What was once thought to be a problem only for the IT Industry has now become a problem for India’s banking industry too! Here’s more to it!
Banks across India are seeing high attrition rates as new-age fintech companies are fighting a talent war to offer attractive pay packages, especially in the IT segment.
Banks like HDFC, Axis, and IndusInd are seeing attrition rates between 30 and 50%. The microfinance sector is the worst hit, with attrition levels as high as 60% among young employees.
What are Banks Doing?
To reduce this employee turnover, banks give perks like rental accommodation to newcomers from other states and cities.
For example, Suryoday Small Finance Bank offers an education allowance for children up to Rs 500 per child to employees whose salary is less than Rs 25,000 per month. 250 employees benefitted from this in July. For Axis Bank, work from anywhere has given it access to talent in tier 2-3 cities, which it couldn’t have access to otherwise!
What’s in It for Investors?
What’s suitable for one business stakeholder is not necessarily good for another. While higher salaries and other perks are ideal for a company’s employees and may help reduce employee turnover, they will lead to higher employee costs and reduced profit margins, which is unsuitable for a company’s shareholders.
Although the situation is not that grave, shareholders in such companies should remain cautious.