RBI removes Paytm Payments Bank from Second Schedule after Delhi High Court winding order
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Banking regulation and fintech oversight: a GS3 and Economy case study on regulatory compliance.
Why in news
The RBI removed Paytm Payments Bank Ltd (PPBL) from the Second Schedule of the RBI Act, 1934, following a Delhi High Court order to wind up the bank after its license was cancelled for non-compliance.
Background
The RBI removed PPBL from the Second Schedule of the Reserve Bank of India Act, 1934, on October 7, 2026. The bank had faced successive restrictions starting from March 11, 2022, and January 31, 2024, before its license was cancelled in April.
Facts for Prelims
- BodyReserve Bank of India (RBI) is the regulatory body that manages the Second Schedule of the RBI Act, 1934
- Act / BillReserve Bank of India Act, 1934 governs the inclusion of banking entities in the Second Schedule
- FactPaytm Payments Bank Ltd (PPBL) license was cancelled in April 2026 due to non-compliance and detrimental affairs
- PlaceDelhi High Court issued the winding up order for PPBL
Prelims practice question
Which act governs the inclusion of banking entities in the Second Schedule managed by the RBI?
- (a)Reserve Bank of India Act, 1934
- (b)Banking Regulation Act, 1949
- (c)Payment Systems Act, 2000
- (d)Financial Services Act, 1991
Show answer
Answer: (a) Reserve Bank of India Act, 1934 — The Reserve Bank of India Act, 1934 governs the inclusion of banking entities in the Second Schedule.
For Mains
Q. Examine the regulatory challenges faced by fintech entities in India and the role of the RBI in ensuring compliance with banking norms.
Dimensions to cover in your answer
- Regulatory arbitrage: Difficulty in monitoring non-banking financial companies (NBFCs) and payment banks for systemic risks
- Compliance oversight: Balancing rapid fintech innovation with stringent KYC and AML protocols under RBI Act
Keywords: Regulatory Compliance · Fintech Oversight · Monetary Stability · Banking License · Systemic Risk
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