RBI Action: Paytm Payments Bank Licence Cancelled Over Governance Failures

Paytm Payments Bank's (PPB) banking licence has been revoked by the Reserve Bank of India (RBI). The RBI said that the bank's "general character of management" was harmful to depositors' and the public's interests. Additionally, it highlighted how the bank's operations were run in a way that hurt both the bank and its depositors.

Taken in accordance with Section 22(4) of the Banking Regulation Act, 1949, the measure will take effect as of April 24, 2026, the last business day of the year. This ruling officially forbids Paytm PB from engaging in the "banking" industry. Requests for winding up will be made to the High Court by the RBI.

PPB Vs RBI the Battle Continues

After being barred from accepting new customers since 2022, PPB has now been barred from doing business, a first in recent history. On top of that, it was demonetised from credit and deposit transactions two years ago. According to the RBI, the bank's actions hurt both the bank and its customers. Furthermore, the highest authority mentioned that the overall nature of the bank's management is detrimental to both depositors' and the public's best interests.

According to various media reports, the regulator had to decide quickly. The bank could not accept deposits or make credit transactions, and it couldn't even onboard customers. Cancelling the licence was the sole choice under the circumstances. Paytm stated in an exchange filing that the company was unaffected financially by the revocation of the payments bank licence. Additionally, the statement clarified that Paytm PB is run autonomously, without any interference from the company's board or management.

Step by Step Ongoing Developments in PPB

Paytm PB was barred from accepting new users in March 2022. The bank was thereafter unable to accept deposits or make credits to customer accounts beginning February 29, 2024. Customers were able to freely access and use their funds from all of their accounts, including savings bank accounts, up to the limit of their available balance.

In February 2024, Vijay Shekhar Sharma resigned as a part-time non-executive chairman and board member, and OCL withdrew its candidate from the Paytm PB board. S Sridhar, a seasoned banker, was named non-executive chairman. The current board of directors of Paytm Payments Bank consists of six individuals, one of them being Arun Kumar Bansal, MD and CEO. The fiscal year '25 (FY25) annual report of Paytm Payments Bank states that the listed One97 Communications owns 49% of the bank and Vijay Shekhar Sharma owns 51%.

The central bank has made it clear that Paytm PB has sufficient liquidity to repay all of its deposit obligations when it winds down. Customer deposits totalling INR 1,395.22 crore were held by the bank as of March 31, 2025, spread out among wallets, current and savings accounts, and a total of INR 33.13 crore in gift instruments.