India’s banking sector is experiencing a significant exodus of employees as the industry expands into new geographies and businesses, fueled by a nationwide credit boom and robust economic growth. However, the pressure to deliver results has led to one of the world’s highest attrition rates for bankers.
As more of India’s 1.4 billion people seek loans, managers are pushing their youngest staff to the brink, driving thousands out of the industry. Attrition in finance is nearly double the global average and far higher than in other large countries like the US, Japan, and Germany, even after a slight dip in the most recent data.
Junior bankers face particularly high attrition rates, with figures regularly topping 50% at India’s largest private lenders. The causes are multifaceted. The economic boom has made it easier for entry-level bankers to seek pay increases by moving between firms. However, many feel quitting is their only option for advancement due to limited training and growth opportunities.
While senior banker salaries in India have risen dramatically, approaching figures in Hong Kong and Singapore, salaries for the lowest-level employees remain low. This disparity is widening the gap between the rich and poor, drawing comparisons to the US Gilded Age. Junior employees report that managers are often ill-equipped to prepare new hires for the challenges of India’s financial system.
In the past decade, hundreds of millions of Indians have opened their first bank accounts, and banks have diversified their portfolios significantly. This diversification has led to intense competition among traditional banks, modern fintech firms, and shadow lenders. With bank deposits growing slower than credit, firms are vying for customers in an increasingly crowded market.
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Kamal Karanth, co-founder of Xpheno, a Bengaluru-based solutions firm, noted that many investors see significant upside in India. They expect banks to bring in business by any means necessary, creating a pressure-cooker environment that heavily impacts younger staff and leads to high friction between employees and institutions.
The high attrition rate is costly for the financial sector, India’s largest employer, increasing recruiting and training expenses. It also risks alienating a crucial demographic for driving growth in one of the world’s youngest countries.
Gender disparities further exacerbate the issue. Indian women, who already have one of the lowest labor force participation rates globally, face additional challenges. In the financial sector, only one in 13 female employees were promoted in 2023 compared to one in eight male employees, according to data from Aon, a human capital consulting firm. Entrenched hierarchies related to caste and lineage also pose significant barriers.
Priya Agrawal, founder of the Antarang Foundation, a non-profit advising graduates on career paths, explained that roles in finance are aspirational for many Indians, but economic status often creates an “invisible ceiling.” Unlike in the US or China, English, the primary language in India’s corporate settings, is not spoken by the majority, putting those from non-cosmopolitan backgrounds at a disadvantage.
Junior hires from non-elite schools often end up in less desirable roles, such as selling bank products at gas stations or airports. The high turnover rate ultimately impacts customer experience and risks damaging the reputation of Indian banks. Reducing employee churn is a key priority for maintaining stability and growth in the sector.
- Original Article Lead: Bloomberg
