Paytm fires over 1000 employees to reduce costs; more layoffs are probably coming.


A Financial Technology Company Based in Noida Has Decided To Reduce Postpaid Loans

To reduce expenses, fintech giant Paytm reportedly let go of around 1,000 workers across several divisions, as reported by The Economic Times (ET). Ten percent of the company’s workforce has been affected by layoffs during the last several months.

In 2022 and 2021, the corporation let go of roughly 20,000 and 4,000 workers, respectively. The loan division of Paytm has probably been impacted by the recent development.

The fintech company declared weeks ago that it will curtail the issuance of small-ticket loans, notably those under Rs 50,000, in response to the Reserve Bank of India’s tightening guidelines for unsecured personal loans. This is when the decision to terminate these employees was made.

Paytm is trying to reduce expenses as a result of realigning some of its companies. This implies that the corporation may experience additional layoffs in the upcoming months. All of the layoffs occurred in the last several months.

This indicates that the decision will affect more than 10% of Paytm’s total staff. This action also follows the UPI platform’s decision to discontinue its “buy now pay later” lending segment and small-ticket consumer lending.

Following more than a thousand job losses, Paytm’s layoffs rank among the largest of any modern Indian tech company. This year, thousands of jobs have been terminated by startup companies in India due to funding shortages and internal economic restructuring.

The majority of Paytm’s employment cutbacks are probably coming from its loan division, which has experienced rapid expansion in the past year. Although it mostly offers loans under ₹50,000, Paytm Postpaid is quickly moving into wealth management.

But this year, Paytm’s stock suffered greatly, plunging nearly 20% on December 7. Following the company’s announcement that it would be discontinuing the Paytm Postpaid loan plan, the stock saw a sharp decline.

The central bank recently increased the risk rating for personal loans that are unsecured from 100% to 125%, which prompted the Noida-based banking technology company to reduce its postpaid loan activity.

Those who take out personal loans for the first time may experience quicker, earlier delinquencies, according to the company. Furthermore, according to a Business Standard article from October, the availability of credit for shorter tenures, such as three and six months was seeing increasing leverage and worse collection efficiency.

The fintech leader will now concentrate on granting more expensive personal and business loans to consumers who are lower-risk and have excellent credit histories, working with the biggest banks and non-banking financial organizations.

Layoffs at India’s startup businesses

The choice is made at a time when Paytm is restructuring its operations, which includes getting rid of its “buy now pay later” lending section on the UPI platform and small-ticket consumer loans.

Reports indicate that the bulk of Paytm’s layoffs are probably focused on its loan division, which has grown significantly over the last 12 months. The company Paytm Postpaid, which is well-known for providing loans under ₹50,000, is allegedly concentrating more on wealth management.

Businesses have been cutting employees as a result of a lack of funding and an emphasis on profitability. Over 380 workers at the unicorn ed-tech company Unacademy received pink slips in March of this year.

Similar layoffs affected more than 300 workers at the on-demand delivery company Dunzo this year. In another round of layoffs this year, social media startup ShareChat let go of 200 workers or around 15% of its personnel.

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