RBI Cancels Licence of Paytm Payments Bank
RBI Cancels Licence of Paytm Payments Bank: Key Reasons & Implications
The Reserve Bank of India (RBI), through its order dated April 24, 2026, has cancelled the banking licence of Paytm Payments Bank Limited under Section 22(4) of the Banking Regulation Act, 1949, with effect from the close of business on April 24, 2026.
As a result, the bank is no longer permitted to carry on the business of “banking” as defined under Section 5(b), or any other activity specified under Section 6 of the Act, with immediate effect. The RBI will also initiate proceedings for winding up the bank by filing an application before the appropriate High Court.
The bank currently holds sufficient liquidity to meet and fully repay its deposit liabilities during the winding-up process.
The decision to cancel the licence was based on the following grounds:
- The bank’s affairs were conducted in a manner detrimental to its own interests as well as those of its depositors, indicating non-compliance with Section 22(3)(b) of the Act.
- The overall character of the bank’s management was found to be prejudicial to depositors and public interest, violating Section 22(3)(c).
- Allowing the bank to continue operations would not serve any useful purpose or public interest, as per Section 22(3)(e).
- The bank failed to adhere to conditions prescribed under its payments bank licence, thereby breaching Section 22(3)(g).
It is pertinent to note that regulatory concerns had been flagged earlier. The bank was directed to cease onboarding new customers with effect from March 11, 2022. Subsequently, on January 31, 2024, and February 16, 2024, additional restrictions were imposed, including a prohibition on accepting further deposits, credits, or top-ups in customer accounts, prepaid instruments, and wallets.
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