Aiming Restart, Paytm Seeks RBI Nod for Wallet Revival Post-Licence Shock

In a bid to rebuild its core payments business, One97 Communications has applied for a fresh Prepaid Payment Instrument (PPI) licence from the Reserve Bank of India (RBI). The move comes months after the RBI cancelled Paytm Payments Bank's licence due to severe compliance issues, including lax KYC verification and data governance failures between the parent company and its banking unit. The RBI strict action against the Paytm started in 2022 with ban on onboarding new customers and ultimately cancellation of its banking license in April 2026.

If the application is approved, the new licence will allow Paytm to relaunch its popular digital wallet under its payment aggregator arm, gaining direct operational control without needing a captive bank.
Fighting for Market Share.

While Paytm kept its UPI services running by partnering with major lenders like SBI, HDFC Bank, Axis Bank, and YES Bank, the loss of its wallet created a gap that rivals quickly exploited. Re-entering the space puts Paytm in direct competition with dominant market players:

Competitor Market Role Key Edge

• PhonePe UPI & Wallets Controls ~50% of India's UPI volume
• Google Pay UPI Holds ~36% UPI market share
• MobiKwik Wallets & BNPL Strong presence in credit-backed wallets
• Amazon Pay E-Commerce Wallets Deep integration with Amazon's ecosystem
• Securing the PPI approval is crucial for Paytm to restore user balances, offer low-friction micro-payments, and retain small merchants. The application currently awaits central bank review.