The Reserve Bank of India (RBI) today cancelled the banking licence of Paytm Payments Bank Limited (PPBL) with immediate effect, marking the end of the payments bank’s operations after years of persistent regulatory non-compliance.
In an order issued under Section 22(4) of the Banking Regulation Act, 1949, the RBI stated that the licence stands cancelled from the close of business today. PPBL is now prohibited from conducting any banking business as defined under the Act. The central bank will approach the High Court for the winding up of the bank. RBI confirmed that PPBL holds sufficient liquidity to repay all deposit liabilities in full.
The regulator cited multiple grounds for the drastic action:
- The bank’s affairs were conducted in a manner detrimental to the interests of the bank and its depositors.
- The general character of its management was prejudicial to the interests of depositors and the public.
- Allowing the bank to continue would serve no useful purpose or public interest.
- The bank failed to comply with the conditions of its payments bank licence.
This decision comes more than two years after the RBI first imposed restrictions on PPBL and over a year after severe business curbs were placed on the entity.
The RBI’s scrutiny of Paytm Payments Bank dates back to at least March 2022, when the regulator directed the bank to stop onboarding new customers with immediate effect due to “material supervisory concerns.”
The situation escalated significantly in early 2024. On January 31, 2024, the RBI imposed fresh business restrictions on PPBL, citing “persistent non-compliances and continued material supervisory concerns.” These included, a ban on accepting any further deposits, credits, or top-ups in customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, and similar facilities. The restrictions were originally set to take effect from February 29, 2024, but were later extended to March 15, 2024, to allow customers and merchants time to make alternative arrangements.
Customers were allowed to withdraw or utilise their existing balances without restrictions, and pipeline transactions initiated before the cutoff were to be settled by mid-March 2024. The 2024 curbs effectively halted most banking activities at PPBL while the parent company, One97 Communications (Paytm), worked to migrate operations and partnerships.
Despite these measures, the bank continued to operate in a highly restricted manner until today’s full licence cancellation.
RBI has emphasised that depositors are protected, as the bank has adequate liquidity to repay all liabilities during the winding-up process. Existing customers will no longer be able to use PPBL-linked services for new transactions, but withdrawals and utilisation of current balances remain unaffected until the formal winding-up proceedings conclude.
Paytm Payments Bank was one of the early players in India’s payments bank space, launched to promote financial inclusion through digital wallets, UPI, and small savings accounts. Its parent company, Paytm, has been a major force in India’s fintech and digital payments sector, though the regulatory actions led to significant business disruption, a sharp decline in monthly transacting users, and revenue pressure in 2024–25.
However, Paytm, the UPI service provider, continues to operate as a separate entity. Its UPI accounts were already migrated to other banks.
