RBI removes Paytm Payments Bank from list of scheduled banks after cancellation of banking licence — What we know

The Reserve Bank of India has removed Paytm Payments Bank from its list of recognised scheduled banks due to non-compliance with regulations. The bank's licence, cancelled in April 2023, was deemed detrimental to depositors' interests.

The Reserve Bank of India (RBI) has today, on 7 October, officially removed Paytm Payments Bank (PPBL) from the list of recognised scheduled banks following the cancellation of its banking licence, as per a PTI report.

This comes after the central bank in April this year, cancelled the banking licence issued to PPBL for non-compliance with norms. It stated that the affairs of the bank were conducted in a manner detrimental to the interest of its depositors, the report added.

Later, the Delhi High Court (HC) also ordered that Paytm Payments Bank Ltd (PPBL) be wound up.

What has RBI said?

“Paytm Payments Bank Limited has been excluded from the Second Schedule to the Reserve Bank of India Act, 1934...,” the central bank said in a statement on Wednesday.

A notification in this regard was published on 31 July and published in the Gazette of India in September.

The Second Schedule of the RBI Act is the official list of recognised banks that meet the central bank's financial standards and get special operational privileges. ‘Scheduled bank’ means a bank included in the Second Schedule.

What was the issue with PPBL?

PPBL, an associate firm of Vijay Shekhar Sharma-promoted fintech firm Paytm, came under the regulatory scanner on multiple occasions earlier, including in March 2022 when the central bank barred it from onboarding new customers.

While cancelling the licence, the RBI had said the affairs of the bank were conducted in a manner detrimental to its own interests as well as its depositors.

Earlier, PPBL was directed to stop onboarding new customers with effect from 11 March 2022 amid “material supervisory concerns” observed in the bank.