Delhi HC orders winding up of Paytm Payments Bank, appoints former SBI official as liquidator

The Delhi High Court has ordered the winding up of Paytm Payments Bank Ltd (PPBL), three months after the Reserve Bank of India cancelled its banking licence, drawing the curtains on the payments bank’s operations.

Through orders dated July 8 and July 22, the court directed that PPBL be wound up under the Banking Regulation Act, 1949.

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The court appointed Girikumar M Nair, a former chief general manager of State Bank of India, as the official liquidator of PPBL. With effect from July 8, Nair will exercise all the powers of the bank’s board and oversee the winding-up process, including the settlement of liabilities and repayment of depositors.

The RBI had cancelled PPBL’s banking licence with effect from April 24. The cancellation barred the entity from conducting banking business or undertaking any additional activities permitted to banks under the legislation.

Following the licence cancellation, the central bank approached the Delhi High Court, seeking PPBL’s winding up and Nair’s appointment as liquidator.

At the time of cancelling the licence, the RBI had said PPBL had sufficient liquidity to repay its entire deposit liabilities during the winding-up process.

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The regulator had cited multiple grounds for revoking the licence, including the manner in which the bank’s affairs were conducted, which it said was detrimental to the interests of the bank and its depositors. It had also said the general character of PPBL’s management was prejudicial to depositors and the public interest, and that the bank had failed to comply with conditions stipulated in its payments bank licence.

The April action followed a prolonged period of regulatory restrictions on PPBL. In January 2024, the RBI had barred the bank from accepting fresh deposits, credit transactions or top-ups in customer accounts, wallets, FASTags and other prepaid instruments after March 15, citing persistent non-compliance and material supervisory concerns.

The winding-up order applies to Paytm Payments Bank and does not, by itself, stop services offered through the broader Paytm platform using other banking partners.