Delhi High Court orders winding up of Paytm Payments Bank

The court-appointed liquidation process follows years of regulatory action over compliance lapses, with the Reserve Bank of India maintaining that the payments bank has sufficient liquidity to meet all depositor obligations during closure.

The Delhi High Court has directed the winding up of Paytm Payments Bank, bringing to a close the operations of the lender after years of regulatory action over compliance deficiencies. The order follows a petition by the Reserve Bank of India (RBI), which had sought the bank's closure after cancelling its banking licence earlier this year.

In a statement, the RBI said the High Court, through orders issued on July 8 and July 22, approved the winding up of Paytm Payments Bank under the provisions of the Banking Regulation Act, 1949, read with the Companies Act, 2013. The decision marks the final legal step in the closure process initiated by the central bank.

The court has also appointed Girikumar M. Nair, a former Chief General Manager at State Bank of India, as the official liquidator. He will take charge of the liquidation process and assume the powers previously vested in the bank's board of directors with effect from July 8.

Regulatory action followed prolonged compliance concerns

Paytm Payments Bank, promoted by One97 Communications founder Vijay Shekhar Sharma, had been under regulatory scrutiny for several years. The RBI first restricted the bank from onboarding new customers in March 2022 after identifying supervisory concerns.

The regulatory measures intensified in January 2024 when the central bank prohibited the payments bank from accepting fresh deposits, citing continued non-compliance with regulatory requirements. The RBI subsequently initiated steps to wind up the institution after determining that corrective measures had failed to address its concerns.

In April 2026, the central bank cancelled the bank's licence, stating that its affairs were being conducted in a manner considered detrimental to the interests of depositors. Following the licence cancellation, the RBI approached the Delhi High Court seeking formal liquidation proceedings and the appointment of an official liquidator.

Depositor interests remain protected

The RBI has reiterated that Paytm Payments Bank possesses adequate liquidity to meet its entire deposit liabilities during the winding-up process. The assurance is intended to safeguard customer interests as the liquidation proceeds under judicial supervision.

Once regarded as India's largest payments bank after receiving its licence in 2015, Paytm Payments Bank played a significant role in the country's expanding digital payments ecosystem. Unlike conventional commercial banks, payments banks are permitted to accept deposits and facilitate payment services but are not allowed to extend loans.

Following the RBI's licence cancellation earlier this year, One97 Communications had clarified that it no longer had any financial exposure to Paytm Payments Bank, stating that its investment in the associate entity had already been fully impaired by March 2024.

The High Court's order formally concludes the regulatory process against the payments bank, while the court-appointed liquidator will now oversee the settlement of liabilities and completion of all statutory procedures in accordance with applicable banking and company laws.