Paytm Payments Bank begins winding up after RBI revokes licence
What's the story
Paytm Payments Bank Limited (PPBL) has started the voluntary winding-up process after the Reserve Bank of India (RBI) revoked its banking license. The decision was approved by the board and shareholders at a meeting on April 25. Paytm said that the resolution for voluntary winding-up was passed a day after RBI's decision came into effect on April 24.
Regulatory concerns
RBI revoked PPBL's banking license
The RBI revoked PPBL's license under Section 22(4) of the Banking Regulation Act, 1949, citing serious regulatory lapses and concerns about the bank's management. The central bank said that the institution's functioning was detrimental to depositors and its overall stability. It also noted that the general character of its management was not in line with public interest.
Operational restrictions
Bank no longer permitted to undertake banking activities
With the cancelation in force, PPBL is no longer permitted to undertake banking or related business activities. The RBI said it would apply for the winding-up of the bank before the high court. While it remains operational, its activities are severely limited to processing withdrawals of existing deposits and facilitating loan referrals through banking correspondents. It cannot take fresh deposits.
Company statement
Paytm clarifies on exposure to PPBL
Paytm has clarified that it does not have any exposure or material business link with PPBL. The company said all its services continue to operate without interruption. It also reiterated that after the completion of the winding-up process, PPBL will cease to be an associate of One 97 Communications Ltd (OCL).