The Reserve Bank of India (RBI) has officially removed Paytm Payments Bank Limited (PPBL) from the list of scheduled banks after cancelling its banking licence earlier this year due to regulatory non-compliances that jeopardized depositor interests.
- RBI cancelled Paytm Payments Bank licence for norm violations
- Bank barred from onboarding new customers since March 2022
- PPBL removed from RBI’s Second Schedule listed banks
What happened
In April 2026, the Reserve Bank of India cancelled the banking licence of Paytm Payments Bank Limited (PPBL), citing conduct detrimental to the interests of both the bank and its depositors. This action followed multiple regulatory interventions starting in 2022, including a prohibition on onboarding new customers due to material supervisory concerns. In early 2024, RBI further imposed restrictions on the bank’s ability to accept deposits or credits in existing customer accounts and prepaid instruments.
Following the licence cancellation, the Delhi High Court ordered the winding up of PPBL. Subsequently, the RBI officially removed Paytm Payments Bank from its list of scheduled banks, which is documented in the Second Schedule of the Reserve Bank of India Act, 1934. This exclusion was notified in July and published in the Gazette of India in September 2026, formally stripping PPBL of the privileges and recognition accorded to scheduled banks.
Why it matters
Scheduled banks in India benefit from special operational privileges under the RBI Act, including access to certain government facilities and regulatory safeguards. Removal from this list means PPBL ceases to be recognised as a standard banking entity, which impacts its ability to operate as a full-service bank. This underscores the seriousness with which RBI enforces compliance with banking norms to protect depositor interests.
PPBL, affiliated with the Vijay Shekhar Sharma-led Paytm fintech group, was a major player in India’s digital banking space. The regulatory actions and ultimate licence cancellation reflect increasing scrutiny on fintech and payments banks, signaling that innovative banking models must maintain strict adherence to regulatory standards or risk losing licenses.
What to watch next
Market participants will be closely watching the implications of PPBL’s exit from scheduled bank status on its depositors, customers, and the wider fintech ecosystem. Authorities may set precedents for tighter oversight on payments banks and fintech companies handling deposits and payment instruments, potentially prompting shifts in regulatory frameworks.
Stakeholders should monitor further developments from the Delhi High Court regarding the winding up process of PPBL, as well as any RBI updates on enforcement actions or revised guidelines for fintech banks. The evolving regulatory landscape will likely influence new entrants and current players targeting digital banking opportunities in India.