Paytm Payments Bank Faces Impending License Revocation After Failed Takeover Talks

Paytm Payments Bank is facing the looming risk of license revocation as its operations wind down, making it a significant instance in Indian banking history. Sources suggest that the RBI may consider drastic actions, such as canceling the bank’s license and appointing an administrator to oversee critical aspects.

Despite multiple attempts at due diligence for a potential takeover, Paytm Payments Bank has not found a suitable buyer. Large banks, including a rival payments bank, have shown interest in acquiring the bank but backed out due to concerns over inadequate KYC compliance.

Following a board reconstitution and contract terminations, Paytm founder Vijay Shekhar Sharma‘s majority stake in the bank has come under scrutiny, with the RBI signaling strict regulatory oversight.

An explicit FAQ from the RBI indicates that no new deposits or credits will be allowed after March 15, 2024, pointing towards the bank’s imminent closure. Depositors are advised to withdraw funds before the deadline to avoid transfer to the unclaimed deposits account.

In the event of license revocation, Paytm Payments Bank’s unclaimed deposits will be managed under the Deposit Education and Awareness Fund Scheme, 2014. An appointed administrator will be responsible for handling deposit claims and ensuring satisfactory repayments to depositors.