State-Run banks, crumbling under the toxic loan pile, seem to be steadily losing some of their pop as one of the largest employers. Job creation in public sector banks saw a modest growth of just 1.3 per cent during FY17, a five-year-low, according to latest data.
This is excluding the country’s largest bank State Bank of India (SBI), which saw a decline of 1.5 per cent, following its merger with associate banks in April. On the other hand, private sector lenders ticked a growth of 7.5 per cent, while the overall banking sector saw a marginal growth of 3.6 per cent in hiring during FY17, over the previous year.
According to RBI’s ‘Statistical Tables Relating to Banks in India: 2016-17’, nationalised banks, excluding SBI, have been hiring fewer employees every year for some time. For instance, state-run banks hired an average of 17,000 staff every year in the past five years, while private lenders hired nearly double that figure — that is 31,000 every year. If the pace of employee additions among private players continues, they may soon overtake nationalised banks as the largest hirers.
In 2012, government banks (excluding SBI) employed nearly five lakh, while private banks’ workforce comprised nearly half at roughly 2.5 lakh. But the gap is narrowing every year and as of FY17, nationalised banks employed 5.8 lakh, while private players employed up to 4 lakh people.
The slow pace of growth among government banks has been a drag on the sector’s employee growth, which saw an addition of a mere three lakh new jobs in six years between 2011-12 and 2016-17.
The banking sector is one of the largest employers hiring over 13 lakh people and if the sector continues to add fewer jobs, it can derail the government’s one million jobs target. But, there’s hope that a turnaround is imminent. Both Finance Minister Arun Jaitley and RBI governor Urjit Patel stressed that the government’s recent Rs 2.11 lakh crore bank recapitalisation plan will not only improve credit growth, but also aid job creation.