New Delhi, Apr 25, (APAC Media): The Reserve Bank of India has cancelled Paytm Payments Bank’s banking licence and prohibited it from conducting any business, effective immediately.
The RBI will now approach the High Court to begin the process of winding up Paytm Paymenrt Bank.
However, the bank currently has enough liquidity to return all customer deposits when this winding up occurs.
Earlier in March 2022 Paytm Payments Bank was asked to stop onboarding new customers. Later in early 2024, further deposits, credits and top-ups in existing customer accounts and prepaid instruments were also disallowed. Therefore, canceling the license was the next logical step.
Paytm Payments Bank ad obtained a limited banking licence in August 2015 that allowed it to take small deposits but not give out loans. It was backed by One 97 Communications with investments from China’s Ant Group and Japan’s SoftBank.
RBI attributed the license cancellation to several concerns.
Paytm Payments Bank allegedly operated in a manner detrimental to its own interests and those of its depositors. This resulted in non-compliance with Section 22(3)(b) of the Banking Regulation Act.
The bank’s management was allegedly detrimental to the depositors and against the overall public interest. This resulted in a gross violation of Section 22(3)(c) of the Act.
Paytm Payments Bank did not adhere to the conditions mentioned in its licence. This directly led to a breach of Section 22(3)(g) of the Act.
Given these concerns, the RBI felt that continuing Paytm Payments Bank operations would not serve any meaningful purpose or benefit the public, as per Section 22(3)(e) of the Banking Regulation Act..
RBI has also assured the general public that notwthstanding the license revoke of Paytm Payments Bank thet can continue to use the Paytm App for UPI, recharges, and payments.
