The clarification came after Google pulled down the Paytm app from its Play Store for allegedly violating its gambling policies.
"We continue to work with Google to restore our Android app. We assure all our users that their balances & linked accounts are 100 per cent safe. Our services are fully functional on all existing apps and you can continue enjoying Paytm like before," the company said.
The company recently launched the 'Paytm Cricket League' on its consumer app for users to engage in their passion of cricket and get cashback.
The game allows users to get player stickers after each transaction, collect them and receive Paytm Cashback.
"Today afternoon, we received communication from Google that they are suspending our app because they believe this to be a violation of their Play Store policies on gambling," the company informed.
The Paytm Android app was then unlisted from Google's Play Store and was temporarily unavailable to users for new downloads or updates.
"While it is clear that all activities on Paytm are completely lawful, we have temporarily removed the cashback component in an effort to meet the Play Store policy requirements," the company said.
Earlier, Suzanne Frey, Vice President, Product, Android Security and Privacy, said: "We don't allow online casinos or support any unregulated gambling apps that facilitate sports betting. This includes if an app leads consumers to an external website that allows them to participate in paid tournaments to win real money or cash prizes, it is a violation of our policies."
Google added: "We have these policies to protect users from potential harm. When an app violates these policies, we notify the developer of the violation and remove the app from Google Play until the developer brings the app into compliance."