Attrition Spikes In Indian Small Finance Banks

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00:00 India's small finance banks are staring at a talent war as employee attrition has jumped

00:05 significantly in FY23.

00:08 Given the limited talent pool and resources, several lenders like the AU Small Finance

00:13 Bank, Ujjivan Small Finance Bank, Utkarsh Small Finance Bank and the Equita Small Finance

00:19 Bank have witnessed a sharp rise in attrition.

00:23 For these lenders, the attrition rate has now ranged between 35% and 48%, a trend which

00:30 was also seen in India's private sector banks as per BQ Prime's previous report.

00:35 But let's be very clear that the attrition in the small finance banks is concentrated

00:40 among the frontline employees.

00:42 For AU Small Finance Bank, the employee turnover rate increased to 47.3% in FY23 compared with

00:50 42.3% in FY22.

00:54 The bank's head of HR, Vivek Tripathi, told BQ Prime that there has been some increase

00:59 in turnover rate as the overall base of employees remained the same.

01:04 Experts at BQ Prime spoke to explain the possible reasons for a spike in attrition.

01:10 These include aggressive expansionary plans leading to increased competition within the

01:15 sector all to attract better talent.

01:18 Second, the inability to pay beyond a level as small finance banks tend to have limited

01:24 resources.

01:25 But the problem does not end here.

01:27 It comes with employee costs.

01:28 BQ Prime's analysis of data across quarters showed that even the employee expenses have

01:35 spiked.

01:36 Now, given the current economic landscape, monitoring attrition becomes even more important.

01:42 As per experts, if the SFBs are not able to attract the right talent at the right scale,

01:48 it will compromise not just the quality but also the sustainability of growth.

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