RBI revokes Paytm Payments Bank licence, moves to wind up operations

India’s central bank has cancelled Paytm Payments Bank’s licence citing regulatory breaches and risks to depositors, halting all banking activities and initiating winding-up proceedings while assuring customers of full repayment of deposits.

The Reserve Bank of India has cancelled the banking licence of Paytm Payments Bank Limited, bringing its operations to an immediate halt. The decision, effective from the close of business on April 24, 2026, bars the entity from carrying out any form of banking activity under existing regulations.

In its official order, the central bank stated that the licence was withdrawn under provisions of the Banking Regulation Act, 1949. As a result, the bank is no longer permitted to accept deposits, offer financial services, or conduct any business classified under banking operations.

Regulatory violations and governance concerns

The regulator cited multiple grounds for its action, pointing to serious lapses in compliance and governance. According to the central bank, the bank’s functioning was detrimental not only to its own stability but also to the interests of depositors. Authorities found that the institution failed to meet key regulatory conditions required to operate as a payments bank.

Further, the management’s conduct was deemed inconsistent with public interest, raising concerns over the bank’s ability to safeguard customer funds. The regulator also noted that allowing the bank to continue operations would not serve any meaningful purpose, given the extent of the identified issues.

The action follows a series of earlier restrictions imposed on the bank over the past few years. In 2022, the bank was directed to stop onboarding new customers. Subsequent directives in 2024 barred it from accepting fresh deposits, credits, or wallet top-ups, significantly limiting its operations.

Winding-up process and depositor safeguards

Following the licence cancellation, the central bank will now approach the High Court to initiate formal winding-up proceedings for the bank. This legal process will determine the closure and settlement of the institution’s liabilities.

Despite the shutdown, the regulator has assured that depositors’ interests will remain protected. It stated that the bank currently holds sufficient liquidity to repay all outstanding deposits once the winding-up process begins. This assurance is expected to ease concerns among customers regarding the safety of their funds.

The development marks one of the most significant regulatory actions in India’s payments banking space, underscoring the central bank’s strict stance on compliance and depositor protection.