India’s beleaguered Fintech firm Paytm has secured approval from a government panel that oversees investments linked to China to invest 500 million rupees ($6 million) in a key subsidiary, Reutersreported on Tuesday, quoting three sources with direct knowledge of the matter.

The approval, which the report said still has to be vetted by the finance ministry, will remove the main stumbling block to the unit, Paytm Payment Services, resuming normal business operations.

Paytm Payment Services is one of the biggest remaining parts of the fintech firm’s business, accounting for a quarter of consolidated revenue in the financial year ended March 2023, the report added.

A separate unit, Paytm Payments Bank, was wound down this year by order of the central bank due to persistent compliance issues, triggering a meltdown in Paytm’s stock.

The government panel had earlier held back approval due to concerns about the 9.88 percent stake in Paytm held by China’s Ant Group. India has intensified scrutiny of Chinese businesses since a 2020 border clash between the two countries, the report said.

Paytm has been waiting for the nod from the government panel for about two years and without it, it would have had to also wind down its payment services business, which was forbidden from taking on new customers in March 2023, according to Reuters‘ report.

Once the approval has been formalised, it will be able to seek a so-called “payment aggregator” licence from the Reserve Bank of India. According to the sources, two of whom are government sources, declined to be identified as the decision has not been formally announced.

India’s foreign, home, finance and industries ministries, whose representatives sit on the panel, did not reply to emails seeking comment, the report added.

A Paytm spokesperson said the company does not comment on market speculation. “We will continue to make disclosures in compliance with our obligations under the SEBI Regulations, and will inform the exchanges when there is any new material information to share,” the spokesperson said.

Featured photo credits: Paytm’s Facebook page

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