Amid uncertainty regarding its future, Indian digital payments company Paytm may reduce its banking unit's workforce by nearly 20%. 

Paytm Payments Bank will lay off employees from specific divisions, including operations, reported Business Standard. As of December 2023, data from information provider Tracxn indicates that the unit had 2,775 employees. 

Paytm, formerly known as One 97 Communications, holds a 49% stake in the bank. In late January, the Reserve Bank of India (RBI) ordered the bank to cease accepting credit transactions or deposits across various products, including savings accounts, prepaid cards, and digital wallets, by March 15, due to ongoing compliance breaches. 

Paytm shares have declined by 54% since the regulatory crackdown, marking the most severe 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," stated the first source, an employee at the banking unit. 

"Employees are frustrated because the management has gone back on their word that nobody will be laid off," they added. 

During an internal town-hall meeting in February, Paytm CEO Vijay Shekhar Sharma assured the bank's staff that there would be no layoffs, revealed Business Standard. 

The annual appraisal cycle is currently ongoing at the company, which may result in adjustments based on performance evaluations and role suitability.  This process is distinct from layoffs.

Following Friday's deadline, customers with deposits in the bank's accounts, wallets, and toll tags for paying highway taxes can still access them. However, no fresh deposits can be made. 

Paytm Payments Bank will retain its regulatory license unless revoked by the RBI. The purpose of Paytm Payments Bank after the business halt remains unclear. 

Paytm, which has been utilising its banking unit to support digital payments via its app, expects to receive a license from the National Payments Corporation of India (NPCI) this week. 

This license would enable Paytm customers to continue using the app for payments through the country's popular unified payment interface (UPI).