Money & Banking

Private banks on hiring, branch expansion spree

M.V.S. Santosh Kumar N.S. Vageesh Chennai/Mumbai | Updated on October 09, 2012


Public sector lenders need to recruit aggressively to replace superannuating staff

In 2011-12, banks in India added 5,664 branches and 42,334 employees.

According to RBI data, Indian banks, as of last fiscal, had a network of 83,229 branches and an employee count of 10.1 lakh.

Private banks have been aggressive in their expansion, adding 1,377 branches or one-fifth of new branch additions in 2011-12. The share of private bank branches to total branches rose from 13 per cent in 2007-08 to 16.1 per cent in 2011-12. The share of public sector banks in total branch network was 83.5 per cent as of March 2012.

The 42,334 employee-addition looks smaller when natural attrition in the form of retirements inpublic sector banks are taken into account.

On a net basis (addition minus retirements), State Bank of India lost the most employees, with the headcount falling by 7,400 employees. Public sector banks as a whole had net addition of 19,400 employees followed by new private banks, with 18,800 employees.

Interestingly, ICICI Bank, which added a similar number of branches (around 200 branches) as that of HDFC Bank and Axis Bank, saw a reduction in staff strength.

While HDFC Bank added 10,300 employees and Axis Ban 5,400, ICICI Bank’s employee-count declined by 10,000 in the two years ended March 2012. This indicates that ICICI Bank is continuing to make itself leaner, after the Bank of Rajasthan acquisition.

However, this metric may not be completely representative of the level of activity as private banks tend to outsource much of their activities and, hence, project a lower headcount.

RBI Deputy Governor K.C. Chakrabarty, in a speech in February 2012, said: “Public sector banks which account for nearly three-fourths of the one million people working in Indian banks face the prospect of retirement of nearly 55 per cent of their staff in the next decade.”

SBI Managing Director A. Krishna Kumar, in a recent interaction with Business Line, said “the estimate is that about 35-40 per cent of SBI’s staff would be retiring in the next five years. That is, 70,000-80,000 people will be retiring in the next five years across all levels.”

This would mean that while the net additions may seem low, banks will actually be hiring employees in huge numbers to replace superannuating staff.

Cost per employee

The cost per employee continues to indicate that banking is certainly not a low-paying profession.

For public sector banks, it has gone up to Rs 7.44 lakh from Rs 7.2 lakh a year ago and Rs 5.5 lakh in 2009-10. In the private sector, it was Rs 6.88 lakh against Rs 6.5 lakh a year ago.

New private banks had a cost per employee of Rs 7.2 lakh. With younger workforce in the case of new private banks, it seems as though they are better paymasters.



Published on October 09, 2012

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