Paytm Shares Rise 7% Ahead of Reports of In-Principle Indian Approval for Prepaid Payment Instruments
Key Facts
Reports on November 13, 2026, said Paytm Payments Services, a subsidiary of the Paytm group, had received in-principle approval from the Reserve Bank of India to issue prepaid payment instruments, a move that could open a new regulatory path for the group’s services. But the central bank’s published list on November 1 still classified the company’s application as “under process,” while in-principle approval alone does not confer the right to operate the system. The bank’s directives require final authorization under the Payment and Settlement Systems Act, 2007, before activity can begin. The transition from initial approval to service provision therefore remains contingent on completing regulatory procedures. This comes as Paytm’s banking and regulatory activities are subject to separate developments involving different entities within the group.
The central bank’s approval regulates the prepaid payment instrument sector because its rules prohibit any entity from setting up and operating payment systems for these instruments without the bank’s prior approval or authorization. The bank defines the instruments as means that enable the purchase of goods and services, access to financial services, and transfers using stored value. The application therefore concerns a specific payment activity subject to separate authorization, and does not in itself mean Paytm Payments Services has begun operating customer wallets. The bank’s directives allow holders of instruments that meet full identity verification requirements to use them for purchases, money transfers or cash withdrawals, subject to applicable rules. These uses remain subject to the instrument category’s terms and the regulatory controls imposed by the bank.
Paytm Payments Services should be distinguished from Paytm Payments Bank, as the former’s application concerns prepaid payment instrument services, while the bank was a separate banking entity. The Reserve Bank of India announced the cancellation of Paytm Payments Bank’s banking licence effective from close of business on April 24, 2026, and said it would apply to wind up the bank. That step is not equivalent to cancelling the subsidiary’s application for a licence to issue prepaid payment instruments, nor does it automatically grant the subsidiary the bank’s powers. If the company’s regulatory path proceeds to final authorization, it would fall under a framework different from that of the bank whose licence was cancelled. Each entity’s powers remain tied to the type of activity and the authorization granted to it.
The central bank’s list dated November 1 included Paytm Payments Services’ application among those “under process,” before reports published on November 13 announced the in-principle approval. The timeline reflects a possible change in the application’s status during that period, while final authorization remains a necessary condition for operations. In directives updated through September 30, 2026, the bank required payment instrument issuers to conduct a system audit covering cybersecurity controls. The audit report must also be submitted to the bank within six months of the date the licence is obtained. This means completion of approvals is followed by a specific supervisory obligation concerning system integrity and cybersecurity.
At group level, parent company One 97 Communications recorded operating revenue of 2,648 crore rupees in the quarter ended September 30, 2026, up 28.5% year on year, and net profit of 226 crore rupees. The results provide financial context for the group during a period in which licensing procedures for its payment services unit are developing. In the market, the parent company’s shares rose 7% during trading on November 12, ahead of the approval news, reaching 1,903.05 rupees. A report said the shares had crossed 1,900 rupees for the first time since their listing day on November 18, 2021. The report linked the rise to hopes related to a new merchant discount rate framework for transactions through the Unified Payments Interface, rather than to the approval news published the following day.