The Reserve Bank of India has asked an entity of Paytm to resubmit its application for a permit needed to provide payment aggregator services, a potentially lucrative business the company is trying to expand into.
RBI asked Paytm Payments Service Ltd. to resubmit its application after obtaining necessary approvals from its parent company to comply with foreign direct investment guidelines, the fintech firm said in a note to the exchange on Saturday.
Paytm powered by SoftBank Group Corp. and Ant Group Co., is expanding its product offering to convince investors of its earnings potential even as losses mount. The stock has lost three-quarters of its value since Paytm’s IPO a year ago — the worst first-year drop among major global IPOs in the past decade.
Also read: Regulations for offline payment aggregators comparable to online peers, says RBI
Payment aggregators are platforms that offer various payment options to both customers and merchants. They require a license from the Reserve Bank of India to operate.
PPSL, a 100% subsidiary of Paytm’s parent company One97 Communication Ltd., has also been asked by the RBI not to take on any new online merchants as customers. Paytm can still add offline merchants as users.
“This does not have a material impact on our business and revenue as RBI’s announcement only applies to the onboarding of new online retailers,” Paytm said. “We hope to obtain the necessary permits in a timely manner and resubmit the application.”
PPSL must resubmit the application within 120 days.
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