Delhi High Court Orders Winding Up of Paytm Payments Bank After RBI Licence Cancellation

The Delhi High Court has ordered the winding up of Paytm Payments Bank, marking the final stage in the lender's closure after months of regulatory action by the Reserve Bank of India (RBI). The court has also appointed a liquidator to oversee the process, following the RBI's decision to cancel the bank's licence earlier this year over persistent regulatory concerns.

Delhi High Court Orders Liquidation of Paytm Payments Bank

According to the RBI, the Delhi High Court has appointed former State Bank of India executive Girikumar M. Nair as the official liquidator. Effective July 8, he will manage the liquidation process and exercise all the powers previously held by the bank's board.

The central bank had cancelled Paytm Payments Bank's banking licence on April 24 and subsequently approached the court to initiate winding-up proceedings. At the time, the RBI said the bank's affairs had been conducted in a manner detrimental to the interests of the bank and its depositors.

Why Did RBI Take Action Against Paytm Payments Bank?

Paytm Payments Bank, backed by One 97 Communications, was once India's largest payments bank after receiving its licence in 2015. Payments banks can accept deposits but are not permitted to lend.

Regulatory scrutiny began in March 2022, when the RBI barred the bank from onboarding new customers due to supervisory concerns. The restrictions intensified in January 2024, when the central bank prohibited the bank from accepting fresh deposits, citing continued non-compliance with regulatory requirements.

What Does the Winding Up Mean?

The court-ordered liquidation formally begins the process of closing Paytm Payments Bank under the supervision of the appointed liquidator. The liquidator will oversee the settlement of the bank's affairs in accordance with legal procedures.

The development marks the conclusion of a prolonged regulatory action against the payments bank, which had once played a significant role in India's digital payments ecosystem.

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Conclusion

The winding up of Paytm Payments Bank marks the end of a regulatory process that began with supervisory concerns and culminated in the cancellation of its banking licence. The court-appointed liquidator will now oversee the closure process, bringing an end to the operations of one of India's earliest and largest payments banks.

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