India's Paytm banking unit to cut about 20% of staff as business halt looms, sources say (updated)

Tracxn Technologies

14/03/2024 13:30

(Adds approval from Indian payments authority in paragraph 17)
    By Jaspreet Kalra and Siddhi Nayak
       MUMBAI, March 14 (Reuters) - Indian digital payments
firm Paytm  PAYT.NS  plans to cut close to 20% of staff at its
banking unit amid uncertainty over the unit's future due to a
looming central bank deadline for it to halt most operations,
two sources said.
    Paytm Payments Bank has decided to lay-off 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 shows. 
    Paytm, formally known as One 97 Communications, owns a 49%
stake in the bank which was ordered by the Reserve Bank of India
(RBI) at the end of January to stop accepting credit
transactions or deposits across products such as savings
accounts, prepaid cards and digital wallets by March 15,
following persistent compliance breaches.
    Paytm shares have lost 54% of their value since the
regulatory clampdown, in the worst crisis for one of India's
largest digital payment firms.
    "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," this person
said.
    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, also a banking unit employee, said.
    Neither source wished to be identified as they are not
authorised to speak to the media. 
    A spokesperson for Paytm Payments Bank declined to comment. 
    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 Friday's deadline, customers who have deposits in the
bank's accounts, wallets and toll tags for paying highways
taxes, can still access them. But no fresh deposits can be made.
    Paytm Payments Bank will also still hold 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licence unless it is withdrawn by the RBI.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. 
    Both sources said there had been no update from Paytm on
what banking staff would do after the move.
    Paytm has absorbed about 100 employees from the banking
unit, the second source said.
    Paytm, which had been using its banking unit to back digital
payments through its own app, was granted a licence on Thursday
from the National Payments Corp of India (NPCI) which will allow
its customers to continue using the Paytm app for payments
through the country's popular unified payment interface (UPI). 

 (Reporting by Jaspreet Kalra and Siddhi Nayak
Editing by Mark Potter)
 ((jaspreet.kalra@thomsonreuters.com; +91-8769636545;))