The Reserve Bank of India (RBI) has granted in-principle authorisation to Paytm Payments Services Limited (PPSL), a wholly-owned subsidiary of One 97 Communications Ltd (Paytm), to operate as an online payment aggregator under the Payment and Settlement Systems Act, 2007.
The approval was conveyed in an official letter dated August 12, 2025 and disclosed via stock exchange filings.
This marks a turnaround for Paytm after the RBI had rejected its payment aggregator licence application in November 2022, instructing the company to reapply with compliance under foreign direct investment (FDI) norms. The earlier rejection was accompanied by restrictions on onboarding new merchants, which have now been withdrawn with this approval.
Per the letter, the approval covers only online payment aggregator operations, and does not extend to other payment activities outside their scope.
"It should be noted that this in-principle authorisation only covers online PA operations as defined in PA-PG Guidelines and transactions which do not fall under the ambit of the said guidelines including 'pay-out transactions undertaken on behalf of merchants should not be routed through escrow account designated for PA operations," it noted.
The development paves way for Paytm to resume merchant onboarding and expand its digital payments infrastructure after nearly three years of regulatory uncertainty.
The RBI’s approval also comes with some regulatory conditions. The central bank “has advised PPSL to conduct a system audit, including a cyber security audit, and submit a report within six months, failing which the in‑principle authorisation will lapse and final approval will not be granted.
Additionally, PPSL is required to comply with the RBI’s guidelines pertaining to obtaining prior approval in cases of change in shareholding, acquisition of control, or transfer of payment system operations for non-bank payment system operators.
The recovery
The latest development coincides with Paytm’s strong financial rebound. In Q1FY 26 (April–June 2025), Paytm posted a consolidated net profit of Rs 123 crore, a dramatic turnaround from a Rs 839 crore loss in the same quarter last year.
This was the first operationally-driven quarterly net profit reported by the firm since listing. The recovery followed a difficult period starting in January 2024, when the RBI imposed restrictions on its banking unit, Paytm Payments Bank, triggering a sharp revenue drop over six months. Since then, the firm has been focussing on reviving operations by tightly controlling expenses, offloading non-core assets like Paytm Insider, and resetting its merchant lending business.
In a related ownership shift, Chinese fintech major Ant Financial recently completed its full exit from Paytm, selling its remaining 5.84 percent stake for about Rs 3,800 crore via block deals. With this, Chinese ownership in the company has been reduced to zero, marking a significant shift in its shareholding pattern.
The operating revenue in the latest quarter surged 28 percent YoY to Rs 1,918 crore, while contribution profit grew 52 percent YoY to Rs 1,151 crore, delivering a contribution margin of 60 percent. At the same time, Paytm stock has been exhibiting a bullish momentum.
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