In a major regulatory action, the Reserve Bank of India has cancelled the banking licence of Paytm Payments Bank Ltd, more than 2 years after imposing restrictions over rule violations.
The bank, backed by One 97 Communications, had received a limited banking licence in August 2015. This allowed it to accept small deposits but not offer loans. The company had earlier attracted investments from Ant Group and SoftBank.
In January 2024, the RBI had directed the bank to stop accepting fresh deposits, citing non-compliance with regulations. These included lapses in customer due diligence, issues related to the use of funds, and weaknesses in technology infrastructure.
On Friday, the central bank said it will apply for winding up the bank before the high court.
As of now, the bank continues to operate with strict limitations. It can only process withdrawals of existing deposits and facilitate loan referrals through banking correspondents, as stated on its website. However, it is not allowed to accept any new deposits.
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