GoCrackIt Originals: Current Business Problem

Case ID: GCICBP| HRM | 143 | 01st Mar 2024

Paytm- How will it attract and retain its employees amidst

regulatory headwinds?

©2024 This case is written by Alok Shrivastava, Co-Founder (GoCrackIt) as the basis for class discussion &
education rather than to illustrate either effective or in effective handling of any entity/ management. This
case can not be copied and circulated without the explicit permission of GoCrackIt.
Paytm, once a leading startup in India's digital payments sector, gained prominence in
2014-2015 due to its innovative approach. It thrived on the growing trend of digital
payments, especially after the Indian government's demonetization move in 2016.
However, despite its success in user adoption and transaction volumes, Paytm faced
profitability issues, exacerbated by its entry into multiple segments without a clear path to
profitability.

The company's IPO in 2021 was met with skepticism due to overvaluation, leading to a
significant drop in stock prices shortly after listing. It came with India's biggest IPO (at
that time) with its $2.4 billion offering. The issue price was Rs 2,150 per share. As per most
experts, the valuations were exaggerated. As a result, the stock price crashed after the
listing. The share price fell by 30% within the first month of listing. The downward strategy
continued, and at one time, the stock was down 75% from the issue price.

Paytm's journey was also marked by several instances of non-compliance with regulatory
requirements, including violations related to licensing conditions and false information
submission to the RBI. The recent hit came when the RBI imposed restrictions on Paytm's
Payments Bank business due to irregularities in KYC norms and compliance issues.

The aftermath of these challenges saw a decline in investor confidence, operational

impacts, and reports of customers shifting to competitors. Speculative reports further
fueled uncertainty around Paytm's future. Despite attempts to address concerns by
engaging with regulatory authorities and government officials, the company's reputation
and trust suffered significant damage.

Ultimately, Paytm's ability to navigate regulatory challenges, regain customer trust, and
address profitability concerns will determine its future success and sustainability in the
competitive financial services industry1.

Problem

The coming months will be crucial for the fintech major with over 33,000 employees
onboard. Can it address regulatory concerns without stifling innovation? Can it retain its
talent amidst the uncertainty? More importantly as it strives to grow its non banking
business like e-commerce how will it be able to attract top talents2.

1https://www.icicidirect.com/research/equity/finace/the-paytm-saga-end-to-the-story-or-revival-
possible
2https://www.peoplematters.in/article/employee-relations/can-paytm-keep-its-talent-amid-
regulatory-headwinds-40253

©2024 This case is written by Alok Shrivastava, Co-Founder (GoCrackIt) as the basis for class discussion &
education rather than to illustrate either effective or in effective handling of any entity/ management. This
case can not be copied and circulated without the explicit permission of GoCrackIt.