Shares of One97 Communications, the parent company of fintech major Paytm, came under sharp selling pressure on Friday, January 23, sliding over 7% during intraday trade. The decline followed media reports suggesting that the Reserve Bank of India’s Payment Infrastructure Development Fund (PIDF) scheme has been discontinued after December 31, 2025, raising concerns about the impact on payment infrastructure providers.
The stock ended the session with losses of around 8%, extending its weekly decline to more than 15% amid a broader sell-off in domestic equities. Market participants reacted nervously to the possibility that the absence of subsidies could slow Paytm’s expansion in smaller towns and rural markets
What is the PIDF scheme?
The Payment Infrastructure Development Fund (PIDF) is a ₹1,000 crore initiative introduced by the Reserve Bank of India in 2021. The primary objective of the scheme was to accelerate the adoption of digital payments beyond major urban centres by subsidising the deployment of payment infrastructure.
Under the PIDF, financial support was provided for installing Point of Sale (PoS) terminals and Soundbox devices in Tier 3 to Tier 6 cities, the Northeastern states, and among beneficiaries of schemes such as PM SVANidhi and Vishwakarma. The subsidies covered a significant portion of the cost of these devices, reducing the financial burden on payment service providers.
Initially launched for a three-year period, the scheme was later extended until December 31, 2025. According to recent media reports, there has been no announcement so far regarding any further extension or replacement.
Why does PIDF matter for Paytm?
Paytm has been one of the biggest beneficiaries of the PIDF scheme. As a leading player in India’s digital payments ecosystem and the pioneer behind the popular Paytm Soundbox, the company leveraged the subsidies to rapidly expand its merchant network in non-metro regions.
The financial support allowed payment companies to recover much of the upfront capital expenditure related to manufacturing, deploying, and marketing payment devices. Prior to the scheme, these costs were typically recovered over a longer period through merchant fees and transaction volumes.
With the help of PIDF, Paytm and its peers were able to scale faster in Tier 3 and smaller markets, where affordability and return on investment are critical factors.
Why are Paytm shares falling?
Investor concerns stem from the possibility that, without PIDF support, the economics of expanding payment infrastructure could become less attractive. Some analysts believe the absence of subsidies may have a double-digit impact on operating profits, especially in the near term, as companies may need to absorb higher costs or slow down deployment.
The uncertainty has also come at a time when overall market sentiment remains cautious, amplifying the reaction in Paytm’s stock price.
Company’s clarification
Responding to queries, Paytm sought to reassure investors about its ability to manage the transition if the scheme is not extended. The company stated that it expects to offset the impact over time through higher revenues and more targeted sales efforts.
According to Paytm, the incentive amount received under the PIDF scheme was ₹128 crore for the six months ended September 30, 2025. The company also clarified that, as of now, there has been no official communication from the RBI or other authorities regarding an extension or replacement of the scheme.
Company’s clarification
Responding to queries, Paytm sought to reassure investors about its ability to manage the transition if the scheme is not extended. The company stated that it expects to offset the impact over time through higher revenues and more targeted sales efforts.
According to Paytm, the incentive amount received under the PIDF scheme was ₹128 crore for the six months ended September 30, 2025. The company also clarified that, as of now, there has been no official communication from the RBI or other authorities regarding an extension or replacement of the scheme.
What lies ahead for Paytm?
Going forward, investors will closely track any formal announcement from the RBI on the future of the PIDF. In the absence of subsidies, Paytm’s focus is likely to shift towards improving monetisation, optimising costs, and driving higher productivity from its existing merchant base.
While the near-term stock reaction highlights market anxiety, the long-term impact will depend on how effectively Paytm adapts its business model and whether digital payment adoption continues to deepen across India without policy support.
