RBI revokes licence of Paytm Payments Bank Ltd, to initiate shutdown

Reserve Bank of India has cancelled the banking licence of Paytm Payments Bank Ltd, citing persistent regulatory violations and governance concerns, and will initiate winding-up proceedings before the High Court, according to the central bank’s order.

In its directive dated April 24, 2026, the RBI said the licence stood revoked with effect from the close of business the same day under provisions of the Banking Regulation Act, 1949. The move bars the bank from carrying out any form of banking activity with immediate effect.

Regulatory findings and action

The RBI said it found that the bank’s affairs were conducted in a manner “detrimental to the interest of the bank and its depositors” and that the “general character of its management” was prejudicial to public interest.

It added that Paytm Payments Bank had failed to comply with licensing conditions and that allowing it to continue operations would serve no useful purpose.

The central bank will now apply for the bank’s winding up before the appropriate court, while assuring that the lender has sufficient liquidity to repay all deposit liabilities.

Escalation after years of restrictions

The action follows a series of regulatory measures imposed over the past few years. In March 2022, the RBI directed the bank to stop onboarding new customers. This was followed by tighter restrictions in early 2024, including a ban on fresh deposits, credits and wallet top-ups.

Despite governance changes, including the exit of Vijay Shekhar Sharma as non-executive chairman and board member and a subsequent board overhaul with independent directors, regulatory concerns persisted.

Paytm distances core operations

Following the RBI’s decision, One 97 Communications Ltd said there would be no financial or operational impact on the listed entity.

The company stated that Paytm Payments Bank operates as an associate entity with no shared board or management oversight. It added that it had already impaired its investment in the bank.

Paytm also said its core services, including the Paytm app, UPI, QR payments, Soundbox, card machines, payment gateway and financial services, will continue without disruption. The company noted it has already transitioned operations to partner banks and has no material business arrangements with the payments bank.

Sector impact and next steps

The shutdown marks a significant development in India’s fintech sector. Paytm Payments Bank had been a notable player in segments such as digital wallets and FASTag services, with a sizeable share in transaction volumes.

Earlier restrictions had already disrupted these businesses, pushing the company to migrate to alternative banking partners.

The focus will now shift to orderly repayment of depositors and closure of operations, bringing an end to one of India’s most prominent payments bank ventures.