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The Reserve Bank of India has cancelled the banking licence of Paytm Payments Bank, citing serious regulatory concerns over its operations and management practices. The central bank stated that the bank’s affairs were conducted in a manner detrimental to depositor interests and public interest. Following the decision, the entity has been barred from undertaking any banking activities. The RBI has also indicated that it will approach the high court to initiate winding-up proceedings. The bank has sufficient liquidity to meet its deposit liabilities, according to the regulator. Paytm Payments Bank had already been restricted from onboarding new customers since 2022, reflecting prolonged regulatory scrutiny.
The Reserve Bank of India (RBI) has cancelled the banking licence of Paytm Payments Bank, citing concerns over the manner in which the institution’s affairs were being conducted, according to a statement issued in the past week. Advertisement
The central bank stated that the bank’s operations were found to be detrimental to the interests of both the institution and its depositors. It further observed that the general character of the bank’s management was prejudicial to depositor interests as well as the broader public interest, leading to the decision to revoke the licence.
Following the cancellation, Paytm Payments Bank has been prohibited from carrying out any form of banking business. The regulator has also indicated that it will initiate legal proceedings by applying to the relevant high court to wind up the bank.
The RBI clarified that the bank currently holds sufficient liquidity to repay its entire deposit liability during the winding-up process. This assurance is aimed at safeguarding depositor interests and ensuring an orderly resolution.
The action follows a period of sustained regulatory oversight. Paytm Payments Bank had been restricted from onboarding new customers since March 2022, reflecting earlier supervisory concerns raised by the regulator.
The cancellation of the licence represents a significant enforcement step within the RBI’s regulatory framework, particularly in cases involving persistent non-compliance and governance-related issues. The central bank has continued to emphasise adherence to operational and managerial standards to maintain stability within the financial system.
The move also underlines the importance of regulatory compliance for entities operating within the banking and payments ecosystem, especially those handling depositor funds. The RBI’s decision to pursue winding-up proceedings indicates a structured approach towards resolving the institution while prioritising depositor protection.
Source - PTI
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