Paytm wallet to return? One97 Communications takes first step to relaunch wallet, applies for RBI PPI licence

Paytm parent One97 Communications has applied for a Prepaid Payment Instrument (PPI) licence through its wholly owned subsidiary Paytm Payments Services Ltd (PPSL), taking its first formal step towards re-entering the digital wallet business after the Reserve Bank of India (RBI) cancelled the licence of Paytm Payments Bank earlier this year.

The company disclosed the development in its June quarter investor presentation, saying the proposed wallet service would complement its existing payment offerings and provide consumers with an additional payment option.

"Our wholly owned subsidiary, Paytm Payments Services Limited (PPSL), has applied for a wallet licence. As highlighted earlier, we believe that consumers benefit from a range of payment options and wallet will add to completeness of our consumer offerings," the company said.

A PPI licence issued by the RBI allows authorised entities to issue and operate prepaid payment instruments such as digital wallets. These wallets enable users to load money in advance and use the stored value to make online and offline purchases, pay utility bills, transfer funds within permitted regulatory limits and carry out routine digital transactions without directly using a bank account.

Unlike a savings account, a prepaid wallet holds only the amount that a customer has loaded into it. If the application is approved, Paytm will be able to offer wallet services directly through PPSL instead of depending on partner banks for such products.

The application marks a significant milestone in Paytm's efforts to restore its payments ecosystem following regulatory action against Paytm Payments Bank. The bank had been under RBI scrutiny for several years over compliance and governance concerns. After imposing restrictions on onboarding new customers and other supervisory measures, the central bank cancelled the bank's licence in April 2026, citing persistent violations of licensing conditions and regulatory requirements. The RBI had also clarified that the bank held sufficient liquidity to repay depositors during the winding-up process.

Following the cancellation, Paytm shifted its focus to maintaining uninterrupted UPI services by partnering with multiple banks. While customers and merchants continued to use UPI seamlessly, the company no longer had its own wallet offering, creating a gap in its consumer payments portfolio.

The wallet business was once one of Paytm's biggest strengths, helping the company build a large user base before expanding into merchant acquiring, financial services, ticketing and commerce. Over the past year, the company has rebuilt much of its payments infrastructure, including transferring its offline merchant acquiring business to PPSL and strengthening partnerships with banking institutions.

A fresh PPI licence would allow Paytm to bring back a key payments product and reduce its reliance on external banking partners for wallet services. It would also strengthen the company's position in India's competitive digital payments market, where UPI continues to dominate but wallets remain relevant for specific consumer use cases.

The development comes alongside an improvement in Paytm's financial performance. For the quarter ended June 30, the company reported a 79% year-on-year increase in net profit to ₹220 crore, while revenue from operations rose 28% to ₹2,448 crore, supported by growth in merchant payments and financial services.

If the RBI approves the application, Paytm would be able to relaunch its digital wallet, offer customers an additional payment option alongside UPI, deepen user engagement within its app, strengthen its merchant payments ecosystem and further diversify its digital payments business.