Banking current affairs, 30 July 2026: Paytm Payments Bank goes into liquidation

One substantial item this week and a set of routine ones that are worth reading anyway. As always, each item links to the official release so you can check it yourself, and for each one we set out the concept an examiner would actually build a question around.

The usual caution applies. We report what the release says. Where a release records an action without stating a reason or a figure, you will find the action here and neither of the other two, because filling those gaps from imagination is how a current affairs digest stops being worth reading.

Paytm Payments Bank ordered to be wound up

This is the item to know from the week. The RBI’s release of 28 July 2026 sets out the full sequence, and the sequence is the answer to most questions that could be asked about it.

Winding up of Paytm Payments Bank Limited

What the release records, in order:

1. By an order dated 24 April 2026, the RBI cancelled the banking licence of Paytm Payments Bank Limited under Section 22(4) of the Banking Regulation Act, 1949, with effect from the close of business that day.
2. The RBI then applied to the Delhi High Court for the bank to be wound up, using its powers under Sections 38 and 39 of the same Act, and asked that Shri Girikumar M Nair, a former Chief General Manager of the State Bank of India, be appointed Liquidator.
3. By an order dated 8 July 2026, read with a further order dated 22 July 2026, the High Court ordered that the bank be wound up under the Banking Regulation Act, 1949 read with the Companies Act, 2013, and appointed Shri Girikumar M Nair as Official Liquidator.
4. With effect from 8 July 2026, the Official Liquidator exercises all the powers of the bank’s Board.

The concept being tested. Three separate legal steps are involved here and they are routinely muddled, so keep them apart.

• Licensing sits in Section 22. A bank needs a licence from the RBI to carry on banking business in India, and sub-section (4) is the provision under which the RBI can cancel one.
• Winding up sits in Sections 38 and 39. Note carefully who does what: a banking company is wound up by the High Court, not by the RBI. The RBI applies; the court orders. Under Section 39 the RBI, the State Bank of India, or another bank or person notified by the central government can be appointed Official Liquidator, which is why a former SBI officer being named here is unremarkable rather than surprising.
• Companies Act, 2013 applies alongside the Banking Regulation Act. The banking statute does not replace general company law; it overrides it where the two conflict.

The point most likely to be turned into a question is simply this: the RBI cancels a licence, but only a High Court can order a banking company to be wound up. A question that offers “the RBI wound up the bank” as an option is testing exactly that distinction.

Worth knowing alongside it, because a liquidation is when it becomes relevant: deposits with an insured bank are covered by the Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the RBI, and in a liquidation the DICGC pays insured depositors through the liquidator. The current limit per depositor per bank is published on the DICGC’s deposit insurance pages, and you should read it there rather than trust a figure quoted second-hand, including ours.

A last piece of context on the entity itself. A payments bank is a differentiated bank licensed under Section 22 but restricted in what it may do: it accepts demand deposits up to a per-customer ceiling, it may issue debit cards, and critically it cannot lend or issue credit cards. That restriction is the defining feature of the category and the most asked fact about it.

Treasury bill cut-offs, and reading a yield curve

The 29 July auction results give you three points on the short end of the curve in one place.

91-Day, 182-Day and 364-Day T-Bill Auction Result: Cut-off

Tenor	Notified	Cut-off price	Implicit yield
91-day	₹9,000 crore	₹98.6861	5.3402%
182-day	₹8,000 crore	₹97.2846	5.5977%
364-day	₹7,000 crore	₹94.5863	5.7393%

The full notified amount was accepted at each tenor.

The concept being tested. Treasury bills are zero-coupon instruments. They pay no interest; they are issued at a discount to a face value of ₹100 and redeemed at par, and the return is the difference. That is why the table shows a price and an implicit yield rather than a coupon, and it is why the price falls as the tenor lengthens: ₹94.59 for a 364-day bill against ₹98.69 for a 91-day one.

Two things follow, both of which get asked:

• Yield moves inversely to price. A lower cut-off price at auction means a higher yield, so a fall in the cut-off price is a rise in the cost of government borrowing.
• The three yields rise with maturity, from 5.34% to 5.74%. A curve sloping upward like this is the normal shape, and it means lenders want more for parting with money for longer.

Remember the tenors themselves, because they are asked directly: T-bills are issued in 91-day, 182-day and 364-day maturities. Anything longer is a dated security, not a bill.

The overnight repo auction, and what the corridor looks like

Result of the Overnight Variable Rate Repo (VRR) auction held on July 29, 2026

The RBI notified ₹50,000 crore for one day, received bids of ₹56,620 crore, and allotted ₹50,020 crore at a cut-off of 5.26%, with the weighted average also at 5.26%.

Set that against the rates the RBI publishes on its own front page as of 30 July 2026:

Standing Deposit Facility rate	5.00%
Policy repo rate	5.25%
Marginal Standing Facility rate	5.50%
Bank Rate	5.50%
Cash Reserve Ratio	3.00%
Statutory Liquidity Ratio	18.00%

The concept being tested. This is the liquidity adjustment facility corridor, and the shape of it is the examinable part. The repo rate sits in the middle as the policy rate. The SDF is the floor, the rate at which banks park surplus funds with the RBI, and it is uncollateralised, which is what distinguishes it from the old reverse repo. The MSF is the ceiling, the rate at which banks borrow against their statutory liquidity holdings. Here the corridor is 25 basis points on each side of the repo rate.

Now read the auction against that. A variable rate repo injects liquidity: the RBI lends, banks bid, and unlike a fixed-rate window the price is discovered at auction. Bids of ₹56,620 crore against ₹50,000 crore notified means banks wanted more than was on offer, and the cut-off settled marginally above the repo rate at 5.26%. Both of those point the same way, towards banks being short of funds rather than flush with them. The mirror image is a variable rate reverse repo, which absorbs liquidity, and the RBI conducts that when the system is in surplus. Knowing which of the two drains and which injects is worth more marks than any individual number in the release.

One term that turns up in these releases and deserves a line: the weighted average call rate is the operating target of monetary policy. Not the repo rate, which is the instrument. That is a cleaner answer than most candidates give.

Government borrowing, briefly

Underwriting Auction for sale of Government Security for ₹34,000 crore on July 31, 2026

The government is re-issuing the 6.94% GS 2036 for ₹34,000 crore, with the auction on 31 July 2026. Each Primary Dealer carries a Minimum Underwriting Commitment of ₹810 crore.

The concept being tested. Skip the numbers and learn the roles. A Primary Dealer is a registered intermediary in the government securities market whose obligation is to bid at auctions and thereby guarantee that the issue is fully subscribed. Underwriting is that guarantee: the dealer commits to take up any unsold portion, for which it earns a commission. A re-issue means more of an existing security is sold rather than a new one created, which concentrates trading in fewer lines and so makes them easier to buy and sell. And the RBI is acting here as debt manager to the government, a role quite separate from its role as monetary authority. That separation is itself a favourite question.

What to write in your notebook

Three lines:

1. Paytm Payments Bank: licence cancelled by the RBI under Section 22(4) of the Banking Regulation Act; wound up by order of the Delhi High Court under Sections 38 and 39, with an Official Liquidator appointed. The RBI applies, the court orders.
2. Policy corridor as it stands: SDF 5.00% as the floor, repo 5.25%, MSF 5.50% as the ceiling. CRR 3.00%, SLR 18.00%.
3. T-bills are zero-coupon, issued at a discount in 91, 182 and 364-day tenors. Price and yield move in opposite directions.

For the framework behind the second of those, see RBI and monetary policy basics. For the statutory scheme behind the first, the Banking Regulation Act sections cited above are worth reading once in the original; they are short.