According to RBI’s report on Indian Banking Trends and Progress 2023-24, employee turnover is high across some private sector banks (PVBs) and small finance banks (SFBs).
The central bank warned that high turnover and employee turnover pose serious operational risks, including disruption to customer service. It also leads to loss of knowledge within the organization and increased recruitment costs.
The report said that the total number of employees in private sector banks (PVBs) exceeded the number of employees in public sector banks (PSBs) in 2023-2024, but their attrition rate has increased sharply over the past three years. He pointed out that the average turnover rate is about 25 people per year. cent.
Speaking at the PVB board meeting last month, RBI Deputy Governor Swaminathan J pointed out that the turnover rate in the private banking industry is extremely high.
He said the average turnover rate for private banking groups in fiscal 2024 was about 25%, with some banks seeing even higher turnover rates over the past three years.
“After engaging with some organizations on this issue over the last year, we have seen improvements, but there is still a long way to go. Attrition is more than just a statistic. This is an indicator of serious issues in the world.
“When banks lose talented employees, especially junior and front-line employees, they don’t just lose people; they lose experience, customer relationships, and operational continuity. This could seriously impact customer ownership and lead to an unsatisfactory experience at the front-line counter,” Swaminathan warned.
Reducing turnover is therefore not just an HR function, but a strategic imperative.
“As a board member, I strongly encourage you to explore and support initiatives that emphasize career development, mentorship programs, competitive benefits, and a supportive work culture that makes employees feel valued. .
“By prioritizing the stability of our people, the Board is laying the foundations for long-term growth and building a bank that attracts, retains and develops talent for future leadership roles.” said.
The report found that banks are improving onboarding processes, offering extensive training and career development opportunities, mentorship programs, competitive benefits, and supportive work cultures to build long-term employee engagement. It is necessary to introduce strategies such as:
Meanwhile, a Reserve Bank survey conducted in October 2024 found that 45% of responding regulated companies said they were using generative AI for tasks such as supporting employees and summarizing documents.
