RBI Cancels Paytm Payments Bank Licence Over Conduct Detrimental to Depositors

The Reserve Bank of India (RBI) has cancelled the banking licence of Paytm Payments Bank Limited via an order dated April 24, 2026. This action was taken under Section 22(4) of the Banking Regulation Act, 1949, and is effective from the close of business on April 24, 2026. Consequently, Paytm Payments Bank Limited is immediately prohibited from conducting any 'banking' business as defined in Section 5(b) or any other business specified under Section 6 of the Banking Regulation Act, 1949.

The RBI's decision stems from findings that the bank's affairs were conducted in a manner detrimental to the interests of the bank and its depositors, violating Section 22(3)(b) of the BR Act. Additionally, the general character of the bank's management was deemed prejudicial to depositors and the public interest, contravening Section 22(3)(c) of the BR Act. The RBI also determined that allowing the bank to continue would serve no useful purpose or public interest, as per Section 22(3)(e), and that the bank failed to comply with its Payments Bank license conditions, violating Section 22(3)(g).

This cancellation follows previous regulatory actions. Paytm Payments Bank Limited was directed to stop onboarding new customers on March 11, 2022. Further business restrictions were imposed on January 31, 2024, and February 16, 2024, disallowing new deposits, credits, or top-ups in existing customer accounts, prepaid instruments, and wallets.

The RBI intends to apply to the High Court for the winding up of Paytm Payments Bank Limited. The bank has stated it possesses sufficient liquidity to repay its entire deposit liability upon liquidation.