Paytm Payments Services Limited (PPSL), the payments aggregator arm of Vijay Shekhar Sharma-led Paytm, has received the in-principle approval from the Reserve Bank of India.

The central bank, in its letter dated August 12, said "Reserve Bank of India hereby grants an in-principle authorisation to Paytm Payments Services Limited.

The in-principle authorisation only covers online PA operations as defined in PA-PG guidelines and transactions which do not fall under the ambit of the said guidelines including 'pay-out' transactions undertaken on behalf of merchants should be routed through escrow account designated for PA operations.

The RBI added that PPSL is advised to undertake a system audit, including cyber security audit. "The System Audit Report should be submitted to RBI within six months from the date of this letter, failing which the in-principle authorisation granted hereby shall lapse automatically and grant of final authorisation not considered thereafter."

"PPSL is advised to note that in case of change of shareholding/ownership of the company, the company should refer to and be guided by 'Requirement for obtaining prior approval in case of takeover/acquisition of control of non-bank PSOs and sale/transafer of payment system activity of non-bank PSO', dated July 4, 2022."

Merchant onboarding restrictions placed on PPSL, since November 25, 2022, stand withdrawn from the date of this letter, the RBI letter added.

Paytm parent entity One97 Communications, in its stock exchange filings, said, "This is in furtherance to our stock exchange filing dated August 28, 2024, regarding the application filed by PPSL, a wholly-owned subsidiary of One97 Communications Ltd (OCL) for a payment aggregator licence. We would like to inform you that the Reserve Bank of India has granted 'in-principle' authorisation to PPSLvide its letter dated August 12, 2025, to operate as an online payment aggregator under the Payments and Settlement Systems Act, 2007."

The Head and Tale had previously reported that the company re-applied for the license in January after addressing RBI queries.

PPSL -- which was barred from onboarding new merchants for over two years -- witnessed significant impact on its revenue. One of the concerns in the approval process has been the scrutiny over Chinese fintech giant Ant Group’s stake in Paytm. 

The approval comes barely a week after Ant Group's Antfin, backed by Chinese giant Alibaba, offloaded its entire 5.84% stake in the fintech through a bulk deal worth about Rs 3,800 crore.

In August 2024, PPSL received approval from the Ministry of Finance to invest an additional $6 million (Rs 50 crore) into its payment services business. The move was aimed at meeting compliance requirements and bolstering its case for the PA license.

Over the past few months, The Head and Tale has exclusively reported on the ongoing restructuring at PPSL. In January, we broke the story of a leadership shake-up, beginning with the resignation of CEO Nakul Jain. His notice period was extended, and he eventually left the company in July.

In June, we also reported exclusively that former PayU India chief business officer Sudhir Sehgal had joined PPSL as chief operating officer. At the time, several sources told us that Sehgal had been brought in to take over as CEO -- though the formal transition awaited Jain's exit.

"Now that the licence has come through, the company might formally announce Sehgal as CEO of PPSL soon," one of the sources said.

In April this year, as part of the restructuring, PPSL laid off all employees above the General Manager (GM) level.