Mumbai, Aug. 4 -- In 2017, the Indian government made FASTag toll payment mandatory for all new vehicles. Paytm, already eyeing dominance in digital finance, quickly seized the moment. The fintech company's banking arm, Paytm Payments Bank Ltd (PPBL), jumped in and by 2020 had become the country's top FASTag issuer, with three million tags.

But behind the scenes, things were less straightforward. "Two teams, issuer and acquirer, ran the whole FASTag tech and product back-end," said a person with direct knowledge of the matter, requesting anonymity. "Oddly, the teams weren't a part of PPBL. They were under One97 Communications, the parent company."

This corporate structure of Paytm Payments Bank, which depended heavily on infrastructure ...