The Reserve Bank of India (RBI) is considering an unprecedented move to revoke the banking licence of Paytm Payments Bank ahead of its scheduled winding down operations on March 15th.
If it proceeds, this would mark the first time in over 20 years that the RBI has cancelled a bank’s licence.
Persistent Non-Compliance Drives Expected Regulatory Action
According to a media report, the drastic action is prompted by Paytm Bank’s repeated lack of due diligence and non-compliance with multiple regulatory requirements.
On January 31st, the RBI had banned the bank from taking fresh deposits and issuing loans over consistent breaches. A system audit highlighted persistent concerns.
The March 15th deadline for settling all accounts was an extension to the original February 28th timeline enforced by the RBI.
Appointment of Administrator Possible
Per the report, the RBI may appoint an administrator to oversee critical aspects of Paytm Bank’s functioning as part of the licence revocation process.
This follows One97 Communications, Paytm’s parent firm, recently approving the discontinuation of several inter-company agreements with the payments bank.
