Some of the small finance banks (SFBs) of the country witnessed a sharp rise in attrition in the last financial year, according to their annual reports. Experts attributed this to tough competition from rivals.
At least three SFBs — AU Small Finance Bank, Equitas Small Finance Bank and Ujjivan Small Finance Bank — on average reported an attrition rate of 41 percent in FY23, data showed.
This was significantly higher compared to the last two financial years' average of 34 percent and 26 percent.
AU SFB, the largest SFB by asset under management (AUM), recorded an attrition rate of 47.3 percent in 2023 compared to 42.3 percent and 34.2 percent in 2022 and 2021, respectively. The bank recorded the highest attrition at the frontline and junior-level employees, where the rate in FY23 was at 53 percent and 35 percent, respectively.
Equitas SFB showed an attrition rate of 40 percent. The same was 31 percent and 24 percent in 2022 and 2021, respectively.
Whereas the attrition rate in Ujjivan SFB in 2023 was 37 percent, rising from 35 percent in 2022 and 22 percent in 2021.
Also read: Top private banks see highest attrition at junior level in FY23
A banker from one of the SFBs mentioned above said that the bank is assessing different opportunities and measures to keep the attrition rate at minimum.
“We have discussed the issue in some meetings. We are working on some plans to make sure that the attrition is minimum,” the banker said on the condition of anonymity.
An email sent to these banks seeking comments did not elicit any response till the time of filing this report.
An industry-wide issue
Other than SFBs, a Moneycontrol assessment of some of the top private sector banks earlier showed a high attrition rate in FY23.
The country’s largest private sector bank, HDFC Bank’s attrition for FY23 rose to 34.1 percent compared to 27.6 percent in FY22 and 15.4 percent in FY21.
Axis Bank’s overall attrition for FY23 stood at 34.8 percent compared to 31.6 percent in FY22 and 19.1 percent in FY21.
For Kotak Mahindra Bank, the overall attrition in FY23 was 45.9 percent, up from 39 percent in FY22 and 28.8 percent in FY21.
Whereas the attrition rate for IndusInd Bank in FY23 stood at a whopping 51 percent compared to 37 percent in FY22 and 21 percent in FY21.
Experts said the primary reason for high attrition in SFBs is the availability of better opportunities in other financial services companies.
“Better pay, facilities and convenience are some prominent features employees look for today. They get better opportunities in other companies and so they jump for those jobs,” said Chandan Sinha, former executive director at Reserve Bank of India.
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