Hit by the economic slowdown and rising non-performing assets, leading private sector banks are downsizing their workforce, balancesheet, offering lower packages to fresh recruits and reviewing the bonus quantum for their existing employees.
The country?s largest private sector bank ICICI Bank, which had aggressively expanded its workforce in the last couple of years has reduced its manpower base by 1,500 to 37,000 within one year between December 2007 and December 2008.
?In the current fiscal, around 7,500 people left our bank. We recruited 4,000 fresh faces and re-deployed around 2,000 people across various segments in the bank from other departments like two-wheeler financing, personal loans, retail lending etc. The sum mentioned includes retired employees, lay-offs due to non-performance or misconduct (around 800 employees) and the natural attrition which is currently 18% in our bank,?said Ram Kumar, executive director & HR chief, ICICI Bank. Ramkumar said though the bank is not planning any wage cuts in the near future, it is reviewing its bonus packages as they are correlated with individual performance of the employees and the bank?s profitability at the end of this fiscal.
On the current business strategy in tandem with the economic downturn, an official of the bank said that during the current year, the bank has pursued a strategy of lightening the balance sheet and prioritising capital conservation, liquidity management and risk containment given the challenging economic environment.
Taking a similar route another new generation private sector bank Kotak Mahindra Bank has also decided to go slow on expanding business. Dipak Gupta executive director of the bank said, ?Our bank has taken a conscious decision to go slow on expanding its credit portfolio in the prevailing scenario where most Indian banks have recognised a dire need to expand their loan books. Presently, we would like to conserve our capital. We may utilise the funds in future for various reasons, including a possible buy-out of an Indian bank. Also, non performing assets are building up in our retail loan portfolio.?
Though the insiders of the bank have confirmed about large-scale lay-offs, particularly management trainees, the official spokesperson of the bank said, ?We deny any lay-offs. Kotak does not comment on market rumours and conjecture as a matter of our corporate policy.?
Hemant Kaul, executive director, Axis Bank pointed out, ?We do not anticipate any major downsizing, or wage or bonus cuts to happen in the immediate future.?
R Venkattesh, executive VP and head (HR), Development Credit Bank opined, ?As the Indian banking sector is going through a downturn currently, the bonus packages of the DCB employees, after a thorough review, are likely to be less than expected. However, we are not going to cut wages.??Our workforce, that was 2,100 employees as on December 31, 2007, has come down marginally to 1,976 people as on December 31, 2008,?Venkattesh added. Rana Kapoor, managing director and CEO, YES Bank said, ?The Indian banking space is now out of the golden era that Indian economy witnessed between 2003-2008 and hence, the sector is expected to see a moderation in the overall compensation levels of the senior bankers.??Their bonuses and high wages are under review at present, as the banking sector is in a compression mode. The pay packages of these graduates would be designed taking in to consideration multiple factors, including the steep fall in inflation,?he concluded.