RBI revokes Paytm Payments Bank’s licence due to noncompliance
The Reserve Bank of India revoked Paytm Payments Bank Limited‘s license on Friday due to noncompliance with the regulatory requirements stipulated in its payments bank license.
In a decisive step, the central bank said the organization would no longer be allowed to conduct banking activities and declared that it would petition the High Court to begin the process of closing the bank.
According to its directive, the central bank said that, as of the close of business on April 24, the RBI has revoked Paytm Payments Bank Limited’s banking license, which was granted under Section 22(4) of the Banking Regulation Act, 1949 (‘BR Act’).
“Therefore, with immediate effect, Paytm Payments Bank Limited is forbidden from engaging in the business of ‘banking’ as defined in Section 5(b) or any other business as listed in Section 6 of the Banking Regulation Act, 1949,” the RBI added.
The RBI stated that it will petition the High Court for the bank’s liquidation.
The RBI said that Paytm Payments Bank has sufficient liquidity to cover all of its deposit obligations, guaranteeing that depositors’ interests will be protected during the closure.
According to the central bank, “Paytm Payments Bank Limited has sufficient liquidity to meet all of its deposit liabilities upon the bank’s closure.”
Additionally, it said that there would be no advantage to the public or purpose in allowing the bank to continue operating.
The RBI stated that “allowing the bank to continue as envisioned in Section 22 (3) (e) of the BR Act would not serve any useful purpose or public interest.”
According to the central bank, “the bank violated the provisions of Section 22(3)(g) of the BR Act by failing to comply with the terms specified in the Payments Bank license issued to it.”
The bank had previously been instructed to halt the enrollment of new clients as of March 11, 2022.
Subsequently, the RBI stated that several business restrictions were placed on the bank on January 31, 2024, and February 16, 2024, which, among other things, prohibited any further deposits, credits, or top-ups in prepaid instruments, wallets, and other existing customer accounts.