RBI cancels Paytm Payments Bank licence; bars it from banking operations

The Reserve Bank of India has cancelled the banking licence of Paytm Payments Bank with effect from April 24, 2026, effectively barring it from undertaking any banking business.

The central bank said the payments bank is now prohibited from conducting the business of “banking”, following serious regulatory concerns.

In its order, the RBI noted that the affairs of the bank were conducted in a manner detrimental to the interests of the institution and its depositors.

It further stated that no useful purpose or public interest would be served by allowing the bank to continue operations under the existing framework.

The regulator also highlighted that Paytm Payments Bank had failed to comply with the conditions stipulated under its payments bank licence, leading to the decision to revoke it.

While in-principle approval was granted by the RBI in August 2015, Paytm Payments Bank commenced operations in May 2017 and was formally inaugurated by then Finance Minister, late Arun Jaitley.

The RBI had barred the payments bank from onboarding new customers and from undertaking fresh transactions, including top-ups of customer accounts, prepaid instruments, wallets and FASTags, from March 15 last year.

The payments bank had effectively ceased operations, resulting in no meaningful financial impact.

Shares of Paytm have risen over 11% in the past month and more than 27% over the last year.

The RBI’s move is likely to come as a shock for investors, especially as the company was seen to be recovering from regulatory pressures. Over the past year, the Reserve Bank of India had allowed international travellers to use Paytm for payments to Indian merchants, opening up monetisation opportunities beyond India.