Paytm’s payments services arm has received in-principle authorisation from the Reserve Bank of India (RBI) to operate a payment system for issuing prepaid payment instruments (PPIs), including digital wallets. Following the announcement on Friday, shares of parent company One 97 Communications rose to a 52-week high of Rs 1,960.
The approval was granted to Paytm Payments Services Limited (PPSL), a wholly owned subsidiary of One 97 Communications, under the Payment and Settlement Systems Act, 2007. The authorisation is subject to compliance with the RBI’s Master Directions on Prepaid Payment Instruments.
PPIs allow users to store money digitally and use it to make payments and other transactions. The approval marks a step forward for Paytm’s payments business, enabling it to expand its wallet-related services.
The stock has been gaining momentum in recent sessions. On Thursday, One 97 Communications shares rose 7.31% to close at Rs 1,925, crossing the Rs 1,900 mark for the first time since the company’s 2021 listing. The closing price was just Rs 25 below its listing price of Rs 1,950 on the National Stock Exchange.
Investor interest has also been supported by expectations of a new merchant discount rate (MDR) framework for Unified Payments Interface (UPI) transactions. The National Payments Corporation of India deferred the proposed levy until after Diwali last month. The proposal involves an MDR of 40 basis points on person-to-merchant UPI transactions above Rs 2,000.
Analysts estimate that UPI-related MDR revenue could reach Rs 1,160 crore for Paytm in FY28 if the framework is implemented.
In September, global brokerage Bernstein named Paytm its top pick, retaining an Outperform rating and a target price of Rs 2,200. It projected the company’s revenue to grow at a compound annual growth rate of 24% between FY26 and FY30, citing merchant lending growth and improving operating leverage.
Source: The Times of India
