RBI Cancels Paytm Payments Bank License, Cites Depositor Risks

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 winding up of the bank. The banking regulator would be making an application for winding up of the bank before the high court.

Giving reasons for cancelling the licence of the 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 the 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.

Earlier, the central bank had prohibited Paytm Payments Bank from onboarding new customers in March 2022. Later, the RBI prohibited Paytm Payments Bank from deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards etc.