Paytm has reportedly received government approval to invest $6 million in its crucial payments subsidiary.
That green light came from a government panel overseeing investments tied to China, allowing embattled Paytm to invest $6 million in Paytm Payment Services, Reuters reported Tuesday (July 7), citing sources with knowledge of the matter.
This approval, the report says, still needs to be vetted by India’s finance ministry. Assuming that body signs off, it will allow Paytm Payment Services to resume normal business operations. Reuters notes that this is one of the largest remaining parts of Paytm’s business, making up 25% of the company’s consolidated revenue in the financial year ended March 2023.
Another Paytm business, Paytm Payments Bank, ceased operations earlier this year after India’s central bank found persistent compliance issues.
According to Reuters, the government panel had been withholding approval over concerns about the 9.88% stake Paytm had in the Chinese company Ant Group. India has stepped up scrutiny of China-based businesses since a border skirmish between the two countries in 2020.
The report says Paytm has waited two years for this approval, and would have had to shut down its payment services business without it. That unit was barred from taking on new customers in March 2023. Now, the company will be able to apply for a “payment aggregator” license from the Reserve Bank of India (RBI), the country’s central bank and banking regulator.
PYMNTS has contacted Paytm for comment but has not yet gotten a reply. A Paytm spokesperson told Reuters the company does not comment on market speculation.
Paytm has seen its share of the payments market in India dip in recent months, losing out to firms like Walmart-backed PhonePe and Google Pay in terms of traffic on India’s United Payments International (UPI) network.
Companies like Paytm, Indian tech giant Adani, Google and PhonePe are all competing for consumer attention in a country that has been on a “digital payments journey” for the last 15 years, as PYMNTS wrote late last year.
Research by PYMNTS Intelligence has shown that digital wallets are now the preferred method of payment for upwards of half of retail purchases in India, with 80% of digital wallet users opting for UPI.