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RBI again Highlighted Rising Attrition Rates in Private Sector Banks


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Employee attrition rates have been rising sharply in select private sector banks (PVBs) and small finance banks (SFBs), with an average turnover rate of 25% in FY24, according to the Reserve Bank of India’s (RBI) Report on Trends and Progress of Banking in India 2023-24. Some banks have seen even higher turnover rates over the past three years.

Earlier in November, Reserve Bank of India (RBI) Deputy Governor Swaminathan J. Speaking at a conference for private sector bank directors emphasized that the average attrition rate in private banks stood at 25% in FY 2024, with some banks witnessing even higher rates over the last three years.

In FY24, HDFC Bank reduced its attrition rate by 7% year-on-year to 27%, though the rate for women employees remained slightly higher at 28% compared to 27% for men. The highest turnover was among employees under 30 years, followed by those in the 30–50 age group.

Performance Across Other Private Banks

Several private sector banks also reported notable improvements in attrition rates:

  • ICICI Bank: Reduced attrition by 6% to 25%.
  • Axis Bank: Improved by 6%, bringing attrition to 29%.
  • Kotak Mahindra Bank (KMB): Attrition declined by 6% to 40%, though it remained the highest among major private banks.
  • IndusInd Bank: Achieved a significant 14% reduction, bringing attrition to 37%.
  • YES Bank: Reduced attrition by 5% to 38%.

The RBI has raised concerns about the risks posed by high attrition rates, which can disrupt customer services, lead to a loss of institutional knowledge, and increase recruitment costs. The central bank emphasized that these challenges go beyond mere statistics and reflect deeper issues in employee engagement and retention strategies.

In a recent speech at the Conference of Directors of Private Sector Banks, RBI Deputy Governor Swaminathan J highlighted the significant impact of high attrition rates in the banking sector. He noted that while there has been some improvement since the RBI’s last discussions on this issue with select banks, much more needs to be done.

“The attrition numbers are not merely statistics; they are indicators of deeper challenges in the bank’s approach to employee engagement and retention,” Swaminathan said. He warned that losing talented employees, especially at junior and frontline levels, not only means losing people but also valuable experience, customer relationships, and operational continuity. This can negatively affect customer satisfaction and the overall experience at bank counters.

Swaminathan emphasized that reducing attrition is not just an HR issue but a strategic priority for banks. He urged directors to support initiatives focused on career development, mentorship programs, competitive benefits, and creating a workplace culture where employees feel valued.

“By prioritizing employee stability, Boards are setting the foundation for long-term growth, building a bank that attracts and retains talent, and nurtures it for future leadership roles,” he added.

The RBI report suggests that banks should implement strategies such as improved onboarding processes, comprehensive training, career development opportunities, mentorship programs, and a supportive workplace culture to enhance employee engagement and reduce attrition.

In addition, a survey conducted by the RBI in October 2024 revealed that 45% of regulated entities are using Generative AI for tasks like assisting employees and document summarization, highlighting the growing role of technology in supporting workforce efficiency.

As of March 31, 2024, private banks employed 846,530 individuals, while public sector banks (PSBs) had 746,679 employees.

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.

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. 

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.

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