Tech Integration And Partnerships Trim PSU Banks' Employee Headcount

Increased automation in the banking sector has been a primary reason for reduction in employee headcount at PSU banks.

<div class="paragraphs"><p>An employee working on a laptop. (Photo: Glenn Carstens Peters/ Unsplash</p></div>
An employee working on a laptop. (Photo: Glenn Carstens Peters/ Unsplash

The call for 'agitational programmes' by public sector bank unions has brought the issue of a potential manpower crunch in these lenders back on the table.

On Nov. 11, the All India Bank Employees' Association wrote a letter to Finance Minister Nirmala Sitharaman on the issue. Through this letter, officers of 12 public sector banks urged the government to advise bank management to re-examine its manpower policy and provide sufficient staff.

Some even took to social media to express their resentment due to alleged deteriorating working conditions, staff shortages and officials' departures from PSBs.

The employee headcount is going down, and people are burdened with work, according to an AIBEA member who spoke on the condition of anonymity. This is the root cause of every issue in public sector banks, this person said.

So, is there a lack of workforce?

An overview of the banks’ annual reports across six financial years (FY18–FY23) shows that employee headcount has shown signs of slowing down while business per employee has increased.

Given the technology wave and the adoption of more partnerships, PSU banks that saw a reduction in their overall workforce include the State Bank of India, Bank of Baroda, Canara Bank and Indian Overseas Bank.

Others, like Punjab National Bank and the Central Bank of India, showed a mixed trend, with employee headcount falling at some points and rising at others.

One of the primary reasons for this decline could be the increasing automation in the banking sector, according to Vinit Bolinjkar, head of research at Ventura Securities Ltd. “This has led to a reduction in backend work and the overall manpower requirements of the organisations,” he said.

On July 31, in a written reply in Lok Sabha, Bhagwat Karad, minister of state for finance, said that the requirement of manpower in each public sector bank is determined by the respective bank, keeping in view various factors like business requirements, spread of activities, unplanned exits, etc.

“…. a total of 78,367 staff has been recruited in clerical and subordinate cadres during FY 2019–2023,” he said.

Before this, Finance Minister Nirmala Sitharaman, in another written response on Dec. 13, 2021, denied a shortage of bank staff at public sector entities.

“As per inputs received from public sector banks, as of 1.12.2021, 95% of staff is in position against the sanctioned staff strength,” she said. “The small proportion of vacancies is substantially attributable to attrition on account of superannuation and other usual factors,” she added.

There are complaints about the manpower crunch, but no, it's not that, according to Amit Khurana, head of equity and research at Dolat Capital. “Hiring is not happening because there is no need anymore. Technology has taken over many tasks,” he said.

Technology Takes Over

With the consolidation of PSU banks, the capital that was infused post-the non-performing asset crisis also brought in a wave of digitisation, according to Lohit Bhatia, president of workforce management at Quess Corp.

“Hence, a lot of banks' back-end work, which was done manually, moved in favour of technology. So, the same workforce is not needed anymore,” he said.

Moreover, in the last few years, the way the digital payments network in India has surged is huge; physical transactions and activities have gone down, he said.

Krishnendu Chatterjee, vice president and business head of TeamLease Services agrees. The huge push towards lending has resulted in banks operating through their subsidiaries or partners, he said.

“These partners are now directly working with banks and catering to the requirements. So, the need for main banks to hire is going down, and going to a third party also helps them in many ways,” he said.

The banks’ books are increasing, and so is the business, Khurana said.

Variabilisation has happened towards business metrics, and so the business per employee is rising, Chatterjee said.

“It is the incentives and rewards that are driving employees to work more,” he said.

Given the rise in fintechs, there has been a tectonic shift in the choice of jobs as well, according to Bhatia of Quess Corp.

“It’s not a talent crunch, but talent demand has split across segments,” he said.

With a limited talent pool, the options are now numerous. Earlier, one would look at PSU banks for stability and job safety, but now, private players are becoming a preference because of their pay and incentives, Bhatia added.