Paytm gets Government Approval for its ₹500 Million Investment! Paytm Comeback?

Paytm has received approval from a government panel to invest ₹500 million in its key subsidiary, Paytm Payment Services, allowing the unit to resume normal operations. It was stuck for many months so it can be a comeback gateway for Paytm.

This decision comes after prolonged scrutiny due to Paytm's connections with China’s Ant Group, which holds a 9.88% stake in the company. The approval still requires a review by the finance ministry before becoming final​​.

This investment is critical for Paytm Payment Services, which accounts for 25% of Paytm's consolidated revenue. The firm had previously faced setbacks, including the winding down of Paytm Payments Bank due to compliance issues and the rejection of its payment aggregator license application by the Reserve Bank of India in 2022.

The latest approval will enable Paytm to reapply for this license, crucial for expanding its payment services​​.

Following the approval, shares of One97 Communications, the parent company of Paytm, increased 10% and was locked in the upper circuit at ₹509.05 on the NSE. This also marks the first time since February 8 that shares of Paytm surpassed the ₹500-level.

In the June quarter, Paytm's revenue dropped by 36% year-over-year to ₹1,502 crore due to ongoing challenges from RBI restrictions. The company's net loss also widened sharply to ₹840 crore in Q1 of FY25, the steepest loss since its listing.