RBI Cancels Paytm Payments Bank Licence As ₹800 Crore In Customer Deposits Remain Frozen Two Years After Shutdown

The official conclusion of the Paytm Payments Bank story has been reached. Using Section 22(4) of the Banking Regulation Act, 1949, the Reserve Bank of India withdrew Paytm Payments Bank Limited’s banking license on April 24, 2026, with effect from that day’s close of business. However, a concerning picture of the condition of customer savings that are still stuck at the now-defunct bank came out even as the regulator moved to wind down the firm through the High Court. Over ₹800 crore in client funds are still stuck at Paytm Payments Bank almost two full years after operations were first suspended, according to sources quoted by CNBC-TV18.

The particulars of that figure’s breakdown are disturbing. About ₹400 crore of the ₹800 crore is in frozen accounts, meaning that users are unable to access or withdraw the money. Even though the bank has been in a wind-down position for a long time, the remaining ₹400 crore reflects unclaimed deposits that have not been taken out.

“The Reserve Bank of India has cancelled the licence of Paytm Payments Bank Limited effective April 24, 2026, citing regulatory non-compliance and risks to depositor interests. Previously, the bank was directed to stop the onboarding of new customers, and certain business…”~Ministry of Information and Broadcasting

How Paytm Payments Bank Got Here: A Timeline Of Escalating Restrictions

It took some time for Paytm Payments Bank to fail. It was the result of a multi-year regulatory decline that started in 2018 when the RBI first raised issues regarding the bank’s compliance procedures. When the government ordered the bank to completely cease enrolling new clients in March 2022, things really got out of hand. This was a major setback for a business strategy that relied on growing its user base. The bank was fined ₹5.39 crore by the RBI in October 2023 for failing to keep a sufficient distance between its operations and those of its parent company, One97 Communications.

The decisive blow came in January 2024, when the RBI directed the bank to halt all fresh deposits, wallet top-ups, and credit transactions effectively shutting down the core of its banking operations. By February 29, 2024, customers were barred from depositing or receiving any money into their accounts. They could only withdraw what was already there, within the limits of their available balance.

The same month, Vijay Shekhar Sharma, founder of One97 Communications and the majority shareholder of Paytm Payments Bank with a 51% stake, stepped down as part-time non-executive chairman and board member. One97 Communications, which holds the remaining 49%, simultaneously withdrew its nominee director from the bank’s board. Veteran banker S. Sridhar was subsequently appointed as non-executive chairman to oversee the wind-down process.

“#RBI cancels license Of #Paytm Payment Bank Effective…”~Shereen Van

The Scale Of Deposits And The RBI’s Assurance On Repayment:

Paytm Payments Bank had around ₹5,500 crore in total client deposits at the time of the RBI’s January 2024 restrictions. This was a sizable sum of money that was divided among gift cards, current accounts, savings accounts, and wallets. The bank’s FY25 annual report revealed that deposits had dropped to ₹1,395.22 crore across wallets, current and savings accounts, and ₹33.13 crore in gift instruments by March 31, 2025, more than a year after the freeze. Customers who were able to access their money made withdrawals, which is reflected in that reduction.

But the CNBC-TV18 report makes clear that the pace of withdrawal has stalled significantly. The ₹800 crore that remains is divided between two distinct categories of stranded funds — frozen accounts from which customers cannot withdraw at all, and unclaimed balances where account holders have either not initiated withdrawal or are perhaps unaware their money is still sitting in an institution that no longer has an operating banking licence.

The RBI, in cancelling the licence, did offer a specific assurance to depositors: the bank holds sufficient liquidity to repay all its deposit obligations upon winding up. However, the process of winding up will now be initiated through the High Court — a legal process that, depending on its complexity, could extend the timeline before all depositors are made whole.

“RBI cancels Paytm Payments Bank licence; cites governance lapses. Regulator says bank has sufficient liquidity to repay all deposits upon winding up and will approach High Court.”~Business Standard

What The Closure Means For Paytm And Whether Customers Will Get Their Money Back:

For One97 Communications, the listed parent company that operates the Paytm brand, the licence cancellation formally closes a chapter that had already been functionally over for more than two years. The company stated in an exchange filing that it has no material business arrangements with Paytm Payments Bank and no financial exposure to the entity — having already migrated its payment and financial services operations to third-party banking partners after the January 2024 crackdown.

Paytm’s core day-to-day services: UPI payments, merchant acquiring, QR code payments remain fully operational and unaffected by the licence cancellation. The company’s stock, however, has remained under pressure through this period. When the original RBI directive landed in January 2024, One97’s shares fell by around 20% in a single trading session. The formal cancellation has renewed sentiment concerns around the stock, even as the business itself has pivoted away from its banking arm.

Market analysts who follow the fintech space have offered mixed readings on the strategic implications. Pranav Gundlapalle, a senior research analyst, noted that the payments bank experiment was “to some extent an industry and regulatory experiment” and that exiting this structure could actually give Paytm more room to pursue an NBFC licence potentially opening a new chapter in its financial services ambitions. Mohit Agarwal from Unaprime Investment Advisors added that Paytm’s core value today lies in its payments distribution business, merchant acquiring, and loan sourcing and that this exit could prove strategically positive if executed cleanly.

For the hundreds of thousands of customers whose money remains trapped in frozen or unclaimed accounts, however, the question is a more immediate one and the answer depends heavily on how efficiently the RBI and the High Court can move through the formal winding-up process.

“EXCLUSIVE | ₹800 crore of deposits still stuck in Paytm Payments Bank, two years after halt in operations. Of this, roughly ₹400 crore is in frozen accounts and ₹400 crore remains unclaimed. RBI has cancelled the bank’s licence effective April 24, 2026.”~CNBC-TV18