RBI cancels Paytm Payments Bank's license, cites 'detrimental' operations
What's the story
The Reserve Bank of India (RBI) has revoked the banking license of Paytm Payments Bank Limited. The decision was taken earlier today, and is effective from close of business on April 24, 2026. The RBI cited that the bank's operations were "detrimental to the interest of the bank and its depositors." It also failed to comply with conditions set out in the payments bank license issued to it.
Legal action
RBI to file application for winding up of bank
The RBI has also announced plans to file an application with the High Court for the winding up of Paytm Payments Bank. The central bank's decision means that the bank is prohibited from carrying out any 'banking' activities as defined under Section 5(b) or any other activity mentioned in Section 6 of the Banking Regulation Act, 1949.
Reasons
Reasons for cancellation of banking license
The RBI has cited several reasons for canceling the banking license of Paytm Payments Bank. These include conducting its affairs in a manner detrimental to the interest of both the bank and its depositors, and having a management character prejudicial to public interest. The bank also failed to comply with conditions stipulated in its payments bank license, violating provisions of Section 22 (3)(g) of the Banking Regulation Act.
Operational restrictions
Bank was earlier barred from accepting new deposits
In January 2024, the RBI had barred Paytm Payments Bank from accepting new deposits over non-compliance with rules. These included customer due diligence, fund utilization, and tech infrastructure. Earlier in March 2022, the bank was also barred from onboarding new customers. Although it continues to operate, its operations are largely restricted to processing withdrawals of existing deposits and facilitating loan referrals through banking correspondents.