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INDIA’S banks are expanding into new geographies and businesses, driven by a nationwide credit boom and a go-go period of economic growth.

But the pressure for firms to deliver has yielded a worrying side effect: one of the world’s worst attrition rates for bankers.

As more of India’s 1.4 billion people seek out loans, some managers are driving their youngest staff to the brink, pushing thousands out of the industry.

By one estimate, attrition in finance is nearly double the global average and far higher than other large countries like the US, Japan and Germany, even after India’s rate dipped slightly in the most recently available data.

Among junior bankers, the numbers are even bleaker. At India’s largest private lenders, attrition rates regularly top 50 per cent.

The reasons are complex. India’s boom has made it easier for some entry-level bankers to seek pay bumps by jumping from firm to firm. But others complain that quitting is their only option for advancement given sparse training and growth opportunities.

Banker pay has risen dramatically in India for senior roles — approaching figures in Hong Kong and Singapore — but salaries for the lowest rung of employees remain stubbornly low. It’s fueling a fast-widening gap between the nation’s rich and poor that has prompted comparisons to the US Gilded Age.

More broadly, junior employees say managers aren’t equipped to prepare hires for the challenges of the financial system in today’s India.

Hundreds of millions of people have opened their first bank account in the last decade alone. And many banks have diversified their portfolios in ways that would have been unfathomable for most of India’s modern history, when the nation was shut off from investors.

These forces have led to fierce competition among traditional banks, modern fintech firms and shadow lenders. As investment opportunities expand in India, bank deposits are now growing slower than credit — meaning firms are fighting for customers in a far more crowded field.

Kamal Karanth, co-founder of Xpheno, a Bengaluru-based solutions firm, said many investors see nothing but upside for India. They expect banks to do whatever it takes to bring in business — a pressure-cooker environment that often falls heaviest on younger staff and leads to “higher friction between employees and institutions.”

“The sales teams are the worst affected,” he said. “Front-line staff have to sell company products aggressively and end up facing tough working conditions and the wrath of consumers.”

Just ask Ajay, who was initially thrilled to accept a job last year at a mid-sized bank in Mumbai. Bosses said he’d play a pivotal role in their expansion plans. But things didn’t quite pan out that way. The bank over-delegated, Ajay said, expecting him to win over merchants in areas already dominated by bigger, well-established institutions.

The bank, which had mostly focused on agriculture, wants to diversify into new segments. Yet bosses have few relationships in those sectors, according to Ajay, 23, who’s the first in his family to attend college. Many junior staffers have quit during Ajay’s 10 months in the job, frustrated with compensation inequity and slow career progression.

“My managers are always unhappy with my work,” said Ajay, who didn’t want to be identified by his full name to avoid retaliation from employers.

Unusually high churn at financial institutions has caught the attention of the Reserve Bank of India. Governor Shaktikanta Das said last October that the central bank is watching attrition levels “closely” and putting together a team to address the issue.

Attrition

Attrition is expensive for the financial sector, India’s largest employer, pushing up recruiting and training costs. It’s also a warning that firms risk alienating an important demographic for driving growth in India, one of the youngest countries in the world.

Gender adds another barrier. India’s women — whose labour force participation rate is already among the lowest globally — face an especially tough climb. In the financial sector, only one in 13 female employees were promoted in 2023 compared to one in eight male employees, according to data from Aon, a human capital consulting firm.

Entrenched hierarchies related to caste and lineage make it difficult for outsiders.

Priya Agrawal, founder of the Antarang Foundation, a non-profit that advises graduates on career paths, said roles in finance are aspirational for Indians, but many find it impossible to break through an “invisible ceiling” because of their economic status.

Unlike places like the US or China, the primary language in India’s corporate settings — typically English — isn’t spoken by a majority of people in the country. That means Indians who didn’t grow up in cosmopolitan metro cities are often at a major disadvantage when interacting with the nation’s elites.

Take Chirag, 25, who was ecstatic when he joined a shadow lender’s wealth team four years ago to sell savings accounts and personal loan products. A first generation white-collar worker, Chirag hadn’t come from money: His father is a chauffeur and his mother cooks for several households in an upscale Mumbai suburb.

His excitement was short-lived. Chirag’s role was not the desk job he imagined and he struggled to access wealthy clients or expand his network.

Chirag said he’s trying to save enough money for a management degree, so “at least people will look at me with respect.” But with tuition fees of 200,000 rupees (S$3,160), he’s anxious about how he’ll afford everything.

“I don’t look like the rich people I have to sell products to,” said Chirag, who asked to go by his first name to avoid retaliation from employers. “They don’t trust me.”

An expectations mismatch is also partly to blame. As banks have broadened their services, younger staff are sometimes hired as wealth advisors but then placed in different roles, which leads to them feeling undervalued, according to Diya Zachariah, who worked for many years at TNS India foundation, a non-profit that offers career training.

Junior hires who didn’t attend India’s elite schools are often funneled into less savory roles, including selling products for banks at gas stations or in airports.

Ultimately, high churn impacts the customer experience and risks damaging the reputation of Indian banks. Dissuading junior employees from hopping from firm to firm is a key priority.

“The attitude is: Life is too short. Let me try it out. It’s not about careers,” said Rajkamal Vempati, president and head of human resources at Axis Bank. “You can jump from a job. You can come back.” The company recently launched Project Thrive, a program aimed at nurturing internal career paths.

There are signs of progress. Top banks have lately reduced employee churn by 600 to 700 basis points, though the figures are still among the worst in the world.

Over the past fiscal year, Axis Bank’s attrition fell to 28.8 per cent from 34.8 per cent, according to data from Macquarie Group. Similar drops were also reported at Kotak Bank and HDFC Bank, which set up a task force to boost retention and train managers.

Agrawal said pledges of more diversity in India’s banks are empty unless bosses address the challenges faced by junior executives. She suggested that firms provide lower-income staff with mentors — or risk losing out on talent that’s vitally needed in one of India’s fastest-growing industries.

“They have to walk the talk on diversity,” she said. “Or else we will create more inequality.” BLOOMBERG