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Business Explainer | June 11, 2026
In 2009, Vijay Shekhar Sharma launched a platform called Paytm under One97 Communications, a company he had founded nine years earlier. It began as a mobile recharge website. By November 2021, it had raised Rs 18,300 crore in India’s largest-ever IPO at Rs 2,150 per share. On its first day of trading, the stock fell 27.4% to Rs 1,560.80, the worst debut for a major Indian IPO in years. In January 2024, the RBI ordered Paytm Payments Bank to stop accepting deposits, triggering a sustained share price decline to an all-time low of Rs 310 on May 9, 2024. In April 2026, the RBI cancelled Paytm Payments Bank’s licence entirely. Yet by May 2026, One97 Communications had reported its first full year of profit at Rs 552 crore, and its stock had recovered to Rs 1,105. This is the Paytm story: founded in optimism, scaled through a government demonetisation shock, tested by regulatory failure, and now in a cautious recovery phase.
Table of Contents
- Part I: From Mobile Recharges to a Fintech Superapp (2000 to 2020) One97 Communications, the Paytm wallet, demonetisation, and the payments bank experiment
- Part II: The Rs 18,300 Crore IPO and Its Troubled Listing India’s largest-ever IPO, the 27% first-day crash, and what the market was pricing
- Part III: The Business Model and Revenue Segments Payments, financial services distribution, and marketing services
- Part IV: The Regulatory Crisis at Paytm Payments Bank The March 2022 new-customer ban, the January 2024 deposit freeze, and the April 2026 licence cancellation
- Part V: The Financial Picture from IPO to FY2026 Five years of losses, Rs 663 crore loss in FY2025, and the Rs 552 crore profit in FY2026
- Part VI: The Restructuring and the Road to Profitability Migration to partner banks, new banking partnerships, the Paytm Payments Services approval, and FY2026 results
- Frequently Asked Questions
Rs 18,300 cr
Raised in the November 2021 IPO at Rs 2,150 per share, India’s largest-ever public offering at the time, valuing One97 at Rs 1.39 lakh crore.
Rs 310
All-time low share price reached on May 9, 2024 after the sustained decline following the RBI’s January 2024 deposit ban on Paytm Payments Bank, an 85.6% fall from IPO price.
Rs 552 cr
Paytm’s maiden full-year profit reported for FY2026, a Rs 1,215 crore swing from a loss of Rs 663 crore in FY2025. Revenue grew 22% to Rs 8,437 crore.
Apr 24, 2026
Date on which the RBI cancelled Paytm Payments Bank’s banking licence under Section 22(4) of the Banking Regulation Act, 1949, effective immediately.
Part IFrom Mobile Recharges to a Fintech Superapp (2000 to 2020)
One97 Communications and the Founding Idea
Vijay Shekhar Sharma was born in Aligarh, Uttar Pradesh, and studied electronics and communications engineering at Delhi College of Engineering, graduating in 1998. While still in college he built a website called indiasite.net, which he sold for approximately $1 million within two years. In December 2000, he founded One97 Communications in New Delhi with a focus on mobile content services, providing news, cricket scores, ringtones, jokes, and exam results to telecom subscribers at a time when smartphones did not exist and mobile internet penetration was negligible.
One97 survived the early 2000s on business-to-business mobile content contracts with carriers like Airtel and Vodafone. The company was loss-making for years. The transformation came in 2009 when Sharma, having observed the mobile payments market in China, launched Paytm, which stood for Pay Through Mobile, as a prepaid mobile and DTH recharge platform built on top of One97’s existing mobile infrastructure. The initial investment in the platform was approximately $2 million. The product was simple: a mobile-first interface that let users top up their prepaid phones without needing a scratch card or a physical retailer.
Why the recharge use case was the right entry point: India in 2010 had over 700 million mobile subscribers, most of them on prepaid plans. Recharging a prepaid phone required buying a physical voucher from a retailer, a process that was inconvenient, especially for small-denomination recharges. Paytm solved a real and frequent pain point for a mass audience. This gave it an enormous base of transacting users before it expanded into bill payments, ticketing, and eventually financial services. Acquiring a user for a Rs 10 recharge and converting them to a Rs 5,000 wallet balance was the core user-acquisition logic that shaped the company’s expansion through the early 2010s.
