During a recent public talk, Reserve Bank of India (RBI) Governor Shaktikanta Das mentioned that many employees are leaving their jobs at private banks, and the central bank is concerned about it. He urged banks to create a strong team to address this issue.
The departure of employees from private banks has been high lately because their workload has increased. Experts also point out that competition from fintech companies and modern lenders has tempted employees away from these banks.
Governor Das highlighted this issue, emphasizing the need for banks to take it seriously. To manage this, banks are looking into more training programs for their employees. HDFC Bank’s CFO, Srinivasan Vaidyanathan, mentioned that they are actively working on this.
The workload at banks hasn’t reduced, but the responsibilities of employees have increased. This has led to burnout due to longer working hours, causing more employees to leave. This situation is particularly noticeable in governance and branch-related functions within the banks.
Recent reports from various banks showed that around 34-51% of employees left their jobs in 2022-23. Banks like Kotak Mahindra, IndusInd, and Yes Bank have seen attrition rates above 40%.
Private banks now have more regulatory requirements, which means they need to report to audit committees and regulators more frequently. The pressure to maintain profits forces banks to reduce operational costs, which results in more reporting responsibilities for existing staff.
New companies like Jio Financial Services are expanding rapidly, competing for experienced personnel. This has led to a talent war between banks and other lenders, causing more employees to switch jobs.
Even junior employees, with starting salaries between 15,000 to 20,000, are being lured by competitors offering salary increments of 10-15%. Private banks need to consider whether their compensation packages match those offered by newer banks and fintech companies.
Lohit Bhatia, President of Workforce Management at Quess Corp, raises questions about where employees from private banks are going, what roles they are offered elsewhere, and whether the pay in private banks matches up.
To control this attrition, banks must implement better training programs, improve the skills of existing employees, streamline the onboarding process, and reconsider their salary structures, according to banking experts.