On April 24, 2026, the Reserve Bank of India (RBI) revoked the banking license of Paytm Payments Bank, effectively halting its operations following prolonged regulatory oversight. This action follows restrictions imposed over two years ago due to various compliance failures.
The RBI’s directive prohibits Paytm Payments Bank from conducting any banking activities under the Banking Regulation Act. The central bank stated that the institution’s operations were not serving the interests of depositors or the public. It also noted that the bank failed to fulfill the necessary criteria for maintaining a payments bank license.
The RBI highlighted that the management’s practices harmed depositor interests, prompting the shutdown. However, the bank holds sufficient funds to repay all deposits to customers.
Established in 2015 as a subsidiary of One97 Communications, Paytm Payments Bank functioned as a payments bank, accepting limited deposits and savings but not providing loans like conventional banks.
In its order, the RBI referenced sections of the Banking Regulation Act, 1949, indicating non-compliance with licensing conditions. The bank was found in violation of Section 22(3)(c) and Section 22(3)(g), leading to the immediate ban on all banking operations.
Regulatory issues with Paytm Payments Bank began in 2018, when the RBI identified problems with know-your-customer (KYC) procedures. Concerns included multiple accounts linked to a single PAN card, potentially enabling rule circumvention, and transactions exceeding allowed limits, heightening money laundering risks.
A 2018 audit uncovered deficiencies in customer onboarding and verification. Consequently, the RBI mandated a halt to new customer additions until corrections were made.
Oversight intensified over time. In March 2022, the RBI ordered a stop to new customer onboarding due to significant supervisory issues. The situation escalated in January 2024, when the bank was barred from accepting new deposits over problems with customer verification, fund management, and technology infrastructure. These restrictions, initially effective from February 29, 2024, were extended to March 15, 2024, to facilitate transitions for users.
Customers could access and use existing balances freely, with pending transactions settled by mid-March 2024. Despite efforts to shift operations, the bank operated under strict limits until the license revocation.
In October 2023, the RBI fined the bank ₹5.39 crore for failing to adhere to guidelines, including KYC violations.
