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The Delhi High Court has ordered the winding up of Paytm Payments Bank Limited (PPBL) following the Reserve Bank of India's decision to revoke its banking licence earlier this year over persistent regulatory violations. The court has appointed former State Bank of India executive Girikumar M. Nair as the official liquidator, who has assumed the powers of the bank's board. PPBL had faced regulatory action over the past few years, including restrictions on onboarding new customers and curbs on deposits and wallet top-ups, before its licence was cancelled.
The Delhi High Court has ordered the winding up of Paytm Payments Bank Limited (PPBL), the Reserve Bank of India (RBI) said on Tuesday. The development follows the RBI's decision earlier this year to cancel the bank's licence after finding repeated non-compliance with regulatory requirements and concluding that the bank's affairs were being conducted in a manner detrimental to both its own interests and those of its depositors.
Following the licence cancellation, the RBI had stated that it would approach the Delhi High Court seeking the winding up of PPBL under the provisions of the Banking Regulation Act, 1949. Acting on the central bank's application, the court passed orders earlier this month directing that the bank be wound up under the Banking Regulation Act, 1949, read with the Companies Act, 2013.
The court has appointed Girikumar M. Nair, former Chief General Manager of State Bank of India, as the Official Liquidator of PPBL. According to the RBI, the official liquidator has been vested with all powers prescribed under the Banking Regulation Act, 1949, along with the applicable provisions of the Companies Act, 2013.
The RBI said that, under the court's order, the official liquidator has exercised all the powers of the PPBL board with effect from earlier this month. He will oversee the liquidation process in accordance with the legal framework governing banking companies.
Paytm Payments Bank, an associate entity of Vijay Shekhar Sharma-promoted fintech company Paytm, had been under the RBI's regulatory scrutiny for several years. Regulatory action against the bank began in 2022, when it was prohibited from onboarding new customers after the central bank identified material supervisory concerns. At that time, the bank was also instructed to appoint an independent IT audit firm to conduct a comprehensive audit of its technology systems.
The regulatory action intensified in early 2024, when the RBI imposed multiple business restrictions on PPBL. These included prohibiting fresh deposits, credits and top-ups in existing customer savings accounts, prepaid payment instruments and wallets. Customers were, however, permitted to withdraw or utilise their existing balances within the prescribed regulatory framework.
After continued supervisory assessments, the RBI cancelled PPBL's banking licence earlier this year, stating that the bank had failed to address persistent compliance issues despite repeated regulatory interventions. The central bank had also observed that the manner in which the bank's affairs were being conducted was detrimental to the interests of both the institution and its depositors.
The winding-up order marks the final stage in the regulatory action initiated against PPBL. With the official liquidator now assuming control, the liquidation process will proceed under the supervision of the Delhi High Court in accordance with the Banking Regulation Act and the Companies Act.
Source PTI
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