Paytm Payments Bank has asked to cut about 20 percent of its staff as business halts.

Indian digital payments firm Paytm The central bank plans to cut about 20 percent of staff in its banking unit amid uncertainty about the unit’s future due to a deadline to freeze most operations, two sources said.

Paytm Payment Bank Sources with direct knowledge of the matter said that it has been decided to lay off staff in some divisions, including operations.

Data from information provider Tracxn showed the unit had 2,775 employees as of December 2023.

Paytm, formally known as One 97 Communications, owns a 49 percent stake in the bank which is mandated by the Reserve Bank of India (RBI) to stop accepting credit transactions or deposits in products such as savings accounts, prepaid cards and digital wallets by March 15, after a series of compliance breaches in late January.

In the worst slump for one of India’s largest digital payments firms, Paytm shares have lost 54 percent of their value since the regulatory ban.

“Since this regulatory order coincides with the appraisal season, employees with lower ratings have been asked to leave,” said the first source, an employee of the banking unit.

“Employees are frustrated because management has gone back on its word that no one will be fired,” the person said.

In an internal town hall meeting in February, Paytm CEO Vijayshekhar Sharma assured the bank’s staff that there would be no layoffs, another source, also an employee of the banking unit, said.

Neither source was identified because they are not authorized to speak to the media.

A spokesperson for Paytm Payments Bank declined to comment.

A Paytm spokesperson said: “There are no layoffs.” The spokesperson added that the company conducts annual evaluations that may lead to adjustments based on performance reviews and role fit. “It is important to understand that this process is separate from termination”.

After Friday’s deadline, customers who have money in their bank accounts, wallets and toll tags to pay highways taxes can still access them. But no fresh can be collected.

Paytm Payments Bank will also have a regulatory license until it is withdrawn by the RBI.

Another source said it is not clear what purpose Paytm Payments Bank will serve after the business ceases.

Both sources said there has been no update from Paytm on what the banking staff will do after the move.

Paytm has absorbed around 100 employees from the banking unit, another source said.

Paytm, which is using its banking unit to back digital payments through its app, is expected to get a license from the National Payments Corporation of India (NPCI) this week to allow payments to its customers. So Paytm will allow to continue using the app. The country’s popular Unified Payment Interface (UPI).

© Thomson Reuters 2024

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