Fintech giant One97 Communications — the owner of the Paytm brandname — has been permitted to invest in wholly-owned subsidiary Paytm Payments Services Ltd (PPSL), a regulatory filing said on Wednesday.

PPSL will now re-apply for a payments aggregator’s licence, the filing said.

“With this approval in place, PPSL will proceed to resubmit its PA application. In the meantime, PPSL will continue to provide online payment aggregation services to existing partners,” Paytm filing said.

One 97 Communications has been under the scrutiny of India’s banking regulator and financial crime-fighting agency after the central bank ordered it to wind down its payments bank in January.

One97 Communications has no listed promoter and a gaggle of foreign investors together hold 57.81 per cent in the company. Of these, four foreign funds hold 35.54 per cent with the stakeholding classified as foreign direct investment.

These include SAIF Partners India, Resilient Asset Management BV and Antfin (Netherlands) Holding BV.

The ministry’s approval means that these FDI investors could pump funds into Paytm Payments Services via the Paytm parent firm.

The company did not share details of the investment that has been approved.

Paytm Payment Services is one of the biggest remaining parts of the fintech firm’s business and had accounted for a quarter of its consolidated revenue in the financial year ended March 2023.

Vivek Joshi, India’s financial services secretary, had said in July that the company can approach India’s central bank to seek a payment aggregator licence, which the bank will evaluate.

Shares of One 97 closed 1.3 per cent lower on Wednesday. They have fallen more than 29 per cent since January, when the central bank had ordered a wind down of the payment bank.

FDI check

The RBI’s PA guidelines state that a single entity cannot continue to provide an e-commerce marketplace along with payment aggregator services and such payment aggregator services must be separated from the e-commerce marketplace business.

However, the RBI had rejected Paytm’s PA licence permit application in November 2022 and instructed the company to reapply with Press Note 3 compliance under foreign direct investment norms.

Under Press Note 3, the government had made its prior approval mandatory for investments from nations that share land borders with India.

At the time of application rejection, China’s Alibaba Group was the biggest stakeholder in the company.

With inputs from Reuters