RBI cancels Paytm Payments Bank licence, to seek winding up

Paytm Payments Bank Ltd has lost its banking licence, with the Reserve Bank of India banning the lender from carrying out operations with immediate effect. The RBI said Paytm Payments Bank has enough funds to repay its liabilities during the winding-up process. Paytm had obtained ​a limited banking license in August 2015 that allowed it to take small deposits but not give out ​loans. The RBI said no purpose would be served by allowing the lender to continue operations and that it had failed to comply with conditions attached to its payments bank licence.
The RBI's action began in 2022 when it imposed curbs on the lender. It tightened the curbs in 2024 after repeated supervisory concerns over governance, compliance and operations surfaced. The RBI cited multiple grounds for cancelling the licence, including the conduct of the affairs of the bank going against the interests of the lender and its depositors. The regulator said the character of its management was prejudicial to depositors and public interest.Paytm Payments Bank has been barred from onboarding new customers with effect from March 11, 2022.
The RBI ​said on ⁠Friday it would make an application for winding up of the ​bank before the high court. While the ​bank ⁠remains operational, its activities are severely limited to processing withdrawals of existing deposits and facilitating ⁠loan ​referrals through banking correspondents, according ​to its website. It cannot take fresh deposits.
Paytm, founded by Vijay Shekhar Sharma, launched its Paytm Payments Bank Limited in 2017. However, it soon landed in trouble with the regulators over persistent non-compliance, including KYC Irregularities and concerns over illegal financial activities. According to its FY 24-25 annual report, Paytm Payments Bank had 30 million bank accounts, with over 100 million KYC-compliant customers, and over 300 million wallet users. It was also the largest issuer of FASTag (over 8 million).