Taiwanese chip designer MediaTek is investing USD 60 million (about Rs 400 crore) in One97 Communications, which runs Paytm.
The transaction values the digital payment services and e-commerce firm at about USD 5 billion.
When contacted, a Paytm spokesperson confirmed the development.
The funds will be used for expanding payments and commerce businesses and for building and launching the payments bank, she added.
Paytm founder Vijay Shekhar Sharma has earlier said its payments bank will become operational later this year.
Interestingly, Mediatek is also an investor in Paytm's rival, Mobikwik in India. In May this year, Mediatek had participated in an estimated USD 50 million fund raising by Mobikwik.
Alibaba-backed Paytm is looking at raising about USD 300 million (over Rs 2,000 crore) in fresh funding.
While a number of multi-million dollar fundings were announced last year by the likes of Flipkart, Snapdeal and Ola, the last few months have been tough for startups as investors have tightened their purse strings.
According to sources, Paytm is looking at more funding in coming from a clutch of investors, including Goldman Sachs as well as existing investors, Alibaba and its payments affiliate Alipay and venture capital firm SAIF Partners.
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