Paytm Payments Bank: Reports of FDI investigation have emerged against Paytm Payments Bank, which is facing action from the Reserve Bank of India (RBI). Paytm Payments Services Limited (PPSL), a subsidiary of One97 Communications, had received FDI from China. The government is investigating this matter. China's Ant Group has invested in One 97 Communications.
PPSL application was rejected in November, 2022
PPSL had applied for a license to RBI to operate as a payment aggregator and payment gateway in November 2020. However, RBI rejected PPSL's application in November 2022. The company was ordered to resubmit it so as to comply with Press Note 3 under FDI rules. After this, the company filed the application on December 14, 2022 as per the FDI guidelines. One 97 Communications has not said anything at this time regarding this investigation.
Inter-ministerial committee investigating investment from China
The Economic Times, quoting sources, has claimed that an inter-ministerial committee is investigating the investment from China in PPSL. After investigation, a decision will be taken on the FDI issue. Under Press Note 3, the government had made it mandatory to seek approval from countries sharing land borders with India before foreign investment in any sector. The purpose of this step was to protect domestic companies from takeovers after the COVID-19 pandemic. This rule applies to countries like China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan sharing borders with India.
Paytm Payments Bank has stopped taking deposits
Last month, RBI had banned Paytm Payments Bank from taking any kind of deposit or top up. The bank will not be able to deposit money in any customer account, prepaid instrument, wallet or Fastag after February 29. RBI had taken this strict decision after a comprehensive system audit report. The central bank had said that the bank was not following many rules. The bank was banned from adding new customers on March 11, 2022.
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