Delhi HC orders winding up of Paytm Payments Bank after RBI action

The Enforcement Action

The Reserve Bank of India has confirmed that Paytm Payments Bank Limited (PPBL) is being wound up, following the cancellation of the bank's licence and orders passed by the High Court of Delhi. In a press release dated 28 July 2026 (reference 2026-2027/771), the RBI said the High Court, by orders dated 8 July 2026 read with 22 July 2026, directed the winding up of PPBL and appointed an Official Liquidator to take charge of the bank.

According to the RBI, the banking licence held by PPBL was cancelled on 24 April 2026 under Section 22(4) of the Banking Regulation Act, 1949, with effect from the close of business that day. The winding-up orders followed the RBI's own application to the High Court, which the regulator says it moved under Sections 38 and 39 of the same Act. The court has named Shri Girikumar M Nair, a former Chief General Manager of the State Bank of India, as the Official Liquidator.

Per the press release, the liquidator is empowered to "exercise all the powers prescribed under the provisions of the Banking Regulation Act, 1949" together with the applicable provisions of the Companies Act, 2013. In practical terms, the appointment transfers control of the bank's assets, records and residual obligations from its management to a court-supervised officer.

PPBL is an associate of the listed payments company One97 Communications Limited. Neither PPBL nor its parent has issued a public response to the winding-up orders on the official record at the time of writing. This report frames the action strictly as a regulatory and judicial step - a licence cancellation and a court-ordered winding up - and not as any allegation against a named individual.

How the Scheme Worked

This is a supervisory and licensing action rather than a case of alleged market manipulation, so the "mechanism" here is the regulatory process by which a payments bank moves from restriction to closure. The RBI's 28 July press release records the sequence in outline, and the underlying grounds sit with the regulator's earlier directions.

The chronology on the official record runs as follows. The RBI first curtailed PPBL's operations through a series of business restrictions, progressively barring the bank from taking on new activity. With those curbs in place, the regulator cancelled the bank's licence on 24 April 2026 under Section 22(4) of the Banking Regulation Act. Cancellation of a banking licence removes the legal authority to carry on banking business in India, which in turn sets the stage for an orderly winding up rather than continued operation.

Having cancelled the licence, the RBI applied to the High Court of Delhi for the bank to be wound up. The court passed its winding-up orders on 8 July 2026, read with a further order on 22 July 2026, and appointed the Official Liquidator. From that point the liquidator, not the bank's board, controls the process.

It is worth being precise about what the 28 July press release does and does not say. It sets out the licence-cancellation date, the statutory sections invoked, the dates of the court orders and the identity of the liquidator. It does not, in this particular release, restate the detailed grounds for cancellation; those flow from the RBI's earlier supervisory actions against the bank. Readers should therefore treat the closure as the outcome of a compliance and supervisory process, documented step by step by the regulator, rather than as a single dramatic event. A payments bank also operates under a narrower remit than a full-service bank: it can accept deposits up to a per-customer ceiling and cannot lend, so the exposure in a winding up is to balances held rather than to loans owed.

The Law Invoked

The RBI press release cites three provisions of the Banking Regulation Act, 1949, and the reporting here is confined to those.

Section 22 governs the licensing of banking companies. Sub-section (4), which the RBI invoked on 24 April 2026, is the provision under which the regulator may cancel a licence already granted, for example where a banking company fails to comply with the conditions or requirements attached to it. Cancellation under this section is what ends a bank's authority to operate.

Sections 38 and 39, cited as the basis for the RBI's application to the High Court, deal with winding up. Section 38 empowers the High Court to order the winding up of a banking company, including on an application by the RBI in defined circumstances. Section 39 concerns the appointment and role of the Official Liquidator in such a winding up. The press release also notes that the liquidator will operate under the applicable provisions of the Companies Act, 2013, which supplies the general framework for corporate liquidation once a company is being wound up. Each provision is described here only in the plain-English sense of what it does; the specifics of the proceedings rest with the court and the regulator.

