RBI cancels license of Paytm Payments Bank; shares in focus

In a order dated April 24, the RBI announced that it has cancelled the banking licence issued to Paytm Payments Bank. The action was taken under Section 22(4) of the Banking Regulation Act, 1949 (‘BR Act’) effective from close of business on April 24, 2026.

"Consequently, Paytm Payments Bank Limited is prohibited from conducting the business of ‘banking’ as defined in Section 5(b) or any additional business specified under Section 6 of the Banking Regulation Act, 1949 with immediate effect. RBI will make an application for winding up of the bank before the High Court," the banking regulator said.

The central bank noted that Paytm Payments Bank has enough liquidity to repay its entire deposit liability upon winding up of the bank.

Here's why RBI cancelled Paytm Payments Bank licence

• The affairs of the bank were conducted in a manner detrimental to the interest of the bank and its depositors. Thus, the bank is not complying with Section 22 (3) (b) of the BR Act, the RBI said.
• The general character of the management of the bank is prejudicial to the interest of depositors as also the public interest. Thus, the bank is not complying with provisions of Section 22 (3) (c) of the BR Act.
• No useful purpose or public interest would be served by allowing the bank to continue as envisaged in Section 22 (3) (e) of the BR Act.
• The bank failed to comply with the conditions stipulated in the Payments Bank license issued to it, thereby violating the provisions of Section 22 (3)(g) of the BR Act.

Earlier, RBI had directed Paytm Payments Bank to stop bringing in new customers with effect from March 11, 2022. On January 31, 2024 and February 16, 2024, certain business restrictions were also imposed on the payments bank which disallowed any further deposits, credits and top-ups in existing customer accounts, prepaid instruments, wallets, etc.