RBI revokes banking licence of Paytm Payments Bank
The licence of Paytm Payments Bank Limited was cancelled as the affairs of the bank were conducted in a manner detrimental to the interests of the bank and its depositors
The Reserve Bank of India (RBI) on Friday revoked the banking licence of Paytm Payments Bank Limited, bringing a sudden end to one of India’s most well-known payments bank experiments.
In a notification dated April 24, the RBI said it has cancelled the banking licence issued to Paytm Payments Bank Limited under Section 22(4) of the Banking Regulation Act, 1949 (‘BR Act’) effective from close of business on April 24, 2026.
Consequently, Paytm Payments Bank Limited is prohibited from conducting the business of ‘banking’ as defined in Section 5(b) or any additional business specified under Section 6 of the Banking Regulation Act, 1949 with immediate effect. The RBI will make an application for winding up of the bank before the high court.
The notification stated that the Paytm Payments Bank Limited has enough liquidity to repay its entire deposit liability upon winding up of the bank.
The RBI cancelled the licence of Paytm Payments Bank Limited as the affairs of the bank were conducted in a manner detrimental to the interests of the bank and its depositors.
Also, the general character of the management of the bank is prejudicial to the interest of depositors as also the public interest.
The notification noted that no useful purpose or public interest would be served by allowing the bank to continue as envisaged. Moreover, the bank failed to comply with the conditions stipulated in the Payments Bank licence issued to it, thereby violating the provisions of Section 22 (3)(g) of the BR Act.
Previously, the bank was directed to stop onboarding of new customers with effect from March 11, 2022. Thereafter, on January 31, 2024, and February 16, 2024, certain business restrictions were also imposed on the bank which, inter alia, disallowed any further deposits/credits/top-ups in existing customer accounts, prepaid instruments, wallets, etc, as per the notification.
