RBI Revokes Paytm Payments Bank Licence Over Regulatory Breaches

The Reserve Bank of India (RBI) on April 24, 2026, withdrew the banking licence of Paytm Payments Bank Limited, citing serious regulatory concerns and practices deemed detrimental to the interests of depositors. The action, taken under Section 22(4) of the Banking Regulation Act, 1949, became effective at the close of business on the same day.

According to the central bank, the institution failed to adhere to the conditions attached to its payments bank licence and did not meet key regulatory requirements. RBI noted that the bank’s operations and management were not aligned with depositor protection and public interest, thereby violating multiple provisions of the Banking Regulation Act.

Following the cancellation, Paytm Payments Bank is no longer permitted to carry out any form of banking business as defined under the Act. The RBI has also indicated that it will initiate winding-up proceedings by approaching the appropriate High Court.

The regulator highlighted several reasons for this decision, including mismanagement, non-compliance with licensing conditions, and continued operations that did not serve any broader public interest. These issues collectively led to the conclusion that allowing the bank to continue functioning would not be justified.

Paytm Payments Bank, backed by One 97 Communications, had received its payments bank licence in August 2015, enabling it to accept limited deposits but restricting lending activities. Over time, the RBI had imposed multiple restrictions on the bank. In March 2022, it was barred from onboarding new customers, and in January 2024, it was directed to stop accepting fresh deposits due to lapses in compliance, including concerns related to customer due diligence and technological systems.

At present, the bank’s operations remain limited to facilitating withdrawals of existing balances and acting as a channel for loan distribution through partner institutions. It is not permitted to accept any new deposits.

Following the announcement, shares of Paytm closed marginally lower by 0.5% at ₹1,153 on April 24.