With India's credit boom and strong economic growth, the Indian banking sector is rapidly expanding. However, as more Indians seek loans, some bank managers put a lot of pressure on young employees, leading to the highest turnover rate of Indian bank employees in the world.

According to media reports, although the turnover rate has declined slightly in the latest data, the turnover rate of Indian financial workers is almost double the global average, far higher than other countries such as the US, Japan, and Germany. Among them, the turnover rate of junior bankers in India is particularly serious, and the turnover rate of some large private banks has even exceeded 50%.

Wages of grassroots workers continue to be sluggish, leading to a widening gap between rich and poor in India

The reasons for this phenomenon are complex and varied. First, the growth rate of bank deposits in India has lagged behind the growth rate of credit. As a result, competition between traditional banks, modern fintech companies, and shadow banks (informal borrowers) is gradually heating up, and companies have to compete for customer resources in an increasingly competitive market. Kamal Karanth, co-founder of Bengaluru based solutions company Xpheno, stated:

“Many investors are confident in the potential of the Indian market, and they expect banks to do their best to expand their business. However, this high-pressure work environment often puts younger employees under the greatest pressure, which in turn exacerbates the conflict between employees and the organization.”

“The sales team has been the hardest hit. Frontline workers must actively promote the company's products and have to face difficult working conditions and customer dissatisfaction.”

Second, India's rapid economic growth has enabled some junior bank employees to raise their salaries by changing jobs.

Third, due to limited training and promotion opportunities, they can only seek development by quitting their jobs.

Fourth, although salaries for senior banking positions in India have risen sharply, close to Singapore's level, the wages of grassroots workers have always been very low. This has led to a widening gap between rich and poor in India, which some people compare to America's “Gilded Age” at the end of the 19th century.

Fifth, junior employees generally believe that management has failed to provide new employees with the skills to adapt to the current financial system. Over the past decade, hundreds of millions of Indians have opened bank accounts for the first time. At the same time, many banks have expanded their business into fields that were previously unimaginable. This was unimaginable in much of India's past modern history, because India's financial market was very closed until now.

Sixth, the scope of services in the financial industry has been expanded. Young employees are sometimes hired as wealth advisors, but their actual jobs are assigned to other positions, which makes them feel that they are being disrespected. This is particularly evident among employees who have graduated from non-elite schools, who are often assigned less popular jobs, such as marketing banking products at gas stations or airports.

Seventh, unlike other countries, the main language in India's corporate environment is usually English, which is not spoken by most people in India. This means those who didn't grow up in big cities are often at a disadvantage when interacting with national elites.

Furthermore, gender inequalities are also evident in the financial sector. According to data from human resources consulting firm Aon, the promotion ratio of female employees in the financial industry is far lower than that of men. Only 1 out of every 13 female employees is promoted, while 1 out of every 8 male employees is promoted. This phenomenon echoes the current situation where India's female labor force participation rate is low globally, and it is particularly difficult for women to advance in the workplace.

India's deep-rooted caste and family hierarchy make it difficult for outsiders to enter the industry. Priya Agrawal, founder of the Antarang Foundation, pointed out that many talented people are unable to break through the “invisible ceiling” due to financial position restrictions.

The Bank of India and the banking sector are working to reduce employee turnover

The high employee turnover rate not only affects the customer experience, damages the Bank of India's reputation, but also increases recruitment and training costs. Furthermore, India is one of the youngest countries in the world, and the financial sector, as India's largest employment sector, the high turnover rate means that companies may lose young talents that are important to driving India's economic growth. Bank of India Governor Shaktikanta Das said in October last year that the central bank is closely monitoring this phenomenon and has set up a task force to address employee turnover.

Despite many challenges, the Indian banking sector is also seeking improvements. Top banks are working to reduce employee turnover rates. According to Macquarie Group Ltd, Axis Bank's employee turnover rate has dropped from 34.8% to 28.8%. Kotak Bank and HDFC Bank also reported similar declines, and the latter two banks even set up task forces to improve employee retention and train managers.

Additionally, some banks, such as Kotak Bank and HDFC Bank, have launched internal career development programs, such as HDFC Bank's “Project Thrive,” which aims to cultivate employees' internal career growth.

Agrawal emphasized, “Banks need to take real action on diversity, not just make promises. It is recommended that companies equip low-income employees with mentors to avoid losing talent. Banks' promises in terms of diversity need to be fulfilled through practical actions, otherwise we will create more inequalities.”