One97 Communications, the parent company of Paytm, said on Friday, November 13, that its wholly owned subsidiary Paytm Payments Services Limited (PPSL) has received in-principle authorisation from the Reserve Bank of India (RBI) to set up and operate a payment system for prepaid payment instruments (PPIs) in India.
The authorisation, granted under the Payment and Settlement Systems Act, 2007, will allow PPSL to move towards offering prepaid payment instruments, including digital wallets, subject to receiving the RBI’s final authorisation.
Paytm had disclosed in its Q1 FY27 earnings release that PPSL had applied for a wallet licence.
However, the in-principle approval does not allow the company to immediately start issuing wallets. The RBI letter makes it clear that PPSL can commence issuance of PPIs only after receiving the final authorisation or Certificate of Authorisation.
As part of the approval conditions, PPSL has been asked to conduct a system audit, including a cybersecurity audit, through an eligible auditor. The audit must comply with the RBI’s November 5, directions on cyber resilience and digital payment security controls for non-bank payment system operators.
The company is required to submit the system audit report to the RBI within six months of receiving the November 13 letter. Failure to do so will result in the in-principle authorisation automatically lapsing, after which the regulator will not consider granting final authorisation.
The RBI has also asked PPSL to comply with its applicable directions on the storage of payment system data and prior approval requirements in case of changes in the company’s shareholding or ownership.
The development marks a step towards Paytm’s proposed return to the prepaid wallet business, but the subsidiary will need to complete the prescribed compliance requirements and secure final regulatory approval before launching such services.
Paytm gets RBI in-principle approval to issue prepaid payment instruments, including wallets