Paytm to cut 20% of banking unit staff amid regulatory woes
- ByStartupStory | March 14, 2024
Indian digital payments giant Paytm plans to reduce its banking unit’s workforce by nearly 20% amid uncertainty over the unit’s future due to an impending central bank deadline, according to two sources familiar with the matter.
The sources, who spoke on condition of anonymity, revealed that Paytm Payments Bank intends to lay off employees in specific divisions, including operations.
As of December 2023, the unit had a total of 2,775 employees, according to data from information provider Tracxn.
In late January, the Reserve Bank of India (RBI) ordered Paytm Payments Bank to cease most of its operations, such as accepting credit transactions or deposits, by March 15 due to ongoing compliance breaches.
Following the regulatory crackdown, Paytm’s shares have plummeted by 54%, marking a significant crisis for one of India’s largest digital payment firms.
An employee at the banking unit stated, “Since this regulatory order has coincided with appraisal season, employees with low ratings have been asked to leave.”
Another source, also from the banking unit, disclosed that during an internal town-hall meeting in February, Paytm CEO Vijay Shekhar Sharma assured staff that there would be no layoffs.
A Paytm Payments Bank spokesperson declined to comment on the matter, while a spokesperson for Paytm stated, “There are no layoffs here.” However, they acknowledged that the annual appraisal cycle is ongoing, which may result in adjustments based on performance evaluations and role suitability.
After the March 15 deadline, existing customers can still access their deposits, wallets, and toll tags, but no new deposits will be accepted.
It remains uncertain what role Paytm Payments Bank will play after halting its operations, according to one of the sources.
Both sources noted that there has been no communication from Paytm regarding the future roles of banking staff after the business halt.
Approximately 100 employees from the banking unit have been absorbed by Paytm, according to the second source.
Paytm is awaiting a licence from the National Payments Corp of India (NPCI) this week, allowing its customers to continue using the Paytm app for payments through the unified payment interface (UPI).
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