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The Reserve Bank of India has revoked the licence of Paytm Payments Bank, effectively bringing an end to its banking operations after a series of regulatory concerns.
The regulator announced that the institution is now prohibited from carrying out any form of banking activity, citing serious lapses in governance and compliance. According to the central bank, the bank’s operations were conducted in a manner that was detrimental to both depositors and broader public interest.
The decision follows a history of regulatory scrutiny, culminating in a comprehensive systems audit conducted in 2024. The audit uncovered persistent non-compliance issues and significant supervisory concerns, prompting the regulator to impose restrictions on key operations, including the acceptance of new deposits, credit transactions, wallet top-ups, and fund transfers.
In explaining its latest action, the central bank pointed to continued failures in addressing these deficiencies, as well as concerns around management practices that it deemed prejudicial to stakeholders.
Despite the severity of the regulatory action, the impact on parent company Paytm is expected to be limited. Analysts note that the company had already distanced itself operationally and financially from the payments bank, with commercial agreements terminated and its equity investment fully written down by March 2024.
While the regulator’s move signals a strong stance on compliance and governance within India’s financial sector, Paytm’s core business operations are expected to continue largely unaffected due to its legal and structural separation from the bank.
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