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Why 1000s of Bankers Are Quitting Their Jobs in India?

Submitted by admin on December 2nd, 2024

Currently, the number of banks in India is increasing in different geographical locations and business sectors, owing to the credit and ‘go-go’ period of upbeat economic growth. But the pressure for firms to deliver has yielded a worrying side effect: according to Bloomberg, one of the worst turnover rates for bankers in the world.

Loan Demands

With an increasing number of people in India’s 1.4 billion population demanding loans, some managers encourage their youngest employees to crack, outsourcing the struggling thousands. Apart from this, various estimates point out that attrition in the finance sector is nearly double the worldwide average and significantly greater than countries as big as the US, Japan, and Germany, and although the pace appeared to decline in available data from India lately, it is still higher than in other global territories.

America’s Gilded Age

To that end, among junior bankers, the numbers are even bleaker. Lakshmi keeps changing its guard; at India’s largest private lenders, attrition rates are most often north of 50 percent – frequently, reason enough. India’s success story has helped entry-level bankers demand pay raises by hopping from one firm to another. However, some of the employees argue that the only way they can change their status is by quitting because there is little training and development. While top bankers ‘salaries have grown significantly in India to match the Asia region more closely to that seen in Hong Kong and Singapore, basic pay for low-ranking employees has remained low. It is only deepening a rapidly growing income inequality that has been compared to that of America’s Gilded Age.

India’s post Liberalization history

In a broader perspective, junior employees complain that managers are ill-prepared to train hires for the realities of the financial system in present-day India. Since the beginning of the current decade, several hundred million people have started their banking journey with a first account. Many banks have diversified their portfolios in ways that would have been inconceivable for most of India’s post-liberalization history when the nation was closed to investors.

The forces have put pressure on the incumbent and established traditional banks, relatively young modern financial technologies companies, and shadow lenders. While investment options are increasing in India, deposits are rising more slowly than credit – that is, firms are competing for consumers in a much more competitive arena.

Investors’ Story

Kamal Karanth, a Bengaluru-based solutions firm co-founder elaborated that many investors only look at the India story from the top. They want the financial institutions to go all out to lure in customers — a stressful situation made worse by the fact that such expectations weigh most on new talent and contribute to the existing increased tension between employees and institutions.

“I will tell you that the sales teams are the ones that are most affected,” he said. This has implications whose result is that: “Front-line staff have to sell company products aggressively, and end up receiving and bearing tough working conditions and the consumer fury.”

What about Ajay who happily took a job last year with a mid-sized bank in Mumbai? Managers said he would be relied on to be an asset when it comes to their expansion strategies. But things didn’t quite pan out that way Of course that was not quite how things transpired. The bank over-delegated, Ajay said, to courting merchants in territories that were already entrenched with large and well-developed banks.

Agriculture & Bank

The bank grew out of a base primarily in agriculture and is now seeking to expand across other segments. However, bosses don’t have many ties in those industries said Ajay, 23, who is the first in his family to go to college. About 50% of the junior employees have left companies during Ajay’s stint of 10 months citing issues to do with compensation disparity and promotions that took too long.

“My managers are always dissatisfied with my performance,” said Ajay who asked not to be named in this interview to avoid compromising his opportunities in the labor market.

This has caught the attention of the Reserve Bank of India bearing in mind that customers’ churn at financial institutions is off the roof. Last October, Governor Shaktikanta Das said that the RBI is observing the attrition levels ‘sincerely’ and is in the process of forming a team to tackle the problem.

Currently, attrition is costly to the financial sector; being the largest employer in India, recruiting and training expenses skyrocket. It is also a reminder that firms are failing to connect with a key segment that can power value creation in India, one of the youngest countries globally.

Gender Barrier

Gender adds another barrier. India’s women – who already have one of the lowest labor force participation rates globally – have their work cut out for them. The financial situation for women was similar; where in 2023, one woman was promoted for every thirteen employees in contrast to one man for every eight, information according to the Aon company, a human capital consulting firm.

Caste Barrier

Inherent outsiders’ barrier associated with caste, and lineage makes it tough for the latter ones. Ms Agrawal of the Antarang Foundation, a non-profit organisation that mentors graduates about career options said that in India, jobs in the finance sectors are well regarded. Still, due to economic constraints, many Indians face an ‘invisible ceiling’.

It is important to note that different from other places such as the US or China, the language that is most likely to be used in the business world, which is English is not spoken by more than half of the Indian population. That implies that over 95% of the Indian population that did not grow up in developed cosmopolitan metro cities are in a snake basket to start with when dealing with the elites of the country.

Consider Chirag for instance, now 25 years old, who felt on top of the world when the young shadow lender landed him a job in the wealth team four years ago to sell savings accounts and personal loan products to customers. A first-generation white-collar worker, Chirag hadn’t come from money: His father is a driver and his mother is a helper cooking for a number of families in upper-middle-class localities of Mumbai.

This was short-lived especially because as he was already regaling in the success of his operations the police swooped on him. Chirag was not getting a desk job he thought he would be having and the problem was he was not getting the wealthy clients or the contacts he wanted.

The young man said he is working to put money aside for a management course so that “people will have no choice but to respect me.” But tuition fees range from INR200,000 ($2,389) and he fears how else he will manage all the expenses.

“I don’t look like the rich people I have to sell products to,” said Chirag, who asked to go by his first name to protect himself from potential employer retribution. “They don’t trust me.”

TNS India foundation

There is also an expectations mismatch recurrence factor which contributes to this. With the diversification of services being offered by banks, young people were are hired and classified as wealth advisors, but later deployed in other positions, thus, making them feel unappreciated, said Diya Zachariah, who once worked, at the TNS India Foundation, a non-profit organization for career training.

Indians who did not get through to these top schools find themselves hired into relatively oily positions at banks, selling the products to people at gas stations or airports.

Quality Of Customer Interactions

Lastly, high churn prevents managing the quality of customer interactions and can harm the image of Indian banks. One of the major goals is to prevent junior employees from constantly switching their employers.

“The attitude is: Life is too short. Let me try it out. It’s not about careers,” said Rajkamal Vempati, president and head of human resources at Axis Bank. “You can jump from a job. You can come back.” The company has recently introduced a program called Project Thrive as the internal career development model.

There are signs of progress. Top banks have lately reduced employee churn by 600 to 700 basis points, though the figures are still among the worst in the world. Over the past fiscal year, Axis Bank’s attrition fell to 28.8 percent from 34.8 percent, according to data from Macquarie Group Ltd. Similar drops were also reported at Kotak Bank and HDFC Bank, which set up a task force to boost retention and train managers. Agrawal said pledges of more diversity in India’s banks are empty unless bosses address the challenges faced by junior executives.

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