Early Funding and the Ant Financial Partnership
Paytm’s early investors included SAIF Partners (now Elevation Capital), which backed the company in its early years. The critical funding inflection came in 2015, when Ant Financial, the financial services affiliate of Alibaba Group, made a significant investment in One97Communications, acquiring a strategic stake at a reported valuation near $5 billion. The Ant Financial relationship brought more than capital. It brought expertise in the mobile payments model that had already been proven in China through Alipay, providing Paytm with a strategic template for expanding beyond recharges into a broader financial services platform.
In August 2018, Berkshire Hathaway, Warren Buffett’s investment holding company, invested approximately $300 million in One97 Communications for a stake of approximately 2.6%, an investment that attracted wide attention given Buffett’s traditional aversion to technology companies he did not fully understand. Berkshire later divested its stake before the IPO. SoftBank’s Vision Fund also held a stake at the time of IPO and fully exited by July 2024.
The Demonetisation Windfall
On November 8, 2016, Prime Minister Narendra Modi announced the demonetisation of all Rs 500 and Rs 1,000 notes, withdrawing approximately 86% of India’s currency in circulation from legal tender status. The announcement created an acute cash shortage and forced hundreds of millions of Indians, many of whom had never used digital payments, to seek alternatives. Paytm was the most accessible and established digital wallet available at that moment.
The response was immediate and dramatic. On November 9, 2016, Paytm ran full-page advertisements in leading national newspapers congratulating the government on the decision and urging the public to use Paytm. Traffic to the platform increased by 435% in the first 24 hours. App downloads grew by 200%. Money added to Paytm wallets surged by 1,000%. The company was signing up approximately 70,000 new merchants per day during November 2016. Its wallet user base grew from 125 million before demonetisation to 185 million within three months. By March 2017, the wallet base had crossed 218 million users. Demonetisation was the single most consequential external event in the company’s commercial history.
The Payments Bank: A Licence That Came With Conditions
In August 2015, the RBI granted in-principle approval to Vijay Shekhar Sharma for a payments bank licence. Paytm Payments Bank Limited was incorporated on August 22, 2016. It formally launched operations on May 23, 2017, after receiving its final operating licence from the RBI under Section 22(1) of the Banking Regulation Act, 1949. The ownership structure was unusual: Vijay Shekhar Sharma personally held 51% and One97 Communications held the remaining 49%. This structure reflected RBI rules that required the promoter individual to hold a majority stake in a payments bank rather than a corporate entity holding a controlling interest.
Payments banks were a new category created by the RBI to deepen financial inclusion. They could accept deposits of up to Rs 1 lakh per customer, issue debit cards, offer internet banking, and facilitate payments and remittances. They could not lend. The business model was therefore built around float income on deposits, payment fees, and the cross-selling of third-party financial products. For Paytm, the payments bank was expected to provide the regulated infrastructure for scaling its financial services ambitions, and potentially converting into a Small Finance Bank after five years of operation, which would have allowed it to enter the lucrative lending segment directly.
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Dec 2000One97 Communications founded in New Delhi
Vijay Shekhar Sharma founds the company as a mobile content provider to telecom operators. Initial revenue from ringtones, news, and cricket score services.
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2009Paytm launched as mobile recharge platform
One97 launches Paytm with an initial investment of approximately $2 million. First use case is prepaid mobile and DTH recharges. The platform expanded to include debit card and bill payments from 2013 onward, with Paytm Wallet formally introduced in January 2014.
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2015Ant Financial invests; RBI grants payments bank in-principle approval
Ant Financial acquires a strategic stake at a valuation near $5 billion. RBI simultaneously gives in-principle approval for a payments bank licence to Vijay Shekhar Sharma.
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Nov 8, 2016Demonetisation announced; Paytm sees 1,000% wallet top-up surge
The government withdraws Rs 500 and Rs 1,000 notes. Paytm signs 70,000 new merchants per day in November 2016. Wallet user base grows from 125 million to 185 million in three months.
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May 23, 2017Paytm Payments Bank commences operations
The bank launches with Sharma holding 51% and One97 Communications 49%. Products include savings accounts, wallets, debit cards, and UPI payments. Deposits capped at Rs 1 lakh per customer.
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Aug 2018Berkshire Hathaway invests approximately $300 million
Warren Buffett’s Berkshire Hathaway acquires approximately 2.6% stake in One97 Communications. SoftBank Vision Fund also holds a significant stake at this point.
