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Paytm is a story full of complexities

Hidden ownership, complex investment routes, and murky control mechanisms raise questions about accountability and potential vulnerabilities

Paytm is a story full of complexities

Different analysts are trying to interpret the Paytm episode in different ways. The only thing one can figure out the reason behind the RBI action against the country’s largest fintech firm is violation of KYC norms by it.

A retired SBI official told Bizz Buzz on condition of anonymity that the fintech firm had been opening several accounts of the same customers for quite a few years in the past. Interestingly, it was having a host of ‘mule accounts’ which are basically used for money laundering purpose.

Paytm, a holding of Chinese company Alibaba, is the country's largest e-payment company. Some people consider Vijay Shekhar Sharma to be the owner of Paytm because he is also the chief managing director of this company. But do you know how much stake he holds in the company? He holds only 15.7 per cent stake in the company.

The name of the main company of Paytm is One 97 Communication Limited. This is a Singapore company, now all the confusion starts from here because Alibaba has also not made its investment through its parent company in China. Rather, it has invested in Paytm through one of its subsidiary companies, which is registered in Singapore. The name of the company investing in Paytm is 'Alibaba Singapore Holdings Private Limited'.

A media report suggests that Paytm had opened several hundred accounts based on a single PAN in sheer violation of KYC norms.

Alibaba had announced to buy 41 per cent stake in Paytm in 2015. Actually, that's when Jack Ma of Alibaba came to India. The real rise of Paytm started after demonetization, Paytm which had received funding from China's Alibaba.

Actually, Paytm's model was developed similar to Alibaba company's payment gateway Alipay. In 2018, Alibaba Singapore's stake in Paytm e-commerce reduced to 36.31 per cent. Mayasoshi Son's SoftBank also directly invested its stake in the company by 20 per cent, but in China also both the companies have stake in each other, hence this matter is complicated.

The remaining shares of Paytm are held by SAP Ventures, Silicon Valley Bank, Paytm's management team and other investors. SAIF Partners India's stake is 4.66 per cent. In 2017, the one per cent share of Paytm held by Anil Ambani was also bought by Alibaba, a large share is also with Alibaba's Ant Financial, that is, if seen clearly, in 2020 also, Chinese Alibaba Group and its affiliate Ant Financial have the majority shares of One97 Communications...just for show, an Indian has been made the main face of the company.

Now the moot question arises that if the people under Paytm fold will be able to use its wallet post February 29.

Alibaba's team develops the risk control capacity of Paytm's operations. And knowledgeable people say that risk control capacity is the back bone of any online company.

Paytm is not a small company. Recently an interview of Vijay Shekhar Sharma was published. In this he claimed that Paytm's share in online payments in the country is still 70 to 80 per cent, only Paytm's payment gateway has been authorized for the responsibility of selling railway tickets, the daily ticket sales of railways are not worth crores but billions.

Kumud Das
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