Paytm Faces Major Setback: Why RBI Removed Paytm Payments Bank From the Scheduled Banks List
12 hours ago
The Reserve Bank of India (RBI) has formally removed Paytm Payments Bank Limited (PPBL) from the Second Schedule of the Reserve Bank of India Act, 1934. The move marks another important step in the regulatory closure of the payments bank after the central bank cancelled its banking licence earlier this year.
According to the RBI, PPBL was excluded from the Second Schedule through a notification dated July 31, 2026, which was subsequently published in the Gazette of India. The exclusion was formally highlighted by the central bank on October 7, 2026.
But why was Paytm Payments Bank removed from the scheduled-bank list, and what led to the cancellation of its banking licence in the first place?
The latest development is connected to a much larger regulatory process that began several years ago.
On April 24, 2026, the RBI cancelled the banking licence of Paytm Payments Bank under Section 22(4) of the Banking Regulation Act, 1949. The cancellation took effect from the close of business on the same day, meaning the bank was no longer permitted to conduct banking activities.
The RBI cited multiple reasons for its decision. It said the affairs of the bank had been conducted in a manner detrimental to the interests of the bank and its depositors. The central bank also stated that the general character of the management was prejudicial to depositors and the public interest.
In addition, the RBI said the bank had failed to comply with conditions attached to its payments bank licence and that there was no useful purpose or public interest in allowing it to continue as a banking entity.
The regulator had also stated that PPBL had sufficient liquidity to repay its entire deposit liability during the winding-up process.
The licence cancellation did not come as an isolated decision.
In March 2022, the RBI directed Paytm Payments Bank to stop onboarding new customers, citing material supervisory concerns. The bank was also directed to appoint an IT audit firm to conduct a comprehensive audit of its information technology systems.
Further restrictions followed in January and February 2024. These included restrictions on accepting additional deposits, credits or top-ups in customer accounts, prepaid instruments and wallets.
These measures significantly affected the bank's ability to expand its banking operations and eventually became part of the wider regulatory action that culminated in the cancellation of its licence.
A scheduled bank is a bank included in the Second Schedule of the RBI Act, 1934, meaning it meets the conditions prescribed under the law and operates within the RBI’s regulatory framework.
The removal of Paytm Payments Bank from this list is therefore more than a routine change in status. It follows the cancellation of its banking licence and the subsequent winding-up process.
For market participants, developments involving banks and financial institutions can also influence market sentiment, banking stocks and trading activity. Traders who actively track such regulatory developments often look at their potential impact on sectors and individual stocks before making a move. For those exploring short-term market opportunities, understanding how such news can affect trade options can be an important part of following market trends.
The latest RBI notification should therefore be viewed as another step in the broader closure of PPBL, rather than an entirely new regulatory action.
Following the licence cancellation, the RBI moved towards winding up the bank.
The Delhi High Court subsequently ordered the winding up of PPBL in July 2026 and appointed Girikumar M. Nair, a former State Bank of India executive, as the official liquidator. The liquidation process commenced in July.
This is important because the removal from the scheduled-bank list comes after several stages of regulatory and legal action.
In other words, the sequence was broadly:
Regulatory concerns → restrictions on operations → banking licence cancellation → winding-up process → removal from the Second Schedule.
No. The removal of PPBL from the scheduled-bank list should not be confused with the shutdown of all Paytm services.
PPBL was a banking entity associated with the wider Paytm ecosystem. The company has continued operating several of its core services through partnerships with other banks under a multi-bank model.
According to reports, services such as UPI payments, QR payments, Soundbox, card machines and the Payment Gateway continue to operate through banking partners.
This distinction is important for customers. The regulatory action is specifically against Paytm Payments Bank Limited, and does not automatically mean that the entire Paytm platform or all its services have been discontinued.
The removal of PPBL from the Second Schedule represents another formal step in the conclusion of the bank's regulatory journey.
For customers and investors, the key point is that the latest development is part of an already ongoing winding-up process rather than a sudden restriction imposed on the wider Paytm platform.
The RBI's actions over the past few years show how regulatory concerns can progressively escalate when a banking institution fails to meet applicable requirements. In this case, restrictions that began in 2022 were followed by additional business curbs in 2024, licence cancellation in April 2026 and the subsequent winding-up process.
For Paytm users, the most important distinction remains between the payments bank and the company's other businesses. The removal of PPBL from the scheduled-bank list specifically concerns the banking entity and its regulatory status.
The RBI's decision to remove Paytm Payments Bank from the Second Schedule is the latest chapter in the bank's regulatory closure. The decision follows the cancellation of its banking licence in April 2026, after the RBI cited concerns relating to the bank's operations, management, depositor interests and compliance with licence conditions.
With the Delhi High Court having ordered the bank's winding up, the latest RBI notification is part of the formal process of bringing the bank's operations to an end.
For users, however, it is important not to equate the closure of PPBL with the closure of the entire Paytm ecosystem. Several services continue to operate through other banking relationships, making it essential to distinguish between the payments bank and the broader platform.
