Of the 12 public sector banks, seven saw a decline in headcount in FY25 over the previous year. State Bank of India (SBI) witnessed the largest addition to the workforce among peer banks, with a net 3,930 employees joining the lender in 2024-25. The steepest decline was at Union Bank of India, where the number of employees fell by 1,935.
Parekh also highlighted how government-run lenders are focusing on productivity. “One of the parameters from the perspective of the government, which is the largest shareholder of public sector banks, is certainly the business per employee metric.”
Others said that the groundwork to improve productivity at PSU banks has started showing results.
“Over the last 3-4 years, the public sector banks have emphasised on sales and revenue generation,” said Upasana Agarwal, partner, professional and financial services, ABC Consultants, a recruitment and talent advisory firm.
They hired senior executives with the required expertise on three-year contracts from private banks and there is a focus on transformation, technology, customer experience and retention, Agarwal said. “This implies an impact on productivity, which is showing in the numbers today.”
Lateral hiring is the process of recruiting an expert for a specific role from another organization. In 2022, SBI hired Nitin Chugh as deputy managing director and head of digital payments. Chugh was previously the chief executive of Ujjivan Small Finance Bank and had spent several years at the largest private lender, HDFC Bank. In 2020, Bank of Baroda appointed Ian De Souza as the chief financial officer. According to his LinkedIn profile, he was previously at Yes Bank. De Souza left Bank of Baroda in 2024 to join the National Stock Exchange.
Some banks have also pushed for stronger human resource (HR) strategies. Business Standard reported on 1 August that State Bank of India (SBI) has decided to engage a management consultant to develop a five- and 10-year HR strategy. The consultant, it said, is expected to advise on aligning the state-backed lender’s HR policies and processes with its overall performance goals, and benchmarking with industry best practices.
“Over the years, there certainly has been a change in the work culture of PSU banks,” said Veinu Nehru, managing partner, Fynehand Consultants, a talent advisory firm. “There is an increased focus on performance-based appraisal, unlike in the past, where employees were not motivated enough.”
