Daijiworld Media Network - Mumbai

Mumbai, Apr 24: In an unprecedented regulatory action, the Reserve Bank of India on Friday cancelled the banking licence of Paytm Payments Bank Ltd (PPBL) with immediate effect and said it will approach the High Court for winding up of the bank.

The central bank said the action was taken under Section 22(4) of the Banking Regulation Act, 1949, citing serious governance concerns, violations of licensing conditions and conduct deemed detrimental to the interests of depositors and the institution.

With the cancellation taking effect from the close of business on April 24, Paytm Payments Bank has been barred from carrying on banking business or any other activity permitted under the Banking Regulation Act.

In a statement, the RBI said the bank has sufficient liquidity to repay all deposit liabilities during the winding-up process, seeking to reassure customers following the drastic move.

The regulator said the decision was based on multiple grounds, including non-compliance affecting depositor interests, public interest concerns and failure to meet conditions attached to the payments bank licence.

The action follows a series of regulatory restrictions imposed on PPBL over the past few years. In March 2022, the RBI had directed the bank to stop onboarding new customers. Further curbs imposed in early 2024 had tightened restrictions on its operations.

Friday’s decision marks the strongest action taken so far against a payments bank in India and is expected to have significant implications for the fintech and digital banking sector.