First time in the History of Public Sector banks, the Share of Bank employees fell below the 50% mark. As reported by HT on December 27, 2022, RBI annual publication, Statistical Tables relating to Banks in India for 2021-22.
As per the data shared by Reserve Bank of India on bank-wise and category-wise employees of Scheduled Commercial Banks (SCBs) in the country. The share of Public Sector Bank employees across all categories (officers, clerks and sub-staff) stood at 49.13% in 2021-22.
This is the first time PSB employees will not have a 50% share in total Bank employees in India comprising both Private and Government banks. Even if one were to add the number of employees of India Post Payment Bank – it is owned by the department of post of the government of India – this number does not go beyond 50%.
If compare with the Data of 2004-05, when the share of PSB employees in total SCB workforce was more than 87%. It means a huge reduction of 37% and more, though the Public Sector Banks have shown the tremendous growth within these years.
In absolute terms, the total number of PSB bank employees stood at 7, 70,000 in 2021-22. Whereas in 2016-17, it 857.
Compare to PSBs, the private banks have shown the increase from 400,000 to 650,000 during this period. The rest are in foreign banks operating in India, payment banks, and small finance banks. Almost all of these are in the private sector.
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PSBs Loosing Talents at Management Level
Private Banks have a much bigger share of staff in the officer cadre than PSBs and they are known to pay significantly higher salaries than government banks at the management level. If we go with the version of the former RBI governor Raghuram Rajan, who have pointed to the inability of government banks to pay higher salaries as an important handicap in attracting talent.
PSBs are shrinking their Footprint
Due to various policies, mergers , the overall shares of the Public Sector banks in the business has reduced from 87% of the market share in 1989-90 to mere 54% in 2021-22. The respective numbers for share in total deposits are 88% and 60%. Though the government continues to hold back on big-ticket bank privatization in India, at least in terms of ownership, the banking business has increasingly moved from government owned banks to the private sector.
Also Read – Bank Privatization: BOI, UCO Bank to Go Private? Here’s list shared by NITI Aayog
What is the Future of Public Sector Banks in India
If we compare with these numbers, the Public Sector banks will move out of the market within 30 years and field will be freed for the Private Sector. Though, the public sector banks (PSBs) are among the last remaining bastions of trade unions in India, and the government has not been able to push big-ticket privatization of PSBs, this development is yet another example of the market-driven, changing landscape of the banking industry. The former governor of the RBI, Mr. YV Reddy, and one of India’s most respected voices on the financial sector. In a 2019 interview, Mr. Reddy called for a strategic presence of government banking in India. “What does strategic presence mean?
You decide that so much percentage [of banking] should be in public sector. Determine through competition which public sector banks should be supported. Public sector banks which are doing well, you support. Those public sector banks which are not doing well, sell away the shares. Then there will be competition among them,” Reddy said.
