SUMMARY
The new entity, PB Pay, will “carry on” the business of payment aggregation by facilitating offline or digital payment acceptance infrastructure for merchants, PB Fintech said
PB Fintech said that the new entity will apply for the payment aggregator licence with the Reserve Bank of India once it is incorporated
The wholly-owned subsidiary will be set up with a proposed authorised share capital of INR 50 Cr and a proposed paid-up share capital of INR 27 Cr
Fintech major Policybazaar’s parent PB Fintech on Wednesday (March 20) said it plans to incorporate a new wholly-owned subsidiary to enter the payment aggregation business.
In a regulatory filing with the exchanges, the company said that the new entity, called PB Pay, will “carry on” the business of payment aggregation. PB Fintech said that the new entity will apply for the payment aggregator licence with the Reserve Bank of India (RBI) once it is incorporated.
“… we hereby inform that the Board of Directors… has, inter-alia, considered and approved incorporation of a wholly-owned subsidiary of the Company under the name and style of “PB Pay Private Limited” to carry on the business of payment aggregator – domestic and / or cross border or both, as may be permitted by the Reserve Bank of India, by facilitating merchants with offline and/or digital payment acceptance infrastructure or both,” said the regulatory filing.
The wholly-owned subsidiary will be set up with a proposed authorised share capital of INR 50 Cr and a proposed paid-up share capital of INR 27 Cr.
It is pertinent to note that the payment aggregator framework was first introduced by the central bank in March 2020. The licence is mandatory for acquiring merchants and delivering digital payment acceptance solutions.
Apart from a host of regulatory and statutory measures that applicants need to comply with, the companies seeking the payment aggregator licence should also satisfy the minimum net worth threshold.
PB Fintech’s move comes at a time when the RBI has heightened its scrutiny around payment aggregators and increased compliance requirements for issuing such licences.
In September last year, the central bank in a single stroke rejected the PA licence application of 72 startups, including existing licence holders. The RBI’s concerns, in the past, have ranged from not meeting the net-worth criteria to failures to conduct system and cybersecurity audits.
However, the central bank has granted the licence to a number of players in recent times. Earlier this month, the RBI granted the payment aggregator licence to Infibeam Avenues and Amazon Pay. Prior to that, it also accorded approval to MSwipe, Zoho, Juspay, Decentro, among others.
The move to incorporate a payment aggregator subsidiary comes at a time when PB Fintech is riding high on the back of its maiden profitable quarter The company posted a profit after tax (PAT) of INR 37.2 Cr in Q3 FY24 as against a loss of INR 87.6 Cr in the third quarter (Q3) of FY23. Operating revenue jumped 43% year-on-year to INR 871 Cr in Q3 FY24.
Shares of PB Fintech closed 1.73% higher at INR 1,116.85 on the BSE on Wednesday (March 20).
