RBI cancels banking license of Paytm Payments Bank

Mumbai: The Reserve Bank of India (RBI) has cancelled the banking license of Paytm Payments Bank, one of the country's leading payment banks. The action was taken after the central bank found that Paytm had violated the guidelines prescribed when the license was originally granted. With this move, the RBI clarified that Paytm has lost its authorisation to conduct banking transactions. The order was issued to take effect immediately. However, the RBI stated in a press release that despite the cancellation, Paytm possesses sufficient liquidity to fully refund all depositors' money.

The central bank added that it would approach the High Court to initiate winding-up proceedings. According to the RBI report, the activities of Paytm Payments Bank were found to be contrary to the interests of its depositors. The report also highlighted a persistent failure to comply with banking license regulations.

The cancellation became effective at the close of business hours today. Under Section 5(b) of the Banking Regulation Act, the entity can no longer conduct banking business or provide any related services mentioned under Section 5. Meanwhile, it remains unclear how this decision will impact Paytm's popular UPI services.