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Oct 2021RBI penalises PPBL Rs 1 crore for false information during licence application
An early regulatory signal. The bank had reportedly provided incorrect information when applying for its Certificate of Authorisation. The penalty is small but flags early compliance culture concerns.
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Nov 18, 2021One97 Communications lists on BSE and NSE at Rs 2,150 per share
India’s largest-ever IPO raises Rs 18,300 crore. The stock opens at Rs 1,950 and closes at Rs 1,560.80 on listing day, a 27.4% fall from IPO price.
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Mar 11, 2022RBI bans Paytm Payments Bank from onboarding new customers
The RBI cites “material supervisory concerns” under Section 35A of the Banking Regulation Act. An IT audit firm is ordered to review the bank’s systems. New wallet and savings account signups halt immediately.
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Oct 2023RBI imposes Rs 5.39 crore penalty on PPBL for KYC violations
The penalty covers continued breaches of KYC norms, failure to identify beneficial owners, improper transaction monitoring, and delayed reporting of a cybersecurity incident.
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Jan 31, 2024RBI orders PPBL to stop accepting fresh deposits after February 29, 2024
The most severe regulatory action yet. All credits and deposits in savings accounts, wallets, FASTags, and prepaid instruments banned. Deadline later extended to March 15, 2024. Stock crashes from approximately Rs 760 to Rs 310.
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Feb 26, 2024Vijay Shekhar Sharma resigns from PPBL board
Sharma steps down as part-time non-executive chairman and board member of Paytm Payments Bank. One97 Communications simultaneously announces it has written off its entire investment in PPBL as of March 31, 2024.
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Aug 2025Paytm Payments Services Limited receives RBI payment aggregator approval
PPSL, a separate One97 subsidiary, receives RBI approval to operate as an online payment aggregator. This allows merchant onboarding and partial restoration of payment processing capabilities previously handled by PPBL.
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Apr 24, 2026RBI cancels Paytm Payments Bank’s banking licence
Under Section 22(4) of the Banking Regulation Act, 1949, effective from close of business April 24, 2026. Winding-up proceedings to be initiated in the High Court. The Paytm app and UPI services remain unaffected as they operate through partner banks.
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May 7, 2026One97 Communications reports FY2026 annual profit of Rs 552 crore
First full year of profitability in the company’s history. Revenue grows 22% to Rs 8,437 crore. EBITDA turns positive at Rs 502 crore vs a loss of Rs 1,506 crore in FY2025. Stock rises 6% on results day to Rs 1,105.
Part IIThe Rs 18,300 Crore IPO and Its Troubled Listing
The Deal Structure
One97 Communications filed its Draft Red Herring Prospectus with SEBI in July 2021. The IPO comprised a fresh issue of Rs 8,300 crore and an offer for sale of Rs 10,000 crore by existing shareholders. The price band was set at Rs 2,080 to Rs 2,150 per share. At the upper end of Rs 2,150, the company was valued at approximately Rs 1.39 lakh crore. The IPO opened for subscription on November 8, 2021, and closed on November 10. Shares were allotted on November 15 and listed on BSE and NSE on November 18, 2021.
The Rs 18,300 crore IPO surpassed Coal India’s Rs 15,475 crore offering of 2010 to become India’s largest-ever public offer. Anchor investors including BlackRock, Canada Pension Plan Investment Board, GIC, Birla Mutual Fund, HDFC Mutual Fund, and Mirae Asset were allotted shares worth Rs 8,235 crore, the largest anchor allocation in Indian IPO history at that time. The total institutional demand was 10 times the anchor allotment. The IPO was subscribed approximately 1.89 times overall, with the QIB portion subscribed 2.79 times.
Why the IPO was criticised before listing: Macquarie Research published a note shortly before listing that cut its target price to Rs 1,200 per share, 44% below the issue price, stating that Paytm’s “business model lacks focus and direction.” The firm noted that Paytm faced competition from PhonePe and Google Pay in UPI payments, from Amazon and Flipkart in e-commerce, and from banks in financial services, and that it was therefore unable to build a durable moat in any of these segments individually. Critics also noted that the company had not achieved profitability and had not provided a clear timeline for doing so. The prospectus itself stated that the company “expects to make losses for the foreseeable future.” At the IPO price, the company was valued at approximately 26 times its gross profit for FY2021, a multiple that assumed rapid and sustained monetisation improvement.
