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Shares of fintech firm <keyword id="181441" type="General" weightage="20" keywordseo="One97-Communications" source="Orion">One97 Communications</keyword> -- the owner of <keyword id="19898109" type="General" weightage="100" keywordseo="Paytm" source="keywords">Paytm</keyword> brand -- jumped 5 per cent on Thursday morning after the company received the government's approval for downstream investment in wholly-owned subsidiary <keyword id="22960487" type="General" weightage="20" keywordseo="Paytm-Payments-Services-Ltd-" source="keywords" meta.keywordsubtype="org" meta.entityname="Paytm Payments Services Ltd." meta.hostid="261" meta.entityid="Paytm Payments Services Ltd.">Paytm Payments Services Ltd.</keyword> The stock climbed 5 per cent to Rs 565 on the BSE. At the NSE, it surged 4.98 per cent to Rs 564.80. The company will reapply for a <keyword id="6640986" type="General" weightage="20" keywordseo="payment-aggregator" source="Orion">payment aggregator</keyword> (PA) licence, a regulatory filing said on Wednesday. "We would like to inform you that <keyword id="20410230" type="General" weightage="20" keywordseo="PPSL" source="keywords">PPSL</keyword> has received approval from the government of India, <keyword id="156153" type="General" weightage="20" keywordseo="Ministry-of-Finance" source="Orion">Ministry of Finance</keyword>, Department of Financial Services, vide its letter dated August 27, 2024, for downstream investment from the company into PPSL. "With this approval in place, PPSL will proceed to resubmit its PA application. In the meantime, PPSL will continue to provide online payment aggregation services to existing partners," Paytm filing said. The Reserve Bank of India (RBI) had rejected Paytm's PA licence permit application in November 2022 and instructed the company to reapply with Press Note 3 compliance under the foreign direct investment norms. As per Press Note 3, the government had made its prior approval mandatory for investments from nations that share land borders with India.

Paytm shares jump 5% on receiving government's nod for investment in Paytm Payments Services

<ul><li><keyword id="6357120" type="General" weightage="100" keywordseo="paytm" source="Orion">Paytm</keyword> said <keyword id="1426939" type="General" weightage="80" keywordseo="ppsl" source="Orion">PPSL</keyword> has now received a letter from <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword> in response to an application for the authorisation to provide PA services for online merchants.</li><li>Paytm, in the regulatory filing, said it can resubmit the PA application within 120 calendar days.</li><li>The company will not onboard new online merchants till the time approvals remain pending.</li></ul> Banking regulator RBI has put a pause on onboarding of online merchants by <keyword id="12003494" type="General" weightage="50" keywordseo="paytm-payments-services" source="Orion">Paytm Payments Services</keyword>, even as the company said it will have no material impact on its business, according to a regulatory filing. One97 Communications (OCL), which owns the Paytm brand, had proposed to transfer the payment aggregator services business undertaken by it to Paytm Payments Services (PPSL) in December 2020 to comply with payment aggregator (PA) guidelines of the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (RBI) but the banking regulator had rejected its application. The company had re-submitted the required documents in September 2021. Paytm said PPSL has now received a letter from RBI in response to an application for the authorisation to provide PA services for online merchants. As per the letter, PPSL is required to "Seek necessary approval for past downward investment from the company into PPSL, to comply with FDI Guidelines" and "not onboard new online merchants". Paytm, in the regulatory filing, said it can resubmit the PA application within 120 calendar days. The company will not onboard new online merchants till the time approvals remain pending. PAs are entities that facilitate e-commerce sites and merchants to accept various payment instruments from customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own. According to RBI's PAs guidelines, a single entity cannot continue to provide an e-commerce marketplace along with payment aggregator services and such payment aggregator services must be separated from the e-commerce marketplace business. Paytm further said there were no material observations from RBI and the move has no material impact on its business and revenues since the communication from the central bank is applicable only to onboarding of new online merchants. "We can continue to onboard new offline merchants and offer them payment services including All-in-One QR, <keyword id="10896801" type="General" weightage="50" keywordseo="soundbox" source="Orion">Soundbox</keyword>, <keyword id="3885098" type="General" weightage="50" keywordseo="card-machines" source="Orion">Card Machines</keyword>, etc. Similarly, PPSL can continue to do business with existing online merchants, for whom the services will remain unaffected. We are hopeful of receiving the necessary approvals in a timely manner and resubmitting the application," Paytm said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/over-50-of-microbusinesses-had-no-mechanisms-to-cushion-covid-impact-road-to-recovery-report-says/articleshow/95780667.cms">Over 50% of microbusinesses had no mechanisms to cushion Covid impact, Road to Recovery report says</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/elon-musk-may-produce-alternative-smartphones-to-compete-with-apple-android/articleshow/95780494.cms">Elon Musk may produce 'alternative' smartphones to compete with Apple, Android</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/india-sees-a-single-day-rise-of-new-389-coronavirus-infections-tally-rises-to-530608/articleshow/95779680.cms">India sees a single-day rise of new 389 coronavirus infections, tally rises to 5,30,608</a>

