Mumbai: Public sector banks in the country that account for about 70% of the industry are on a hiring spree to keep pace with their business expansion even as private banks are shrinking jobs.
State Bank of India (SBI), the country’s largest lender, plans to hire close to 30,000 for the bank and its seven associates in one year. Among other public sector banks, Union Bank of India has hired 2,000 in the current fiscal and wants to add 3,000 more on its pay rolls in the first half of fiscal 2010, according to a senior official at the bank.
IDBI Bank Ltd too has hired about 2,000 and is looking for another 3,000 while Bank of Baroda (BoB) wants to hire 3,000, including 1,000 officers, and Bank of India, 900, two-third of whom are officers.
Expansion drive: State Bank of India plans to hire 30,000 for the bank and its seven associates in one year. Madhu Kapparath / Mint
Although most fresh recruitments are for Mumbai, they are not restricted to the city alone. In Chennai, Indian Overseas Bank will hire 2,300 and in Delhi, Punjab National Bank (PNB) will hire 600 officers in the next few months. Elsewhere, Andhra Bank in Hyderabad will hire more than 600 and the Mangalore-based Corporation Bank plans to hire about 900 clerks and officers in 2009-10. It has already recruited about 300 officers this year.
According to senior bankers, at least 40,000 have been hired by the public sector banks in the current fiscal and the figure will substantially go up next year. The number of people fired by private and foreign banks also run in thousands, according to bankers. Many of them are direct sales agents, or DSAs, who market credit cards, mortgages and personal loans. With the slump in demand for retail loans, banks are snapping ties with agencies that supply DSAs to them. Mint could not independently ascertain the figures.
A voluntary retirement scheme, introduced early this century, saw at least 11% of 870,000 bank employees marching out of public sector bank premises. Since then, banks have not recruited too many people while their assets have risen nearly three times, from Rs10.2 trillion in 2001 to Rs29 trillion in 2008. On top of that, a large number of employees have retired in past few years. They were recruited in early 1970s, after the nationalization of banks.
At the end of fiscal 2008, public sector banks had about 720,000 employees on their pay rolls.
Some of the private banks that have aggressively grown their business, riding on the world’s second fastest growing economy, are now shrinking their balance sheets while public sector banks are expanding by opening new branches across the country.
According to Anurag Khanna, chairman and managing director of Banknet India, a banking research company, new recruitments are to keep pace with the banks’ expansion plans. “The banks are adopting fast-track promotions to fill in any management gap,” said Khanna.
The Reserve Bank of India’s emphasis on financial inclusion is also forcing public sector banks to hire more for rural areas and open branches there, Khanna said.
Another reason behind the sudden spurt in recruitment is the fact that unlike private banks, public sector banks cannot outsource many activities, including sourcing loans.
Apart from recruiting through a normal process of written examinations and interviews, banks are also going for campus recruitments and outright poaching—sometimes from fellow public sector banks. BoB and PNB also took officers on contract offering them higher pay packet by monetizing the perks available for officers of similar grade but the system has been scrapped in the face of stiff resistance put up by unions.
“We are battling private and foreign banks with public sector tools,” said Dipankar Mukherjee, general manager, human resources and marketing at BoB.
“Wage hikes are decided for the entire industry. You really cannot do anything fundamentally different in this set-up. Our systems and expectations are that of private sector but our incentives are public,” said Mukherjee.
Low salary, tough working conditions, frequent transfers and an opaque promotion policy deters public sector employees from working effectively.
PNB and BoB wanted differential wages for their employees but they could not move ahead with their plans as the unions opposed that.
“We dropped our plan of deciding salaries of our own because it seemed our employees did not want higher salary,” said K.C. Chakrabarty, chairman and managing director of PNB.
Despite low salary, many private sector employees are now approaching public sector banks looking for job security.
Ashwin Ramarathinam contributed to this story.