What Happens Next

With the winding-up orders passed and an Official Liquidator appointed, the matter now moves into a court-supervised liquidation. The liquidator's task is to take custody of PPBL's assets and records, verify and rank claims, realise assets and distribute proceeds in the order of priority the law prescribes. Communications to customers and creditors in a winding up typically come from the liquidator's office rather than from the former management.

Orders of a single judge of the High Court can ordinarily be challenged before a Division Bench of the same court, and thereafter, in appropriate cases, before the Supreme Court. Any such steps would be a matter for the parties entitled to take them. Because a payments bank does not lend, the principal question for most customers is the treatment of deposit balances held with the bank, which the liquidation process is designed to address in an orderly manner.

For depositors, the immediate practical point is that closure is now a formal, supervised process with a named officer accountable to the court. That tends to favour orderly resolution over the uncertainty of an unregulated collapse, though timelines in liquidations can be long.

What It Means

The clearest signal from this action is that the RBI is prepared to follow a licence cancellation through to a full winding up, using the courts, when it concludes that a bank should no longer operate. For depositors and customers, the episode is a reminder to keep balances and records in order and to act on official communications promptly.

There is a concrete protection worth knowing. Deposits with Indian banks, including payments banks, are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly owned RBI subsidiary, up to 5 lakh rupees per depositor per bank. Because payments banks may hold only a limited balance per customer, the great majority of individual balances fall within that insured limit. Affected customers should watch for notices from the Official Liquidator and the DICGC on how and when to lodge claims.

More broadly, the case underlines the value of checking a bank's standing directly at source. The RBI publishes lists of licensed banks and payment operators on its website, and its press releases record supervisory actions as they are taken. Verifying an institution's current status through those official channels, rather than relying on brand familiarity, is the simplest protective habit an ordinary customer can adopt.

FAQ

What exactly did the RBI announce?

Per its press release dated 28 July 2026, the RBI confirmed that the High Court of Delhi, by orders dated 8 July 2026 read with 22 July 2026, directed the winding up of Paytm Payments Bank Limited and appointed an Official Liquidator. The bank's licence had earlier been cancelled on 24 April 2026 under Section 22(4) of the Banking Regulation Act, 1949.

What kind of action is this?

It is a regulatory and civil-court process. The RBI cancelled the bank's licence under the Banking Regulation Act, 1949 and then obtained winding-up orders from the High Court of Delhi, which appointed an Official Liquidator. The matter concerns the bank as an institution rather than any named individual. As a general principle in Indian law, a person is presumed innocent until proven guilty, and any allegation is tested through due process before it can be treated as a finding.

What happens to money held in a Paytm Payments Bank account?

Customer balances now fall within a court-supervised liquidation managed by the Official Liquidator. Deposits are additionally insured by the DICGC up to 5 lakh rupees per depositor per bank. Customers should follow official notices from the liquidator and the DICGC for the process and timeline for claiming balances.

Can the winding-up order be challenged?

An order passed by a single judge of a High Court can generally be appealed to a Division Bench of the same court, and thereafter, in appropriate cases, to the Supreme Court. Whether any appeal is filed is a matter for the parties entitled to bring one; nothing in the record indicates the outcome of any such step.

How can I check whether a bank is licensed?

The RBI publishes lists of licensed banks and authorised payment operators, and issues press releases when it takes supervisory action, on its website at rbi.org.in. Checking an institution's current status through these official sources is the most reliable way to confirm that a bank is operating with a valid licence.

Where can I read the official record?

The RBI's press release on the winding up of Paytm Payments Bank Limited, dated 28 July 2026, is published on the RBI website and is the primary source for this report.

This report is based on the official RBI press release dated 28 July 2026 on the winding up of Paytm Payments Bank Limited. It was surfaced via coverage in The Economic Times.