RBI pauses onboarding of online merchants by Paytm Payments Services; firm says no material impact on biz

New Delhi, <keyword id="20004114" type="General" weightage="20" keywordseo="vijay-shekhar-sharma" source="keywords">Vijay Shekhar Sharma</keyword>, one of the most recognised faces of India's fintech industry, has seen a fair share of controversies. Sharma launched <keyword id="19898109" type="General" weightage="20" keywordseo="paytm" source="keywords">Paytm</keyword> - an acronym for 'pay through mobile' - offering mobile recharges. He launched wallet services in 2011 but the big push came with the 2016 demonetisation. He took out front-page ads in top newspapers with Prime Minister Narendra Modi's photo, calling demonetisation the "boldest decision in the financial history of independent India". With fewer currency notes in circulation, Paytm was on a roll. Sharma made a splash in 2018 by getting USD 300 million investment in Paytm from <keyword id="19921921" type="General" weightage="20" keywordseo="warren-buffett" source="keywords">Warren Buffett</keyword>'s Berkshire Hathaway. *Controversies* Paytm was mired in controversies with its Chinese connection following huge investments from Alibaba Group. The Chinese internet firm became the biggest shareholder in Paytm with a 34.7 per cent stake before the company's initial public offer. Alibaba group firm Antfin sold around 5 per cent shares to lower its stake below 25 per cent to comply with regulatory requirements at the time of IPO. To shed its Chinese-owned entity image, Paytm in August 2023 announced that founder and CEO Vijay Shekhar Sharma would acquire a 10.3 stake in Antfin through his overseas entity Resilient Asset Management BV which will make him the largest stakeholder in the company with 19.42 per cent stake. In return, Resilient issued a debt instrument --optionally convertible debentures, to Antfin thereby maintaining the economic interest of Alibaba group firm. With this transaction, Antfin's direct stake in Paytm was reduced to 13.5 per cent. Antfin further sold 3.6 per cent in Paytm to bring its shareholding to less than 10 per cent and at present holds 9.89 per cent of the fintech firm. The company's market cap has eroded drastically since the time of its listing. The company's IPO opened on November 8, 2021, in the price band of Rs 2,080-2,150 per share. The Paytm IPO made history with over Rs 18,300 crore share sale 'making it the largest public issue in India's corporate history. But the company's stock made a weak debut in the market on November 18 and hit a lower circuit after recording about 20 per cent decline during trading hours. It finally closed at Rs 1,560, down by about 27 per cent, compared to its issue price of Rs 2,150. Since then, Paytm shares have not been able to cross even half the mark of the issue price. After the <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>'s January 31 move, One97 Communications shares tanked around 40 per cent to close at Rs 487.05 on BSE on Friday. Billionaire businessman <keyword id="19952201" type="General" weightage="20" keywordseo="warren-buffet" source="keywords">Warren Buffet</keyword>'s Berkshire Hathaway sold its stake in Paytm at a loss of 31 per cent per share in November 2023. Berkshire Hathaway had invested in Paytm for about Rs 1279 per share but sold it for Rs 877.29 apiece. At present, Cayman Island-registered SAIF III Mauritius Company Limited is the single largest direct shareholder in Paytm with a 10.83 stake followed by Sharma's Resilient Asset Management BV with a 10.29 per cent stake. SAIF Partners is led by Chinese-origin entrepreneurs with Andrew Y Yan as its managing partner. *Paytm run-ins with RBI* RBI on June 19, 2018, prohibited Paytm Payments Bank from opening any new account and wallet with effect from June 20, 2018, on account of supervisory concerns, which were lifted by RBI on December 27, 2018, with effect from December 31, 2018. The Office of Banking Ombudsman issued a show-cause notice dated March 6, 2019, for Paytm Payments Bank's failure to monitor a certain account maintained with it which had shown a sudden increase in the velocity of daily transactions involving immediate transfer to other banks. The actions were found to be in the violation of RBI's provisions on KYC. RBI rejected Paytm Payments Services Ltd's (PPSL) application to operate as a payment aggregator on November 25, 2022. The banking regulator asked the firm to re-submit applications within 120 days after it gets government approval on investment made by OCL into PPSL as per FDI guidelines. The regulator asked PPSL to continue operations with the condition that no new merchants should be onboard. After completion of 120 days, RBI again granted PPSL an extension but without removing the bar on new merchant onboarding. RBI issued a show cause notice to PPBL on July 29, 2021 for submitting false information to RBI confirming completion of the transfer of the Bharat Bill Payment Operating Unit ("BBPOU") by OCL to PPBL on August 28, 2017. The actual transfer of the BBPOU business by the Company to PPBL was completed only by March 31, 2021. RBI on October 1, 2021, imposed a penalty amounting to Rs 1 crore on PPBL for a contravention of the Payment and Settlement Systems Act, 2007. RBI imposed a penalty of Rs 5.93 crore on PPBL on October 10, 2023, after it found several non-compliances including banks failure to identify beneficial owners in respect of entities on-boarded by it for providing payout services. RBI found that PPBL did not monitor payout transactions and carry out risk profiling of entities availing payout services, breached the regulatory ceiling of end of the day balance in certain customer advance accounts availing payout services. The banking regulator found that PPBL reported a cyber security incident with delay and failed to implement device binding control measures related to 'SMS delivery receipt check'. PPBL video-based customer identification process infrastructure failed to prevent connections from IP addresses outside India.

