On Friday, the Reserve Bank of India (RBI) canceled the banking license of Paytm Payments Bank Limited, citing ongoing non-compliance and serious operational concerns. The RBI's statement indicated that the bank's management practices were detrimental to both depositors and the public interest, stating that allowing the bank to continue would not serve any useful purpose. This decision follows a series of regulatory actions against the bank, including a March 2022 ban on onboarding new customers and further restrictions in March 2024 that prohibited it from accepting new deposits and processing transactions. Founded in 2017 by Vijay Shekhar Sharma, Paytm Payments Bank had amassed over 30 million accounts and was the largest issuer of FASTags, with more than 8 million tags in circulation. Following the license revocation, the bank will enter winding-up proceedings, with the RBI ensuring it has sufficient liquidity to meet its deposit liabilities. This unprecedented action against a specialized bank underscores the declining significance of payment banks in the Indian banking sector, as digital payment methods like the Unified Payment Interface (UPI) have gained popularity, leading to increased compliance costs for these institutions.