Swipe, But Verify: Paytm’s Comeback Gets RBI Nod, But Shadows Linger

Image Source: Business Today

India’s fintech poster child, Paytm, is back in the spotlight—and this time, it’s not just for its stock swings or investor exits. After months of regulatory turbulence, the company has secured a long-awaited in-principle approval from the Reserve Bank of India (RBI) to operate as a payment aggregator for online merchants. The move marks a major milestone in Paytm’s comeback trail, but the road ahead is still dotted with compliance checkpoints and reputational repair.

Here’s a deep dive into the latest developments and what they mean for Paytm’s future.

1. Regulatory breakthrough: a long-awaited green light
- On August 12, 2025, RBI granted Paytm’s Payment Services unit permission to operate as an online payment aggregator
- This approval comes nearly three years after Paytm was initially denied the license due to foreign investment compliance issues involving Chinese stakeholders
- The license allows Paytm to onboard new online merchants and offer payment services including cards, net banking, and UPI
- The company must complete a system audit and cybersecurity review within six months to retain the license

2. Strategic pivots and partnerships
- Following RBI’s earlier ban on Paytm Payments Bank from accepting fresh deposits, Paytm quickly partnered with Axis Bank, HDFC Bank, SBI, and Yes Bank to maintain service continuity
- These partnerships helped Paytm reroute its payment flows and preserve merchant relationships during the regulatory freeze
- The aggregator license now enables Paytm to consolidate these services under its own umbrella, restoring operational autonomy

3. Investor sentiment and Ant Group’s exit
- Just days before the RBI approval, China’s Ant Group sold its remaining 5.8 percent stake in Paytm’s parent company, One97 Communications, for $454 million via block deals
- This follows an earlier exit in 2023, when Ant Financial offloaded a 10.3 percent stake to founder Vijay Shekhar Sharma in a no-cash transaction
- The complete exit of Chinese investors is seen as a strategic clean-up, aligning Paytm with India’s foreign investment norms and easing regulatory pressure

4. Lingering shadows: compliance still under scrutiny
- Paytm is still navigating RBI’s restrictions on its Payments Bank, which remain in place due to KYC lapses and data governance concerns
- The company must also comply with India’s Digital Personal Data Protection Act and RBI’s guidelines on digital lending and UPI charges
- Its lending and BNPL operations are under watch, with stricter norms around risk assessment and data privacy now in force
- Any misstep in these areas could trigger fresh regulatory action, making compliance a non-negotiable priority

5. Market response and business outlook
- Paytm’s stock has shown signs of recovery, climbing from its 2024 low of ₹310 to over ₹650 in recent weeks
- Analysts remain cautiously optimistic, citing improved governance and strategic clarity
- The company is focusing on core fintech services, merchant expansion, and AI-driven personalization to regain market share
- However, competition from PhonePe, Google Pay, and NPCI-backed platforms continues to challenge Paytm’s dominance in UPI and digital payments

Final takeaway
Paytm’s comeback is real—but it’s not yet complete. The RBI’s nod to its payment aggregator license is a major win, signaling regulatory trust and operational revival. But with compliance audits pending and legacy issues still unresolved, the company must tread carefully. For investors and users alike, Paytm’s wallet may be half full—but whether it overflows again depends on how well it balances innovation with accountability.

Sources: TechCrunch, IndustryWired, Ease to Compliance.