Vijay Shekhar Sharma: The controversies of the architect of fintech

<ul class="summary-list"><li>The federal government has discharged student loans for thousands of defrauded borrowers.</li><li>However, private borrowers who attended the same schools are still trying to get relief from Navient.</li></ul>Raised in Venezuela, Leandro Pucci moved to the US when he was 27 years old — and he wanted to get started on his education right away.After struggling with residency complications, he finally enrolled at an Art Institute campus in California. It was the early 2000s, and digital media was really taking off; he thought it was the perfect opportunity to launch a career in the field.However, the Art Institute was far from what it seemed on paper. According to findings over the past decade by a group of state attorneys general, the for-profit chain misrepresented the value of its programs and forced students to take on unaffordable debt. For example, they found that the schools advertised that over 80% of graduates land jobs within six months of graduation, which was not always the case. All remaining campuses shut down in September 2023.While President Joe Biden's Education Department <a target="_blank" href="https://www.businessinsider.com/student-loan-forgiveness-art-institutes-borrower-defense-debt-cancellation-biden-2024-5">discharged federal student loans</a> for thousands of Art Institute attendees, many more still hold debt that a private loan company, Navient, hasn't relieved.For Pucci, it's nearly $60,000."I basically work for Navient. Every paycheck I get goes to Navient," Pucci, 59, told BI. "The stress has been really killing me. I feel so defeated. I feel trapped, and this has been so traumatic, especially the last couple of months, it's been really, really difficult."<div type="image" title="Leandro Pucci" height="932" width="1243" msid="111188148" hostid="261" sizebytes="45044"></div>While defrauded borrowers like Pucci are eligible to apply for relief from private lenders, Navient's application for the relief is <a target="_blank" href="https://navient.com/loan-servicing/private-student-loans/">not yet publicly available</a>. Even if a borrower manages to get the application, it can take hours to fill out and still result in a denial.The larger issue at play extends far beyond Navient. As millions of Americans<a target="_blank" href="https://www.businessinsider.com/stories-of-student-loan-debt-hamster-wheel-borrowers-cant-escape-2022-1"> struggle with student-debt loads</a>, with some of them being forced to make payments on loans for schools accused of fraud that did not deliver on their promises. While the Education Department has <a target="_blank" href="https://www.businessinsider.com/student-loan-debt-cancellation-payment-pause-borrowers-disabilities-defrauded-2021-6">taken a range of steps</a> to cancel student debt for borrowers who went to schools it found guilty of fraud, those with private loans do not qualify for the same relief. The lender, instead, can decide how it wants to craft a relief process, if at all.<h2 id="00fc56f2-0583-420d-a037-4f8246e44d30">Relief is 'still in its early stages'</h2>Sen. Elizabeth Warren wants answers. In April, she <a target="_blank" href="https://www.businessinsider.com/elizabeth-warren-cancel-student-debt-borrowers-transfer-navient-to-mohela-2024-4">sent an inquiry to Navient</a> about the process and its responsibility to discharge fraudulent loans under a consumer protection tool known as the Holder Rule. A Navient spokesperson referred BI to excerpts from the company's response to Warren, which stated that the discharge process is "still in its early stages.""As part of this enhanced process, we have started to communicate to borrowers who may qualify. As the process continues to roll out, we expect that more borrowers will submit applications, leading to increased levels of cancellation," the company told Warren.Navient said that it increased its reserves by $35 million in anticipation of relieving debt for defrauded borrowers, and it's "committed to addressing valid school misconduct claims" to fulfill its responsibility under the Holder Rule.The company also told Warren that "in light of the circumstances of some private loan borrowers who attended certain for-profit colleges … particularly those borrowers who suffered a negative impact from school closures or false promises," it would be appropriate to develop a discharge process similar to that of the federal government for defrauded borrowers.While Navient promises that more borrowers will gain access to relief through the new application, the lack of clarity surrounding