Why Paytm Payments Bank is shutting down: From licence cancellation to liquidation

The Delhi High Court has ordered the winding up of Paytm Payments Bank Limited (PPBL), bringing the formal closure process of the bank into motion after the Reserve Bank of India (RBI) cancelled its licence earlier this year.

The RBI said in a statement on Tuesday that the High Court, through orders passed on July 8 and July 22, directed that PPBL be wound up under the provisions of the Banking Regulation Act, 1949, along with relevant provisions of the Companies Act, 2013.

The court has appointed Girikumar M. Nair, a former Chief General Manager of the State Bank of India (SBI), as the official liquidator to oversee the winding-up process. According to the RBI, the liquidator will exercise all powers of the bank's board from July 8, 2026, as part of the liquidation proceedings.

Why Paytm Payments Bank is being closed

The winding-up order follows the RBI's decision on April 24, 2026, to cancel PPBL's banking licence under Section 22(4) of the Banking Regulation Act.

The central bank had said that the affairs of the bank were being conducted in a manner that was "detrimental to the interest of the bank and its depositors". Following the licence cancellation, the RBI approached the Delhi High Court seeking formal winding-up proceedings and appointment of a liquidator.

The court's order now begins the final legal process for closing the payments bank.

Four-year regulatory action

Paytm Payments Bank, backed by fintech company One97 Communications, was among the first entities to receive a payments bank licence in 2015. It played a significant role during the expansion of India's digital payments ecosystem.

Unlike traditional banks, payments banks can accept deposits and provide payment services but cannot offer loans.

However, the bank faced increasing regulatory scrutiny over compliance issues. In March 2022, the RBI directed PPBL to stop onboarding new customers after identifying supervisory concerns.

The restrictions were expanded in January and February 2024, when the RBI barred the bank from accepting fresh deposits, credit transactions and top-ups in customer accounts, prepaid instruments and wallets.

The RBI had also directed the bank to conduct a comprehensive IT systems audit.

Final stage of closure

With the appointment of an official liquidator, PPBL's board powers will now be transferred to the liquidator, who will oversee the winding-up process according to banking and corporate laws.

The development marks the conclusion of a regulatory crackdown that lasted more than four years and ends the operations of one of India's most prominent payments banks.

Paytm Payments Bank was launched during a period of rapid growth in digital payments, but regulatory concerns over compliance eventually led to restrictions, licence cancellation and now formal liquidation proceedings.