Paytm has received an important regulatory breakthrough after the Reserve Bank of India granted in-principle authorisation to its wholly owned subsidiary, Paytm Payments Services Limited, to issue prepaid payment instruments, including digital wallets. The development pushed One 97 Communications shares to an intraday high of ₹1,960 on November 13.

The approval marks a significant step towards bringing Paytm’s wallet business back after regulatory restrictions disrupted its earlier operations. However, customers cannot start using newly issued Paytm wallets immediately because final RBI authorisation is still required.

The authorisation was granted through a letter dated November 13, 2026, under the Payment and Settlement Systems Act, 2007. It allows Paytm Payments Services to establish and operate a payment system for prepaid payment instruments.

Prepaid payment instruments include digital wallets and other stored value payment products. These allow customers to load money in advance and use the balance for eligible transactions.

An important distinction is that the approval has been granted to Paytm Payments Services, a wholly owned subsidiary of One 97 Communications. It is not a restoration of the banking licence of Paytm Payments Bank.

The RBI has made the authorisation conditional on compliance with its applicable prepaid payment instrument regulations. The company must also complete a system audit covering cybersecurity requirements.

The audit must be conducted by an eligible auditor, including a CERT-In empanelled auditor or a suitably qualified information systems auditor. This requirement is intended to assess the company’s systems and digital payment security controls.

Paytm Payments Services must submit the audit report to the RBI within six months from the date of the authorisation letter. Failure to meet this deadline will cause the in-principle authorisation to lapse.

Even after completing the audit, the company will need to obtain final authorisation or a Certificate of Authorisation from the RBI. Only then can it begin issuing prepaid payment instruments to customers.

The latest development follows Paytm’s application for a wallet licence on December 31, 2025. The company had previously disclosed this application in its Q1 FY27 investor communication.

Paytm’s earlier wallet business operated through Paytm Payments Bank. Regulatory restrictions imposed on that bank disrupted fresh deposits, credits and wallet top-ups, forcing the company to reorganise parts of its payments operations.

The RBI cancelled Paytm Payments Bank’s banking licence on April 24, 2026. The latest approval is therefore important because it provides a separate regulatory route for Paytm Payments Services to build its own prepaid payment instrument business.

The market reacted positively to the announcement. One 97 Communications shares climbed as much as 1.8% to ₹1,960 during Friday’s trading session, marking a fresh record high.

The share price also moved above its November 2021 listing price of ₹1,950 for the first time. However, it remained below the IPO price of ₹2,150.

The potential return of wallet services could help Paytm expand its range of payment options. It may also create opportunities in prepaid cards and specialised payment products once the required approvals are completed.

However, the competitive environment has changed considerably since Paytm originally launched its wallet in 2014. Unified Payments Interface transactions have become widely used for everyday digital payments.

This means that a revived wallet business may not automatically achieve the same importance it enjoyed several years ago. Its future performance will depend on customer adoption, merchant acceptance and the usefulness of its prepaid products.

Paytm management has previously indicated that wallets should not be viewed as being as important or as widely used as they were three years ago. This makes the company’s eventual product strategy worth watching.

Prepaid instruments can still serve specific requirements such as gifting, meal benefits, transit payments and other controlled spending applications. These categories may provide opportunities beyond general purpose digital wallets.

For Paytm, the immediate priority is completing the prescribed system and cybersecurity audit within the regulatory deadline. The next major milestone will be obtaining the RBI’s final authorisation.

Investors will also watch whether the company can translate this regulatory progress into additional customers, payment activity and sustainable revenue. The financial contribution is unlikely to be immediate because the business must first complete the remaining approval process.

Paytm’s latest RBI development is therefore an important step towards rebuilding its prepaid payments offering, but it is not yet a full wallet relaunch. The audit, final approval and the company’s ability to compete in today’s digital payments market will determine how much this opportunity ultimately contributes to its business.