India's Reserve Bank of India has cancelled the banking licence of Paytm Payments Bank, more than two years after imposing business restrictions over compliance failures.
The RBI announced the decision on 24 April 2026, stating it would apply to the high court for the winding up of the bank. The regulator cited conduct detrimental to depositors' interests and contrary to the public interest as grounds for the cancellation. The move marks the first time the RBI has revoked the licence of a specialised payments bank in India.
Background and regulatory timeline
PPBL was granted a limited banking licence in August 2015 under a framework conceptualised by Indian regulators in 2014 to support small deposits and domestic cash transfers. Unlike full-service banks, payments banks are permitted to accept small deposits but cannot issue loans directly.
In January 2024, the RBI ordered PPBL to stop accepting fresh deposits, citing non-compliance across multiple areas, including customer due diligence, use of funds, and technology infrastructure. Following that order, the bank's activities were restricted to processing withdrawals from existing accounts and facilitating loan referrals via banking correspondents.
According to Reuters, in February 2026, RBI officials held internal discussions on whether to cancel the licence or pursue a merger with another institution. Airtel Payments Bank, backed by India's second-largest telecommunications company Bharti Airtel, had informally expressed interest in acquiring PPBL the previous year, but those discussions did not advance. Regulatory sources indicated the RBI ultimately considered outright cancellation preferable to a merger.
Implications for One 97 and the payments bank model
PPBL's parent, One 97 Communications, holds a 51% stake in the bank. One 97 stated the licence cancellation will carry no financial impact on the company, noting it has no exposure to PPBL and no material business arrangements with the entity. The company also clarified that PPBL operates independently, without board or management involvement from One 97.
The cancellation nonetheless closes a chapter on One 97's ambitions in deposit-taking services. The company had previously transferred its wallet business to PPBL as part of RBI-mandated restructuring, and had publicly signalled its intent to reclaim that business unit.
More broadly, the licence cancellation draws attention to the diminishing role of the payments bank model in India's financial system. The rise of the Unified Payments Interface (UPI), which enables real-time digital transfers at scale, has also significantly eroded the utility case for payments banks. As transaction volumes migrated to UPI, compliance costs for payments banks continued to rise, with the RBI requiring tighter monitoring of small deposit accounts over concerns around potential misuse.