The Listing Day Crash
On November 18, 2021, One97 Communications opened at Rs 1,950 per share, 9% below the issue price. By the close of trading it had fallen to Rs 1,560.80, a 27.4% decline from the IPO price of Rs 2,150. This was the worst listing performance for a large Indian IPO in many years. Founder Vijay Shekhar Sharma’s personal equity holdings fell in value by approximately Rs 4,400 crore on listing day alone. The stock would go on to make a new all-time high of Rs 1,961.05 on November 18, 2021 itself before closing well below that figure. It never returned to above Rs 2,000.
Paytm Share Price Journey: IPO to FY2026 (Key Price Points)
One97 Communications (NSE: PAYTM) share price at significant dates. Source: NSE/BSE exchange data and company announcements.
Part IIIThe Business Model and Revenue Segments
One97 Communications reports revenue across three principal segments. The composition of each segment has shifted significantly since the RBI action on PPBL, which disrupted the payments bank-linked portion of the business. The tabs below explain each segment.
Payment Services (Merchant and Consumer Payments)
Rs 6.5L crMerchant GMV in Q4 FY2026 (up 27% YoY)
1.51 crSubscription merchant devices (Soundboxes and QR) as of March 2026
4 bps+Payment processing margin in Q4 FY2026, above prior guidance of 3 bps
The payments segment covers UPI transactions, wallet payments, QR code-based merchant payments, and Paytm Soundbox device subscriptions. Paytm earns revenue from merchant discount rates (MDR) on certain payment types and a monthly subscription fee from merchants who lease Soundbox and card machine devices. The Soundbox, a small speaker that reads out payment confirmations in local languages, has become Paytm’s most distinctive merchant-facing product and is deployed across 1.51 crore storefronts in India.
Consumer UPI gross transaction value grew 46% year-on-year in Q4 FY2026, outpacing the industry by 2.2 times. Paytm has been gaining UPI consumer market share every month for over a year. After PPBL’s deposit ban in early 2024, Paytm’s UPI payments were migrated to Yes Bank as the banking partner. This migration caused short-term disruption but was completed without material permanent loss of merchant acceptance points.
Financial Services Distribution
Rs 2,593 crFY2026 distribution revenue (up 52% YoY)
7.5 lakhKey financial services customers in Q4 FY2026 (up 36% YoY)
50%+Share of merchant loan disbursements that are repeat borrowers
Paytm operates an asset-light, distribution-only model in financial services. It does not lend from its own balance sheet. Instead, it connects merchants and consumers to partner banks and non-banking financial companies that underwrite and hold the loans. Paytm earns a distribution fee per loan disbursed. This model means Paytm carries no credit risk from lending, an important distinction for investors assessing balance sheet quality.
Product categories include personal loans, merchant cash advances, buy-now-pay-later, insurance, and mutual fund distribution. The lending business was significantly disrupted when the RBI issued guidance in November 2023 against first loss default guarantees in the fintech lending model, prompting Paytm and others to cut back small-ticket personal loan disbursements sharply. The recovery in FY2026 financial services revenue reflects the rebuilding of this book through new banking partnerships that replaced the PPBL channel.
Marketing Services and Commerce
AI-ledPersonalisation driving higher revenue per active customer
TicketsMovies, events, travel via Paytm Insider platform
AdvertisingBrands pay for placement and targeted reach to Paytm’s transacting user base
The marketing services segment includes advertising and promotional revenue earned by offering brands access to Paytm’s transacting user base, ticketing revenue through Paytm Insider (events, movies, sports), and commerce revenues. This segment is the smallest of the three by revenue contribution but is growing as Paytm increasingly uses AI-led personalisation to improve recommendation quality and ad targeting.
Management has guided that marketing services will be the next significant growth driver after payments and financial services, as the combination of a large transacting user base, real-time purchase intent signals from payment data, and improved AI targeting tools creates an advertising inventory that is attractive to consumer brands. The segment’s contribution margin is high once the fixed costs of maintaining the platform are met.
Part IVThe Regulatory Crisis at Paytm Payments Bank
The regulatory action against Paytm Payments Bank was not a single event. It was a sequence of escalating interventions spanning four years, each more severe than the last, culminating in licence cancellation in April 2026. The accordion below presents each phase factually, drawing on RBI press releases and public disclosures.
