The government is reviewing China’s foreign direct investment in Paytm Payments Services Ltd (PPSL), the payment aggregation unit of One97 Communications Ltd, sources said. In November 2020, PPSL applied to the Reserve Bank of India (RBI) for a license to operate as a payment aggregator under the Regulatory Guidelines for Payment Aggregators and Payment Gateways.

However, in November 2022, the RBI rejected PPSL’s application and asked the company to resubmit its application to comply with Press Note 3 under FDI rules. One97 Communications Ltd (OCL) received investment from China’s Ant Group.

Subsequently, the company submitted the required application for OCL’s past downward investment in the company to the Government of India on December 14, 2022, in order to comply with Press Note 3 under the Foreign Direct Investment Guidelines. Sources said an inter-ministerial committee is reviewing China’s investment in PPSL and will take a decision on the FDI issue after due consideration and comprehensive review.

According to Press Note 3, the government has made it mandatory for countries bordering India to take prior approval for foreign investment in any sector to curb opportunistic acquisitions of domestic businesses in the wake of the COVID-19 pandemic. Countries that share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan.

A request for comment to OCL remained unanswered after the report was filed. The Reserve Bank last month prohibited OCL’s associate Paytm Payments Bank Ltd (PPBL) from accepting deposits or recharges from any customer account, prepaid instruments, wallets, FASTags, etc. after February 29, 2024.

The Reserve Bank’s action against PPBL follows a comprehensive system audit report and subsequent compliance verification report by the external auditor. The RBI said the reports revealed persistent irregularities and ongoing significant supervisory issues at PPBL, requiring further supervisory action.

On March 11, 2022, the Reserve Bank of India immediately banned PPBL from accepting new customers.

(This story has not been edited by News18 staff and is published from associated news agency – PTI)