RBI Cancels Banking Licence Of Paytm Payments Bank | Here's Why

New Delhi: The Reserve Bank of India (RBI) has cancelled the banking licence of Paytm Payments Bank Limited under Section 22(4) of the Banking Regulation Act, 1949 (‘BR Act’). The order is effective from close of business on April 24, 2026.

The central bank stated that Paytm Payments Bank failed to comply with the conditions of the licence.

Paytm Payments Bank Limited is now prohibited from conducting the business of ‘banking’ as defined in Section 5(b) or any additional business specified under Section 6 of the Banking Regulation Act, 1949 with immediate effect. RBI will make an application for winding up of the bank before the High Court.

In a press release, RBI said that it cancelled the licence of because of the following reasons:

1. The affairs of the bank were conducted in a manner detrimental to the interest of the bank and its depositors. Thus, the bank is not complying with Section 22 (3) (b) of the BR Act.
2. The general character of the management of the bank is prejudicial to the interest of depositors as also the public interest. Thus, the bank is not complying with provisions of Section 22 (3) (c) of the BR Act.
3. No useful purpose or public interest would be served by allowing the bank to continue as envisaged in Section 22 (3) (e) of the BR Act.
4. The bank failed to comply with the conditions stipulated in the Payments Bank license issued to it, thereby violating the provisions of Section 22 (3)(g) of the BR Act.

In January, the RBI had directed Paytm Payments Bank Ltd to stop onboarding of new customers with immediate effect, following persistent non-compliances and material supervisory concerns.