Mumbai, April 24, 2026: The Reserve Bank of India (RBI) has cancelled the banking licence of Paytm Payments Bank Limited with immediate effect, citing serious regulatory and governance concerns. The decision, announced through an order dated April 24, 2026, bars the bank from carrying out any form of banking business.
The cancellation has been issued under Section 22(4) of the Banking Regulation Act, 1949. As a result, Paytm Payments Bank is no longer permitted to conduct activities defined as “banking” or undertake any additional business allowed under the Act. The RBI also confirmed that it will initiate proceedings to wind up the bank by filing an application before the appropriate High Court.
Despite the drastic regulatory action, the central bank stated that the institution currently holds sufficient liquidity to repay all its depositors in full during the winding-up process, offering some reassurance to customers.
Regulatory Violations and Governance Concerns
The RBI outlined multiple grounds for the cancellation, pointing to persistent non-compliance with statutory provisions. According to the central bank, the affairs of the bank were conducted in a manner detrimental to both the institution and its depositors, violating Section 22(3)(b) of the Act.
Further, the regulator flagged concerns over the bank’s management, stating that its overall functioning was prejudicial to the interests of depositors and the public, thereby breaching Section 22(3)(c). The RBI also concluded that allowing the bank to continue operations would not serve any meaningful public interest, invoking Section 22(3)(e).
In addition, Paytm Payments Bank was found to have failed in complying with conditions tied to its payments bank licence, amounting to a violation under Section 22(3)(g) of the Act.
History of Restrictions
The cancellation follows a series of regulatory actions over the past few years. The RBI had earlier directed the bank to stop onboarding new customers from March 11, 2022. Subsequently, in January and February 2024, stricter business restrictions were imposed, including a ban on accepting further deposits or credits into customer accounts, wallets, and prepaid instruments.
These measures, according to the RBI, were intended to address ongoing compliance issues, but ultimately failed to bring about sufficient corrective action.