A few weeks ago businessline reported that the Reserve Bank of India had met the chiefs of private banks to understand the reasons for high attrition in the sector. The article invoked a wave of interest across the banking fraternity, which brings us to the question: who is to take the blame for the high attrition rates in the private banking space – bank managements, the regulator or employees?

Let’s explore the point around the regulator first, which often conducts surprise checks at bank branches to check the levels of customer service and whether regulations pertaining to the upkeep and maintenance of branches, including display of countless circular and notices, are in place. And then there is the recently prevalent practice of penalising and then giving a chance to speak, especially when it comes to small frauds that surface in the remote areas of bank branches.

To be fair, with three back-to-back bank failures in recent times, the regulator is justified in displaying abundance caution. But can some of this be automated and customised to ease the workload at branches? That’s a point that needs the collective working of the regulator and banks.

The more pertinent question to ask is whether the managements are settling their employees, especially those at the branch, with undue pressure of sales.

Sales pressure is not new in the banking industry, given that it is a space that works on rigorous targets. More so after 2015 with the wave of retailisation. But what exactly is being sold? It’s not just loans, credit cards or fixed deposits and savings bank and current account deposits. Frankly, if it was just this, employees may not be crying a river because this is the basic expected of them. Today, employees are being rewarded for the number of insurance products and mutual funds they sell; how much business is upscaled to wealth management and so on. This is a commission business for the bank which, in turn, is shared with employees who help generate it. Employees doing well on these counts earn expensive trips to Hong Kong and Thailand. This is partly why employees are also to be blamed because it’s their lure for the extras that has reset the industry expectations. So much that they cannot push back, and the line between selling and mis-selling has blurred.

Where do we draw the boundary? The answer to that will depend on how much of selling and cross-selling a bank targets, and how it would want to model its fee income component. Today, fee income accounts for 32-35 per cent of a bank’s profit and loss statement, against 25 per cent a decade ago. To sum up, the truth is that as much as compliance has increased, so have the expectations of banks. Will anyone take a step back to ease the life of everyone involved in the ecosystem?

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