The Reserve Bank of India has formally removed Paytm Payments Bank Limited from its official roster of recognised scheduled banks, concluding another step in the regulatory unwind of the lender. The central bank announced that the entity has been excluded from the Second Schedule to the Reserve Bank of India Act, 1934.
The update follows a notification issued by the central bank on July 31, which was subsequently published in the Gazette of India in September. The Second Schedule functions as the official catalog of financial institutions that meet statutory standards and hold operational privileges under the banking framework.
The regulatory action arrives months after the central bank cancelled the banking licence issued to Paytm Payments Bank with effect from April 24. At the time of that decision, authorities stated that the financial institution operated in a manner detrimental to the interests of depositors and failed to comply with statutory norms under the Banking Regulation Act, 1949.
Subsequent legal developments included a directive from the Delhi High Court ordering the formal winding up of the company. During the initial licence cancellation, the central bank noted that the entity maintained adequate liquidity to cover its entire deposit liability during the liquidation process.
The lender, an associate firm of the fintech company founded by Vijay Shekhar Sharma, faced extensive supervisory penalties prior to the revocation of its permit. In March 2022, the regulator barred the institution from onboarding new customers due to material supervisory concerns and mandated an exhaustive system audit by an independent information technology firm.
Further restrictions followed in January and February, restricting fresh deposits, credit additions, and wallet top-ups. Representatives for the primary fintech platform clarified that consumer services remain unaffected by the removal from the scheduled list, pointing to existing multi-bank arrangements for unified payments interface operations and noting that material business ties with the payments bank concluded earlier.
The formal exclusion updates the central bank records to match the current liquidation standing of the lender. Legal proceedings regarding the winding-up process remain active before the High Court.