Paytm Payments Bank Limited (PPBL) may reduce its workforce by approximately 20 per cent due to uncertainty surrounding the bank's future, reported news agency Reuters quoting two sources.
The sources suggested that the company's decision to cut jobs from the payments bank comes as the Reserve Bank of India (RBI) has mandated it to cease several key operations by March 15 due to ongoing compliance issues.
The bank intends to lay off employees in various departments, including operations, added the sources quoted in the report.
As of December 2023, the bank had a workforce of 2,775 employees.
The RBI's action against PPBL has led to a loss of confidence among investors of digital payments firm Paytm, which owns a 49 per cent stake in the firm. It may be noted that Paytm shares have lost over 50 per cent of their value since the RBI took action against PPBL.
"Since this regulatory order has coincided with the appraisal season, employees with low ratings have been asked to leave," the first source, an employee at the banking unit, told the news agency. "Employees are frustrated because the management has gone back on their word that nobody will be laid off," added the person.
During a town hall meeting held internally in February, Paytm CEO Vijay Shekhar Sharma reportedly assured the bank's employees that there would be no layoffs, according to the second source, who is also an employee in the banking unit.
However, a Paytm spokesperson denied that there will be any job cuts due to RBI's action against the payments bank.
"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," said the spokesperson.
"It's crucial to understand that this process is distinct from layoffs," the spokesperson added.
After the March 15 deadline, customers will still have access to their deposits and wallets held by Paytm Payments Bank, but no new deposits will be accepted. It remains uncertain what role the bank will serve following the cessation of its operations.
Despite the challenges, Paytm is expecting to receive a licence from the National Payments Corporation of India (NPCI) that would allow its customers to continue using the Paytm app for payments through the unified payment interface (UPI).
However, there has been no update from Paytm regarding the future roles of banking staff post the operational halt. The company has reportedly absorbed around 100 employees from the banking unit.
