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Paytm has received preliminary approval from the Reserve Bank of India to issue prepaid payment instruments, including digital wallets, through its subsidiary Paytm Payments Services. The development, reported on November 13, could allow the fintech company to rebuild its wallet operations independently of Paytm Payments Bank, which previously housed the service.
The approval represents an important regulatory step for Paytm after several years of restrictions affecting its payments bank business. However, the company will still need final authorisation before it can begin offering the approved prepaid payment services.
A Separate Route for Wallet Operations
Paytm launched its digital wallet in 2014 before transferring the business to Paytm Payments Bank in 2017. The payments bank later faced regulatory restrictions, including limits on onboarding customers and accepting deposits or wallet top-ups.
The RBI imposed broader restrictions on Paytm Payments Bank in 2024 over compliance and supervisory concerns. The regulator subsequently cancelled the bank’s licence in 2026, leading to its winding up.
The preliminary approval for Paytm Payments Services creates a potential route for the company to operate wallet services through a separate regulated entity rather than relying on the former payments bank structure.
Potential New Payment Products
If final authorisation is granted, Paytm could explore a wider range of prepaid payment products, potentially including digital wallets and prepaid cards. These services could provide additional payment options for customers and businesses using the company’s ecosystem.
The approval may also allow Paytm to strengthen its position in India’s digital payments market, where competition includes banks, payment applications and other fintech platforms.
However, the preliminary stage is important. Paytm cannot treat the approval as permission to immediately restart all wallet operations. The company must complete the remaining regulatory process and meet the conditions attached to the authorisation.
Regulatory Progress After a Difficult Period
The development has attracted investor attention because it reduces some of the uncertainty surrounding Paytm’s ability to operate a wallet business independently. Reuters reported that the company’s shares reached a record high during trading on November 13 after the news.
Any financial contribution from the wallet business is likely to take time. Analysts cited in the report said a meaningful revenue impact may not emerge before financial year 2028.
For Paytm, the next step will be securing final approval and demonstrating that its payments operations can meet the RBI’s regulatory expectations. The development marks progress, but the full commercial impact remains dependent on the final authorisation and subsequent rollout.
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