(Bloomberg) -- India's banking regulator asked a unit of Paytm to resubmit its application for approval required to provide payment aggregator services, a potentially lucrative business the company is trying to expand into.
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The Reserve Bank of India asked Paytm Payments Service Ltd. to resubmit its application after seeking necessary approvals from its parent to comply with foreign direct investment guidelines, the fintech company said in a disclosure to stock exchanges on Saturday.
Paytm, backed by SoftBank Group Corp. and Ant Group Co., is expanding its product offering in a bid to convince investors of its earnings potential even as losses mount. Its stock has lost three-quarters of its value since Paytm's initial public offering a year ago -- the worst first-year decline among large IPOs globally over the past decade.
Payment aggregators are platforms providing diverse payments options to customers such as merchants. They need a license from the Reserve Bank of India to operate.
PPSL, a 100% subsidiary of Paytm parent One97 Communication Ltd., was also asked by RBI to not onboard new online merchants as customers. Paytm can still keep adding offline merchants as users.
"This has no material impact on our business and revenues, since the communication from RBI is applicable only to onboarding of new online merchants," Paytm said. "We are hopeful of receiving the necessary approvals in a timely manner and resubmitting the application."
PPSL has to resubmit the application in 120 days.
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