Earlier this year, the Reserve Bank of India (RBI) directed Paytm to halt several of its financial services due to repeated regulatory violations. Following the ban, Paytm requested approval from the National Payments Corporation of India (NPCI) in August.

In March, the NPCI granted Paytm approval to engage in UPI transactions as a Third-Party Application Provider (TPAP), allowing the company to process UPI transactions through four banks: SBI, Axis Bank, HDFC Bank, and YES Bank.

Shares of Indian fintech firm Paytm jumped nearly 6 per cent on Wednesday after the country's payments regulator allowed the company to sign new users for digital payments via UPI, which analysts said removed a key regulatory overhang.

Paytm received NPCI approval for adding new UPI users which paves the way for re-accelerating its dwindling user base and further signaling an easing of regulatory stance, analysts said.

The surge in Paytm share price came after the company announced that National Payments Corporation of India (NPCI) has granted approval to the company to onboard new UPI users

The country's financial regulator wound down Paytm's banking unit in January due to persistent compliance issues, which pulled down its monthly transacting users (MTU) to 70 million in the September-quarter from 100 million in the quarter before the clampdown.

India's Paytm said late on Tuesday it received approval from the country's payments authority to onboard new unified payment interface (UPI) users, providing some relief for the financial services firm after a central bank-ordered ban on its banking unit.

The shares of One 97 Communication, which is the holding company of digital payment service provider Paytm, shoot up more than 11 per cent on the BSE (Bombay Stock Exchange). The shares surged after the company disclosed that the NPCI has allowed to onboard new UPI users.