New Delhi: After months of facing uncertainty and regulatory hurdles, Paytm has finally received the Reserve Bank of India’s (RBI) in-principle approval to operate as a payment aggregator. This is a crucial step for the digital payments firm, aiming to rebuild its core business.

The approval, granted to Paytm Payments Services Limited (PPSL), implies that the company can now officially facilitate online transactions between merchants and customers under the regulatory oversight of the RBI.

A Long Road to Recovery

This milestone didn’t come easy. Just last year, the RBI rejected Paytm’s initial application due to concerns related to foreign direct investment (FDI) rules. At the time, the company was under scrutiny for failing to meet certain compliance norms, particularly around its payments bank operations.

Paytm, being a wholly-owned subsidiary of One 97 Communications, had resubmitted its application for a payment aggregator licence in September 2024. The approval comes after a nine-month wait, during which several peers—such as PayU, Zaakpay (MobiKwik), and PBFintech’s lending unit—secured their licences.

The payment aggregator licence allows fintech companies to process and settle payments on behalf of merchants, streamlining and securing digital transactions for businesses.

However, Paytm took several corrective steps, most importantly, securing FDI clearance from the Finance Ministry and restructuring its ownership.

Freedom from Chinese Stake

A major turning point came last week, when China’s Ant Financial, once a key backer, exited Paytm by selling its entire 5.84% stake for approximately ₹3,803 crore. The complete exit of Chinese ownership is widely believed to have cleared a major regulatory roadblock, easing the RBI’s concerns around foreign influence in India’s financial ecosystem.

A Shift from Pause to Progress

Earlier in 2024, the RBI had also barred Paytm Payments Bank from onboarding new customers over ongoing compliance concerns. But this new approval indicates a shift in the regulator’s stance, as Paytm moves to distance itself from past missteps and reposition itself as a compliant, India-focused fintech player.

With the RBI’s green light, Paytm can now re-engage its merchant partners and focus on scaling its digital payment services, without the burden of regulatory uncertainty or foreign ownership complications.

The Next Move

While this is only an in-principle approval, it marks a fresh chapter for one of India’s most prominent fintech companies. A full license will still depend on Paytm meeting the RBI’s final conditions, but for now, the path to revival seems clearer than it has in months.