Paytm, once a heavyweight in the space, has seen its market share drop to 7.2% from 11% at the end of last year amid regulatory challenges.
The NPCI increasing market share limits is likely to be a controversial move, as several UPI providers have been hoping regulators would step in to curb the dominance of PhonePe and Google Pay, according to several industry executives.
The NPCI, which has so far declined to comment on the market share issue, did not respond to a request for comment on Tuesday.