Policy · Financial Services

Sebi notice, Paytm bank winding up, UPI MDR

By Startup Enthusiast · 9 September 2026

Date: 9 September 2026
Company: Paytm
What it does: Digital payments and financial services
Kind: Policy
Sector: Financial Services

What they do

Paytm offers UPI payments, recharges, bill payments, insurance, and credit cards

What happened

SEBI issued a show cause notice to Paytm's CEO and CFO over a 2023 loan announcement; Delhi HC ordered winding up of Paytm Payments Bank; NPCI introduced…

Why it matters

The MDR on large UPI transactions will generate additional revenue for Paytm from merchant transactions that were earlier free

The details

SEBI issued a show cause notice to Paytm CEO Vijay Shekhar Sharma and CFO Madhur Deora on 11 Aug 2026.
The notice questions the timing of Paytm's Dec 6, 2023 announcement restricting small personal loans below ₹50,000 after RBI's clampdown on unsecured consumer lending.
SEBI is investigating whether Paytm leadership timely informed investors of the loan cutbacks and if the announcement complied with securities market regulations.
Executives have 14 days to reply; a show cause is not an accusation but a chance to respond before SEBI decides on a breach.
Paytm stated it does not anticipate financial damage from the proceedings at this time.
The Delhi High Court ordered winding up of Paytm Payments Bank under the Banking Regulation Act 1949 and Companies Act 2013, per orders of Jul 8 and Jul 22, 2026.
A former SBI officer was named official liquidator for the winding up.
RBI confirmed the winding-up order on Jul 28, 2026; PPB faced heightened scrutiny since RBI's Mar 2022 directive to stop onboarding new customers and Jan 2024 ban on new deposits.
NPCI introduced Merchant Discount Rate (MDR) up to 0.4% on UPI P2M transactions above ₹2,000, effective Oct 15, 2026.
Paytm said MDR will generate additional revenue from merchant business for transactions that were earlier free.
Paytm clarified UPI payments remain free for customers; P2M transactions below ₹2,000 remain free for merchants per NPCI circular.
RBI said MDR on large-value UPI transactions strengthens long-term sustainability of the digital payments ecosystem.

The bigger picture

The show cause notice stems from a regulatory concern about timely disclosure of a material change in lending policy.
The winding up of Paytm Payments Bank follows a prolonged period of regulatory restrictions since 2022.
The introduction of MDR on large UPI transactions marks a shift in the cost structure of digital payments in India.

About the business

Paytm offers UPI payments, mobile/DTH recharge, bill payments, FASTag recharge, insurance premium, metro recharge, flight booking, credit cards (HDFC, SBI, Axis), insurance marketplace, and Paytm Money (margin trading facility at 7.99% p.a.).
Paytm for Business provides payment acceptance solutions: UPI, cards, EMI, Paytm QR, Soundbox, Paytm Card Machine.

Founders

Vijay Shekhar Sharma, CEO

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