RBI takes Major Action, cancels License of Paytm Payments Bank

New Delhi: The Reserve Bank of India has taken strict action against Paytm. The Reserve Bank has revoked the banking license of Paytm Payments Bank. In a press release, the central bank (RBI) stated that Paytm Payments Bank can no longer conduct banking operations under the provisions of the Banking Regulation Act. The RBI noted that the bank's operations and management were not in the interest of depositors or the general public, and that the bank failed to comply with the terms and conditions of its Payments Bank license.

The RBI also announced that it would file an application in the High Court to initiate the winding-up process for the bank. The central bank further stated: "Paytm Payments Bank Limited possesses sufficient liquidity to discharge its entire deposit liabilities in the event of the bank's closure."

What did the Reserve Bank say?

According to the Reserve Bank of India, the manner in which Paytm Payments Bank was being operated was detrimental to both the bank and its depositors; furthermore, the general conduct of the management was deemed prejudicial to the interests of depositors and the general public. Consequently, allowing the bank to continue its banking operations was, in no way, in the public interest. In light of these factors, restrictions were previously imposed on the bank, and its banking license has now been revoked.

Prior to this, the RBI had also taken action against Paytm Payments Bank in 2024. On March 11, 2022, the RBI had imposed a ban on onboarding new customers; subsequently, restrictions were also placed on deposits, credits, and top-ups in customer accounts and wallets. Additionally, the Reserve Bank of India had issued a directive ordering the bank to cease accepting new deposits. At the time, the RBI stated that this order was issued due to non-compliance with regulatory norms—specifically those pertaining to comprehensive customer due diligence, the utilization of funds, and the bank's technical infrastructure.

Will Paytm Stock be in Focus on Monday?

The RBI's decision was announced after market hours. Consequently, investors' attention will now be focused on Paytm's shares when the market opens on Monday. It is worth noting that the current share price of Paytm on the BSE stands at ₹1,147.10. On Friday, the stock closed with a decline of 1.10%. Paytm's Initial Public Offering (IPO) was launched in 2021. This IPO caused significant losses for investors. To date, Paytm's share price has not come anywhere close to its IPO issue price. In other words, those investors who were allotted shares in the Paytm IPO have incurred losses. The issue price was fixed at ₹2,150.