The funds will be used to expand the merchant offerings across India to equip them with technology and various other services.
Digital payments major Paytm is looking at raising another round of funding of $1 billion, and is in discussion with multiple investors, including former UK Prime Minister David Cameron, according to sources.
Sources close to the development said the discussions are on and might take a few weeks to get finalised.
They added that the funds will be used to expand the merchant offerings across India to equip them with technology and various other services.
Paytm declined to comment, while a response from Cameron could not be elicited immediately.
Paytm had earlier this week announced a $1 billion (around Rs 7,173 crore) fund raise led by US-based asset management firm T Rowe Price.
Existing investors Alibaba, Softbank and Discovery Capital had also participated in the funding round.
Interestingly, Paytm founder and chief executive officer Vijay Shekhar Sharma tweeted a photograph of him and Cameron on Thursday.
"With so inspiring and savvy @David_Cameron in Singapore! Thanks Sir for your lesson on giving back to society and creating social impact with business," he added.
On Monday, Paytm had said it is planning to invest around $1.4 billion over the next three years to expand financial services.
Reports earlier this year had stated that Paytm, which is facing mounting losses, was looking at raising up to $2 billion in funding.
The company has said it will look at a public listing only after 2021.
Paytm had raised $300 million from Warren Buffett's Berkshire Hathaway in September last year.
One97 Communications Ltd (OCL), the parent company of Paytm, had posted a loss of Rs 3,959.6 crore in 2018-19 as against Rs 1,490 crore a year ago, and its standalone revenue rose marginally to Rs 3,319 crore from Rs 3,229 crore in 2017-18, as per reports.
Photograph: Shailesh Andrade/Reuters
