Delhi High Court orders winding up of Paytm Payments Bank after RBI licence revocation

New Delhi: The final chapter has begun for Paytm Payments Bank Limited. The Delhi High Court has ordered the winding up of the payments bank following the cancellation of its banking licence by the Reserve Bank of India (RBI), paving the way for the formal liquidation process.

The RBI said the High Court, through orders dated July 8 and July 22, directed that Paytm Payments Bank be wound up under the Banking Regulation Act, 1949, read with the Companies Act, 2013.

The court appointed former State Bank of India chief general manager Girikumar M Nair as the official liquidator, authorising him to exercise all powers of the bank’s board from July 8, 2026.

In a separate order passed on July 28, justice Anish Dayal permitted the official liquidator to appoint AZB & Partners as legal adviser for the winding-up process. The court was informed that the firm would assist the liquidator on regulatory compliance and legal proceedings arising during the liquidation. The appointment required the court’s approval under Section 291 of the Companies Act, 2013.

The RBI cancelled Paytm Payments Bank’s licence in April 2026 under Section 22(4) of the Banking Regulation Act after concluding that the bank had persistently failed to comply with regulatory requirements. The central bank said the bank’s affairs were being conducted in a manner detrimental to its interests and those of its depositors, and that its management was prejudicial to public interest.

However, the RBI had clarified that the bank possessed sufficient liquidity to repay all deposit liabilities during the winding-up process.

Following the licence cancellation, the bank’s board approved voluntary winding up in principle on April 25, and shareholders subsequently passed a special resolution supporting the move.

When the RBI’s winding-up petition first came before the High Court in May, Paytm Payments Bank had sought time to submit a proposal to the regulator in the interest of depositors. The court granted the bank eight weeks for the purpose.

However, the bank’s board later resolved not to submit any proposal or representation to the RBI, communicating its decision to the regulator in June. The court subsequently accepted the RBI’s petition and ordered the winding up of the bank.

The High Court has also directed the official liquidator to submit a preliminary report within two months of the winding-up order. He will be paid Rs 5.5 lakh per month from the bank’s assets while overseeing the liquidation process.

Paytm Payments Bank, an associate of Paytm, had been under heightened regulatory scrutiny for several years. In 2022, the RBI barred it from onboarding new customers over supervisory concerns and ordered a comprehensive IT audit. In early 2024, the regulator imposed further restrictions, including a ban on fresh deposits, credits and wallet top-ups.

With the court’s order now in effect, the liquidation process has formally begun, bringing an end to the banking operations of Paytm Payments Bank after years of regulatory action.