There is doubt about the future of Paytm’s (PAYT.NS) banking unit because of a central bank deadline to stop most operations, which is why the company plans to lay off close to 20% of its staff.
People who know about the situation say that Paytm Payments Bank is cutting staff in the operations department.
A company called Tracxn says that as of December 2023, the unit had 2,775 workers.
One 97 Communications, which used to be called Paytm, owns 49% of the bank. The Reserve Bank of India (RBI) told the bank at the end of January that it had to stop accepting credit transactions or deposits for products like savings accounts, prepaid cards, and digital wallets by March 15 because it kept breaking the rules.
Due to the stricter rules, Paytm shares have lost 54% of their value, making this the worst time for one of India’s biggest digital payment companies.
Since it is review time, the first source, who worked in the banking business, stated, “We have asked workers with low ratings to leave because of this regulatory order.”
This person said, “The management has gone back on their word that nobody will be laid off, and workers are frustrated.”
The second source, who also worked in the banking business, said that Paytm CEO Vijay Shekhar Sharma told the bank’s staff in a town hall meeting in February that there would be no layoffs. Both sources refused to be named because they are not allowed to talk to the public.
A Paytm Payments Bank representative refused to say anything.
Someone from Paytm said, “There are no layoffs here.” The company is in the middle of its yearly review process, which could lead to changes based on performance reviews and job suitability, the spokesperson said. “It’s crucial to understand that this process is distinct from layoffs” .
Customers with money in the bank’s accounts, wallets, or toll tags for paying highway taxes can still get to them after Friday’s deadline.
Paytm Payments Bank will also keep its regulatory licence as long as the RBI doesn’t take it away.
The second source said that Paytm has hired about 100 people from the banking business.
Paytm had been using its banking unit to support digital payments through its own app. On Thursday, the National Payments Corp of India (NPCI) gave the company a licence that will let its customers continue to use the Paytm app to make payments through the country’s widely used unified payment interface (UPI).
