Paytm Payments Bank said it will cut about 20 percent of its staff because of the business shutdown

India’s digital payments firm Paytm plans to cut nearly 20 percent of staff in its banking division amid uncertainty over the division’s future due to a looming central bank deadline for it to halt most operations, two sources said.

Paytm Payments Bank has decided to cut 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 showed.

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

Shares in Paytm have lost 54 percent of their value following regulatory restrictions in the worst crisis for one of India’s biggest digital payments firms.

“As this regulatory order coincided with the appraisal season, employees with low ratings were asked to leave,” said the first source, an official at the banking unit.

“Employees are frustrated because management has gone back on its word that no one 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 that there would be no layoffs, said the second source, also an employee of the banking division.

None of the sources wanted to be identified because they were not authorized to speak to the media.

A spokesperson for Paytm Payments Bank declined to comment.

A Paytm spokesperson said, “There are no layoffs here.” An annual appraisal cycle is underway at the company, which may result in adjustments based on performance evaluations and fit for the role, this spokesperson added. “It is extremely important to understand that this process is different from layoffs.”

After Friday’s deadline, customers who have deposits in their bank accounts, wallets and toll tags can still access them. But no new deposits can be made.

Paytm Payments Bank will also continue to hold a regulatory license unless revoked by the RBI.

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

Both sources said there was no update from Paytm on what the bank staff would be doing after the move.

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

Paytm, which uses its banking arm to support digital payments through its own app, expects to receive a license this week from the National Payments Corporation of India (NPCI), which will allow its customers to continue using the Paytm app to make payments through the popular the country’s Unified Payments Interface (UPI).

© Thomson Reuters 2024