Mumbai: After a wait of nearly 15 months, the Reserve Bank of India (RBI) has granted initial approval to PayU, a fintech firm backed by Prosus, to operate as a Payment Aggregator (PA) and resume the process of onboarding new merchants.

This decision comes after the banking regulator returned PayU's application in January 2023, citing its intricate corporate structure, and instructed the firm to reapply.

Consequently, PayU had to halt onboarding new merchants for its online payment aggregation business. Similar restrictions were imposed on Paytm, Razorpay, and Cashfree.

While Razorpay and Cashfree received approval in December last year, Paytm is still awaiting clearance.

"This validation by RBI fills us with joy as it paves the way for us to welcome new businesses onto our platform. This is also a testament to our relentless focus on compliance and corporate governance," said Anirban Mukherjee, CEO, PayU.

Over the past year, the fintech firm preparing for its IPO has collaborated closely with the regulator on reapplying for the license.

Recently, Cred, a fintech firm backed by Kunal Shah, also obtained in-principle approval to operate as a Payment Aggregator, as per a source familiar with the matter.

As a Payment Aggregator, the company can oversee and facilitate the transfer of customers' funds to merchants. It's important to note that this in-principle approval is not the final license; the official license is expected to be granted in approximately six to twelve months.

However, those with in-principle approval can continue their operations unless specifically instructed otherwise by the RBI.