The banking industry in India is grappling with a growing trend of attrition, particularly affecting the sales division. During an earnings call, Yes Bank’s CEO, Prashant Kumar, acknowledged the industry-wide issue and emphasized the bank’s efforts to control attrition, setting a target of limiting overall employee turnover to 25-30%. The concern extends beyond mere salary upgrades, with employees seeking better perks and working conditions. Kotak Mahindra Bank, in particular, has experienced a sharp rise in attrition rates, primarily at the junior level. High employee turnover poses operational risks, leading to customer service disruptions and ethical concerns, as highlighted by former Deputy Governor of the Indian central bank, MK Jain.

Attrition Trends Impacting the Banking Industry

The Yes Bank CEO, Prashant Kumar, acknowledges the rising attrition rates across the banking sector, with sales teams particularly affected. Controlling attrition has become a top priority for the bank.

Entry-level relationship managers, with up to two years of experience, are earning between 30,000-35,000 rupees per month, including revenue-based incentives. Remuneration in this category has grown by 8-10% annually in line with the broader job market.

Reasons Behind Escalating Attrition

While salary upgrades are a driving factor for employee exits, perks such as flexible working conditions also play a crucial role in encouraging job switches. Many employees opt to maximize their gains in a growing job market by exploring new opportunities elsewhere, especially within the first six months of joining a bank.

Kotak Mahindra Bank’s Attrition Challenge

Kotak Mahindra Bank has experienced a significant rise in attrition rates, with the highest churn observed at the junior levels. While senior-level attrition stands at approximately 10%, and mid-level at 20%, junior-level attrition reaches a staggering 50%.

Efforts to Mitigate Attrition

Kotak Mahindra Bank’s whole-time director, Shanti Ekambaram, revealed that the bank is taking measures to address the escalating attrition. Key areas of focus include employee engagement, training initiatives, and the implementation of technology and automation.

Operational Risks Posed by High Attrition

The former Deputy Governor of India’s central bank, MK Jain, expressed concerns about the mounting attrition rates in the banking sector. He highlighted the potential risks, including disruptions in customer services and ethical issues arising from high employee turnover.

Conclusion

The banking industry in India is facing a concerning trend of increasing attrition, with the sales division being particularly affected. Yes Bank and Kotak Mahindra Bank have both acknowledged the issue and are actively working on strategies to control employee turnover. While salary upgrades play a role, employees are also attracted to better perks and flexible working conditions. High attrition rates can lead to operational challenges for banks, including customer service disruptions and ethical concerns. As the industry grapples with this issue, implementing effective retention strategies will be crucial to maintaining a stable and skilled workforce.