RBI has cancelled Paytm Payments Bank’s licence effective April 24, 2026, citing serious regulatory violations, non-compliance, and operations detrimental to depositors’ interests. The bank is now prohibited from any banking activities.
The Reserve Bank of India (RBI) has cancelled the banking licence of Paytm Payments Bank Limited with effect from the close of business on April 24, 2026, citing serious regulatory violations and concerns over the manner in which the bank’s affairs were conducted.
Reasons for Licence Cancellation
In its order on Friday, the RBI said the bank’s operations were found to be detrimental to the interests of depositors and the institution itself, and that the general character of its management was prejudicial to public interest. The regulator also noted that the bank failed to comply with conditions stipulated in its payments bank licence. RBI said, “The affairs of the bank were conducted in a manner detrimental to the interest of the bank and its depositors”. As a result, the licence issued under Section 22(4) of the Banking Regulation Act, 1949 has been withdrawn.
Detailing the reasons, the RBI stated that the bank was not in compliance with provisions as its affairs were conducted in a manner detrimental to the interests of the bank and its depositors. Further, the regulator observed that allowing the bank to continue operations would not serve any useful purpose or public interest. It also flagged non-compliance with licence conditions.
Immediate Consequences and Winding Up
As per RBI direction, Paytm Payments Bank Limited is now prohibited from undertaking any banking activities or any additional business with immediate effect. The RBI said it will initiate the process for winding up the bank by filing an application before the High Court.
It, however, clarified that the bank has sufficient liquidity to repay its entire deposit liabilities upon winding up. RBI said “Paytm Payments Bank Limited has enough liquidity to repay its entire deposit liability upon winding up of the bank”.
History of Regulatory Action
The action follows earlier regulatory interventions. The bank had been directed to stop onboarding new customers from March 11, 2022. Later, in January and February 2024, additional restrictions were imposed, including a ban on accepting fresh deposits, credits, or top-ups in existing accounts, wallets, and prepaid instruments. (ANI)
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