BENGALURU: Paytm Payments Bank will cease its operations including accepting deposits and credit transactions, from Friday (March 15) as mandated by the Reserve Bank of India.
As a result, the banking unit of payments firm Paytm, will cut about 20% of staff. Sources confirmed the job cut in the banking unit and this will affect at least 550 employees.
As per Tracxn, Paytm Payments Bank had 2,775 employees till last year.The central bank had cited persistent non-compliances and continued material supervisory concerns in the bank. Sources added that lay-off will happen in operations, apart from other divisions.
This lay-off announcement comes even as Paytm founder Vijay Shekhar Sharma assured employees in a town hall meeting last month that there would not be layoffs in the company.
Sources aware of the matter also added that only the banking unit is facing layoffs and not Paytm and only the annual appraisal cycle is underway at the payments company.
Meanwhile, a day before the closure of Paytm Payments Bank, National Payments Corporation of India (NPCI) granted approval to One97 Communications Limited (OCL) the parent company of Paytm to participate in UPI as a Third-Party Application Provider (TPAP) under multi-bank model. This means, Paytm can operate UPI services.
Axis Bank, HDFC Bank, State Bank of India and YES Bank will act as Payment System Provider banks to OCL. YES Bank will also be acting as merchant acquiring bank for existing and new UPI merchants for OCL.
The NPCI in a statement said, “@Paytm handle shall be redirected to YES Bank. This will enable existing users and merchants to continue to do UPI transactions and AutoPay mandates in a seamless and uninterrupted manner.”
It also advised to complete migration for all existing handles and mandates, wherever required, to new PSP banks at the earliest.
Meanwhile, Paytm on Thursday clarified that the Paytm app is working and will continue to do so even after March 15, 2024. Paytm spokesperson said, “We are expanding our financial services distribution platform in partnership with leading institutions. Paytm is committed to creating an inclusive next-generation financial ecosystem for our users across the country.”
It also said that Paytm QR codes, Soundbox, and card machines will remain fully operational. “This ensures continued convenience for millions of users and merchants who rely on these services for their daily transactions,” Paytm said.
