RBI Revokes Banking Licence of Paytm Payments Bank

RBI Cancels Banking Licence of Paytm Payments Bank

The Reserve Bank of India (RBI) has taken a drastic measure by cancelling the banking licence issued to Paytm Payments Bank, effective from close of business on April 24, 2026. The decision was made in accordance with Section 22(4) of the Banking Regulation Act, 1949 (BR Act).

According to the RBI, the banking licence was cancelled due to the bank's failure to comply with norms stipulated in the payments bank licence issued to it. The RBI stated that the bank's affairs were conducted in a manner detrimental to the interest of the bank and its depositors. Furthermore, the general character of the management of the bank was found to be prejudicial to the interest of depositors as also the public interest.

The RBI will make an application for winding up of the bank before the High Court. This decision comes after a series of restrictions imposed on the bank by the RBI. In January 2024, the RBI had ordered the bank to stop accepting fresh deposits due to non-compliance with rules, including on customer due diligence, use of funds, and technology infrastructure.

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Paytm Payments Bank had obtained a limited banking licence in August 2015, which allowed it to take small deposits but not give out loans. The bank's activities are severely limited to processing withdrawals of existing deposits and facilitating loan referrals through banking correspondents, according to its website. It cannot take fresh deposits.

Paytm shares closed 0.5% lower at Rs 1,153 apiece on April 24, the same day the RBI made the announcement. Paytm Payments Bank was backed by One 97 Communications, which had once counted China's Ant Group and Japan's SoftBank as investors.