Mumbai: The Reserve Bank of India (RBI) has canceled the banking license of Paytm Payments Bank. The cancellation is effective from the close of business on April 24, 2026. Consequently, Paytm Payments Bank has been prohibited by the central bank from conducting the business of ‘banking,’ marking the final regulatory action against the bank after a series of restrictions that were imposed since 2022.
The central bank said that Paytm Payments Bank has enough liquidity to repay its entire deposit liability upon the winding up of the bank. The banking regulator would be making an application for the winding up of the bank before the high court.
In case you are using services linked to Paytm Payments Bank, experts suggest that you wait for official communication from the RBI regarding withdrawal timelines, refunds, account closure processes, and migration of linked services.
Giving reasons for canceling the license of Paytm Payments Bank, the central bank said that its affairs were conducted in a manner detrimental to the interest of the bank and its depositors, the general character of the management of the bank is prejudicial to the interest of depositors as also the public interest, and that the lender was not complying with provisions of Section 22 (3)(c) of the BR Act.
“No useful purpose or public interest would be served by allowing the bank to continue as envisaged in Section 22 (3)(e) of the BR Act. The bank failed to comply with the conditions stipulated in the Payments Bank license issued to it, thereby violating the provisions of Section 22 (3)(g) of the BR Act,” said the RBI in a release.
Paytm had obtained a limited banking license in August 2015 (backed by One 97 Communications, which once counted China’s Ant Group and Japan’s SoftBank as investors) that allowed it to take small deposits but not give out loans.
Previously, the bank was directed to stop onboarding new customers with effect from March 11, 2022. Thereafter, on January 31, 2024, and February 16, 2024, certain business restrictions were also imposed on the bank which, inter alia, disallowed any further deposits/credits/top-ups in existing customer accounts, prepaid instruments, wallets, etc.
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