The banking regulator had in November last year asked Paytm to reapply for the licence within 120 days and stopped it from signing up new online merchants for the platform.
At that time, the regulator had also directed OCL to “seek necessary approval for past downward investment from the company into PPSL, to comply with FDI (foreign direct investment) guidelines”.
“In this regard, we would like to inform you that we have recently received an extension of time from the RBI for resubmission of the application,” OCL said in a stock exchange filing on Sunday. “The letter from RBI says that PPSL can continue with the online payment aggregation business, while it awaits approval from Government of India (‘GoI’) for past investment from OCL into PPSL as per FDI guidelines,” it said.
This means status-quo remains. While Paytm can continue servicing existing customers of its payment gateway, it cannot onboard new merchants.
Further, Paytm reapplying for its PA licence is contingent on the government’s approval for parent OCL’s investment in PPSL.
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“As per RBI’s letter, on receipt of approval from GoI, PPSL will have fifteen days to submit the application seeking authorisation for PPSL to operate as an online PA. However, if any adverse decision is taken by the GoI, then the same shall be informed to RBI immediately,” OCL said in its filing.“There are no observations in the letter other than what is mentioned above. We are hopeful of receiving the necessary approvals in a timely manner,” it said.
In January, ET was first to report that Paytm’s rival PayU was also asked by the regulator to reapply for its PA licence. It had immediately stopped new merchant onboardings after RBI’s communication.
Two other payment services companies, Razorpay and Cashfree, were also asked to stop new merchant onboardings, with the matter linked to their PA licences. Both Razorpay and Cashfree had received in-principle approval from the RBI last year for their PA applications.
Paytm is one of the top five payment gateway providers in the country as per total transaction value processed, after BillDesk, Razorpay, PayU. The list also includes Cashfree.
Billdesk is the biggest and only gateway provider which hasn’t been banned to onboard new merchants. It also has an in-principle approval from the RBI.
ET had reported on February 21 that as top gateways had paused new signups following the regulator’s order, others such as CCAvenue and Pine Labs’ Plural have seen a spike in user onboardings.
