The Reserve Bank of India (RBI) on Friday revealed that it has cancelled the banking licence of Paytm subsidiary Paytm Payments Bank Limited.
In its statement, the RBI said the bank had been conducting its operations in a manner that was harmful to the interests of its depositors. It also noted that the bank failed to comply with the regulatory norms and conditions attached to its payments bank licence.
Following this decision, Paytm Payments Bank is no longer permitted to carry out any banking activities as defined under the Banking Regulation Act, 1949. The central bank further stated that it will approach the High Court to initiate proceedings to wind up the payments bank.
"Paytm Payments Bank Limited has enough liquidity to repay its entire deposit liability upon winding up of the bank," the RBI said.
4 reasons why RBI cancelled banking licence of Paytm Payments Bank Limited
- Explaining the reasons behind the action, the RBI said the affairs of the bank were handled in a way that harmed both the institution and its depositors.
- It also pointed out that the overall conduct and character of the bank’s management were prejudicial to depositors as well as the broader public interest.
- Additionally, the RBI concluded that allowing the bank to continue operations would not serve any meaningful public purpose.
- The RBI also highlighted that the bank had failed to meet the conditions specified in its payments bank licence.
Overall, the RBI made it clear that these serious lapses left no justification for allowing Paytm Payments Bank to continue operating.
In 2024, the RBI prevented PPBL from accepting new deposits, credits or top-ups in customer accounts, wallets etc.
