Paytm Payments Bank Said to Cut About 20 Percent of Staff as Business Halt Looms

Mar14,2024



Indian digital payments firm Paytm plans to cut about 20 percent of staff at its banking unit, two sources said, as there is uncertainty over the unit's future due to a deadline set by the central bank to halt most operations.

Sources with direct knowledge of the matter said that Paytm Payments Bank has decided to lay off employees in some divisions including operations.

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

Paytm, formally known as One 97 Communications, has a 49 per cent stake in the bank, which was permitted by the Reserve Bank of India (RBI) in late January to accept credit transactions or deposits in products like savings accounts, prepaid cards, etc. Was ordered to close. and digital wallets until March 15 after persistent compliance violations.

Paytm shares have lost 54 percent of their value since the regulatory restrictions, in the worst crisis for one of India's largest digital payments firms.

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

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

At an internal town-hall meeting in February, Paytm CEO Vijay Shekhar Sharma assured bank employees that there would be no layoffs, the second source, a banking unit employee, said.

Neither source wished to be identified as they are not authorized to speak to the media.

A Paytm Payments Bank spokesperson declined to comment.

A Paytm spokesperson said, “There will be no layoffs here.” The spokesperson said the company has an ongoing annual appraisal cycle, which may lead to adjustments based on performance appraisal and role suitability. “It is important to understand that this process is different from layoffs.”

After Friday's deadline, customers who have funds deposited in bank accounts, wallets and toll tags to pay highway taxes can still access them. But no new deposits can be created.

Paytm Payments Bank will still hold the regulatory license until it is withdrawn by the RBI.

It is not clear what purpose Paytm Payments Bank will serve after the business halts, the second source said.

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

Paytm has absorbed about 100 employees from the banking unit, the second source said.

Paytm, which is using its banking unit to support digital payments through its own app, is expected to get a license from the National Payments Corp of India (NPCI) this week to allow its customers. This will allow you to continue using the Paytm app for payments. The country's popular Unified Payment Interface (UPI).

© Thomson Reuters 2024


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