Defections in India’s private sector banks on the decline

Attrition rates shot up to 31-51% in FY23, prompting Reserve Bank of India Governor Shaktikanta Das to take notice. He had said that the RBI was closely monitoring the issue. In the last fiscal year, private banks improved staff turnover rate up to 25-45%, according to an ET study of the annual reports of seven banks.

HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, Bandhan Bank, Industrial Bank and RBL Bankwhich together employed some 730,000 people at the end of March, saw attrition figures moderate by between 4.5 and 14 percentage points in fiscal year 24.

Across the top three banks by staff strength, the attrition rate at HDFC Bank fell to 26.9 per cent in FY24 from 34.2 per cent in FY23. The figure improved to 24.5 per cent from 30.9 per cent in FY20. ICICI Bankand from 45.9% to 39.6% in Kotak Mahindra Bank.

Among the seven banks, Industrial Bank The sharpest decline in attrition rate stood at 37%. Experts say the improvement is partly due to banks’ internal efforts to stem the trend, and also due to market forces, which slowed branch expansion and hiring in the second half of the last fiscal. “There has been a concerted effort by all banks (to curb attrition) through various internal HR interventions,” said Prakhar Tripathi, partner, human capital consulting, Deloitte India, who heads the financial services segment. “This includes creating a retention hook through a ‘purpose’ — offering meaningful career paths and learning journeys that are not the traditional vertical or hierarchical career paths, but also include horizontal and cross-functional careers.”