The licence has been revoked under Section 22(4) of the Banking Regulation Act, 1949, with the payments bank now barred from undertaking any form of banking business. The central bank said it will approach the High Court to initiate winding-up proceedings.
Reassuring depositors, the RBI said Paytm Payments Bank has sufficient liquidity to repay its entire deposit liabilities, ensuring customers can withdraw their funds during the wind-down process.
In its order, the regulator noted that the affairs of the bank were conducted in a manner detrimental to the interests of the institution and its depositors, and that its management was prejudicial to public interest. It added that the bank had failed to comply with conditions under its payments bank licence and that no useful purpose would be served by allowing it to continue operations.
Transition complete; Paytm says no impact on operations
Paytm said there will be no financial or business impact on One 97 Communications following the RBI’s decision. The company clarified it has no exposure to Paytm Payments Bank or any material business arrangements with it, and that the entity operates independently without any board or management overlap.
It added that it had already impaired its investment in the payments bank as of March 31, 2024. All services, including the Paytm app, UPI, Paytm Gold, QR, Soundbox, card machines and payment gateway, will continue to operate without interruption. The company emphasised that the development is limited to the payments bank and does not affect its broader operations.
The licence cancellation marks the culmination of regulatory action that began in March 2022, when the RBI first barred the bank from onboarding new customers. Restrictions intensified in January 2024, when fresh deposits, credit transactions and wallet top-ups were disallowed. By March 15, 2024, the bank was no longer permitted to accept any fresh funds into customer accounts or prepaid instruments, effectively freezing its liability side.
This triggered a structural separation between Paytm’s banking arm and its broader payments ecosystem. In March 2024, the National Payments Corporation of India approved Paytm as a third-party application provider, allowing it to continue UPI services through partner banks, with migration to a multi-bank framework led by Yes Bank.
Over the following months, merchant settlements and payment flows were shifted to partner banks, while the wallet business became a non-reloadable instrument. Although the payments bank remained legally in existence, it was functionally dormant through 2024 and 2025, with no meaningful banking activity.
Subsequent regulatory approvals supported this transition. One 97 Communications received approval to onboard new UPI users in October 2024, while Paytm Payments Services secured a payment aggregator licence in November 2025, strengthening its payments distribution model independent of the bank.
As per people familiar with the matter, CNBC-TV18 has learnt that the gap between the 2024 restrictions and the April 2026 licence cancellation was aimed at ensuring an orderly exit. By halting fresh inflows while allowing withdrawals, the regulator enabled a gradual run-down of liabilities, minimising disruption and ensuring depositor protection.
Paytm Payments Bank was granted in-principle approval in August 2015, commenced operations in May 2017, and was inaugurated by then Finance Minister Arun Jaitley.
Shares of Paytm have risen over 11% in the past month and more than 27% over the last year.
