In a decisive regulatory action, the Reserve Bank of India (RBI) has withdrawn the banking authorisation granted to Paytm Payments Bank Limited, effectively ending its operations as a payments bank. The decision, which took effect at the close of business on April 24, 2026, prohibits the entity from continuing any banking-related activities.

The central bank also confirmed that it will approach the High Court to begin formal liquidation proceedings. In its official communication, the RBI stated that it intends to file an application seeking the winding up of the bank.

This step represents a significant escalation in the supervisory measures taken against the institution, which had already been functioning under strict operational limits for more than two years.

Grounds for the Action

According to the regulator, the bank’s operations were being carried out in a manner that posed risks to depositors and did not align with public interest. The RBI also flagged concerns about the conduct and management practices, stating that they were not in the best interests of customers or the financial system.

Additionally, the bank was found to have breached conditions attached to its payments bank licence and to have violated provisions of the Banking Regulation Act. The central bank concluded that allowing it to continue operations would not serve any constructive purpose.

Earlier Supervisory Curbs

The cancellation follows a series of restrictions imposed over time. The bank had been barred from adding new customers starting March 11, 2022. Subsequently, in early 2024, the RBI tightened oversight further by disallowing fresh deposits, credits, and wallet top-ups in existing accounts.

These measures had already constrained the bank’s business model and curtailed its ability to expand.

Impact on Customers

In its statement, the RBI assured depositors that the bank holds sufficient liquidity to settle its outstanding deposit obligations during the winding-up process. Customers are expected to receive their funds in accordance with legal and regulatory procedures once the closure process begins.

Setback for Digital Payments Ecosystem

The revocation is a substantial blow to the larger Paytm network, which had relied heavily on the payments bank to power wallet services, merchant transactions, and digital banking offerings.

Payments banks were introduced in India to promote financial inclusion by offering deposit and transaction services without engaging in conventional lending. Paytm Payments Bank was among the most prominent players in this segment.

With its licence now withdrawn, industry observers will closely watch how the parent company restructures its financial services operations and ensures a smooth transition for millions of users.