The agency must provide information to a third-party auditor that all data on the service will be stored solely in India.
Now the tech giant is getting ready to submit the report for approval to the Reserve Bank of India, a person familiar with the situation told Bloomberg news agency on Monday.
In the meantime, WhatsApp declined to comment on the report.
"WhatsApp looks forward to providing WhatsApp Payments based on the UPI [Unified Payments Interface] standard to all users in India and we continue to work with our local partners towards a shared goal of supporting a more Digital India", WhatsApp spokesman Carl Woog told the agency.
WhatsApp currently has some 300 million users in India. If the government finally greenlights the system, these numbers may boost.
According to the Economic Times newspaper, the Indian government also seeks to ensure that Internet companies host Indian user data on local servers, as it is concerned about the possibility of data theft and cyber surveillance.