The Reserve Bank of India on April 24 cancelled the banking licence issued to Paytm Payments Bank Limited, citing serious regulatory concerns.
In a statement, the RBI said the bank had conducted its affairs in a manner “harmful to depositors’ interest” and failed to comply with conditions stipulated under its payments bank licence.
Immediate Halt To Banking Operations
“The Reserve Bank of India (RBI) has, vide order dated April 24, 2026, cancelled the banking licence issued to Paytm Payments Bank Limited under Section 22(4) of the Banking Regulation Act, 1949 (BR Act) effective from close of business on April 24, 2026.
“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. RBI will make an application for winding up of the bank before the High Court,” the statement said.
Reasons For Cancellation
The central bank outlined multiple grounds for its decision:
“(1) The affairs of the bank were conducted in a manner detrimental to the interest of the bank and its depositors. Thus, the bank is not complying with Section 22 (3) (b) of the BR Act.
(2) The general character of the management of the bank is prejudicial to the interest of depositors as also the public interest. Thus, the bank is not complying with with provisions of Section 22 (3) (c) of the BR Act.
(3) 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.
(4) 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,” the RBI said.
Move to Wind Up the Bank
The RBI said it would approach the High Court to initiate winding-up proceedings against the bank following the cancellation of its licence.
Stock Market Reaction
On April 24, shares of One 97 Communications closed 0.5% lower at Rs 1,153 apiece.
Background: Earlier Regulatory Actions
Paytm Payments Bank, backed by One 97 Communications, received its payments bank licence in August 2015, allowing it to accept small deposits but not extend loans.
In January 2024, the RBI directed the bank to stop accepting fresh deposits, citing non-compliance with rules related to customer due diligence, use of funds, and technology infrastructure.
Earlier, the bank had also been instructed to stop onboarding new customers with effect from March 11, 2022.
Current Status Of Operations
While the bank remains operational, its activities are now restricted. It can process withdrawals of existing deposits and facilitate loan referrals through banking correspondents, but it is barred from accepting fresh deposits.
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