CURRENT AFFAIRS | 25 APRIL 2026
CLAT GK + Banking Law & Financial Regulation
The Reserve Bank of India has cancelled the licence of Paytm Payments Bank Ltd (PPBL), invoking its powers under Section 35A of the Banking Regulation Act, 1949. RBI’s order cited persistent KYC and anti-money-laundering failures — including the bank’s tolerance of a single PAN being linked to multiple customer accounts, a textbook money-laundering vulnerability. PPBL had already been barred from onboarding new customers since March 11, 2022, after a 2018 inspection flagged systemic gaps. The owner is One 97 Communications (51%) led by Vijay Shekhar Sharma.
Constitutional / Legal Framework
- Banking Regulation Act 1949 — Section 35A: Empowers RBI to issue directions in public interest, including suspending operations or cancelling licences.
- Sec 22 BR Act 1949: Licensing requirement for banking companies.
- Prevention of Money Laundering Act, 2002 (PMLA): KYC violations create predicate-offence exposure.
- RBI’s KYC Master Directions (2016, periodically updated): Mandate Customer Due Diligence, ongoing monitoring, PEP checks.
- Puttaswamy v. Union of India (2017, 9-judge): Privacy as fundamental right under Art 21 — informs Aadhaar/PAN data handling.
- Digital Personal Data Protection Act, 2023: Significant Data Fiduciary obligations on financial intermediaries.
- Precedents: PMC Bank (2020) and Sri Guru Raghavendra Sahakara Bank — RBI moratorium and licence revocation.
Why This Matters for CLAT 2027
A high-frequency intersection of banking law, white-collar regulation, and data protection — exactly the layered fact pattern CLAT loves. The set-up tests Section 35A BR Act, the 50% deposit cap on Payments Banks, the PMLA predicate-offence chain, and the Puttaswamy–DPDP overlap on KYC data. Expect a passage on RBI’s regulatory toolkit followed by inferential questions on proportionality, natural justice, and licence-cancellation precedent (PMC, Sri Guru Raghavendra).
Key Facts at a Glance
| Regulator | Reserve Bank of India |
| Action | Licence cancellation of Paytm Payments Bank |
| Statute Invoked | Sec 35A, Banking Regulation Act 1949 |
| Owner | One 97 Communications (51%) — Vijay Shekhar Sharma |
| Onboarding Bar Since | March 11, 2022 |
| Trigger | Single PAN linked to multiple accounts (KYC/AML breach) |
| Deposit Cap | Rs 2 lakh per customer (Payments Bank rule) |
| Indian Precedents | PMC Bank, Sri Guru Raghavendra Sahakara Bank |
| Data Overlap | Puttaswamy (2017) + DPDP Act 2023 |
Mnemonic / Memory Hook
P-A-Y-T-M — PAN-multiple-accounts (trigger) · AML/KYC failure · Year 2022 onboarding bar · Thirty-Five-A BR Act invoked · Money-laundering precedent (PMC).
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