Paytm seeks RBI approval to revive digital wallet business

One97 Communications has applied for a Prepaid Payment Instrument licence from the Reserve Bank of India, aiming to restore Paytm's wallet services, diversify its digital payments offerings and strengthen its consumer and merchant ecosystem.

One97 Communications has approached the Reserve Bank of India (RBI) for a Prepaid Payment Instrument (PPI) licence, marking a significant step in its efforts to revive Paytm's digital wallet business after the closure of its payments bank operations. If approved, the licence would enable the company to independently offer prepaid wallet services and expand its digital payments portfolio beyond Unified Payments Interface (UPI)-based transactions.

The application comes as Paytm continues to reshape its payments strategy following regulatory action against Paytm Payments Bank. While the company has maintained uninterrupted UPI services through partnerships with multiple banks, its wallet business has remained inactive since the banking arm ceased operations.

A PPI licence authorises eligible entities to issue digital wallets and other prepaid payment products that allow users to load money in advance for transactions. Such wallets can be used for merchant payments, utility bill settlements, online purchases and fund transfers within regulatory limits, providing an alternative payment option alongside bank accounts and UPI.

Licence could restore a key component of Paytm's payments ecosystem

Securing a fresh PPI licence would allow Paytm to regain direct control of its wallet business under One97 Communications, instead of operating through its former banking subsidiary. The move is expected to strengthen the company's payments ecosystem by reintroducing wallet-based services that had previously been an important part of its digital offerings.

Earlier, Paytm Payments Bank came under increasing regulatory scrutiny over compliance-related issues. After imposing restrictions over a period of time, the RBI cancelled the bank's licence in April 2026, citing continued non-compliance with licensing conditions and regulatory requirements. At the time, the central bank stated that the bank had sufficient liquidity to settle depositor obligations during the winding-up process.

Following the closure of the payments bank, Paytm shifted its focus to preserving uninterrupted payment services through collaborations with partner banks, ensuring that customers and merchants continued to access UPI transactions without disruption.

Company eyes broader consumer payment options

A successful approval would enable Paytm to relaunch its digital wallet platform, giving users an additional payment method while increasing engagement within its app. The company could also strengthen merchant services and reduce dependence on bank-led payment partnerships by broadening its portfolio of digital payment solutions.

According to reports, the company said, "We believe that consumers benefit from a range of payment options, and wallet will add to the completeness of our consumer offerings."

The RBI will examine Paytm's application before taking a final decision on the licence. Until then, the company is expected to continue operating its existing UPI services through partner banks while awaiting regulatory clearance for the proposed wallet business.