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Shares of Paytm climbed as much as 10% on Wednesday after media reported that the embattled digital payments firm's CEO had met India's finance minister and central bank to try to resolve a regulatory crackdown on its payments bank business.

Paytm shares climbed as high as 496.25 rupees but remained far below their level before Jan. 31, when the Reserve Bank of India (RBI) ordered Paytm Payments Bank to stop accepting new deposits in its accounts and its popular digital wallets from March, citing supervisory concerns and non-compliance with rules.

The share price rise added to gains on Tuesday when reports of talks with government and central bank officials emerged.

"Discussions are on about addressing the regulatory concerns and compliance issues with both the RBI and the ministry," a source with direct knowledge of the talks told Reuters on Tuesday.

The company has sought an extension of the Feb. 29 deadline from the RBI and has also been seeking clarity from the central bank regarding the transfer of its licence for the wallets business and digital highway toll payment service Fastag, the source said.

"Investors are getting some confidence from the fact that the CEO has met the regulators," said Kranthi Bathini, equity strategist at WealthMills Securities.

"While the main issues of compliance still remain and it is not clear how the company will handle the operational crisis going ahead, the stock has corrected a lot and that may be creating some buying opportunity," Bathini added.

Shares of the company are still trading about 24% below the median price target of 650 rupees of 14 analysts, according to LSEG data.

"There is a realisation that Paytm's payment operations are quite sizable and that customers and merchants could be inconvenienced by a sudden shutdown of payments bank operations and hence efforts would be made to ensure a smooth transition out of its dependency on PPBL," said Pranav Gundlapalle, senior analyst at Bernstein, referring to Paytm Payments Bank Ltd.