What happened
The Delhi High Court appointed Girikumar M. Nair, a former State Bank of India (SBI) chief general manager, as the liquidator of Paytm Payments Bank Ltd. The appointment followed the RBI’s decision to cancel the bank’s licence three months earlier.
The RBI’s direction specified the legal basis for the liquidator’s powers. The liquidator is to exercise powers under the Banking Regulation Act, 1949 and the relevant provisions of the Companies Act, 2013.
Background and earlier position
In the banking regulatory system, a payments bank can operate only with a valid licence granted by the RBI. When the RBI cancels a bank’s licence, the bank’s continued operations are not expected to continue as a going concern. In such situations, authorities move towards winding-up or liquidation under applicable laws, and courts may be asked to appoint an officer to carry out the liquidation process.
In this case, the sequence described in the news report is: RBI cancellation of the licence first, followed by the court appointment of a liquidator.
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