Paytm Payments Bank operations will be wound up: RBI
The beginning of the termination of Paytm Payments Bank Limited
Paytm Payments Bank Limited’s procedure for winding up has started given the authority it received from the Delhi High Court. The government has appointed Girikumar Nair as the Official Liquidator for overseeing the winding up of the bank. The RBI has previously revoked the license of the bank for severe violations.
The Reserve Bank of India has made the announcement regarding the winding up of Paytm Payments Bank
The Reserve Bank of India released a press release that mentioned that the process of winding up is proceeding as per the provisions of Indian Banking Regulation Act (1949) and Companies Act (2013). The directions from the Delhi High Court state that the bank operations are getting liquidated.
The government has selected Girikumar Nair as the Official Liquidator, who has previously been the Chief General Manager in State Bank of India.
Why Did RBI Cancel Paytm Payments Bank’s Licence?
Previously, the RBI took away the banking permission of Paytm Payments Bank after finding alarming instances of violation of rules and regulations and problems concerning the governance and activities of the bank. The authority found out that the bank has violated a number of regulatory laws, resulting in withdrawal of bank’s licence.
Depositors’ Money Remains Safe
According to the central bank, customers’ deposits will not be impacted by the winding-up process. “Our liquidity position is perfectly aligned to meet all the obligations towards our depositors,” said RBI officials.
What Happens Next?
The Official Liquidator will carry out the legal and financial proceedings necessary for the closure of the bank including settling dues, repaying depositors and complying with all necessary formalities.
Conclusion:
The winding-up of Paytm Payments Bank marks the final phase of regulatory action taken by the RBI against the lender. While the bank will cease operations, the central bank has reassured customers that their deposits remain secure and will be repaid through the liquidation process. The appointment of an Official Liquidator is expected to ensure a transparent and legally compliant closure of the bank.
Frequently Asked Questions (FAQs)
1. What is the cause of the shutting down of Paytm Payments Bank?
The Reserve Bank of India ordered the shutting down of Paytm Payments Bank after it revoked its licence for serious breaches of regulations, which was backed by the Delhi High Court.
2. Who has been appointed as the Liquidator?
Girikumar Nair former General Manager of State Bank of India has been appointed as the Liquidator.
3. Is the money safe for customers?
Yes. RBI has stated that the bank has enough cash to meet its liabilities to depositors.
4. Will Paytm app be functional?
This order of winding up applies only to Paytm Payments Bank, while the other functions of Paytm will continue depending upon the regulations approved for them.
5. Which rules are applied to the winding up?
The process is being executed under the Companies Act, 2013 and the Banking Regulation Act, 1949.
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