India's largest lender State Bank of India (SBI) has cut its workforce in the first quarter of fiscal year 2018 by 6,622 people, driven by natural attrition such as retirements and the voluntary retirement scheme, also raising concerns as active digitisation in the banking sector will slow down hiring of the workforce.
The lender has seen a staff reduction to 2.73 lakh from 2.80 lakh at the start of the quarter. SBI, will however, redeploy more than 10,000 employees, following the merger of its six associate banks and digitisation, The Times of India reported.
"Manpower will go down with the period of time. Around 10 per cent reduction in two years may be a possibility," SBI Managing Director Rajnish Kumar told news agency Indo-Asian News Service (IANS) in an interview.
The bank witnessed 7,247 workers retiring and 3,569 employees of the earlier associate banks were offered a voluntary retirement scheme in the first quarter of the current fiscal. SBI, also paid Rs 473 crore ex gratia under this scheme that will result in salary savings of Rs 400 crore annually.
About 30 percent of the staff of rationalised branches will be redeployed in sales functions. The bank has already started a new employee appraisal system where sales performers will receive their incentives too.
The biggest lender has merged 594 branches till August 6 and rationalised 122 administrative offices which is expected to result in savings of over Rs 1,160 crore annually.
More automation, more unemployment
After bulky job cuts in the IT and farming sector, automation has penetrated the banking sector too. Surging digitisation can result in the loss of about 7.1 million jobs by 2020, because of automation globally, according to a World Economic Forum report.
Although layoffs, in public sector banks such as the State Bank of India are not an option, but they are planning to reduce the number of people they hire each year as their focus now shifts to the digital channels.
"Hiring in SBI may not be halted, but will reduce by 50 per cent in a year," Kumar added.
That also suggests that they will now hunt for employees with high-end digital skills, and people who are not exposed to digitisation yet will be losing out in the employment race. The bank is already hiring specialists for the digital space and marketing, though not in large numbers.
Giant private sector banks like HDFC, for the second quarter in a row, has seen a plunge in staff headcount by more than 6,000 to 84,325, again owing to increased automation in the March quarter. The trend is expected to continue.