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Indian digital payments firm Paytm plans to cut close to 20 percent of staff at its banking unit amid uncertainty over the unit’s future due to a looming central bank deadline for it to halt most operations, two sources said.
Paytm Payments Bank has decided to lay-off staff in certain divisions, including operations, the sources with direct knowledge of the matter said.
The unit had 2,775 employees as of December 2023, data from information provider Tracxn shows.
Paytm, formally known as One 97 Communications, owns a 49 percent stake in the bank which was ordered by the Reserve Bank of India (RBI) at the end of January to stop accepting credit transactions or deposits across products such as savings accounts, prepaid cards and digital wallets by March 15, following persistent compliance breaches.
Paytm shares have lost 54 percent of their value since the regulatory clampdown, in the worst crisis for one of India’s largest digital payment firms.
“Since this regulatory order has coincided with appraisal season, employees with low ratings have been asked to leave,” the first source, an employee at the banking unit, said.
“Employees are frustrated because the management has gone back on their word that nobody will be laid off,” this person said.
In an internal town-hall meeting in February, Paytm CEO Vijay Shekhar Sharma assured the bank’s staff there would be no layoffs, the second source, also a banking unit employee, said.
Neither source wished to be identified as they are not authorised to speak to the media.
A spokesperson for Paytm Payments Bank declined to comment.
A Paytm spokesperson said: “There are no layoffs here.” The annual appraisal cycle is underway at the company which may lead to adjustments based on performance evaluations and role suitability, this spokesperson added. “It’s crucial to understand that this process is distinct from layoffs”.
After Friday’s deadline, customers who have deposits in the bank’s accounts, wallets and toll tags for paying highways taxes, can still access them. But no fresh deposits can be made.
Paytm Payments Bank will also still hold a regulatory licence unless it is withdrawn by the RBI.
It is unclear what purpose Paytm Payments Bank will serve after the business halt, the second source said.
Both sources said there had been no update from Paytm on what banking staff would do after the move.
Paytm has absorbed about 100 employees from the banking unit, the second source said.
Paytm, which has been using its banking unit to back digital payments through its own app, is expecting to get a licence this week from the National Payments Corp of India (NPCI) that would allow its customers to continue using the Paytm app for payments through the country’s popular unified payment interface (UPI).
© Thomson Reuters 2024
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