Phase 1: The First Regulatory Strike (October 2021) Oct 2021
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In October 2021, less than a month before the IPO, the RBI imposed a penalty of Rs 1 crore on Paytm Payments Bank for providing false information during the process of applying for a Certificate of Authorisation. The penalty was disclosed in the IPO prospectus. In isolation, a Rs 1 crore fine is a minor matter for an institution of PPBL’s size. In retrospect, it was the first documented compliance failure on record and the first indication that the bank’s relationship with its regulator was not straightforward.
Phase 2: Customer Onboarding Ban (March 11, 2022) RBI Order
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On March 11, 2022, the RBI directed Paytm Payments Bank to immediately stop onboarding new customers, exercising its powers under Section 35A of the Banking Regulation Act, 1949. The bank was simultaneously ordered to appoint an IT audit firm to conduct a comprehensive system audit of its technology infrastructure. The RBI described the action as stemming from “certain material supervisory concerns observed in the bank” but did not publicly specify the concerns in its press release.
The underlying issues, as later established through SEBI disclosures, subsequent audit findings, and RBI communications, included large-scale violations of Know Your Customer norms across merchant accounts, failure to conduct proper background verification before onboarding clients, allowance of data to flow to servers outside India in breach of data localisation norms, and improper transaction monitoring. Importantly, the bank had not maintained adequate arm’s-length distance from its promoter group entities, raising governance concerns about whether PPBL was being operated as an independent regulated entity or as an internal processing arm of One97 Communications.
Phase 3: Penalty for Continuing Violations (October 2023) Oct 2023
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In October 2023, the RBI levied a Rs 5.39 crore penalty on Paytm Payments Bank. The order detailed specific violations: failure to identify the beneficial owner of entities onboarded for payout services, failure to monitor payout transactions and carry out risk profiling of payout clients, breach of the regulatory end-of-day balance ceiling in certain customer advance accounts, delay in reporting a cybersecurity incident, and failure to implement device binding controls and video-KYC infrastructure in line with prescribed norms.
This penalty was significant because it came nineteen months after the March 2022 onboarding ban. The RBI had by then reviewed the external auditor’s report on PPBL’s systems and found no meaningful corrective action had been taken. For regulatory observers, the October 2023 fine was an indication that PPBL’s compliance culture had not changed despite the earlier intervention.
Phase 4: The Deposit Freeze (January 31, 2024) Critical
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On January 31, 2024, the RBI issued its most consequential order against PPBL under Section 35A of the Banking Regulation Act. The order directed that no further deposits, credit transactions, or top-ups would be allowed in any customer accounts, prepaid instruments, wallets, FASTags, or NCMC cards after February 29, 2024. The initial deadline was later extended to March 15, 2024, to give customers and merchants additional time to migrate. Fund transfers (IMPS, AEPS, UPI) were also to be wound down after February 29, and the nodal accounts of One97 Communications and Paytm Payments Services Limited were ordered to be terminated by that date.
The market’s reaction was immediate and severe. Shares of One97 Communications fell approximately 20% on February 1, 2024, the first trading day after the announcement, to Rs 608.80. The stock continued declining, reaching an all-time low of Rs 310 in February 2024, an 85.6% fall from the IPO price of Rs 2,150. The RBI cited the same root causes: persistent non-compliance with KYC and anti-money laundering norms, large numbers of accounts with inadequate KYC, PAN validation failures across lakhs of accounts, cases where a single PAN number was linked to more than 100 customers, and transactions in prepaid instruments beyond regulatory limits that raised money-laundering concerns.
Phase 5: Licence Cancellation (April 24, 2026) Final Order
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On April 24, 2026, the RBI cancelled Paytm Payments Bank’s banking licence under Section 22(4) of the Banking Regulation Act, 1949, effective from the close of business the same day. The order found that the bank’s affairs were being conducted in a manner “detrimental to the bank and its depositors,” that its management was prejudicial to the interests of depositors and the public, and that allowing the bank to continue operating as a payments bank would serve no useful purpose. The RBI stated it would approach the High Court to initiate formal winding-up proceedings.
This was one of the strongest actions the RBI has taken in the payments banking space. Importantly, the Paytm app, Paytm UPI, Paytm Soundbox, Paytm QR, Paytm card machines, and Paytm Payment Gateway were unaffected by the cancellation. These services were already operating through One97 Communications and its subsidiaries rather than through PPBL, having been migrated to partner banks over the preceding two years. One97 Communications had written off its entire investment in PPBL as of March 31, 2024, meaning the financial exposure of the listed entity to the payments bank had already been eliminated from the balance sheet.
