RBI Cancels Paytm Payments Bank Licence, To File for Wind-Up Before HC

RBI cancels banking licence of Paytm Payments Bank, to make an application for winding up of the bank before the High Court
The Reserve Bank of India (RBI) on Friday cancelled banking licence of Paytm Payments Bank effective April 24.
“Consequently, Paytm Payments Bank Limited is prohibited from conducting the business of ‘banking’ or any additional business specified under Section 6 of the Banking Regulation Act, 1949 with immediate effect. RBI will make an application for winding up of the bank before the High Court,” RBI said in a statement.
“Paytm Payments Bank Limited has enough liquidity to repay its entire deposit liability upon winding up of the bank,” RBI said.
The bank failed to comply with the conditions stipulated in the Payments Bank license issued to it, thereby violating the provisions of Section 22 (3)(g) of the Banking Regulation Act, 1949, RBI said in a circular.
In March 2024, Paytm Payments Bank was prohibited from accepting new deposits, credit transactions, or top-ups in customer accounts, wallets, FASTags, or NCMC cards.
Previously, the bank was directed to stop onboarding of new customers with effect from March 11, 2022. Thereafter, on January 31, 2024 and February 16, 2024, certain business restrictions were also imposed on the bank which, inter alia, disallowed any further deposits/credits/ top-ups in existing customer accounts, prepaid instruments, wallets, etc.
According to the RBI statement, the central bank cancelled the licence of the Paytm Payments Bank Limited as the affairs of the bank were conducted in a manner detrimental to the interest of the bank and its depositors.
“The general character of the management of the bank is prejudicial to the interest of depositors as also the public interest. Further, no useful purpose or public interest would be served by allowing the bank to continue as envisaged in Section 22 (3) (e) of the BR Act,” the circular read.
The bank failed to comply with the conditions stipulated in the Payments Bank license issued to it, thereby violating the provisions of Section 22 (3)(g) of the BR Act.