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India’s top private sector banks expect the trend of slowing attrition from FY24 to spill over to the just-concluded fiscal (FY25), which could also mean slower hiring in the current financial year as fewer fresh positions open up for new talent. This comes on the back of a subdued entry-level job market, a pivot towards internal talent development by private banks, and some lenders’ preference for contractual workers against hiring for permanent positions. These factors are expected to continue slimming attrition numbers in the new fiscal year as well.
“Attrition numbers are definitely going to be lower in the previous fiscal (FY25)," said a banker at a large private sector bank on condition of anonymity, adding that banks realised after covid that they did not require that many people and employees also found a lot of opportunities elsewhere. “It is difficult to predict what the hiring situation in the current financial year will be like. But since many are hiring only to fill vacancies, lower attrition would mean fewer job additions," the banker added.
Bankers Mint spoke with said lenders had hired in excess after the pandemic and underestimated the growth of digital services. This led to an increase in attrition in FY22 and FY23 as people quit banks in hordes to join insurance, e-commerce and logistics firms in customer-facing roles like sales and services. Thereafter, though, the outflow has slowed.
For instance, in FY24, , and Axis Bank reported attrition of 24.5%, 26.9%, and 28.
8%, respectively. Their comparative attrition numbers in FY23 were 30.9%, 34.
2% and 34.8%, respectively, as per data compiled by Macquarie. Attrition figures for FY25 are yet to be announced.
Emails sent to HDFC Bank, ICICI Bank and Axis Bank remained unanswered till press time. To be sure, not only has the hiring frenzy post-covid ebbed, companies across sectors have preferred to recruit contract employees over the past few quarters, and reduced their dependence on permanent hiring. “In the temporary workforce segment, while the overall BFSI market has remained subdued in terms of hiring in FY25 compared to FY24, attrition among contract staff continues to hover at an elevated level of around 10% per month," said Kartik Narayan, CEO for staffing at Ltd.
Narayan attributed this partly to talent moving to other industries where their skills are in demand. “Additionally, we’re seeing resistance from some individuals to shift from sales roles to collections, a transition increasingly necessitated by evolving business requirements amid changing market dynamics," he added. Last October, Mint wrote that contract hiring for six months to a year is expected to increase by 20% over the next few months, creating 600,000-700,000 jobs across the organized sector.
This demand comes at a time when project visibility is low amid uncertain global economic conditions and wars, making companies reluctant to hire employees at high pay scales. This means fewer opportunities for employees to jump jobs. Meanwhile, banks are upskilling employees and hiring via internal routes rather than depending on lateral talent, which is more expensive.
In fact, attrition in the past few years has been higher in the junior levels whereas mid- to senior-level executives have stayed back for longer. The chief human resource officer of a private lender said attrition in FY25 will be lower than FY24, with the slowdown more prominent at middle and senior levels. “The overall tally of employee strength in FY25 and FY24 may be similar, but going ahead, replacement hiring will be less.
The campus programs will continue but we will slow down on middle and senior recruitments," said the HR head cited above. Sector experts point to a similar trend. Upasana Agarwal, partner, professional and financial services at executive search and talent advisory firm ABC Consultants, said there is likely to be a 10% dip in senior- and mid-level hiring in FY25 versus FY24.
“The number of people in the middle to senior management, above the position of vice-president (VP), has dropped," said Agarwal, adding that vice-presidents in most banks come with an experience of at least 10 years and a compensation of 35-50 lakh. “Going ahead, banks will reduce their replacement hiring as growth is coming from digitally enabled models, which have lower talent needs than traditional models. The new fiscal’s (FY26) recruitment target, headcount requirement is expected to reduce as well," said Agarwal.
High attrition in banks has also caught the attention of the Reserve Bank of India (RBI). In a report last December, RBI said that while the total number of employees of private banks surpassed that of public sector banks (PSBs) during FY24, their attrition has increased sharply over the past three years, with average attrition rate of around 25%. “In various interactions with banks, the Reserve Bank has stressed that reducing attrition is not just a human resource function but a strategic imperative," it said in its report Report on Trend And Progress of Banking In India.
According to the placement head of one of the Indian Institutes of Management (IIMs), the domestic banks were fewer in number at the campus recruitments. “The Indian banking sector has recruited fewer students when compared to previous years. Several reasons, including the economy may have played a role in this," said this person, who did not want to be named.
Some of the other reasons include a reduced budget that pushed these banks to go for smaller B-schools and hire from their best students. A campus graduate from the older IIMs can command annual compensation of 30-35 lakh in domestic firms, while her peer from a tier-II B-school would command 15-20 lakh..
