New Delhi: Paytm has moved a step closer to restarting its prepaid wallet business after the Reserve Bank of India (RBI) granted in-principle authorisation to its wholly owned subsidiary, Paytm Payments Services Limited (PPSL), to issue and operate prepaid payment instruments (PPIs), including digital wallets.
The development marks an important step in Paytm’s efforts to restore a service that was once central to its digital payments business. However, customers will have to wait before they can use newly issued Paytm wallets, as the company must complete regulatory requirements and obtain final authorisation from the central bank.
In a stock exchange filing dated November 13, 2026, One 97 Communications, Paytm’s parent company, confirmed that PPSL had received the RBI’s preliminary approval to establish and operate a payment system for issuing prepaid payment instruments in India.
The authorisation is subject to compliance with the RBI’s Master Directions on Prepaid Payment Instruments, dated August 27, 2021, as amended from time to time.
Final RBI approval still required
The in-principle authorisation does not allow Paytm to immediately restart wallet services. The company has clarified that PPSL can begin issuing prepaid instruments, including wallets, only after receiving the final authorisation or Certificate of Authorisation from the RBI.
Before that, the subsidiary must fulfil the regulatory conditions prescribed by the central bank. These include a system audit covering cybersecurity, with the audit to be conducted by an appropriately qualified and recognised auditor.
Reports on the RBI’s conditions indicate that PPSL has been given six months to submit the required audit report. The process is intended to establish that the company’s payment system and security controls meet the applicable regulatory standards.
The distinction between preliminary and final approval is important for customers. While the latest development creates a route for Paytm to return to the wallet business, it does not mean that existing or new users can immediately start loading money into a newly launched Paytm wallet.
The company will first have to complete the prescribed checks and receive the regulator’s final clearance.
Paytm applies for a separate wallet authorisation
The latest approval follows Paytm’s efforts to secure an independent regulatory route for its prepaid payment instrument business.
The company had disclosed in its first-quarter FY27 earnings communication that PPSL had applied for a wallet licence. The application was submitted on December 31, 2025, according to reports on the regulatory filing.
The proposed arrangement would allow Paytm to operate its wallet business through Paytm Payments Services rather than depend on Paytm Payments Bank, which had previously housed the service.
This is significant because the regulatory restrictions imposed on Paytm Payments Bank had disrupted the company’s ability to offer wallet top-ups and other services through the bank.
By seeking authorisation through its wholly owned payments subsidiary, Paytm is attempting to establish a separate operating structure for prepaid payment instruments.
How RBI restrictions affected Paytm’s wallet business
Paytm’s wallet was among the company’s prominent consumer payment offerings after its launch in 2014. It allowed users to add money in advance and use the balance for payments across supported merchants and services.
The wallet business was transferred to Paytm Payments Bank in 2017. However, the bank subsequently faced regulatory action from the RBI over compliance and supervisory concerns.
In March 2022, the central bank barred Paytm Payments Bank from onboarding new customers. The restrictions were widened in January 2024, when the RBI directed the bank to stop accepting fresh deposits and credits, including wallet top-ups, subject to the specified transition arrangements.
The measures affected several services associated with the bank and forced Paytm to adjust parts of its payments operations.
In April 2026, the RBI cancelled Paytm Payments Bank’s banking licence, leading to the bank’s winding-up process. The latest in-principle approval for PPSL is therefore an important development in Paytm’s attempt to bring back prepaid wallet services through a different entity.
What the approval could mean for Paytm’s business
The return of wallet services could broaden Paytm’s payment offerings and create additional opportunities beyond its existing products.
Prepaid payment instruments allow customers to load money in advance and use the balance to pay for goods and services. Digital wallets are one of the most familiar forms of PPIs. Other possible offerings in the category include prepaid cards and instruments designed for specific purposes.
The approval could therefore help Paytm explore additional products once it receives final regulatory clearance.
However, the competitive environment has changed considerably since Paytm’s wallet became a major part of its business. Unified Payments Interface (UPI) transactions have become widely used for everyday digital payments, reducing the dependence of many consumers on general-purpose prepaid wallets.
Paytm management has also previously indicated that wallets should not be viewed as having the same level of relevance they enjoyed several years ago. Nevertheless, prepaid instruments designed for specific uses, including gifting, meal benefits and transit payments, continue to have potential applications.
The scale of any business recovery will depend on customer demand, the products Paytm introduces and the company’s ability to compete in an increasingly crowded digital payments market.
Paytm shares touch a record high
The RBI’s preliminary authorisation also lifted investor sentiment towards Paytm’s parent company, One 97 Communications.
The company’s shares rose as much as 1.8% to reach an intraday high of Rs 1,960 on November 13, marking a record high. The movement reflected optimism that the regulatory development could reopen opportunities for Paytm’s payments business.
Market observers have noted that the approval could eventually support additional revenue opportunities, including prepaid card services. However, the financial contribution is unlikely to be immediate because the company must first complete the audit process and obtain final authorisation.
The latest development is therefore a regulatory milestone rather than an immediate restart of Paytm’s wallet operations.
For customers, the next important update will be the RBI’s final clearance. Until then, Paytm’s return to prepaid wallets remains conditional on completing the required compliance and cybersecurity procedures.