Paytm is in discussions with top Indian officials after experiencing a $2.5 billion market cap reduction.

• Late Tuesday, Nirmala Sitharaman met with Paytm CEO Vijay Shekhar Sharma, according to sources who confirmed an earlier report.
• According to one source, Sharma was instructed to address and resolve the issue with the RBI because it pertained to regulation.

This week, Paytm, a financial technology firm, has been in talks with the Indian government's upper levels in an attempt to reverse a market slump that erased approximately $2.5 billion from its value.

The Reserve Bank of India has instructed Paytm's banking unit to halt accepting new deposits in its accounts or digital wallet from March. Additionally, the federal anti-fraud agency is reportedly investigating Paytm for potential violations of foreign exchange laws.

According to two unnamed sources, Paytm CEO Vijay Shekhar Sharma met with Finance Minister Nirmala Sitharaman on Tuesday evening, as reported earlier by Reuters.

The RBI issue was essentially a regulatory matter, and Sharma was instructed to resolve it with the central bank, according to one of the sources.

The meeting's outcome was debated among the two sources, with one viewing it as productive and beneficial for Paytm in the long run, while the other believed it was unlikely to yield a positive result.

On Wednesday, a Reuters report indicated that Paytm had requested an extension from the RBI to halt the acceptance of new deposits beyond February 29.

The Indian Finance Ministry, the RBI, and Paytm did not respond to CNBC's requests for comment. A Paytm spokesperson denied any violation of foreign exchange laws, stating that they are "unfounded and factually incorrect," according to Reuters.

The company's shares reached a new low earlier in the week after a three-day sell-off following the RBI's order, which wiped out over $2.5 billion in value. However, the shares later rebounded.

This week, Mukesh Ambani, an Indian billionaire, denied media reports that he was purchasing Paytm's digital wallet business. Paytm also rejected these reports as "speculative, baseless, and factually incorrect."

On Thursday, the shares of the company listed on India's National Stock Exchange dropped by 5%.