Paytm CEO Expects Digital Bank Recovery Following Regulatory Suspension

The founder of Paytm expects the company’s banking unit to spring back to life.

Last year, the Reserve Bank of India (RBI) all but shuttered Paytm Payments Bank following warnings about data flows between it and its parent company.

Chief Executive Officer Vijay Shekhar Sharma told Bloomberg News Tuesday (Jan. 21) that he hopes the situation is a temporary one.

“As far as the bank is concerned, which is a separate entity, now we are pretty much at an arm’s length so it should get sorted out soon,” said Sharma, interviewed at the World Economic Forum 2025 in Davos, Switzerland. “We’ve learnt our lessons and we’ve dramatically changed our approach towards the business.”

The RBI — India’s banking regulator and central bank — announced in late last January that it was suspending business at Paytm Payments Bank after an audit found “persistent noncompliances and continued material supervisory concerns.”

Later reports said the regulator’s move followed two years of warnings about the questionable relationship between Paytm and its banking business arm, with the audit showing money and data traffic flow between Paytm Payments Bank and the larger company that sparked accounting and supervisory problems.

The Bloomberg report pointed out that the RBI’s move “severely” hurt Paytm, which relied on the bank for the bulk of its digital payments business. With the bank shuttered, Sharma was left scrambling to find partnerships with other FinTechs. The company also sold off its movie and events ticketing business to Zomato to help reduce expenses and is waiting for permission from India’s central bank to become a payments aggregator.

Now, Sharma is hoping to bring Paytm back to operational profitability, telling Bloomberg; “We’re on track for that. We probably showed the numbers also.”

As Bloomberg noted, Paytm had the payments market more or less to itself when it first launched, but now competes with heavyweights such as Google and the Walmart-backed PhonePe in the digital payments space. It lost ground to those companies last year after the bank was shut down.

Digital payments have long been popular in India, which launched the instant Unified Payments Interface (UPI) in 2016, further accelerating the country’s embrace of the payment method.

Research by PYMNTS Intelligence has found that digital wallets are the preferred payment method for 55% of retail purchases in India, with 80% of digital wallet users choosing UPI. Bank transfers are the second-most used underlying payment method, making up 12% of digital wallet payments.