Digital payments firm Paytm is expected to seek shareholders' approval to raise up to Rs 16,600 crore through an initial share sale, giving it a valuation of over Rs 1.78 lakh crore, according to a source.

The extraordinary general meeting of Paytm is scheduled for July 12 in which the company may seek approval to raise up to Rs 12,000 crore through issuance of fresh equity.

Another Rs 4,600 crore is expected to be raised from the sale of equity shares by existing and eligible shareholders, according to the source.

"The company may seek approval of the shareholders to raise around Rs 16,600 crore through IPO. Existing shareholders, former and present employees have also opted to sell their shares in the process.

"The valuation of the firm is likely to be in the range of Rs 1.78 lakh crore to Rs 2.2 lakh crore," the source said.

With this valuation range, the company is expected to be among top 10 listed financial services companies.

Paytm shareholders include Alibaba''s Ant Group (29.71 per cent), Softbank Vision Fund (19.63 per cent), SAIF Partners (18.56 per cent) and Vijay Shekhar Sharma (14.67 per cent). AGH Holding, T Rowe Price, Discovery Capital and Berkshire Hathaway hold less than 10 per cent stake each in the company.

The company is expected to file documents for the initial public offer (IPO) next week.