To reduce the ever increasing turnover rates, banks must understand and put in place the right strategies to retain staff.
Staff turnover has been a thorn in the side of Indian banks for years. Employee attrition in private sector banks has risen to approximately 25 percent, and this high turnover rate presents considerable operational risks, as indicated by the most recent Report on Trend and Progress of Banking in India 2023-24, reported PTI.
The report released by the Reserve Bank of India stated that employee attrition rates are high across select private sector banks and small finance banks (SFBs).
The overall workforce of private banks exceeded that of public sector banks (PSBs) in the fiscal year 2023-24; however, there has been a significant rise in staff turnover over the past three years, with an average attrition rate of approximately 25 percent, the report pointed out.
“High attrition and employee turnover rate pose significant operational risks, including disruption in customer services, besides leading to loss of institutional knowledge and increased recruitment costs. In various interactions with banks, the Reserve Bank has stressed that reducing attrition is not just a human resource function but a strategic imperative,” it said.
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Though banks face challenges in attracting and retaining staff, there is hope as banks have the ability to turn things around in terms of timely insights and thoughtful and proactive engagement.
Financial institutions must adopt strategies such as enhanced onboarding procedures, offering comprehensive training and career advancement opportunities, establishing mentorship programs, providing competitive benefits, and fostering a supportive workplace culture to cultivate sustained employee engagement, the report stated.
