Attrition in Private Banks

The RBI has noted a three-year attrition rate sharply rising in the private sector banks (PVBs) and small finance banks (SFBs).

Key Highlights:

• This increased attrition brings operational risks including disruption of customer service and institutional knowledge loss.
• Increased attrition requires recruitment and training, which ultimately causes losses in productivity and efficiency.

Attrition

Attrition in banking refers to the loss of employees or customers over a period of time. The term used to describe the reduction in the number of staff or customer accounts due to voluntary or involuntary departures. Attrition is a critical factor for banks, because it directly impacts operational efficiency, customer retention, and overall growth.

Types of Attrition:

• Employee attrition in the banking industry refers to the loss of employees who voluntarily or intentionally leave their jobs, retire, or are laid off.
• Customer attrition refers to the loss of customers or clients who is no longer using the bank’s products or services, or who close their accounts.