CANCELLATION OF THE BANKING LICENCE OF PAYTM PAYMENTS BANK BY RBI AND WINDING UP ORDER BY HIGH COURT IS JUSTIABLE WHEN THE COMPANY RECOVERS FROM LOSSES AND POSTED PROFIT OF ₹552 CRORE PROFIT IN FY 2026

[R V Seckar]

CANCELLATION OF THE BANKING LICENCE OF PAYTM PAYMENTS BANK BY RBI AND WINDING UP ORDER BY HIGH COURT IS JUSTIABLE WHEN THE COMPANY RECOVERS FROM LOSSES AND POSTED PROFIT OF ₹552 CRORE PROFIT IN FY 2026

https://www.linkedin.com/pulse/cancellation-banking-licence-paytm-payments-bank-rbi-winding-sekar-2uu3c/

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CS R.V.Seckar

FCS 4075

JIO- 79047 19295

Pl do visit my blogs :

http://www.rvseckarcompanylaw.blogspot.com/

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[FCA Chandrasekaran Ramadurai]

 

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Dear CS R.V. Seckar and fellow members,

Thank you for sharing the LinkedIn piece and the perspective on Paytm’s remarkable financial turnaround.

One97 Communications (the listed Paytm entity) has indeed delivered an impressive recovery — swinging from a ₹1,776+ crore loss in FY23 to a ₹552 crore PAT in FY26, with operating revenue of ₹8,437 crore, strong merchant GMV growth, and healthy cash reserves. That operational and financial discipline deserves recognition.

However, the cancellation of the **banking licence of Paytm Payments Bank Limited (PPBL)** by the RBI on 24 April 2026 under Section 22(4) of the Banking Regulation Act, 1949, and the subsequent winding-up order by the Delhi High Court (orders dated 8 July and 22 July 2026) stand on an entirely separate legal and regulatory footing.

Key points that distinguish the two entities:

1. **PPBL is a distinct legal entity** holding a payments bank licence. Its affairs were found by the RBI to have been conducted “in a manner detrimental to the interest of the bank and its depositors” and the “general character of the management” was held prejudicial to the interest of depositors and the public interest. These findings relate to persistent non-compliance with the conditions of the payments bank licence, customer due diligence, IT/systems controls, and earlier supervisory directions (restrictions on new customers from March 2022 and on fresh deposits/credits from early 2024).

2. **Parent-company profitability does not cure subsidiary-bank regulatory failures.** Banking licences are granted and cancelled on the basis of the bank’s own compliance culture, governance, risk management and depositor-protection record — not on the consolidated P&L of the promoter group. The RBI explicitly noted that no useful purpose or public interest would be served by allowing the bank to continue.

3. **Depositors are protected.** The RBI has confirmed that PPBL has sufficient liquidity to repay its entire deposit liability. The Official Liquidator (Shri Girikumar M. Nair, former CGM, SBI) has been appointed and is now exercising the powers of the Board.

4. **Paytm itself has clarified** that the licence cancellation of PPBL has no material financial impact on One97 Communications and that the two entities operate independently.

In short, the parent’s return to profitability is a positive corporate story. The regulatory action against PPBL is a separate supervisory decision taken after years of progressive restrictions and is fully within the RBI’s statutory mandate under the Banking Regulation Act. The two developments can (and should) be viewed independently.

Regards,  
 

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This reply is factual, measured, and focuses on the legal/regulatory separation without being confrontational. It acknowledges the turnaround while firmly grounding the response in the actual RBI order and High Court directions. You can soften or strengthen the tone further if needed.

Thanks & regards

CA Chandrasekaran Ramadurai FCA, FCMA, ACS 

Chartered Accountant, Insolvency Professional 

Membership No. 027220 Firm Regn No. 018861S,

Insolvency Professional - IBBI/IPA-001/IP- P/00834/2017-18/11392 

Sole Proprietor: C Ramadurai & CO | Chartered Accountants,

JP Nagar, Bangalore 560078

 

Areas of Specialization: Taxation- Structuring, Compliance & Litigation, Commercial Contracts and Due Diligence  

 

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[R V Seckar]

Dear Sir,

Thanks for enlighteniong on the subject 

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