the timeline can impose a financial burden on those borrowers.Pucci said he obtained an application after filing a complaint with the Consumer Financial Protection Bureau in April, and just two weeks later, he received a denial from Navient. It stated that while Navient "carefully considers a variety of factors in determining whether a private loan should be discharged based on school misconduct," Pucci did not meet the requirements. Since then, he's filed another complaint with the CFPB but has yet to get a clear reason as to why he was denied.The CFPB's Private Education Loan Ombudsman Julia Barnard told BI in a statement that "for years, my office has heard from frustrated victims of predatory schools who are now struggling to get their private lender to cancel their fraudulent loans.""A key measure of a relief process is whether qualifying borrowers get their fraudulent loans cancelled," Barnard said. "My office (and the CFPB more generally) is watching to make sure that student borrowers get appropriate relief and we will step in to help where we can."Pucci said he cannot afford to pay off his private loans for much longer, but he doesn't know what else he can do aside from wait and hope that Navient will eventually give him the same relief the government already did."I made my decisions. I took my responsibility," Pucci said. "But all the investments I need to do for my own business are impossible. I can forget about buying anything anymore because of how much I have to pay Navient."<h2 id="5426efea-9491-4d49-8751-dccd660dff66">'I've spent so much time feeling so alone and isolated'</h2>Theresa Christman's story is similar to Pucci's. The now 40-year-old attended the for-profit International Academy of Design and Technology, which was included in the 2022 Sweet v. Cardona settlement that discharged student loans for federal borrowers who attended a long list of schools. However, she still has about $22,000 in private student loans serviced by Navient that she can't shake."That $400 a month payment was hard, especially when I couldn't afford to eat or pay my bills for a really long time," Christman told BI. She said she had to forgo car insurance, live on food stamps, and drop out of school so she could work full time. "I was still only bringing in $11 an hour, and I was in California, which is not cheap. So it was hard."<div type="image" title="Theresa Christman" height="1152" width="1536" msid="111188153" hostid="261" sizebytes="62570"></div>After filing a complaint with the CFPB, Christman said she received the school misconduct discharge application from Navient — but due to the lengthy application and the amount of proof required, she hasn't had the time to put it together yet."For each section, I am writing pages and pages and pages for each answer. So it's taking me a really long time to do," Christman said. "I don't want to give Navient any reason to deny my claim."The Project on Predatory Student Lending — an advocacy group working to help defrauded borrowers — launched an awareness campaign earlier in June to make borrowers aware of Navient's discharge application, including an example of the <a target="_blank" href="https://static1.squarespace.com/static/62d6e418e8d8517940207135/t/664e4ce0340ea96a0aa70c72/1716407521054/Navient+School+Misconduct+Application.pdf">blank 12-page application</a> borrowers are required to complete.Eileen Connor, director of PPSL, told BI that the process "is really opaque" for borrowers, and it's forcing them to jump through unnecessary hurdles to get relief.In contrast to Navient's process, most federal borrowers "haven't had to apply at all because the department has said that they have enough information in their possession to know that there was a widespread pattern that impacted, in some cases, everybody who went to the school," Connor said. "So I don't really know why that wouldn't be the same for these loans."The lack of clarity going forward has left Christman in a limbo state, not knowing where she'll land once she submits her application."I've spent so much time feeling so alone and isolated," she said. "The financial aspect has been absolutely devastating, but it's also affected my mental health so much."