RBI Cancels Paytm Payments Bank License
New Delhi: The Reserve Bank of India (RBI) has officially cancelled the license of Paytm Payments Bank, bringing a regulatory chapter to a close after more than two years of escalating restrictions over compliance concerns. The action follows repeated violations related to customer due diligence and governance standards.
The central bank first imposed limits in 2022 by stopping the onboarding of new customers. This was followed in January 2024 by a broader crackdown that barred fresh deposits, credit inflows and wallet top-ups. By mid-March 2024, the bank was completely restricted from accepting new funds, effectively halting its core banking operations.
Since then, the Paytm Payments Bank has only been permitted to process withdrawals from existing balances, along with a few limited services under strict oversight.
The RBI stated that the operations of the bank were not in line with depositor protection norms. It noted serious concerns regarding management conduct, saying that functioning of the institution was not in the public interest. According to regulator, allowing the bank to continue would serve no meaningful purpose given the circumstances.
Paytm, operated by One97 Communications, clarified that the license cancellation will not materially affect its business operations. The fintech firm had already separated most of its services from the banking arm following earlier restrictions.
Its Unified Payments Interface (UPI) services now operate through partner banks under a multi-bank model, primarily led by Yes Bank. Merchant payment systems were also shifted to external banking partners. The company continues to operate as a payment aggregator and has received the approvals for onboarding new UPI users.
Customers of Paytm Payments Bank are not facing immediate disruption. Existing account holders can still withdraw their money without restrictions. However, they cannot deposit new funds or add wallet balances.
Daily digital payment services such as UPI transfers, QR-based merchant payments and bill payments continue to function normally through partner bank integrations.