Paytm Payments Bank: Timeline of Regulatory Actions (2021 to 2026)
Severity of RBI actions against PPBL over five years. Higher bar indicates more restrictive action. Source: RBI press releases and Section 35A/22(4) orders.
Part VThe Financial Picture from IPO to FY2026
Five Years of Losses and One Year of Profit
One97 Communications had never reported an annual net profit from the time of its IPO until FY2026. In FY2022, the year of its listing, the company reported a net loss of Rs 2,396 crore on revenues of Rs 4,974 crore. In FY2023 revenue grew to Rs 7,990 crore but the net loss narrowed only modestly to Rs 1,776 crore. In FY2024, the company achieved its first year of adjusted EBITDA profitability, reporting a positive EBITDA of Rs 559 crore, though still recording a net loss of Rs 1,422 crore on a GAAP basis. The RBI action in January 2024 then disrupted FY2025 significantly, contributing to a net loss of Rs 663 crore on revenue that fell to Rs 6,907 crore as the business was restructured.
FY2026 was the turnaround year. Revenue recovered to Rs 8,437 crore, up 22% year-on-year. EBITDA turned strongly positive at Rs 502 crore, a Rs 2,008 crore improvement from the loss of Rs 1,506 crore in FY2025. Net profit was Rs 552 crore, a swing of Rs 1,215 crore from the prior year’s loss. Cash and cash equivalents reached Rs 13,315 crore at year-end, the highest in the company’s listed history. The company also reported that its contribution margin, the profit after variable costs as a percentage of revenue, reached 55% in Q4 FY2026.
One97 Communications: Revenue and Net Profit/Loss (FY2022 to FY2026)
All figures in Rs crore. Source: One97 Communications quarterly and annual results filings on BSE/NSE.
| Metric | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Revenue from Operations (Rs crore) | 4,974 | 7,990 | 9,978 | 6,907 | 8,437 |
| EBITDA (Rs crore) | Not disclosed | Not disclosed | +559 (Adj.) | (1,506) | +502 |
| Net Profit / (Loss) (Rs crore) | (2,396) | (1,776) | (1,422) | (663) | +552 |
| Merchant GMV (Rs lakh crore, annual) | Not disclosed | Not disclosed | ~18.0 | ~15.0 (disrupted) | ~22.0 (est. FY2026) |
| Key Development | IPO listing at Rs 2,150; stock falls 27% on Day 1 | Revenue grows but losses persist; UPI competition intensifies | PPBL customer ban from March 2022; first adj. EBITDA profit | PPBL deposit ban (Jan 2024); Sharma exits PPBL board; revenue falls | First annual net profit; PPBL licence cancelled (Apr 2026) |
The Cost Restructuring That Made FY2026 Profitable
The profitability turnaround in FY2026 was driven substantially by cost discipline rather than revenue growth alone. Marketing expenditure was cut by 65% year-on-year in Q1 FY2026 and held at reduced levels through the year. Total indirect expenses excluding ESOP costs fell 19% year-on-year in Q1 FY2026. Employee headcount was reduced. The removal of the Paytm Payments Bank channel, while initially painful for revenue, also eliminated a large portion of compliance, operational, and technology costs that PPBL had required. The AI-led operating leverage in customer servicing and fraud detection also contributed to margin expansion.
Why FY2026 profitability matters structurally and not just symbolically: Paytm’s first annual profit matters not simply as a milestone but because it demonstrates the company can generate positive cash flow without relying on the payments bank infrastructure. All four quarters of FY2026 were profitable on a PAT basis. The company ended the year with Rs 13,315 crore in cash. This cash balance means the company does not need to raise fresh equity capital in the near term. It also reduces the risk premium investors had historically attached to the stock for fear of dilutive equity raises at depressed prices. The question for FY2027 is whether the profitability is sustainable as the company increases investment in marketing services and financial services growth.
Part VIThe Restructuring and the Road to Profitability
The Bank Migration: From PPBL to Partner Banks
Between February and March 2024, Paytm executed a complex and time-pressured migration of its UPI banking handle from Paytm Payments Bank to Yes Bank. This move was necessary because PPBL’s operational restrictions made it unable to continue serving as the settlement bank for Paytm’s UPI transactions. The migration was completed by the March 14, 2024 deadline. The @paytm UPI handle now processes transactions through Yes Bank rather than through PPBL. Users and merchants experienced some disruption during the migration but the core QR code and Soundbox infrastructure continued functioning.
