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Bank employees getting more productive: RBI study news
11 January 2010

Employees of Indian banks have become more productive over the last few years, according to Reserve Bank of India figures released last week.

Its report titled A profile of banks 2008-09 says that the average business and profits per employee for Indian banks more than doubled in the five years from 2004-05 to 2008-09.

The improvement was due to business growth outpacing the growth in manpower. Indian banks registered a total business growth (advances plus deposits) of 135 per cent from 2004-05 to 2008-09, while the branch network grew by 21 per cent. But their employee strength went up only by 10 per cent.

The decline in employee base of PSBs during this period was due to a good portion of the workforce getting superannuated and the implementation of a voluntary retirement scheme in 2000 to rationalise the workforce. More than 1.26 lakh employees of 26 banks were given the VRS option.

Punjab National Bank, Canara Bank and Central Bank of India have seen their employee strength fall the most among PSBs.

IDBI Bank, Corporation Bank and Oriental Bank are the top three public sector banks in terms of productivity. IDBI Bank has business per employee of Rs20 crore even as it added around 5,600 employees during 2004-09. Corporation Bank also increased its manpower by 2,200.

As the public sector banks' productivity doubled during this period, they caught up with private sector peers in terms of business per employee.

Private banks increased their workforce by more than 110 per cent over the five-year period, and they improved their business per employee by 28 per cent. Some private banks employ direct selling agents who bring in business but don't figure on the bank's payroll; this could overstate their productivity to some extent.

The newer private sector banks such as ICICI Bank, Axis Bank and YES Bank witnessed improvement in their employee productivity in terms of both business and profits.

HDFC Bank, Kotak Mahindra Bank and IndusInd Bank are the only banks which have witnessed a decline in their productivity over the years. HDFC Bank's merger with Centurion Bank of Punjab has taken its toll on productivity.

As productivity of bank employees shot up, so did their compensation. Even as the total employee count for Indian banks grew by 15 per cent, employees' wages grew by 85 per cent over five years.

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Bank employees getting more productive: RBI study