Resentment over opaque and often arbitrary transfer and promotion policies has long been a simmering issue at India’s public sector banks (PSBs), with employees frequently raising concerns about fairness and career progression.
Against this backdrop, the Union finance ministry is working on a series of human resource (HR) reforms across the 12 PSBs, aimed at reducing human interface and automating seniority-based promotion and transfer processes to improve transparency and workplace culture, according to three people familiar with the proposed HR overhaul, which is expected to benefit more than 750,000 employees across these lenders.
The move to reduce human interface in transfer and promotion processes across PSBs comes amid growing recognition that delays, opaque systems and rigid HR practices are hurting employee morale and institutional efficiency, and in extreme cases have been linked to suicides, including recent incidents involving two Bank of Baroda employees, the people cited earlier said, requesting anonymity.
“The Department of Financial Services (DFS) is now pushing a wide-ranging reform agenda aimed at modernizing workforce management and improving transparency across PSBs. As part of the reforms, PSBs have been advised to automate transfer processes through dedicated digital portals and complete annual transfers before June each year using transparent systems with clear seniority lists,” said the first of the three people cited earlier.
“The reform push also focuses on building future-ready talent within PSBs. Banks have been encouraged to promote cross-bank participation in training programmes, tying up with top institutes, creating Centres of Excellence and institutionalizing the sharing of case studies and best practices ” said this person.
The Centre has already directed banks to streamline promotion exercises by starting the process in January-February and declaring results by 31 March to reduce uncertainty and delays, the people added.
The development assumes significance because these state-run banks are the implementing agencies for the government’s flagship welfare and financial inclusion schemes, including the Pradhan Mantri Mudra Yojana, Pradhan Mantri Jan Dhan Yojana, PM SVANidhi, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and Atal Pension Yojana.
Bank union officials welcomed the proposed HR revamp, noting that workplace culture remains a key challenge.
“The proposed HR reforms on transfers, promotions and recruitment transparency are welcome. However, the bigger challenge before the banking industry is not merely administrative transparency but the quality of workplace culture. Employees are affected not only by delays in career progression but also by fear, intimidation, humiliation, excessive pressure and lack of empathy in day-to-day interactions,” said Rupam Roy, general secretary of the All India Bank Officers' Confederation (AIBOC), which represents employees across PSBs, private banks and regional rural banks.
Roy added that it is important to recognize that many employees and managers are not fully aware of what constitutes toxic workplace behaviour.
“Being firm, setting high standards and demanding accountability do not make a leader toxic. However, these objectives can be achieved far more effectively through empathy, guidance and respectful communication. Better ways of engaging with people lead to stronger teams, healthier workplaces and better organizational outcomes,” Roy added.
Queries emailed on Thursday to the spokespersons of finance ministry, DFS, Reserve Bank of India (RBI), Indian Banks' Association, and the 12 PSBs remained unanswered till press time.
Workplace toxicity at these institutions has come under sharp scrutiny following recent incidents involving Bank of Baroda employees. A probationary officer, Bishal Brata Roy, died by suicide in May. His handwritten note reportedly highlighted extreme work pressure, inadequate training, customer aggression, staffing shortages, the restrictive ₹5 lakh service bond that made resignation difficult, and a desire for home postings.
In a post on X on 2 June following the incident, Bank of Baroda said, …"the well-being of our employees remains of utmost importance to us. We are committed to fostering a supportive workplace environment and will continue to strengthen our employee wellbeing initiatives across the organization."
In July 2025, another suicide was reported at Bank of Baroda in Maharashtra, according to multiple media reports.
These reforms reflect a growing recognition that employee experience is a strategic issue, not just an administrative one. Automating promotions and transfers can improve transparency, reduce perceived bias, and bring greater predictability to career progression in public-sector banks, said Balasubramanian A, senior vice-president at TeamLease Services Ltd.
However, workplace culture is shaped by more than just HR systems. Employee workload, performance pressures, managerial practices and grievance redressal mechanisms are equally important. These reforms are a positive step, but lasting cultural change will require a broader focus on employee wellbeing, leadership and accountability, he added.
While separate data on suicides among bankers is not available, according to the National Crime Records Bureau (NCRB), professionals and salaried employees accounted for 9.9% of all deaths by suicide totalling 1,70,746 suicides in total in 2024, the latest year for which data is available.
The proposed HR practice transformation comes at a time when these 12 PSBs have delivered a strong financial performance in FY26, driven by robust business growth, improved asset quality and record profitability. Aggregate business rose 12.8% year-on-year to ₹283.3 trillion as of 31 March 2026, with deposits increasing 10.6% to ₹156.3 trillion and advances growing 15.7% to ₹127 trillion. Aggregate operating profit reached ₹3.21 trillion, while net profit rose 11.1% year-on-year to a record ₹1.98 trillion, marking the fourth consecutive year of profitability for PSBs. The sector’s capital position also remained strong, with aggregate capital adequacy ratio (CRAR) improving to 16.6%, well above the regulatory requirement of 11.5%
The employee count of state-owned lenders rose 0.22% year-on-year to 757,641 as of 31 March 2025, from 756,015 in FY24. In contrast, private banks recorded a 0.86% decline in employee strength, with headcount falling to 838,150 in FY25 from 845,407 in FY24, according to RBI data.