Paytm also established banking partnerships with Axis Bank and other scheduled commercial banks for its financial services distribution business. These partnerships replaced the captive channel that PPBL had previously provided for distributing credit products to Paytm’s merchant and consumer base. The financial services revenue recovery in FY2026, with distribution revenue growing 52% year-on-year to Rs 2,593 crore, reflects the success of this rebuilding exercise.
Paytm Payments Services and Offline Merchant Migration
In August 2025, Paytm Payments Services Limited, a separate wholly-owned subsidiary of One97 Communications, received RBI approval to operate as a full online payment aggregator. This approval restored the ability to onboard new online merchants and process payments, a function that had been handled through PPBL before the bank’s restrictions. In October 2025, One97 transferred its offline merchant payments business generating approximately Rs 2,580 crore in annual revenue to PPSL, aligning with the RBI’s Master Directions on payment aggregators. This structural reorganisation placed the merchant payments business on a fully regulated and operationally independent footing separate from the defunct PPBL.
FY2026 Revenue Mix by Segment (Full Year)
Approximate segment contribution to FY2026 operating revenue of Rs 8,437 crore. Source: One97 Communications FY2026 Results (May 7, 2026).
Share Price Recovery and Ownership Shifts
From its all-time low of Rs 310 in February 2024, the One97 Communications share price recovered to Rs 1,105 by May 7, 2026, a recovery of approximately 256% in approximately 27 months. The 52-week peak reached Rs 1,175 in December 2025. The stock remains well below its IPO price of Rs 2,150, which means investors who bought at the IPO have not recovered their capital, but the directional turnaround is clear.
The ownership structure of the company also changed materially through this period. Foreign institutional investors, who held 72.11% of One97 at the time of listing in June 2021, reduced their stake to approximately 49.4% by March 2026, reflecting persistent selling as the stock declined. Domestic mutual funds increased their holding to 13.11% by March 2025. Antfin (Netherlands) Holding B.V., the Ant Group affiliate, held 9.88% as of April 2024 and announced a planned reduction. SoftBank fully exited by July 2024. Vijay Shekhar Sharma held 9.1% of One97 as of the most recent disclosures. Institutional ownership rising among domestic funds, combined with declining FII selling pressure, is considered a supportive structural factor for the stock.
What the Paytm Story Tells Us About Fintech Regulation in India
Paytm’s story is simultaneously a story about the explosive potential of digital payments in India and about the cost of operating a regulated financial institution without the compliance discipline that regulation demands. The company scaled faster than any fintech in Indian history, powered first by its own product quality, then by the structural shock of demonetisation, and then by the capital markets’ appetite for growth stories in 2021. The IPO was the apex of that valuation. What followed was a reckoning.
The RBI’s action against Paytm Payments Bank was not sudden. It was the end point of a process that began before the IPO, with the October 2021 fine for false information during the licence application. The March 2022 customer onboarding ban was a clear warning that compliance failures were structural rather than isolated. The company’s apparent inability to remediate those failures over the following two years, despite repeated regulatory engagement, ultimately left the RBI with no option but escalation. The January 2024 deposit freeze and the April 2026 licence cancellation are the sequels to choices made much earlier.
The FY2026 profitability turnaround is a genuine commercial achievement. The Paytm app works, merchants use it, UPI volumes are growing, and the financial services distribution business is recovering. The question the FY2026 result leaves open is whether the regulatory trust required to build new licensed financial infrastructure, including the payments aggregator licence, the potential for future banking partnerships, and eventual expansion into lending on its own books, can be rebuilt. That is not a financial question. It is a governance question that only time and conduct will answer.
Frequently Asked Questions
One97 Communications Limited is the listed parent company on BSE and NSE, trading under the ticker PAYTM. Paytm is the consumer-facing brand owned by One97. Paytm Payments Bank Limited (PPBL) was a separate legal entity in which Vijay Shekhar Sharma personally held 51% and One97 held 49%. PPBL held its own banking licence and operated savings accounts, wallets, FASTags, and debit cards. It was a subsidiary in economic terms but structurally separate because banking regulations required the individual promoter, not the corporate parent, to hold majority control.
When the RBI cancelled PPBL’s banking licence on April 24, 2026, it cancelled the subsidiary’s licence, not One97’s operating licences. The Paytm app, Paytm UPI, Paytm Soundbox, and Paytm Payment Gateway continue to operate through One97 and its other subsidiaries. One97 had already written off its investment in PPBL as of March 31, 2024, meaning the financial impact of the licence cancellation on the listed company’s balance sheet was limited to what had already been recognised.
