How fears of China link shut the doors on a Paytm venture

Paytm's troubles with the authorities started much before India's central bank announced strictures on its associate company, Paytm Payments Bank, on 31 January.

- Mihir Mishra & Shayan Ghosh

Early last year, concerned over Chinese investments in One97 Communications Ltd, the listed entity of the Paytm group, the Centre had rejected a proposal by the company for a post-facto approval of investments made in its subsidiary, Paytm Payments Services Ltd (PPSL). PPSL offers digital payments solutions and financial tools for businesses.

The external affairs ministry had recommended against the approval from a "political angle", mentioned in an internal government note that Mint has seen. The "post-facto" FDI proposal was for One97 Communications to invest in its subsidiary Paytm Payments Services, showed the note.

As per the note cited above, One97 Communications was termed at that point as a "foreign-owned and controlled company having certain Chinese shareholders".

After the External Affairs Ministry, the Department of Promotion of Industry and Internal Trade (DPIIT) and Department of Financial Services also did not approve the investments in March and May 2023, respectively.

"As per Paytm Payment Services Ltd, its creation and the capital infusion therein were both undertaken to comply with newly introduced regulations of RBI," according to the note cited above.