Paytm Payments Bank to lay off about 20% of workforce due to closure of business: Report
Paytm parent company One 97 Communications is planning to cut close to 20% of staff at its banking unit as there is uncertainty over its future due to the Reserve Bank of India’s recent clampdown on its services. Two sources told news agency Reuters that the company’s decision to cut jobs from the payments bank is mainly due to the central bank’s mandate to cease several key operations by March 15 due to ongoing compliance issues.
On January 31 this year, the RBI barred Paytm Payments Bank from accepting fresh deposits or top-ups starting from February 29. Later, it extended the end date to March 15 for the convenience of the customers.
Paytm owns a 49% stake in the bank. Paytm Payments Bank had 2,775 employees as of December 2023, data from information provider Tracxn shows. As per Paytm’s FY2022-23 annual report, Payment Services contributed 62% to the company’s total revenue of Rs 7,990 crore for the year, at Rs 4,930 crore.
“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,” the source told Reuters.
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 told Reuters.
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 March 15’s deadline, customers who have deposits in the bank’s accounts, wallets and toll tags for paying highway taxes, can still access them. But no fresh deposits can be made. For now, Paytm Payments Bank has a regulatory licence unless it is withdrawn by the RBI.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.
