Paytm to Cut About 20% of Staff Reductions Amid Regulatory Ambiguity

Indian fintech giant Paytm is bracing for significant staff reductions within its banking arm, aiming to slash approximately 20% of its workforce amidst uncertainties surrounding the unit’s future. Sources familiar with the matter disclosed that Paytm Payments Bank intends to downsize various departments, particularly operations.

According to data provided by information tracker Tracxn, the banking unit boasted a headcount of 2,775 employees as of December 2023. The move comes in response to regulatory directives from the Reserve Bank of India (RBI), compelling the bank to cease most of its operations by March 15, including the acceptance of credit transactions or deposits across savings accounts, prepaid cards, and digital wallets, following persistent compliance violations.

Since the regulatory deadline coincided with the company’s appraisal season, employees with lower performance ratings have been instructed to exit, revealed an employee from the banking unit. This decision contradicts earlier assurances from Paytm CEO Vijay Shekhar Sharma during an internal meeting in February, where he pledged no layoffs.

Both sources, preferring anonymity due to confidentiality constraints, indicated a lack of clarity regarding the fate of banking staff post-restructuring. Despite assertions from a Paytm spokesperson denying any layoffs and attributing the ongoing appraisal process to performance evaluations and role alignments, concerns linger over the bank’s future role and operations.

Following the imposed deadline, existing customers will retain access to their deposits, wallets, and toll tags for highway taxes, albeit fresh deposits will be prohibited. Paytm Payments Bank will maintain its regulatory license unless revoked by the RBI, yet the purpose it serves post-business halt remains uncertain.

The fintech giant has absorbed approximately 100 employees from the banking unit, according to one of the sources. However, there has been no official communication from Paytm regarding the transitional arrangements for affected staff.

Meanwhile, Paytm received a license from the National Payments Corporation of India (NPCI) allowing its customers to continue utilizing the Paytm app for transactions via the Unified Payments Interface (UPI), a significant development as the company navigates regulatory challenges and redefines its operational landscape.