The Reserve Bank of India (RBI) has cancelled the banking licence of Paytm Payments Bank Limited, bringing an end to its operations as a bank effective from April 24, 2026. The decision was announced on Friday, citing multiple violations of the Banking Regulation Act, 1949.
RBI Order Details
In its order, the RBI stated that the licence was revoked under Section 22(4) of the Banking Regulation Act, 1949, and the bank must cease all banking activities from the close of business on April 24, 2026. Consequently, Paytm Payments Bank is prohibited from conducting any banking business as defined under Section 5(b) or any additional business under Section 6 of the Act with immediate effect.
The central bank will approach the High Court to initiate the winding-up process of the bank. The RBI assured that the bank currently has sufficient liquidity to repay all its depositors once the winding-up begins. The statement noted: "Paytm Payments Bank Limited has enough liquidity to repay its entire deposit liability upon winding up of the bank."
Reasons for Licence Revocation
The RBI outlined several reasons for the revocation:
- Non-compliance with Section 22(3)(b): The bank's operations were conducted in a manner detrimental to its own interests and those of its depositors.
- Violation of Section 22(3)(g): The bank failed to meet the conditions specified under its Payments Bank licence.
- Public interest: Allowing the bank to continue operations would not serve any useful purpose or public interest, as per Section 22(3)(e) of the Act.
Background of Restrictions
This decisive action follows earlier regulatory measures against Paytm Payments Bank. The RBI had previously ordered the bank to stop adding new customers from March 11, 2022. Subsequently, on January 31, 2024, and February 16, 2024, the central bank barred any new deposits, credits, or top-ups in customer accounts, prepaid instruments, and wallets.
The cancellation of the licence marks a significant escalation in regulatory action against the bank, which has faced ongoing scrutiny over its compliance with banking norms.
