The Delhi High Court has ordered the winding up of Paytm Payments Bank Limited (PPBL) after accepting a petition filed by the Reserve Bank of India (RBI), marking the formal conclusion of the payments bank’s operations following months of regulatory action.
Justice Anish Dayal approved the appointment of former State Bank of India Chief General Manager Girikumar M. Nair as the Official Liquidator and, on July 29, allowed him to appoint law firm AZB & Partners as legal adviser for the winding-up process.
The RBI had cancelled PPBL’s banking licence in April 2026, citing governance failures and conduct that it said was detrimental to the interests of the bank and its depositors. While the regulator maintained that the bank has sufficient liquidity to repay all deposit liabilities, the liquidation process will now proceed under court supervision.
Paytm Payments Bank had earlier agreed in principle to voluntary winding up and later informed the RBI that it would not contest the regulator’s move.
Court Clears Liquidation Process
The latest order, passed by Justice Anish Dayal, permits the Official Liquidator to appoint AZB & Partners under Section 291 of the Companies Act, 2013, to provide legal assistance during the winding-up process.
According to submissions before the Court, the firm will advise on regulatory compliance, legal proceedings and other statutory requirements involved in closing the bank’s operations. The Court noted that AZB & Partners had previously advised the RBI in matters concerning Paytm Payments Bank, making it well placed to assist the liquidator.
Earlier this month, the High Court accepted the RBI’s petition seeking the bank’s winding up under Sections 38 and 39 of the Banking Regulation Act, 1949, after Paytm Payments Bank decided not to oppose the proceedings.
Girikumar M. Nair has been authorised to exercise all powers previously vested in the bank’s board and will submit a preliminary report to the Court within two months. His monthly remuneration of ₹5.5 lakh will be paid from the bank’s realised assets.
The RBI has reiterated that the bank possesses enough liquidity to repay all eligible depositors in full during the liquidation process, seeking to reassure customers about the safety of their funds.
From Regulatory Crackdown to Closure
The winding-up order brings to an end a prolonged regulatory process that began several years ago. In March 2022, the RBI barred Paytm Payments Bank from onboarding new customers over supervisory concerns. In January 2024, it further restricted the bank from accepting fresh deposits and credit transactions, citing persistent non-compliance.
On April 24, 2026, the central bank cancelled the bank’s licence under Section 22(4) of the Banking Regulation Act, stating that the institution’s affairs had been conducted in a manner detrimental to depositors and that its management was prejudicial to public interest.
A day later, PPBL’s board approved voluntary winding up in principle, and shareholders passed a special resolution supporting the move. Although the High Court initially granted the bank time to make a representation to the RBI, its board ultimately resolved not to submit any proposal, clearing the way for the court to approve the regulator’s petition.
Importantly, the liquidation applies only to Paytm Payments Bank and does not automatically affect digital payment services offered by the broader Paytm platform through partner banks.
The Logical Indian’s Perspective
The closure of Paytm Payments Bank is a reminder that trust is the cornerstone of every financial institution. Strong innovation in digital finance must go hand in hand with transparent governance, regulatory compliance and robust safeguards for customers.
While decisive regulatory action is essential when public interest is at stake, ensuring that depositors are protected and informed throughout the process is equally important.
As India’s digital banking ecosystem continues to grow, accountability and consumer confidence must remain central to its progress. What steps do you think regulators and fintech companies should take to better balance innovation with consumer protection and public trust?
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