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Paytm Payments Bank Limited has been excluded from the Second Schedule to the Reserve Bank of India Act, 1934.
Paytm Payments Bank effectively ceased banking operations when the Reserve Bank of India cancelled its licence on April 24, 2026.
Key Closure Timeline
- March 15, 2024: RBI restricted deposits and top-ups.
- April 24, 2026: Banking licence officially cancelled.
- July 8, 2026: Delhi High Court ordered formal winding up.
- October 7, 2026: Removed from the scheduled banks list.
The Reserve Bank of India (RBI) shut down Paytm Payments Bank due to persistent regulatory non-compliance, material supervisory concerns, and management practices detrimental to depositors.
Rather than a sudden closure, the shutdown was the result of a multi-year regulatory crackdown triggered by several major violations:
Severe KYC and Due Diligence Failures: External audits revealed massive deficiencies in Know Your Customer (KYC) norms. The bank had millions of accounts lacking proper identification, including instances where thousands of accounts were linked to the exact same PAN card.
Money Laundering & Data Security Risks: The RBI flagged potential money laundering vulnerabilities due to a lack of proper transaction monitoring. There were also serious concerns regarding the flow of data and funds between the bank and its parent fintech app, One97 Communications, creating major data security and conflict-of-interest risks.
Ignoring Repeated Warnings: The RBI had been penalising and warning Paytm Payments Bank for years. It first barred the bank from onboarding new customers in March 2022, but subsequent audits showed that the management failed to fix these ongoing issues.
Acts Detrimental to Public Interest: According to the official RBI Press Release, the general character of the bank’s management was found to be “prejudicial to the interest of depositors as also the public interest,” leaving the regulator with no choice but to revoke its license.
