The Reserve Bank of India (RBI) has formally removed Paytm Payments Bank Ltd (PPBL) from the list of scheduled banks, marking another regulatory step following the cancellation of the lender's banking licence.
The central bank said on Wednesday that Paytm Payments Bank Limited has been excluded from the Second Schedule to the Reserve Bank of India Act, 1934.
According to the RBI, the exclusion was made through a notification dated July 31, 2026, and was subsequently published in the Gazette of India on September 7.
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The Second Schedule of the RBI Act contains the list of banks recognised as “scheduled banks”. Inclusion in the schedule is subject to the bank meeting specified requirements and brings certain regulatory and operational privileges.
The move comes months after the RBI cancelled PPBL's banking licence over concerns about the manner in which the bank was being run.
In April this year, the central bank said the affairs of Paytm Payments Bank had been conducted in a manner that was detrimental to the interests of the bank itself as well as its depositors.
The Delhi High Court later ordered the winding up of Paytm Payments Bank.
PPBL, an associate of fintech company Paytm, founded by Vijay Shekhar Sharma, had been facing regulatory scrutiny for several years.
The RBI had, in March 2022, barred the payments bank from onboarding new customers after flagging material supervisory concerns. The bank was also directed to appoint an IT audit firm to conduct a comprehensive audit of its information technology systems.
The regulatory action escalated in early 2024.
On January 31, 2024, the RBI imposed business restrictions on PPBL, which were subsequently modified through an order dated February 16. Among other measures, the bank was barred from accepting further deposits or credits, including through top-ups, in customer accounts, prepaid instruments and wallets.
The restrictions significantly curtailed the banking operations of PPBL and followed the RBI's assessment of persistent compliance and supervisory issues.
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The latest exclusion from the Second Schedule is therefore a formal regulatory consequence of the bank losing its licence.
Paytm Payments Bank was established as a payments bank to provide services including deposits, payments and remittances, subject to the regulatory framework governing the category. Unlike conventional banks, payments banks are subject to restrictions on the activities they can undertake.
The RBI's latest notification does not represent a new banking restriction but formally updates the central bank's list of scheduled banks to reflect PPBL's changed regulatory status.
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