Context:
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.
