The Reserve Bank of India (RBI) on Friday said it has cancelled the banking licence issued to Paytm Payments Bank Limited. With this, Paytm Payments Bank has been officially barred from conducting any banking business, following years of regulatory friction and persistent non-compliance.
What RBI said
The licence was cancelled as the "affairs of the bank were conducted in a manner detrimental to the interest of the bank and its depositors", the RBI said in a statement.
"The general character of the management of the bank is prejudicial to the interest of depositors as also the public interest," it said.
The RBI said on Friday it would make an application for winding up of the bank before the high court.
Past RBI actions
Paytm Payments Bank has been barred from onboarding new customers with effect from March 11, 2022.
In March 2024 Paytm Payments Bank was prohibited from accepting new deposits, credit transactions, or top-ups in customer accounts, wallets, FASTags, or NCMC cards.
What is next for Paytm Payments Bank
While the bank remains operational, its activities are severely limited to processing withdrawals of existing deposits and facilitating loan referrals through banking correspondents, according to its website. It cannot take fresh deposits.
"Paytm Payments Bank Limited has enough liquidity to repay its entire deposit liability upon winding up of the bank," the RBI said.
Paytm, founded by Vijay Shekhar Sharma, launched its Paytm Payments Bank Limited in 2017. However, it soon landed in trouble with the regulators over persistent non-compliance, including KYC Irregularities and concerns over illegal financial activities.
According to its FY 24-25 annual report, Paytm Payments Bank had 30 million bank accounts, with over 100 million KYC-compliant customers, and over 300 million wallet users. It was also the largest issuer of FASTag (over 8 million).
