Indian banks, especially those in the private sector, are seeing a significant number of employees quitting. One bank witnessed over 50% attrition in 2022-23 as employees left in droves to pursue better opportunities. Mint takes a look at why so many bank employees are quitting.
What were attrition levels like in FY23?
Private-sector banks are at the forefront of this round of attrition. Some large banks reported over 30% attrition in 2022-23.
India’s largest private-sector lender, HDFC Bank, saw attrition rise to 34.15% in FY23 from 19.1% in FY22. According to its annual report, attrition was highest in non-supervisory staff roles, which include sales officers.
IndusInd Bank and ICICI Bank reported attrition of 51% and 30.9%, respectively, in the same period.
At IDFC First Bank, attrition in account-opening and other junior roles was 39%, middle management 18%, and senior management 10%, according to its annual report.
In comparison, attrition in public-sector banks is in the low single digits. SBI reported 3% attrition in FY23, according to chairman Dinesh Khara, while Bank of Baroda (BoB) saw 1% attrition.
Which divisions are seeing the highest attrition?
Frontline areas and customer-facing roles are seeing higher attrition than middle and senior management. People in the risk and compliance teams are also being wooed by rival banks. Banking recruiters said companies are trying to retain their workers with counter offers and promises of promotions. The exits, akin to what the information technology sector saw about a year ago, are also affecting the wage costs of banks.
Where are bank executives going?
Rival banks and non-banking financial companies (NBFCs) are taking in a big portion of these workers. According to V Vaidyanathan, chief executive, IDFC First Bank, an increase in branch expansion by lenders has created more opportunities. He said that when a bank opens branches, it looks for experienced salespeople, and naturally employees in their early 20s get a higher compensation if they move.
Sashidhar Jagdishan, chief executive, HDFC Bank said in its annual report that after covid, younger workers may have decided to recalibrate what they want from life. Banking executives often move to similar roles after changing jobs. The hikes in banks over the past two years have been around 9-10%, but banks are offering hikes of 30% or more when hiring from each other.
Is high attrition limited to banks?
No. More than 200,000 job mandates are open in the retail sector and there is a struggle to hire the right workers, even with the festive season just a few weeks away. The insurance sector has seen more than 40% attrition in sales positions. Ironically, banks have been among the biggest hirers of talent from retail and insurance.
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