Paytm Payments Services Ltd (PPSL) has received in-principle authorization from the Reserve Bank of India (RBI) to issue and operate prepaid payment instruments, including digital wallets. The fintech company confirmed the regulatory approval in a filing today, marking a significant step in its efforts to revive its wallet services.
Regulatory Compliance Hurdles
The approval comes under the Payment and Settlement Systems Act, 2007. However, PPSL cannot immediately resume operations. The company must first fulfill specific conditions set by the central bank and secure final authorization, known as a Certificate of Authorization. PPSL submitted its application for a fresh license on December 31, 2025.
The RBI has mandated that PPSL undertake a system audit, including a cybersecurity review, conducted by an eligible auditor. The company must submit this report to the regulator within six months. Failure to meet this deadline will cause the in-principle authorization to lapse, preventing the firm from obtaining final approval. Additionally, the RBI requires PPSL to seek prior approval for any changes in shareholding or ownership, aligning with the central bank’s 2022 guidelines for non-bank payment operators.
A Path Toward Recovery
This development follows a three-year period of regulatory challenges for the company. In January 2024, the RBI barred Paytm Payments Bank from accepting fresh deposits, credit transactions, and wallet top-ups. These restrictions, which became effective on March 15, 2024, disrupted the company’s core wallet operations.
Since that setback, Paytm management has sought to restore the service independently of the payments bank. By pursuing a fresh PPI license through its subsidiary, the company aims to reintegrate digital wallets into its broader consumer payments strategy. The company’s leadership had previously signaled its intent to revive the business during its Q1 FY27 earnings call.