Banking: Clerks Decline, Officers Increase

Private-sector banks employee strength has gone up 2.78 times in over a decade (since FY14) and surpassed that of the State-owned banks, reflecting their growing market share at the cost of their public-sector peers.

Latest data from the Reserve Bank of India showed that at the end of financial year 2024 (FY24), State-owned banks had an employee strength of 764,679, while private sector banks employed 846,530 individuals.

In FY14, state-owned banks had 842,813 employees, compared to 303,856 of the private banks.

During this period, the number of State-owned banks has decreased to 12 due to mergers, while the total number of private sector banks stands at 21.

Meanwhile, during FY14 to FY24, the total employee strength of the banking industry has gone up from 1.25 million to 1.87 million.

Data shows that the reduction in the employee strength of the state-owned banks has been in the 'clerks' category while the private sector banks have added employees in the 'officers' category.

Since FY14, employees in the 'clerks' category of State-owned banks have gone down from 333,583 to 246,965.

In contrast, employees in the 'officers' category of private banks have gone up from 225,805 in FY14 to 796,809 in FY24.

"Private banks have strengthened their outreach and financial inclusion by expanding their branches in tier 2 and tier 3 cities while also diversifying into non-urban lending products like agriculture, microfinancing institutions, etc," said Krishnendu Chatterjee, vice-president & business head, TeamLease Services, adding that public sector banks are not opening as many new branches as the private sector banks.

Also, in the case of public sector banks, increased digitisation has improved efficiencies and customer reach resulting in reduced footfall in branches.
This has led to a drop in hiring.

Additionally, post-merger of the public sector banks, the demand for new manpower has also reduced, Chatterjee said.

Among commercial banks, State Bank of India has the largest employee base, followed by HDFC Bank, ICICI Bank, and Axis Bank.

Experts have indicated that the growing influence of private sector banks in the credit ecosystem, payments ecosystem has also meant that they are hiring more people to reach out to customers in the interiors of the country, which traditionally has been a stronghold of the state-owned banks.

According to Subhasri Narayanan, Director, CRISIL Ratings, credit growth of private banks has outpaced that of public sector banks over the past 10 years, resulting in private banks gaining market share during this period.

"The share of private banks in overall banking sector domestic advances was 20 per cent as of March 31, 2014, which is estimated to have doubled to 40 per cent as of March 31, 2024 (excluding the impact of the merger of a large housing finance company with a private sector bank)," she said.

The growth differential was especially evident in the period from FY15 to FY19, when the public sector banks were grappling with asset quality challenges with their gross non-performing assets (NPAs) reaching a peak of 15.5 per cent as on March 31, 2018, driven primarily by stress in the corporate book, Narayanan said.

In contrast, while private sector banks also witnessed a rise in NPAs, for them, it peaked at a lower level of 5.1 per cent as on March 31, 2020.