“The bank is not complying with provisions of Section 22 (3) (c) of the BR Act,” stated the Reserve Bank of India (RBI) in a recent announcement. This declaration marked a significant turn for Paytm Payments Bank Limited, which has faced mounting scrutiny over its management practices and regulatory compliance.
On April 24, 2026, the RBI officially cancelled the banking licence of Paytm Payments Bank, citing detrimental management practices. The central bank’s decision prohibits the bank from conducting any business with immediate effect. Furthermore, the RBI reassured depositors that the bank possesses sufficient liquidity to repay all deposit liabilities as it winds down operations.
Paytm Payments Bank, a subsidiary of One97 Communications, has been under regulatory scrutiny since 2018 due to multiple compliance concerns. These issues have included violations related to know-your-customer (KYC) norms. In an earlier action, the RBI barred the bank from accepting deposits or top-ups in any customer account after February 29, 2024, emphasizing ongoing regulatory challenges.
The RBI imposed a penalty of Rs 5.39 crore on Paytm Payments Bank in October 2023, highlighting persistent failures to meet financial compliance standards. The central bank’s findings indicated that “the general character of the management of the bank is prejudicial to the interest of depositors as also the public interest.” This statement underscores the gravity of the situation for both customers and stakeholders.
In addition to its recent penalties and restrictions, Paytm Payments Bank was directed to stop onboarding new customers effective March 11, 2022. The RBI’s action follows prior orders issued in March 2022 and further restrictions imposed in early 2024, reflecting an ongoing pattern of non-compliance.
The RBI will now apply to the High Court for the winding up of Paytm Payments Bank. Officials highlighted that allowing the bank to continue operations would serve no useful purpose or public interest as per Section 22 (3) (e) of the BR Act.
As Vijay Shekhar Sharma holds a 51% stake in Paytm Payments Bank while One97 Communications owns 49%, questions arise about how this development will impact their broader business strategy moving forward. No timeline has been shared regarding potential next steps or alternative plans for affected customers.
