Indian fintech giant Paytm has received long-awaited approval from the country’s central bank to operate as a payment services provider for online merchants — just days after one of its Chinese investors sold its entire stake — marking a key regulatory breakthrough after months of setbacks and scrutiny.
On Tuesday, the Reserve Bank of India (RBI) granted “in-principle” approval to Paytm’s Payment Services unit to operate as an online payment aggregator, parent company One97 Communications said in its filing (PDF) to Indian stock exchanges. The approval comes more than two years after the Noida-based fintech was initially denied the license in November 2022 due to noncompliance with India’s rules on receiving investments from countries that share a land border.
Without the license, Paytm was barred from onboarding new online merchants. At the time, the company said the restriction had “no material impact” on its business or revenues. However, at its annual general meeting last September, One97 Communications founder and CEO Vijay Shekhar Sharma stated his intention to reapply for the payment aggregator license.
The approval also comes over a year after the RBI banned Paytm Payments Bank from accepting fresh deposits and enabling credit transactions. Paytm weathered that impact by quickly shifting gears and partnering with Axis, HDFC, State Bank of India, and Yes Bank to make them serve as payment system providers for its consumers and merchants involved in online transactions and autopay mandates.
With the new license, Paytm can operate as a service provider for online merchants, enabling them to accept a range of payment methods, including cards, net banking, and the Indian government-backed Unified Payments Interface (UPI). The approval also lifts the online merchant onboarding restrictions imposed by the central bank in 2022.
The approval comes just a week after China’s Ant Group exited Paytm by selling its remaining 5.8% direct stake in One97 Communications for $454 million through block deals. This follows an earlier exit in 2023, when Ant Financial sold a 10.3% stake — worth $628 million — to Sharma in a no-cash deal.
Paytm is required to undertake a “system audit,” including a cybersecurity review, and submit its report to the Reserve Bank of India within six months. If it fails to do so, the approval will lapse, per the RBI letter enclosed with the company’s stock exchange filing. The license is also limited to online payment services and does not extend beyond that scope.
Techcrunch event
San Francisco
|
October 27-29, 2025
The latest development will help Paytm control most of its value chain, from its offline sound boxes to the online payment gateway, a …