed to continue with its online payment aggregation business for existing partners without onboarding any new merchants. In its blog, Paytm said that its founder CEO remains the single-largest shareholder of OCL with an aggregate shareholding of 19.4%, including shares held by his wholly-owned companies. Ant Financial reduced its stake in OCL to less than 10% in August 2023. Paytm further said that it upholds the highest standards of compliance and transparency. Its commitment extends beyond meeting regulatory requirements to enhancing the robustness and reliability of its services, thus positively contributing to India's digital payment ecosystem. Paytm stated that it deeply values the trust placed in it and are excited to continue providing reliable, secure, and innovative digital payment solutions to millions across India.
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