Reserve Bank Of India / RBI report disclosed! No employee will be available in private bank

Reserve Bank Of India: The latest "Banking Trend and Progress Report 2023-24" released by the Reserve Bank of India (RBI) has raised concerns over the significant increase in the rate of attrition of employees in private sector banks. According to the report, the attrition rate in private banks and small finance banks (SFBs) has reached an average of 25 per cent. This situation is not only operationally risky but also affects critical areas such as customer service, institutional knowledge and recruitment costs.

Rising trend and its impact

According to the report, the number of employees in private sector banks is growing faster than public sector banks (PSBs). But the sharp increase in the trend of attrition in these banks in the last three years has posed many challenges.

Disruption in customer service: When experienced employees leave, there may be a disruption in customer service.

Loss of institutional knowledge: The departure of experienced employees leads to a loss of knowledge related to the bank's operations and process.

Increase in recruitment costs: Frequent recruitment is not only time-consuming but also financially challenging.

RBI recommendations

The RBI has advised banks to look at employee attrition as a strategic requirement beyond "human resources". The following measures have been suggested to tackle this problem:

Long-term employee engagement: Efforts should be made to build long-term relationships with employees.

Training and development opportunities: Comprehensive training and career development programmes can enhance employee satisfaction and commitment.

Competitive benefits and protection schemes: Better benefits and protection schemes are essential to attract and retain employees.

Supportive workplace culture: Employees should be provided an environment where they feel satisfied in their work.

Attention to irregularities

Not only the problem of job switching, but also the irregularities found in the gold loan process have become a challenge for banks. Taking a tough stand on this, the RBI has directed banks to comprehensively review their policies and procedures. There is a need to ensure transparency, especially in loans against gold jewellery and top-up loans.

Solutions and way forward

It is imperative for private banks to adopt long-term strategies to enhance employee satisfaction and commitment. A strong workplace culture as well as focus on improving business processes and risk management are imperative.

This RBI report has once again proved that human resource management in the banking sector is not just a departmental issue but is integral to the long-term success and sustainability of a bank. Private banks need to adopt a clear approach to deal with this challenge, which will not only secure their operations but also strengthen customer trust.