Paytm Payments Bank, the troubled arm of One97 Communications-owned Indian fintech major Paytm, is reportedly planning to trim its staff by 20%. The news comes amid the banking unit’s bleak future as it is slated by the Reserve Bank of India to cease operations by March 15 due to regulatory non-compliance.
According to a Reuters report, quoting unnamed sources, Paytm Payments Bank plans to slash workforce in certain divisions, including operations. Additionally, as per data from Tracxn, Paytm’s banking arm had 2,775 employees. Meaning, around 455 employees could be affected by the layoff.
The news is surprising as the management of Paytm Payments Bank previously at an internal meeting assured employees that there would be no job cuts. In stark contrast to the promise, the company is reported to be laying off employees with low rating during the appraisal season.
To recap, the RBI imposed restrictions on Paytm Payments Bank in January, citing “persistent non-compliances and continued material supervisory concerns”. Reportedly, these include inadequate customer identification and a lack of independence from Paytm. These restrictions included a ban on accepting new deposits and conducting credit transactions, starting from February 29th, which was later extended to March 15th. Days after the RBI’s scrutiny, Paytm founder Vijay Shekhar Sharmastepped down from his position as the non-executive chairman and board member of Paytm Payments Bank
The report noted that while Paytm has absorbed about 100 employees from Paytm Payments Bank, it is still unclear what business the banking unit will serve after the halt and what would its staff do.
Elsewhere, the National Payments Corporation of India on Thursday granted One97 Communications Limited, parent company of Paytm, the license to participates as a Third-Party Application Provider (TPAP) to perform UPI transactions. “This will enable existing users and merchants to continue to do UPI transactions and AutoPay mandates in a seamless and uninterrupted manner,” NPCI said. Shares of Paytm closed 5% higher at Rs 370.90 on BSE on Friday.
