Paytm, the parent company of One97 Communications, has filed for a Prepaid Payment Instrument (PPI) licence with the Reserve Bank of India (RBI), continuing on its quest to revive its digital payments venture. This will enable Paytm to resume its wallet services as an independent entity, if approved.

Key Highlights

• Paytm has approached RBI for a PPI licence to restart digital wallet services of Paytm.
• In April 2026, RBI had withdrawn the licence of Paytm Payments Bank due to persistent violations. 

With the RBI approving the PPI licence, Paytm could resume its digital wallet offerings, thus providing customers with another payment alternative to the UPI. The transaction would also increase usage of the app and enhance the merchant payment system within the app. Apart from that, getting this license would enable Paytm to diversify its payments segment from bank partnerships, which it traditionally relied on for wallet operations.

Paytm's Regulatory Challenge: A Recap

Payments Bank had been subject of regulatory probes over a period of a few years regarding compliance. The RBI put on hold the fresh customer onboarding, set stricter supervisory measures and eventually revoked the bank's licence in April 2026, stating that on-going violations of the licensing conditions and regulatory requirements required the RBI's action.

The RBI also had given assurance then that the bank had adequate liquidity to pay the depositors during the winding-up procedure even after it cancelled its licence, offering some solace to the depositors.

Also Read: RBI Cancels Paytm Payments Bank License, Orders Wind-Up

Timeline of Restrictions on Paytm Payments Bank

Earlier on 29th February 2024, the RBI issued a notice to Paytm Payments Bank Limited (PPBL), banning new deposits and top-ups to its wallet, which severely impacted the bank's wallet and deposit services and facilitated the eventual withdrawal of the bank's licence two years later.

Paytm Payments Bank Limited (PPBL) has a 49% stake in its paid-up share capital from the hands of One97 Communications Limited (OCL). Vijay Shekhar Sharma, who's the founder of One97 Communications, has a 51% stake in the bank, which has operated separately from Paytm's core payments app business despite both operating under a close partnership in the past.

What This Means Going Forward

The PPI license application is a big move by Paytm as a part of its revival of its payment service arm without relying on its former banking arm. Paytm has been granted greater ownership over the wallet segment of its digital payments business, as it is now operating it directly under a separate unit of the company One97 Communications, instead of a separately licensed bank. If and when theReserve Bank of India approves it and when, too, is yet to be seen, but the application is a testament to Paytm's still ongoing efforts to diversify and stabilise its payments ecosystem after the two-year regulatory setback.