The Reserve Bank of India on April 24 said it has cancelled the banking licence issued to Paytm Payments Bank. Business has been done in manner harmful to depositors’ interest, said RBI, adding that Paytm Payments Bank failed to comply with norms stipulated in the payments bank licence issued to it.

The RBI also said it would make an application for winding up of the bank before the High Court.

“The general character of the management of the bank is prejudicial to the interest of depositors as also the public interest... no useful purpose or public interest would be served by allowing the bank to continue...,” the RBI said in a statement. Paytm Payments Bank was not complying with certain norms of the Banking Regulation Act, 1949, it added.

On Friday, Paytm shares closed 0.5 per cent lower at ₹1,153 apiece.

One97 Communications, which owns the Paytm brand, in a company filing said the company has no exposure to Paytm Payments Bank (PPBL) as it had already impaired its investment in the beleaguered entity as of March 31, 2024.

Paytm had obtained a limited banking licence in August 2015 that allowed it to take small deposits but not give out loans.

In January 2024, the RBI had ordered the bank to stop accepting fresh deposits due to, what it said at the time, non-compliance with rules, including on customer due diligence, use of funds and technology infrastructure.

Previously, the bank was directed by RBI to stop onboarding of new customers with effect from March 11, 2022. While the bank remains operational, its activities are severely limited to processing withdrawals of existing deposits and facilitating loan referrals through banking correspondents. It cannot take fresh deposits.