Paytm Unit gets RBI ‘In-Principle’ Nod for Online Payment Aggregator Biz: What it Means for Fintech Giant

The Reserve Bank of India has granted “in-principle” authorisation to Paytm Payments Services Ltd (PPSL), a wholly owned subsidiary of One97 Communications, to operate as an online payment aggregator, the company disclosed in an exchange filing.

The RBI’s approval, conveyed in a letter dated August 12, 2025, requires PPSL to complete a system audit, including cyber-security and IT checks and submit the report within six months.

It warned that the in-principle authorisation will lapse automatically if the audit is not delivered in that time. The regulator also flagged other compliance conditions covering changes in shareholding or control.

In-Principle Licence

The in-principle licence covers only online payment-aggregator operations under the Payment and Settlement Systems Act, 2007, and allows PPSL to pool funds received from customers and transfer them to merchants through designated escrow accounts, effectively lifting the freeze on onboarding new online merchants and reopening a route to payments revenue for the fintech.

RBI cautioned that certain payout transactions remain outside the PA guidelines.

The move follows a fraught regulatory period for Paytm. RBI had previously rejected Paytm’s PA application in November 2022 and, in a sweeping action, barred Paytm Payments Bank from operating, steps that severely constrained the company’s payments business.

The new in-principle authorisation signals a partial regulatory thaw but comes with clear compliance strings attached.

Talking about the update, Ranadurjay Talukdar, Partner and Payments Sector Leader, EY India said, "Following the RBI restrictions, the company was unable to onboard new merchants, which led to the need for a separate approval as an online payment aggregator. Existing merchants were also transitioned to new sponsor banks. With an established presence in offline merchant acquiring, this development could support their broader acquiring operations and contribute to increased competition in India’s digital payments market. "

Financial Recovery & Market Reaction

The authorisation arrives weeks after Paytm’s parent, One97 Communications, reported a strong turnaround, a consolidated net profit of about ₹122–123 crore in Q1 FY26 on revenue of roughly ₹1,918 crore, and the shares rallied on the licence news, hitting fresh multi-month highs.

Together, the results and the RBI nod could help Paytm rebuild merchant flows and diversify revenue beyond its core distribution and financial-services businesses.

PPSL must complete the mandated system audit within six months and meet other RBI conditions to convert the in-principle authorisation into a final licence. Failure to comply would cause the authorisation to lapse and keep merchant onboarding restrictions in place, prolonging regulatory uncertainty for Paytm’s payments ambitions.