The Reserve Bank of India (RBI) has cancelled the banking licence of Paytm Payments Bank, effective the close of business on April 24, 2026, bringing an abrupt end to its operations as a banking entity. The move, issued under Section 22(4) of the Banking Regulation Act, 1949, prohibits the bank from carrying out any form of banking business with immediate effect.
The central bank also confirmed it will initiate proceedings to wind up the bank by filing an application before the High Court. Despite the shutdown, RBI noted that Paytm Payments Bank has sufficient liquidity to repay all its depositors in full during the winding-up process.
In its order, the RBI outlined multiple grounds for revoking the licence, stating that the bank’s affairs were conducted in a manner detrimental to the interests of both the institution and its depositors, indicating non-compliance with Section 22(3)(b) of the Act. It further flagged that the management’s overall conduct was prejudicial to depositors and public interest, violating Section 22(3)(c).
Additionally, the regulator stated that allowing the bank to continue operations would serve no useful public purpose, as per Section 22(3)(e), and pointed to the bank’s failure to comply with conditions tied to its payments bank licence, breaching Section 22(3)(g).
The cancellation marks the culmination of a series of regulatory actions against the bank. RBI had earlier barred Paytm Payments Bank from onboarding new customers starting March 11, 2022. Subsequently, on January 31 and February 16, 2024, the central bank imposed further restrictions, including a prohibition on fresh deposits, credits, and top-ups across customer accounts, wallets, and prepaid instruments.
With the latest directive, Paytm Payments Bank ceases to function as a banking entity, as RBI proceeds with formal winding-up steps.
