Reserve Bank of India (RBI) has for now declined to entertain Paytm Payments Services’ (PPSL), a wholly owned subsidiary of Paytm, application for an authorisation to provide payment aggregator services for online merchants.
The central bank has advised PPSL to resubmit its application within 120 days after taking certain steps. RBI wants Paytm to seek necessary approval for past downward investment from the company into PPSL, to comply with FDI guidelines. PPSL has been advised not to onboard new online merchants, according to RBI letter, whose contents were disclosed by Paytm in a stock exchange filing on Saturday.
Yet another blow
This is the second blow for Paytm from the RBI, which had earlier in March directed the company to stop onboarding new customers on Paytm Payments Bank.
Paytm said in its stock exchange filing on Saturday that there are no other “material observations” made by central bank in its latest letter.
Also, Paytm said that the RBI letter has no material impact on its business and revenues, since the communication from the bank is applicable only to onboarding of new online merchants. “We can continue to onboard new offline merchants and offer them payment services including All-in-One QR, Soundbox, Card Machines, etc. Similarly, PPSL can continue to do business with existing online merchants, for whom the services will remain unaffected”, Paytm said.
A Paytm spokesperson said, “The RBI has not rejected our application, but has simply asked us to reapply in 120 days. We are taking all the necessary steps and are hopeful of getting the required approvals soon.”
“We are hopeful of receiving the necessary approvals in a timely manner and resubmitting the application”.
Paytm is probably the only large payment gateway player to not have received a go-ahead from the RBI. Incumbents like Pine Labs, Cashfree, Razorpay and CCAvenues had received an in-principle approval from RBI. Both BillDesk and PayU are awaiting RBI response. RBI had earlier rejected Mobikwik’s application for payment aggregator licence.