Over the past decade, private sector banks in India have experienced remarkable growth in terms of both market share and workforce size. This shift highlights how private banks are expanding at the expense of state-owned public sector banks.
Workforce Expansion
By the end of the financial year 2024 (FY24), private sector banks employed a total of 846,530 individuals, overtaking the 764,679 employees working for state-owned banks. According to data from the Reserve Bank of India (RBI), this marks a significant increase from FY14 when private banks had only 303,856 employees compared to the 842,813 working in public sector banks.
Private Sector Growth in Officer Positions
One key area of growth for private banks has been in hiring more officers. In FY14, there were 225,805 officers in private banks. By FY24, this number had risen dramatically to 796,809. This growth reflects the private banks’ strategic efforts to reach more customers, particularly in smaller towns and cities (known as tier 2 and tier 3 cities). Private sector banks have also diversified their services, focusing on products like agricultural loans and microfinancing, which has helped them capture a broader customer base.
Public Sector Banks: Mergers and Digitization Impact
While private banks have been expanding, public sector banks have seen a reduction in workforce, mainly due to mergers and the increased use of technology. The total number of public sector banks has shrunk from 27 to 12 between FY14 and FY24 due to consolidation efforts. This has led to fewer job openings, especially for clerical roles, where the number of employees dropped from 333,583 in FY14 to 246,965 in FY24.
The increased use of digital banking services has also reduced the need for branch-based staff. As more customers handle their banking needs online, the footfall at branches has decreased, leading to lower manpower requirements.
Shifting Market Share
One of the most significant changes in the banking sector has been the shift in market share between private and public banks. In March 2014, private sector banks held about 20% of total domestic advances in the banking sector. By March 2024, that figure is expected to rise to 40%.
Public sector banks have faced several challenges over this period, particularly in managing their assets. For instance, in March 2018, public sector banks had a gross non-performing asset (NPA) rate of 15.5%, largely due to bad loans in the corporate sector. This has hampered their ability to grow, especially compared to the more agile private sector banks.
Conclusion
The past decade has brought significant changes to India’s banking sector. Private banks have not only expanded their workforce but have also captured a larger share of the market, thanks to their focus on financial inclusion and innovation. On the other hand, public sector banks, affected by mergers, digitization, and asset quality issues, have seen a decline in their workforce and market presence. This trend is expected to continue, as private banks keep growing their influence in the Indian banking landscape.
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