Public sector banks (PSBs) employed 755,102 individuals in FY11, but by FY24, the number had only slightly increased to 756,015. This represents the lowest workforce count in 13 years. In 13 years, the number of Bank branches increased, the business of banks increased, the workload on staff increased but sadly the number of staff did not increase.
The peak workforce of PSBs occurred in FY17 with 857,500 employees, but since then, the number has dropped by over 100,000. In contrast, private sector banks have seen a significant rise in their workforce, doubling to 845,841 employees during the same period.
The primary reason for the decline in PSB workforce numbers is the series of bank mergers in recent years. In 2019, Dena Bank and Vijaya Bank merged with Bank of Baroda. The following year, 10 state-owned banks were consolidated into just four entities. These mergers led to fewer branches and a reduced need for hiring, as many positions became redundant.
Private sector banks and fintech companies have become attractive options for job seekers, offering higher cash payouts compared to PSBs, which tend to focus on long-term benefits like housing. This shift in focus has drawn younger professionals toward private sector opportunities, where they often find more stability and better monetary rewards.
Between FY18 and FY24, the rise of fintech firms, digital payments, and non-banking financial companies (NBFCs) created a surge in job opportunities within new-age financial services. These firms have actively recruited experienced professionals from public sector banks, especially for roles in risk management and technical functions.
Recruitment in public sector banks has slowed significantly, with hiring now mainly focused on replacing employees who leave. This change is due to slower branch expansions and increased pressure to meet performance targets. In FY24, state-owned banks accounted for only 23% of new branch openings, while private sector banks took the lead.
Another notable trend is the decrease in clerical jobs in banks. In the early 1990s, clerical positions made up more than 50% of bank jobs. By FY21, that number had dropped to just 17.8%. This shift has accelerated in recent years, as public sector banks increasingly hire for more specialized roles.
Many experienced professionals are leaving public sector banks for more lucrative positions in private companies, further reducing the talent pool for state-owned institutions. Additionally, frequent employee transfers in PSBs can discourage professionals seeking more stable roles.
The decline in the workforce of public sector banks is a result of several factors, including structural changes, evolving job preferences, and the growth of alternative financial service providers. While public sector banks continue to play an essential role in India’s economy, addressing these challenges is crucial to ensuring their continued relevance in a competitive financial landscape.
There is also one interesting reason for decline in number of staff in Banks. Banks and Government says that Banks have moved towards digitization and a lot of work has been digitized but the harsh reality is that IT infrastructure of Public Sector Banks is very poor. Though the technology has increased but a lot of work is still manual and requires a lot of man power. Branches are suffering from staff shortage but the banks are hiring only a few number of staff. Moreover, now Banks are slowly and slowly shifting towards hiring contractual staff. A lot of Banks have released notification to hire contractual staff such as Apprentice.
It would be very interesting to watch how the public sector banks manage their staff in the nearby future.
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