The RBI’s April 2026 cancellation order cited persistent non-compliance with regulatory requirements as the primary reason, invoking Section 22(4) of the Banking Regulation Act, 1949. The specific compliance failures documented across the preceding four years included large-scale lapses in Know Your Customer procedures, with audit findings showing absence of KYC across lakhs of accounts, PAN validation failures in lakhs of accounts, and cases where a single PAN was linked to more than 100 customers. The bank also failed to properly monitor payout transactions, did not maintain arm’s-length distance from its promoter group, breached end-of-day balance ceilings in certain customer accounts, allowed data to flow to servers outside India in breach of localisation norms, and delayed reporting a cybersecurity incident.
The RBI found the bank’s affairs were being conducted in a manner detrimental to depositors, and that its management was prejudicial to public interest. The bank had received multiple chances to remediate from 2022 onward without taking sufficient corrective action. By 2026 the RBI concluded that continuing to allow PPBL to operate would serve no useful purpose.
Yes. The Paytm app and all UPI-based payments, Paytm QR, Paytm Soundbox, Paytm card machines, and Paytm Payment Gateway continue to operate without interruption. These services are operated by One97 Communications and Paytm Payments Services Limited, which are separate entities from PPBL and hold their own operating approvals. The UPI handle was migrated from PPBL to Yes Bank in March 2024, well before the licence cancellation. Paytm Payments Services received full online payment aggregator approval from the RBI in August 2025.
What was affected by PPBL’s closure is the savings bank accounts, wallets, FASTags, and debit cards that were issued by PPBL itself. Customers who held deposits with PPBL were directed to withdraw their funds during the wind-down period. Those balances are protected under the Deposit Insurance and Credit Guarantee Corporation scheme up to Rs 5 lakh per depositor.
The November 2021 IPO was priced at Rs 2,150 per share, valuing One97 Communications at Rs 1.39 lakh crore. On listing day, the stock fell 27.4% to Rs 1,560.80. The core criticisms were that the company was loss-making with no clear path to profitability, that it faced intense competition from PhonePe and Google Pay in UPI without the ability to charge MDR on most transactions, that its business model was unfocused across payments, commerce, and financial services without a dominant position in any one segment, and that the valuation was excessive relative to comparable listed fintech companies globally.
As of May 7, 2026, the stock traded at Rs 1,105, recovering approximately 256% from its all-time low of Rs 310 but still 48.6% below the IPO price. Investors who bought at Rs 2,150 on listing day have not recovered their capital after more than four and a half years. Investors who bought at the Rs 310 low in February 2024 have seen a 256% return. The stock’s trajectory reflects both the genuine business recovery in FY2026 and the lasting discount the market applies for the regulatory history and the ongoing memory of the PPBL episode.
A payments bank is a differentiated bank category created by the RBI under the Payments Bank guidelines of 2014, as a vehicle for deepening financial inclusion. Payments banks can accept deposits from individuals and small businesses up to a maximum of Rs 2 lakh per customer per account, offer savings and current accounts, issue debit and ATM cards, provide internet and mobile banking, facilitate domestic remittances and payments, and distribute third-party financial products like insurance and mutual funds. They cannot lend. They cannot issue credit cards. They cannot accept deposits from non-resident Indians or non-individual entities beyond a small business threshold.
The business model of a payments bank is built around transaction fee income, the float interest on deposits held (typically invested in government securities and qualifying assets), and distribution commissions on third-party products. In theory, a payments bank that reached scale could convert to a Small Finance Bank after five years of operation, unlocking the ability to lend. PPBL’s regulatory failures prevented it from following this conversion path and ultimately led to licence cancellation rather than graduation to a higher category of banking institution.
Disclaimer: This article is for informational and educational purposes only and is current as of June 10, 2026. All financial figures and regulatory facts are sourced from One97 Communications’ BSE and NSE stock exchange filings and investor relations disclosures, RBI press releases and orders under Section 35A and Section 22(4) of the Banking Regulation Act 1949, SEBI-mandated IPO filings including the Red Herring Prospectus dated October 2021, and the company’s official quarterly results presentations. This article does not constitute investment advice. Investing in equities involves significant risk, including the risk of loss of capital. The author and FiscalZenith are not responsible for any damages or losses.
