Paytm’s cap table turns Indian: What changes now?

Synopsis

Domestic investors now own 50.3% of the digital payment firm's equity, marking a transition to majority Indian ownership and control. This shift is driven by increased participation from domestic institutional investors (DIIs).

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Paytm, operated by One97 Communications, has officially become an Indian owned and controlled company (IOCC), according to a regulatory filing with stock exchanges on Tuesday.

The development follows changes in its shareholding pattern for the quarter ending March 2026, marking a pivotal moment in India’s fintech space.

Paytm’s domestic shareholding rises

The company disclosed that domestic investors now hold 50.3% of its equity, establishing majority Indian ownership and control.

The shift is underpinned by rising participation from domestic institutions:

Institutional ownership climbed to 23.1% in Q4 FY26 from 14% a year earlier

Indian mutual funds now hold a 16.6% stake across 41 funds, such as Motilal Oswal Mutual Fund, Mirae Asset, and Bandhan Mutual Fund

Insurance companies, including Tata AIA Life Insurance and SBI Life Insurance, have increased their shareholding to 5.1%

What led to IOCC status?

For years, Paytm’s association with foreign investors like China’s Ant Group placed it under heightened regulatory scrutiny, particularly in sensitive areas like payments, data governance, and financial infrastructure.

Chinese financial services major Ant Financial ended its decade-long ties with Paytm. It sold its remaining 5.8% stake in One97 Communications, the digital payment firm’s parent, for Rs 3,800 crore in August last year. The move comes after SoftBank Group fully exited in 2024, closing a chapter that once defined Paytm’s rise.

Also Read: A decade after Jack Ma’s bet, Paytm’s China ties end

Berkshire Hathaway, led by Warren Buffett, had sold shares of One97 Communications worth Rs 1,370 crore in a bulk deal on NSE in 2023. With the sale, Berkshire Hathaway offloaded its entire holding in Paytm.

According to a report by PRIME Database, Paytm shares worth Rs 7,441 crore were offloaded by foreign investors in the December quarter of FY2024, making it the top sell by foreign institutional investors (FIIs). Their holding value against One97 Communications dropped to Rs 25,706 crore from Rs 33,148 crore at the end of the previous quarter.

Why it matters

The IOCC status comes in the backdrop of regulatory action on Paytm Payments Bank, where compliance lapses triggered curbs. The Reserve Bank of India (RBI) shut down its payments bank in January 2024.

Per stock market filings, the company saw its monthly active users drop to around seven crore in December 2024 from 10.8 crore in January that year. As of December 2025, this had inched up to around 7.6 crore.

Becoming Indian-controlled could unlock smoother approvals from the RBI and other regulators, especially as Paytm expands into lending, insurance, and wealth products.

It also strengthens its positioning within the government’s digital sovereignty and Atmanirbhar Bharat framework, where control over financial data and infrastructure is critical.

Paytm’s India biz

Paytm recently brought all its payment businesses under Paytm Payments Services Limited (PPSL), a subsidiary of One97 Communications, with Vijay Shekhar Sharma as the CEO. Both the offline and online payment segments will now be housed under PPSL.

Paytm has been deepening its presence in the fintech space to retain dominance in the payments market.

Paytm Payment Services, a wholly owned subsidiary of One97 Communications, secured the online payment aggregator (PA) licence from the RBI in November last year, following an in-principle approval received in August the same year.

In August 2024, the company secured the required clearances from the Union finance ministry, paving the way for the PA licence. Until it received the in-principle nod, Paytm could not onboard new merchants and was allowed to service only existing ones.

The company is also focussing on its wealth management subsidiary, Paytm Money. Sharma’s aim is to make Paytm one of the top five brokers in three years, thereby competing directly with the likes of Angel One, Groww, and Zerodha, ET had reported earlier.

Bottom line

In Q3 FY26, Paytm posted a net profit of Rs 225 crore, reversing a loss of Rs 208 crore in the same period last year. The Noida-based payments company also saw its operating revenue rise 20% to Rs 2,194 crore from Rs 1,828 crore a year earlier.

Meanwhile, a recent Bernstein report noted that Paytm is ahead of rival PhonePe in monetisation, though both firms have comparable business margins. Paytm, with greater control over costs, has achieved profitability, whereas PhonePe remains in the red.

Paytm's India pivot reflects a broader trend in how domestic capital is stepping up in India’s fintech ecosystem. While reduced reliance on foreign strategic investors may raise questions around long-term capital depth, it simultaneously lowers geopolitical risks.

Shares of One97 Communications have staged a sharp rebound over the past month, climbing over 12% to around Rs 1,137 levels.

Also Read: Paytm is looking at AI as a future revenue line item: CEO Vijay Shekhar Sharma

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