Private Banks Overtake PSUs with 100,000 More Staff as Hiring Accelerates

Mumbai: Private banks in India have now surpassed public sector banks (PSBs) in the number of employees. As of 31 March 2024, private banks employed 846,530 people, while PSBs had 746,679 employees, a difference of about 100,000 staff, according to the Reserve Bank of India (RBI).

Reasons for the Increase in Private Bank Hiring

Recruiters explain that private banks have increased their hiring, especially in areas like information technology (IT) and digital banking. They are also expanding into rural and semi-urban areas, where public banks have traditionally been strong, which requires more staff. In contrast, public banks are not filling positions quickly enough as they become vacant due to retirements. Additionally, private banks offer faster career growth and more publicity about job openings, attracting more employees.

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Comparison of Hiring Trends

In the last fiscal year, private banks added 100,918 employees, while PSBs saw a net reduction of 9,965 staff, taking into account both exits and new hires. Over the past five years, private banks have increased their workforce by 370,140, whereas PSBs have reduced their headcount by over 60,000.

Focus on Rural Expansion

Private banks have particularly focused on hiring in rural and semi-urban areas. Last year, they added 23,821 employees in these regions, compared to 23,582 in urban areas. Most of the new hires were in metropolitan areas, with 53,515 added in these cities. Experts note that private banks’ expansion into “Bharat” (rural India) has required more staff to handle retail and microfinance banking services, which has driven up hiring.

Changing Hiring Patterns and Attrition

While private banks are still hiring, the pace has slowed for some. For example, ICICI Bank added 12,000 employees in FY24, down from 23,200 in FY23. Public sector banks, on the other hand, have much lower attrition rates. For instance, State Bank of India (SBI) had a 3% attrition rate in FY23, compared to over 30% in leading private banks.

Differences in Employee Roles and Costs

The roles and costs of employees differ between private and public banks. Anil Gupta, a senior vice-president at ICRA Ltd, points out that public banks have a larger market share in advances and deposits but also have higher employee expenses, reflecting their better pay structures. For instance, employee costs for public banks were 1.25% of their average assets in FY24, compared to 0.94% for private banks. This reflects the higher pay structure for employees in public sector banks.

Overall, private banks are growing their workforce faster due to their expansion into new areas and their focus on IT and digital banking, while public banks are lagging in hiring and facing lower attrition rates.