Paytm Wallet comeback? One97 seeks RBI nod for fresh PPI licence

The fintech company is looking to revive its wallet business with a fresh PPI licence application, following the RBI's cancellation of Paytm Payments Bank's licence

  After losing its payments bank licence, One97 Communications is taking the next step in rebuilding Paytm's digital payments business. The company has applied for a Prepaid Payment Instrument (PPI) licence from the Reserve Bank of India (RBI), which could allow it to restart wallet services under its own entity if approved.

 

Why has Paytm applied for a PPI licence?

 

A PPI licence allows companies to issue prepaid payment instruments, such as digital wallets, that customers can load with money and use for payments, shopping, and transfers within the regulatory framework.

 

Paytm's wallet business had largely come to a halt after regulatory action against Paytm Payments Bank. Although the company continued to offer UPI services by partnering with other banks, it could no longer operate its wallet business through its banking arm.

   

By applying for a fresh PPI licence, Paytm aims to regain direct control over its wallet services instead of relying on the now-defunct payments bank.

 

What is a PPI licence?

 

A PPI licence enables authorised entities to issue digital wallets and other prepaid payment products. With a PPI licence, users can typically:

 

• Load money into a digital wallet
• Pay merchants online and offline
• Make utility bill payments
• Transfer funds within permitted limits
• Carry out everyday digital transactions without using cash

 

Unlike a bank account, a prepaid wallet stores money that users have already loaded into it.

 

How did Paytm reach this stage?

 

Paytm Payments Bank had faced regulatory scrutiny for several years over compliance issues. Earlier restrictions on onboarding new customers were followed by tighter supervisory actions. In April 2026, the RBI cancelled the bank's licence, citing continued breaches of licensing conditions and regulatory requirements. The regulator also confirmed that the bank had sufficient liquidity to repay depositors during the winding-up process.

 

Following the regulatory action, Paytm shifted its focus to ensuring uninterrupted UPI payments by partnering with other banks. While UPI transactions continued for customers and merchants, the absence of a wallet business left a gap in the company's payments ecosystem.

 

What could the new licence mean?

 

If the RBI grants the PPI licence, Paytm could:

 

• Relaunch its digital wallet services
• Offer customers another payment option alongside UPI
• Increase user engagement within its app
• Strengthen its merchant payment ecosystem
• Diversify its payments business beyond bank partnerships

 

The approval would also help Paytm rebuild a business segment that was once central to its digital payments strategy.  "We believe that consumers benefit from a range of payment options, and wallet will add to the completeness of our consumer offerings," the company said, according to a Moneycontrol report.

 

The RBI will review Paytm's application before deciding whether to grant the licence. Until then, the company will continue operating its existing UPI-based payment services through partner banks.