Lowest Employee Turnover Rates found at ICICI Bank among major Private Sector Banking Institutions
The decline in employee attrition rates in large private sector banks in India is a significant development, primarily driven by a combination of external labor market conditions and internal strategic changes.
The subdued entry-level job market, particularly in the BFSI (Banking, Financial Services, and Insurance) and fintech sectors, has played a crucial role in keeping employees within banks. With fewer opportunities outside, employees are more likely to stay put rather than switch jobs.
Moreover, the growth of digital banking services has created new roles and potentially higher employee satisfaction within banks. The expansion of digital platforms and automated customer service has not only led to the creation of new positions but also contributed to a more efficient and tech-led work environment.
The market has also stabilized post-pandemic recruitment spree, resulting in fewer employees leaving their jobs. The initial surge in hiring after the pandemic caused high attrition, but now, with the market settling down, the churn among new staff has reduced.
Banks are also focusing on selective recruitment in areas like cybersecurity, analytics, and risk management. This targeted approach helps retain skilled talent better, as opposed to the mass hiring practices of the past.
Digitization and automation have further shifted banks from manpower-heavy to tech-led operations, reducing pressures that would increase staff turnover. The operational efficiency gains from these changes have been a significant factor in reducing attrition rates.
Among the large private banks, ICICI Bank has reported the lowest attrition rate. In FY25, the employee attrition rate at ICICI Bank declined to 18% from 24.5% in FY24. Other banks like HDFC, Axis, Kotak Mahindra, and IndusInd also showed similar downward trends.
HDFC Bank's employee attrition rate in FY25 was 22.6%, compared to 26.9% in FY24. Axis Bank's employee attrition rate in FY25 was 25.5%, down from 28.8% in FY24.
Over the past three years, from FY23 to FY25, private sector banks have seen a southward movement in their employee attrition rates. IndusInd Bank's attrition rate was 29% in FY25, lower than 37% witnessed during 2023-24 and 51% in FY23. Kotak Mahindra Bank's manpower exit rate fell to 33.3% in FY25 from 39.6% in the previous year.
In conclusion, the slowing attrition rate in private sector banks can be attributed to a subdued entry-level job market in the BFSI and fintech industries, as well as the growth of digital services. The strategic changes focused on digital transformation and targeted hiring have also played a significant role in this development.
- The subdued entry-level job market in the business sector, specifically in the banking, financial services, and insurance (BFSI) and fintech industries, is keeping employees within India's banks, contributing to the decline in employee attrition rates.
- Banks in India, such as ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, and IndusInd Bank, are experiencing a decrease in employee attrition rates due to the growth of digital banking services, which has led to the creation of new roles and improved employee satisfaction.
- As a result of strategic changes focused on digital transformation and selective recruitment in key areas like cybersecurity, analytics, and risk management, private sector banks in India have seen a significant reduction in employee attrition rates over the past three years, from FY23 to FY25.
