Why Are Clerks Disappearing From Banks?

In the last two years, between 2020-21 and 2021-22, while the total number of employees in the banking sector has gone up by more than 77,000 (5%), the number of clerks has reduced by more than 8,000 (3%). However, this phenomenon isn’t restricted to these two years. Reserve Bank of India (RBI) data shows that between 2012 and 2022 the highest attrition rate among banking employees was clerical staff followed by sub-staff. 

While the attrition rate for clerks for the overall banking sector stood at nearly 16% between 2012 and 2022, as per the RBI data, the number of clerks in private sector banks also fell by more than 27% during this time period. 

RBI data shows that employment rates for both officers and clerks continue to fall for PSU banks. The number of clerks working in the PSU Banks has reduced by more than 13% in this decade. 

The total number of employees working as clerks in the nationalised banks and state banks and its associates stood at more than 3 lakhs in 2011-12, while by 2022, it was around 2.6 lakhs. 

In 2011-12, clerks accounted for nearly 35% of the total employees in the scheduled commercial banks, which fell to merely 19.5% in 2021-22. 

What is making clerks disappear from the banking system? The Core spoke to industry leaders, subject experts, and senior bankers to find out. 

 

Core Banking Solutions 

Many processes in the banking industry have not been digitised with the help of technology. Core banking solutions through digitisation have replaced clerical work like that of cashier, pass book printing and account opening were previously done by the individuals at the positions of the clerks, which are now done by the machine. 

The concept of passbook printing and updates is slowly becoming obsolete among the younger generation who prefer to access their account details online. 

The former HR official said, “Previously, opening accounts, or application of loans needed a human assistant. So, we had senior clerks to help the customers. But these days, be it account opening or application of loans, they can be done just by a few clicks on the apps of the banks. The need for such employees is no more there.” 

 

Clerks Better Protected By Laws 

Because of unions, the work time for clerks is regulated.  CH Venkatachalam, general secretary of All India Bank Employees Association (AIBEA) told The Core, “Banks are hiring very few clerks as they are legally more protected by the labour union law. Their working time is more regulated. A bank can’t ask the clerk to do overtime regularly and retain them more beyond working hours, however, so is not the case for the officers. So officers are not fully protected under the law and they are more likely to be vulnerable.” 

According to some senior bankers, HR policies related to comp offs and compensation for extra working hours are often in place for PSU banks but they are never  implemented. 

“Banks prefer to hire more officers as then they don’t have any restrictions in terms of relocating them. For clerks, banks can’t issue their transfer order beyond a certain radius, while for the officers, there are no such obligations,” said BN Mishra, spokesperson for the Indian Bank Association.  

A former official who was part of the human resource department of a PSU requesting anonymity said that it is usually easier to make officers work more hours than clerks. “Officers are supposed to get 52 days off on weekends, but to meet the deadlines banks call the officers even on weekends. So hardly, an officer ends up getting 30 days off in a year. However, for extra working hours in a week day, an officer can’t claim for extra compensation. And for extra working days on weekends, their comp offs need to be sanctioned by the regional office, which eventually never get sanctioned,” the official told The Core. 

He also pointed out that the officers fear to say anything or protest for not getting the compensation for extra working hours and/or working days as they fear they will be transferred to some remote locations. 

 

Bank Mergers And Outsourcing

While the attrition continues to rise only for the clerical posts for the SCBs, the situation seems even more challenging for PSU Banks. The total number of employees working in the PSU banks barely increased while the same for the overall banking sector has gone up by nearly 50% between 2012 and 2022, the RBI data shows. The number of clerks working in  has reduced by more than 13 per cent in this decade. 

Even PSU banks have adopted the policy of outsourcing, thus compromising on hiring. Moreover, the mergers have contributed largely to the attrition rate in the PSU banks, highlighted senior bank officials. 

“One of the major causes is the merger of banks, as it is often considered as the forced merger. With the mergers, the hiring was compromised. Moreover, there was also a target of cost-cutting on the PSUs and that eventually resulted in less hiring,” said an ex-chairperson of a PSU bank, requesting anonymity. 

In semi-urban and rural areas where customers still prefer to come into the bank for certain services, the banks now outsourced the jobs to banking correspondents. 

He further explained that while earlier there was the need for a PSU branch in rural areas, now these services are outsourced through several firms like Spice Money and PayMe. 

With the aim of reducing the cost of the PSU banks, they are also getting to more outsourcing of employees. As the ex-chairperson pointed out, previously even the drivers, and security guards used to be on the payroll of the banks. But now, such vacancies are taken care of by external agencies. “If we look at the department like the IT department, mostly, it is either on a contractual basis or they are outsourced,” said the ex-banker. 

 

Lack Of Glamour 

Another major factor that is seeing clerks disappear from bank jobs is the lack of glamour. Even 15-20 years ago, banking jobs in the PSU sector used to be lucrative and youngsters wanted to join the sector. However, within the last decade, these jobs have lost their charm. 

“The human resource policy in the PSU banks has lost relevance and today's youths even fail to relate to the HR regulations currently in place in the PSU banks. Aspiration of youth is very different today, their risk perception has also changed largely,” said Sridharan. 

Earlier, school pass outs would also join banking jobs and gradually get promotions. “These days B.Tech graduates and MBA graduates are joining the industry. They are ambitious and also want work-life balance, which the current HR policy fails to provide,” said the senior official from the HR dept of the PSU bank. 

Banks often implement a concept called staff liability, which means that in case, there is any financial loss of the banks, be it in terms of non performing assets or something else, they impose the penalty on the officers, who were on duty back then, pointed out the industry veterans. 

He explained how the situation often acts as a double edged sword for the officers. He highlighted that often managers get instructions from higher authorities to sanction loans even without collaterals and in case of defaults, or RBI penalty, often the bank pressurises the managers to contribute for the loss under the regulation of staff liability. 

Another major loophole in the system is the lack of recognition and lower pay scale. “Any which ways, there has been a fall in the number of clerks hiring in the banks, at such a situation, if a new graduate has to take up a job as an officer in a bank, he would rather go for a private bank, rather than a PSU bank, as the former will offer him/her better pay scale than the PSU,” said the ex-chairperson. 

 

Attrition Rate Of Clerks in the Private Banks 

The total number of employees in the private sector has grown by more than 2.5 times between 2012 and 2022, as per the RBI data. The total number of employees in the private sector banks went up from 2.4 lakhs in 2011-12 to 6.46 lakhs in 2021-22. But the attrition rate for clerks is more than 55%as the number of clerks fell from nearly 54,000 to 23,000 within this decade. 

In a recent media interaction, Amitabh Chaudhury, MD, Axis Bank said that the bank has an attrition rate of nearly 33-35% in junior-level employees. 

“At the front line, all of us are seeing attrition, somewhere between 33-35 per cent, with the attrition rate in corporate officers and senior officials being generally lower. As an industry, we are all used to working with this kind of attrition,” Chaudhury said. 

He even stated that attrition is the reality of the industry to some extent. “The attrition rate varies for various employees in the business. The attrition rate is higher for frontline employees which usually includes the sales and the branch people,” said Chaudhury.

Bank union leaders pointed out that private banks have become more aggressive in terms of hiring and thus the attrition rate has also increased. 

“Private banks can hire and also terminate employees more easily than a PSU bank. But it is not easy for a PSU bank to terminate employees even if they are not performing well. Pvt banks often camouflage their firing of employees as performance-linked separation,” said Srinath Sridharan, author, policy researcher, and corporate advisor, who has worked extensively in the banking and the finance sector of India. 

 

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