After two years of regulatory turbulence, India’s fintech sector is finally stabilising. Three major developments this week show how fast the landscape is maturing. Paytm Payments Services has secured its long awaited payment aggregator licence. PayU India has swung back to profit after a year of compliance delays. And industry leaders at TechSparks have outlined what it really takes to build a lending business that can survive regulation, competition and constant change. These events are not random. They reflect a sector that is moving from high speed growth to disciplined, trust driven scale.

Breakdown:

Paytm gets its final approval
Paytm’s subsidiary, Paytm Payments Services Limited, has received the RBI certificate to operate as a payment aggregator. This approval lifts the ban on onboarding new merchants and marks the end of a long compliance journey that began in 2020.
The RBI first rejected the application in 2022, pushing Paytm to reapply under foreign investment rules. Since then, Paytm has restructured its operations, carved out PPSL as the central merchant business and moved all QR, soundbox and offline payments infrastructure into the entity. PPSL already contributes more than half of Paytm’s standalone revenue. The company is infusing Rs 2,250 crore by the end of this year to scale the unit.

PayU’s profitability comeback
PayU India has reported positive adjusted EBITDA after a long margin squeeze and regulatory uncertainty. The company earned $214 million in revenue with a $3 million profit, marking an important shift for India’s largest payments market player.
The turnaround was driven by higher margin software and risk services, tighter portfolio management and the deeper integration of Mindgate, now 70 percent owned by PayU. Mindgate processes about 10 billion UPI transactions monthly for major banks.
PayU’s lending unit also recovered, improving EBITDA margins from minus twenty percent to near breakeven by focusing on embedded lending partnerships and disciplined risk.

The resilience playbook for lending
At TechSparks 2025, leaders from PhonePe, Freo, Axio and Yubi unpacked how lending is evolving.
PhonePe’s move from payments to lending required a complete mindset shift. Payments are instant. Lending is about trust, documentation and repayment cycles.
Freo learned that a single product is never enough for Tier II and Tier III India, so it grew into a full financial ecosystem.
Axio stressed that lending cannot scale like payments. It needs slow, steady compounding and long customer relationships.
Yubi showed how resilience is built into infrastructure by designing for nine second disbursals, automatic regulatory pivots and real time transparency.
Across all four companies, one theme stood out. AI accelerates underwriting and collections, but judgment still belongs to humans.

Why this matters:

The past two years have been a stress test for India’s fintech ecosystem. Companies that grew fast without discipline have struggled, while those that invested in compliance, transparency and deep technology have emerged stronger.
Paytm’s licence approval ends a long shadow over merchant payments. PayU’s profitability shows the value of patient growth and regulatory alignment. And lending leaders are redefining what scale looks like in a regulated market. The message is clear. India is entering a phase where fintech success is measured by trust, not speed.

The Big Picture:

India now operates one of the world’s most complex and competitive fintech markets. UPI volumes are massive. Regulations are strict. Consumer expectations rise every quarter. In this environment the companies that survive are those that blend innovation with governance.
With payment aggregator licences tightening, data localisation enforced and digital lending rules now mature, the next wave of fintech winners will be those who build systems for compliance by design.
This shift makes India a global model for fintech regulation: open, innovative and tightly governed.

The Crunch:

Indian fintech is no longer the wild west. It is becoming a trust first industry where discipline, transparency and responsible scale matter more than breakneck growth. Paytm’s approval, PayU’s turnaround and India’s new lending playbook show the direction of the next decade. Grow fast, but grow clean.