As Paytm scrambles to fix its business operations after RBI’s crackdown on its payments bank arm, the next measure seems to be cutting its workforce. Paytm's parent company, One 97 Communications, is set to let go of employees across various departments as part of its annual performance review, Moneycontrol reported on Wednesday, citing people familiar with the development.

While the exact number of employees affected remains unknown, certain departments have been instructed to downsize their teams by up to 20%, according to the report. Paytm currently has over 10,000 employees. A company spokesperson did not agree with the publication on the extent of the layoffs, but also did not specify a number.

The layoffs come weeks after the central bank asked Paytm Payments Bank to wind down a majority of operations that include lending and wallet-based transactions by 15 March. The central bank’s stringent curbs came after many warnings to the digital lender over regulatory non-compliance and material supervisory concerns. One of the major lapses the RBI found against Paytm was negligence on know-your-customer, or KYC, processes. For more on this, read our explainer on Indian fintechs’ KYC debacle.

The Paytm spokesperson told Moneycontrol that these cuts—which reportedly began two weeks ago—are distinct from layoffs and a “routine aspect of performance evaluations in any organization”. They added that another reason for trimming the workforce is integration of artificial intelligence-powered automation “to drive efficiency”. In December, CEO and founder Vijay Shekhar Sharma had said in a post on X (formerly Twitter) that in the next 5 years, there will be a “mass industrialisation” of many jobs that are currently done by humans.

While the fintech major did not term it a layoff exercise, one of the employees told Moneycontrol that the company is allegedly not offering affected employees severance packages. Instead, it is making them undergo a one-month performance improvement plan, which will likely lead to termination, followed by a 30-day notice period—a tactic not uncommon among corporates. Going by the report, the reduction in Paytm’s workforce could surpass its December layoffs, where 1,000 employees were let go.

Apart from RBI’s curbs, Paytm is dealing with regulatory pressures, restructuring banking partnerships for its UPI business, trying to obtain a fresh third-party app provider licence and migrating merchants. Last month, Sharma stepped down from the board of Paytm’s payments division amid a major reshuffling exercise.

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