The Reserve Bank of India (RBI) has cancelled the banking licence of Paytm Payments Bank.
The bank has been barred from conducting any banking business due to persistent regulatory non-compliance, governance issues, and violations of licensing conditions.
RBI will approach the High Court for winding-up proceedings, while assuring that the bank has sufficient liquidity to repay all depositors.
RBI Action:
Licence cancelled under Section 22(4) of the Banking Regulation Act, 1949.
Bank prohibited from conducting any banking business with immediate effect.
RBI to initiate winding-up proceedings in the High Court.
Reasons for Cancellation
Persistent regulatory non-compliance and governance failures.
Violations in KYC norms and customer due diligence.
Operations found detrimental to depositors’ interest and public interest.
Failure to comply with conditions of payments bank licence.
Background Developments
RBI had barred onboarding of new customers (2022).
In January 2024, RBI stopped fresh deposits and top-ups.
Bank was under prolonged regulatory scrutiny since 2018.
Impact on Customers
Bank cannot carry out banking operations.
Depositors will be repaid during winding-up process.
Existing services were already restricted prior to cancellation.
Payments Banks in India:
Introduced on recommendation of Nachiket Mor Committee (2013)
Can accept deposits (up to ₹2 lakh per customer)
Cannot provide loans or credit cards
Banking Regulation Act, 1949:
Governs banking operations in India
Section 22: Licensing of banks
RBI (Established: 1935):
As of April 2026, Sanjay Malhotra is the 26th Governor of the Reserve Bank of India (RBI), having taken charge on December 11, 2024. He is supported by a team of Deputy Governors, including Swaminathan Janakiraman, T. Rabi Sankar, and Poonam Gupta (from April 2, 2025).
Paytm Payments Bank:
Launched in 2015
Founder: Vijay Shekhar Sharma
CEO: Arun Kumar Bansal
Promoted by One97 Communications
UPSC - 2027 - Prelims cum Mains - Foundation Course / Batch Starts on 15-04-2026 
