Licence Revoked Under Banking Regulation Act
In its official statement, the RBI confirmed that the licence was withdrawn under Section 22(4) of the Banking Regulation Act, 1949. The decision took effect at the close of business on April 24, 2026. With this move, Paytm Payments Bank is no longer permitted to carry out any form of banking activity. This includes all operations defined under Section 5(b) of the Act, as well as any additional services outlined under Section 6.
Immediate Halt to Banking Operations
Following the cancellation, the bank is prohibited from conducting any banking or related business activities with immediate effect. This marks a complete cessation of its role as a licensed banking entity in India.
Winding-Up Process to Begin
The RBI has stated that it will approach the High Court to initiate the formal winding-up process of the bank. Reassuring depositors, the central bank noted that Paytm Payments Bank currently has sufficient liquidity to repay all its deposit liabilities once the process begins.
Key Reasons Behind the Decision
The RBI outlined several critical factors that led to the revocation of the licence:
Adverse Operational Conduct: The bank’s operations were conducted in a manner detrimental to its own interests and those of its depositors, violating Section 22(3)(b) of the Act.
Management Concerns: The overall conduct of the bank’s management was found to be against public and depositor interests, breaching Section 22(3)(c).
Lack of Public Interest: The RBI concluded that allowing the bank to continue operations would not serve any useful purpose or public interest, as per Section 22(3)(e).
Non-Compliance with Licence Conditions: The bank failed to meet the regulatory conditions tied to its Payments Bank licence, violating Section 22(3)(g).
Background: Earlier Restrictions
This action follows a series of regulatory measures imposed on the bank over the past few years. In March 2022, the RBI had barred Paytm Payments Bank from onboarding new customers.
Further restrictions were introduced in early 2024, when the central bank prohibited new deposits, credits, and top-ups in customer accounts, wallets, and prepaid instruments.
