India’s private banks are witnessing a spike in attrition rates, especially among younger, frontline staff. According to reports, lenders are seeing one in three entry level staff quitting.
Banks are witnessing strong demand for loans amid a rush to capture a larger share of the crowded market, with credit demand growing 15% last financial year and expected to expand 10-12% this year, driven by retail loans.
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With rapid growth comes pressure, with frontline staff facing the brunt of it. HDFC Bank, the country’s largest private lender, saw its employee turnover rate over the last year rise to 34%, while Axis Bank was at nearly 35%. Kotak Mahindra Bank‘s attrition surged to about 50%, with Yes Bank reporting a 43% rate of attrition.
“It is a problem the entire industry is grappling with,” said Axis Bank CEO Amitabh Chaudhry on the lender’s earnings call on Wednesday, reports Reuters.
The bank is exploring various options, including career progression and training, to retain employees, Chaudhry said.
“Attrition happens when there is high demand for an industry’s services and companies are pushing productivity, as is the case with financial services,” said Rituparna Chakraborty, co-founder of staffing firm Teamlease Services.
“We are seeing attrition mostly on the sales side which is a trend across the banking industry,” Yes Bank CEO Prashant Kumar said in an earnings call over the weekend. The bank is working towards controlling it and would “not like to see an overall attrition of more than 25-30%,” he said.
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With entry-level relationship managers earning between Rs 30,000 and Rs 35,000, incentives to switch are far easier to provide.
Remuneration in the category has grown 8-10% annually over the past year, in line with the broader job market, Teamlease’s Chakraborty said. “But staffers will try to maximize gains in a growing market by switching jobs if they have the opportunity,” she added.
But its not only money that is driving attrition rates, perks like flexibility in working conditions are also playing a huge part. Most exits happen within six months of joining, a banker told Reuters.
According to Reuters, Kotak Mahindra Bank – which saw the sharpest jump in attrition- witnessed the worst churn at junior levels.
While the bank is seeing about 10% attrition at the senior level and 20% at the mid-level, attrition is nearly 50% at the junior level, said Shanti Ekambaram, whole-time director at Kotak Mahindra Bank.
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“The bank is working on areas such as engagement, training and technology and automation to control attribution,” Ekambaram said at the lender’s post-earnings analyst call over the weekend.
