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Private lenders surpass PSU peers in employee strength

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In Short:

Private banks have surpassed PSBs in terms of hiring, added over 100,000 employees in FY24 due to a focus on IT and digital banking and expansion in rural areas. PSBs saw a decrease in employees. Private banks also hired more women and more employees in rural/semi-urban areas. Despite higher attrition, private banks offer quicker growth opportunities. Employee composition and costs differ between private and public banks.


The Human Side of Banking Employment Trends

Have you heard the latest buzz in the banking world? Recent data from the Reserve Bank of India (RBI) has revealed an interesting shift in the employment landscape. It seems that **private banks** have surged ahead of Public Sector Banks (PSBs) by a whopping 100,000 employees in FY24. Yes, you read that right! As of 31 March 2024, the headcount at private banks stood at 846,530, while PSBs counted 746,679 employees.

Behind the Numbers:

So, what’s driving this workforce evolution? Recruiters believe that private banks have upped their game in hiring for information technology (IT) and digital banking roles, among others. In a strategic move, private banks have also extended their reach into rural and semi-urban India, traditionally the stronghold of PSBs. This expansion necessitated the hiring of more personnel in these regions.

On the flip side, PSBs seem to be lagging in filling vacancies left by retiring staff. The allure of quicker growth prospects at private banks, coupled with the lack of visibility around job openings at PSBs, has tilted the scales in favor of the private sector.

A Closer Look:

Delving deeper, PSBs witnessed a net reduction of 9,965 employees in the past fiscal, while private banks added a staggering 100,918 new hires. Zooming out to a five-year perspective, PSBs witnessed a decline of over 60,000 jobs from FY19 to FY24, whereas private banks added a whopping 370,140 employees during the same period.

Empowering Women in Banking:

In an interesting turn of events, private banks are also championing gender diversity by hiring more women. While women’s roles dwindled by 800 in PSBs during FY24, private banks onboarded over 35,000 new women employees.

Driving Force Behind Rural Hiring:

Experts attribute the surge in private bank hires to their foray into rural markets. By venturing beyond tier-II cities and expanding retail and microfinance banking services, private banks have actively recruited more personnel to serve customers in rural and semi-urban areas.

Expert Insights:

According to Monica Agrawal from Korn Ferry, private banks’ strategic shift towards the hinterland, combined with their digital banking prowess, fueled a spike in rural hiring. In FY24, private banks recruited 23,821 employees in rural and semi-urban regions, surpassing urban area hires.

The Attrition Conundrum:

While public sector banks boast lower attrition rates, private banks grapple with higher turnover. The allure of fast-track promotions and dynamic roles in private banks have made them a magnet for young talent, especially in IT, digital, and specialist positions.

Comparing Employee Landscape:

Anil Gupta from ICRA Ltd sheds light on the differences in the workforce composition between public and private sector banks. While PSBs command a higher market share in advances and deposits, private banks excel in cross-selling opportunities, leading to varying employee costs.

Despite PSBs holding a larger market share, employee expenses as a percentage of average assets are higher for public banks compared to private banks. This disparity reflects the differing pay structures in the two banking sectors.

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