India Revokes Paytm Payments Bank License

India’s central bank, the Reserve Bank of India (RBI), said it cancelled the banking license of Paytm Payments Bank Limited on Friday, April 24, citing what it described as persistent non-compliance with regulatory norms. The RBI said the bank’s affairs were conducted in a way that was detrimental to the interests of depositors and the public.

The decision follows more than two years of business restrictions that had already been placed on the bank. Officials cited violations that included lapses in customer due diligence, along with concerns linked to the use of funds and the bank’s technology infrastructure.

With the license cancellation, Paytm Payments Bank Limited is no longer permitted to carry out deposit-taking activities. The move also affects One 97 Communications, which holds a 51% stake in Paytm Payments Bank, by preventing deposit-related operations through the bank.

The RBI said it will apply to the high court to begin the winding-up process for the bank. The central bank’s statement framed the step as a depositor-protection measure, pointing to how the bank was managed and the risks it said this posed to the public interest.

Paytm Payments Bank received a limited banking license in August 2015. Under that framework, it was allowed to accept small deposits but was not permitted to issue loans, reflecting the narrower scope of payments banks compared with full-service lenders.

Regulatory pressure intensified earlier this year. In January 2024, the RBI ordered the bank to stop accepting new deposits, a restriction that preceded the latest decision to cancel the license entirely.

Financial disclosures cited in the source show that, as of March 2025, Paytm Payments Bank held 13.95 billion rupees ($149.58 million) in deposits. For fiscal year 2025, it reported a net loss of 946.4 million rupees.

For markets and policymakers, the episode underscores the RBI’s stated focus on compliance standards in areas such as customer due diligence and operational controls, including technology systems. The winding-up process, and how depositors are handled through the court-led procedure, remains a key uncertainty as the RBI moves to seek a high court order.