RBI Cancels Paytm Payments Bank Licence With Immediate Effect

In a press release, RBI said, “Consequently, Paytm Payments Bank Limited is prohibited from conducting the business of ‘banking’ as defined in Section 5(b) or any additional business specified under Section 6 of the Banking Regulation Act, 1949 with immediate effect.” The central bank said it will apply to the High Court for winding up of the bank. Reasons for Cancellation The central bank stated that the bank’s affairs were conducted in a manner detrimental to depositors and public interest, and that its management failed to meet regulatory standards. It also cited non-compliance with licensing conditions and said allowing the bank to continue would serve no useful purpose. Customer Impact and Operations The RBI said the bank has sufficient liquidity to repay all depositors during the winding-up process. Currently, it can only process withdrawals and limited services, and cannot accept new deposits. Paytm’s Response Parent company One 97 Communications clarified that the action applies only to Paytm Payments Bank, which operates independently. It said its core services—including the Paytm app, UPI, and other offerings—will continue without disruption. The move marks the culmination of prolonged regulatory concerns over the bank’s operations and compliance. Prior Restrictions Paytm Payments Bank had faced regulatory action over the past few years. It was barred from onboarding new customers in March 2022, and further restrictions in early 2024 prohibited fresh deposits, credits, and wallet top-ups. (KNN Bureau)