India's private lenders grab brisk business at the cost of soaring attrition

Teamlease Services

27/07/2023 06:09

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      Top private banks report attrition rates of 35-50%
    

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      Highest turnover seen in sales staff
    

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      Brisk growth in retail lending leading to attrition
    

  
    By Ira Dugal and Siddhi Nayak
       MUMBAI, July 27 (Reuters) -   India's private lenders
are contending with soaring attrition amid strong demand for
loans and the rush to capture a larger share of the crowded
market. 
    Credit demand grew 15% last financial year and is seen
expanding 10-12% this year, driven by retail loans. This growth
is mounting pressure on the frontline staff and a jump in
employee turnover raising risks of mis-selling and service
disruption.
    HDFC Bank, India's largest private lender, saw its employee
turnover rate over the last year rise to 34%, while Axis Bank
was at nearly 35%. Kotak Mahindra Bank's attrition surged to
about 50%, with smaller peer Yes Bank in toe at 43%.
    "It is a problem the entire industry is grappling with,"
said Axis Bank CEO Amitabh Chaudhry on the lender's earnings
call on Wednesday.
    The bank is exploring various options, including career
progression and training, to retain employees, Chaudhry said. 
    "Attrition happens when there is high demand for an
industry's services and companies are pushing productivity, as
is the case with financial services," said Rituparna
Chakraborty, co-founder of staffing firm Teamlease Services.
    "We are seeing attrition mostly on the sales side which is a
trend across the banking industry," Yes Bank CEO Prashant Kumar
said in an earnings call over the weekend. The bank is working
towards controlling it and would "not like to see an overall
attrition of more than 25-30%," he said.
    An entry-level relationship manager with up to two years of
experience typically earns between 30,000-35,000 rupees
($792.66) a month, including incentives linked to the revenue
they can generate. 
    Remuneration in the category has grown 8-10% annually over
the past year, in line with the broader job market, Teamlease's
Chakraborty said. "But staffers will try to maximize gains in a
growing market by switching jobs if they have the opportunity,"
she added.
    Exits are not just for salary upgrade but also for perks
like flexibility in working conditions, said another banker who
declined to be named. Most exits happen within six months of
joining, this person added.
    Kotak Mahindra Bank, which has seen the sharpest jump in
attrition, saw the worst churn at junior levels, it said.
    While the bank is seeing about 10% attrition at the senior
level and 20% at the mid-level, attrition is nearly 50% at the
junior level, said Shanti Ekambaram, whole-time director at
Kotak Mahindra Bank.
    "The bank is working on areas such as engagement, training
and technology and automation to control attribution," Ekambaram
said at the lender's post-earnings analyst call over the
weekend. 
   High employee turnover can pose significant operational risks
to banks including disruption in customer services and ethical
issues, MK Jain, a deputy governor at India's central bank said
in a speech in May. Jain has since retired.
    
    ($1 = 82.0023 Indian rupees)

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 (Reporting by Ira Dugal and Siddhi Nayak; Editing by Dhanya Ann
Thoppil)
 ((Ira.Dugal@thomsonreuters.com; +91-9833024892;))