The Reserve Bank of India on Thursday cancelled the banking licence of Paytm Payments Bank Limited, bringing an abrupt end to one of India’s most high-profile payments bank experiments.
In a notification dated April 24, the RBI said the licence stood cancelled with effect from close of business on April 24, 2026, and the bank was immediately barred from carrying out the business of banking.
The central bank also said it will move the High Court for winding up of the bank.
“RBI will make an application for winding up of the bank before the High Court,” the regulator said in its notification.
The action marks a dramatic escalation in regulatory steps against Paytm Payments Bank, which had already faced severe business restrictions over the past two years.
The RBI listed multiple reasons for the cancellation.
It said the affairs of the bank were conducted in a manner detrimental to the interest of the bank and its depositors. It also said the general character of the management was prejudicial to the interest of depositors and public interest.
Further, the RBI said no useful purpose or public interest would be served by allowing the bank to continue.
The regulator also stated that the bank had failed to comply with conditions stipulated in the payments bank licence, violating provisions of the Banking Regulation Act.
The latest move follows earlier curbs imposed by the RBI.
According to the notification, Paytm Payments Bank had been directed to stop onboarding new customers from March 11, 2022.
Later, on January 31, 2024 and February 16, 2024, the RBI imposed further restrictions that barred fresh deposits, credits and top-ups in existing customer accounts, prepaid instruments and wallets.
Those curbs had effectively frozen the bank’s growth and significantly reduced its operating scope.
The RBI sought to reassure customers on repayment.
It said Paytm Payments Bank Limited has enough liquidity to repay its entire deposit liability upon winding up of the bank.
That means depositors are expected to be repaid during the winding-up process, subject to regulatory procedures.
The cancellation is a major setback for the broader Paytm ecosystem, which had built significant customer adoption around wallets, merchant payments and digital banking services.
Payments banks were launched to expand financial inclusion by offering deposits and payments services without full lending operations. Paytm Payments Bank was among the most visible names in that space.
With the licence now cancelled, attention will shift to how parent company Paytm reorganises its banking and payments partnerships, and how smoothly customers are transitioned in the coming weeks.