Recent data from the Reserve Bank of India (RBI) shows that India’s private sector banks now have more employees than their state-owned counterparts, marking a significant shift in the industry. As of March 31, 2024, private banks employed 846,530 individuals, while public sector banks (PSBs) had 746,679 employees.
Reasons for the Shift
The increase in employee strength at private banks can be attributed to several factors. Private banks have been actively hiring in information technology (IT) and digital banking, as well as other roles. They have also expanded their presence in rural and semi-urban areas, traditionally dominated by PSBs, leading to the need for additional staff in those regions. On the other hand, state-owned banks have been slower in replenishing vacant positions due to retirements.
Job Creation Trends
In the past fiscal year, PSBs experienced a net reduction of 9,965 employees, while private banks added 100,918 employees. Over a five-year period from FY19 to FY24, PSBs’ headcount decreased by over 60,000, while private sector banks added 370,140 employees.
Focus on Hiring Women
Private banks have also shown a greater focus on hiring women. In FY24, while PSBs saw a decrease of 800 women employees, private banks added over 35,000 women to their workforce. This trend can be attributed to the expansion of private banks into rural areas, where there has been a higher demand for banking services.
Recruitment in Rural and Urban Areas
Private banks have been actively recruiting in both rural and semi-urban areas. In FY24, they added 23,821 employees in rural and semi-urban regions, slightly more than the 23,582 employees added in urban areas. However, the majority of new hires still joined private banks in metropolitan areas, with 53,515 employees added in these locations.
Moderation in Hiring Pace
While private banks continue to hire, some have moderated the pace of adding employees. For example, ICICI Bank added 12,000 employees in FY24, compared to 23,200 in FY23. In contrast, attrition rates at public sector banks are significantly lower than those at private sector banks. State Bank of India (SBI), for instance, had an attrition rate of 3% in FY23, while leading private banks experienced attrition rates of over 30% during the same period.
Factors Influencing Private Banks’ Growth
Private banks have been able to attract more talent, particularly among younger job seekers, due to reduced hierarchy and quicker promotion opportunities. Profiles in IT, digital banking, data science, and specialist roles like economists have gained traction in private banks. Additionally, private banks have been more proactive in advertising their job openings compared to PSBs.