<h2 id="31d0e4cd-b6f5-45a4-aa05-499de0054e00">'I can finally breathe again'</h2>For some borrowers, the time spent on the application paid off.Victoria Linssen, 59, and Jennifer Nave, 60, attended the for-profit Brooks Institute and DeVry University, respectively. Both received federal relief through the Sweet v. Cardona settlement and then struggled to be free of their private debt through Navient.Earlier this year, Linssen received the school misconduct discharge application."I just slowly but surely made my way through it. I would say it took me somewhere between eight and 12 hours to fill it out," Linssen said."You almost need to be your own attorney to understand how to figure it out," she added. "There's a huge amount of confusion and misunderstanding about what needs to be included, and some students aren't properly following the directions and are getting declined."But Linssen's efforts paid off — she got $70,000 in private loans discharged in May."I will never fully recover from what happened to me. When I left Brooks, I was in so much debt that I didn't want to get married. I was in deep humiliation and shame at the decisions that I had made that put me in so much debt," she said.<div type="image" title="Victoria Linssen" height="3024" width="4032" msid="111188146" hostid="261" sizebytes="1352760"></div>PPSL encourages borrowers who are denied relief through Navient to continue filing complaints with the CFPB. Connor also emphasized the importance of strengthening consumer protection laws not just for Navient but for the private lending industry as a whole, given that there are "different rules when talking about the federal government versus a private actor."Linssen can now finally start to see a future that doesn't include any student debt."I am only just now in the place where I can finally breathe again and start feeling like a normal human being and start planning for the future," she said. "I have that tiny, tiny spotlight of hope at the end of a really long tunnel that I may be able to retire or have a life again."While Nave also eventually got her private loans relieved after filing complaints with the CFPB, she doesn't understand why it has to be this way."It feels like I'm trying to prove to them something they already know," Nave said. "It took me seven hours to fill out, and it's very confusing, so many students are afraid of answering these questions because they're not exactly sure what is being asked."<div type="image" title="Jennifer Nave" height="1208" width="1611" msid="111188156" hostid="261" sizebytes="41930"></div>On June 14, Nave was shocked to see her efforts paid off — Navient effectively discharged her remaining balance after over a decade of payments.Nick Eucker, 38, hasn't been so lucky. Eucker attended the Brooks Institute and graduated with a bachelor's degree in commercial photography in 2008. While he was fortunate to find employment in the field, he wasn't making as much as he was promised — so he struggled to manage his student-loan payments while also juggling rent and other basic necessities, calling it "a huge financial burden.'"As has been the case with many other borrowers, Eucker received a school misconduct discharge application after filing a complaint with the CFPB. He submitted his application — over 200 pages — to Navient in early May, and in June, he received a denial. The reason was the exact same as the one Pucci received: "You do not meet the requirements for discharge based on misconduct by your school."While Navient said it's committed to ensuring all borrowers who qualify for relief receive it, it did not comment on the specific criteria it uses to evaluate borrowers' applications — rather saying that it will continue to evaluate and update the process as it makes sense. But it's leaving borrowers like Eucker and Pucci without any information on how to proceed, keeping them saddled with debt they're struggling to afford."You get your hopes up, and it seems like this program might actually work. But then I got that letter that said I didn't qualify, and it ruined my entire day," Eucker said. "It's this big letdown, once again."

These student-loan borrowers qualify for debt cancellation through the government, but they're struggling to get the same relief on their private balances: 'I feel so defeated. I feel trapped.'

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Paytm shares jump 5% on receiving government's nod for investment in Paytm Payments Services

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RBI pauses onboarding of online merchants by Paytm Payments Services; firm says no material impact on biz

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Vijay Shekhar Sharma: The controversies of the architect of fintech

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These student-loan borrowers qualify for debt cancellation through the government, but they're struggling to get the same relief on their private balances: 'I feel so defeated. I feel trapped.'

Ayelet Sheffey

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