RBI Cancels Banking Licence of Paytm Payments Bank

The Reserve Bank of India (RBI) on 24th April cancelled the banking licence of Paytm Payments Bank Limited (PPBL) with immediate effect, bringing an end to its operations as a payments bank.

The decision, taken under Section 22(4) of the Banking Regulation Act, 1949, comes more than two years after the RBI had barred the bank from accepting fresh deposits or top-ups. The revocation is effective from the close of business on April 24, 2026. 

 RBI’s Rationale

The central bank stated that PPBL’s operations were conducted in a manner “detrimental to the interest of the bank and its depositors.” This prompted the regulator to take the extreme step of licence cancellation.

The RBI also announced that it will approach the relevant High Court to initiate the formal winding-up process of the bank. 

Paytm Payments Bank was promoted by One97 Communications and its founder Vijay Shekhar Sharma. It was among the early entrants in India’s payments bank ecosystem.

About Payments Bank

The concept of payments banks was introduced following the recommendations of the Nachiket Mor Committee, aimed at advancing financial inclusion, particularly for the unbanked and underbanked populations. 

Payments banks are a special category of banks in India with limited operations:

• Can accept deposits up to ₹2 lakh per customer
• Cannot provide loans or issue credit cards
• Offer savings and current accounts, along with debit cards
• Enable fund transfers via systems like NEFT, IMPS, UPI, and AEPS
• Invest primarily in short-term government securities (up to one-year maturity)

They are registered under the Companies Act, 2013, and licensed by the RBI under the Banking Regulation Act, 1949.