The Reserve Bank of India (RBI) has removed Paytm Payments Bank Limited (PPBL) from the list of recognised scheduled banks. The decision follows the cancellation of the bank’s licence over regulatory non-compliance.
According to news agency PTI, the RBI took the latest step on October 7. The central bank had cancelled PPBL’s banking licence in April, stating that the bank’s affairs were being conducted in a manner detrimental to the interests of its depositors.
The Delhi High Court later directed the liquidation of Paytm Payments Bank Limited.
RBI Removes PPBL From Second Schedule
The RBI confirmed the decision in a statement issued on Wednesday, saying that Paytm Payments Bank Limited had been excluded from the Second Schedule of the Reserve Bank of India Act, 1934.
A notification related to the decision was issued on July 31 and was subsequently published in the Gazette of India in September.
The Second Schedule contains the names of banks that meet the financial requirements prescribed by the RBI and are recognised as scheduled banks. Banks included in this schedule are eligible for certain facilities under the RBI framework.
Why Did Paytm Payments Bank Face Regulatory Action?
The latest action follows several regulatory measures taken against PPBL in recent years. The bank, an affiliate of Vijay Shekhar Sharma’s Paytm, was first barred from onboarding new customers in March 2022.
The RBI imposed the restriction from March 11, 2022, citing significant supervisory concerns. PPBL was also directed to appoint an IT audit firm to conduct a comprehensive review of its information technology systems.
Further business restrictions were introduced on January 31 and February 16, 2024. These measures included stopping additional deposits, credits and top-ups in existing customer accounts, prepaid instruments and wallets.
When the banking licence was cancelled, the RBI stated that the bank’s affairs were being conducted in a manner detrimental to the interests of the bank as well as its depositors.
What Happens to Paytm Accounts and Services?
The RBI had earlier assured depositors that their money was safe. In April, the central bank stated that the bank had sufficient liquidity to meet its entire deposit liability during the winding-up process.
Meanwhile, Paytm’s core digital payment services continue to operate. Customers can continue using the Paytm app for UPI transactions, recharges and payments.
One97 Communications also said in a regulatory filing that it has no exposure to PPBL because it had already impaired its investment in the entity as of March 31, 2024.
The company further stated that key services, including Paytm, Paytm UPI, Paytm QR, Soundbox, card machines and Payment Gateway, would continue operating without interruption despite the regulatory action against Paytm Payments Bank.
The company also clarified that its wider ecosystem, including Paytm Gold and Paytm Money, remains unaffected and will continue to operate normally.
Disclaimer
This article is provided for general informational purposes only and is based on the information contained in the source material. Banking regulations, court proceedings and service arrangements may change over time. Customers should refer to official RBI notifications, court orders and Paytm’s latest communications for the most current information concerning their accounts and services.