Reserve Bank of India cancels Paytm Payments Bank Limited licence citing persistent regulatory non-compliance issues

The regulatory action follows a multi-year supervisory cycle where Paytm Payments Bank Limited was repeatedly flagged for deficiencies. On March 11, 2022, the Reserve Bank of India initially directed the bank to cease onboarding new customers. This was followed by more stringent business restrictions on January 31, 2024, and February 16, 2024, which prohibited further deposits, credit transactions, or top-ups in customer accounts and prepaid instruments. The final order issued on April 24, 2026, concludes this period of heightened scrutiny by permanently revoking the institution's ability to operate as a banking entity.

The central bank's decision is anchored in specific statutory violations of the Banking Regulation Act. Specifically, the regulator determined that the bank failed to comply with Section 22(3)(b) regarding the interests of depositors and Section 22(3)(c) regarding the character of its management. Furthermore, the bank was found in violation of Section 22(3)(g) for failing to meet the original conditions stipulated in its Payments Bank license. To facilitate the closure of operations, the Reserve Bank of India has confirmed its intent to file a winding-up application before the High Court, asserting that the bank possesses sufficient liquidity to meet its existing deposit liabilities.

Glossary

Section 5(b): The provision in the Banking Regulation Act that defines banking as the acceptance of deposits from the public for the purpose of lending or investment.

Winding Up: A legal process through which a company's assets are sold and its debts are settled before the entity is formally dissolved.