The Reserve Bank of India cancelled the banking licence of Paytm Payments Bank Limited with effect from the close of business on 24 April 2026. The bank is prohibited from conducting banking business under the Banking Regulation Act, 1949, from 24 April 2026.
Regulatory Framework For Banking Licences
The Reserve Bank of India issues banking licences under the Banking Regulation Act, 1949. Section 22 of the Act deals with licensing of banking companies, and Section 22(3) contains grounds linked to eligibility and compliance.
- Section 22(3)(c) of the Banking Regulation Act, 1949, relates to the character and financial condition of the applicant.
- Section 22(3)(e) of the Banking Regulation Act, 1949, relates to the general character of the management and the company.
- Section 22(3)(g) of the Banking Regulation Act, 1949, relates to the public interest and the interests of depositors.
Payments Banks In India
Payments banks are a category of banks introduced by the Reserve Bank of India in 2014. They can accept demand deposits up to a prescribed limit, issue ATM or debit cards, and provide remittance and digital payment services. They cannot lend money as regular commercial banks do.
Paytm Payments Bank: Key Facts
- Paytm Payments Bank Limited was founded by One97 Communications and Vijay Shekhar Sharma.
- Vijay Shekhar Sharma held a 51% stake in the bank, and One97 Communications held 49%.
- The Reserve Bank of India directed the bank on 11 March 2022 to stop onboarding new customers.
- Further restrictions were imposed on 31 January 2024 and 16 February 2024 on deposits, credits, and top-ups in customer accounts, wallets, FASTags, and NCMC cards.
Winding Up And Depositor Liability
The Reserve Bank of India stated that it will apply to the High Court for the winding up of Paytm Payments Bank Limited. The central bank also stated that the bank has enough liquidity to repay its entire deposit liability upon winding up.
Related Payment Instruments
FASTag is an electronic toll collection system used on Indian highways. NCMC stands for National Common Mobility Card, which is used for interoperable payments across transport and retail systems. One 97 Communications stated that the Paytm app, Paytm UPI, and other services will continue through partnerships with other banks. Paytm Payments Bank was among the early payments bank entities in India.
Last Modified: April 25, 2026