Senior executives in these private banks have told Mint that they are ensuring that candidates with less than 2 years of work experience are not hired from a rival lender.

“We did have attrition which is very high at the junior level. It’s a similar problem that the IT industry had faced. We also probably had this incest, that is one employee going to the other bank, and each one looking for 40-50% higher salary. That seems to have slowed down. There is some informal understanding, like how the IT companies have had, saying that let’s not kill ourselves,” said a senior official at a large private-sector bank.

According to another senior banker, the need for a best-practice rule started right after the pandemic when there was rampant hiring of junior executives in sales and marketing profiles. “We decided last year to not poach executives who have served less than 1-2 years in the rival bank. This informal agreement is to prevent the high attrition level where executives were changing companies every six months,” said the banker.

Emails sent to Axis Bank, HDFC Bank and ICICI Bank went unanswered till press time.

Banks have been seeing attrition as high as 60% among the junior executives, a challenge termed ‘infant mortality’ internally.

The banking sector has tempered hiring, as as they are nearing optimal manpower levels in different business units. The “trajectory” in this was rampant hiring when banks faced attrition of around 35-40% in many of their businesses. In the last financial year, lenders witnessed a sharp rise in attrition, as demand surged for young workforce in sales, marketing with digital skills in insurance, retail and at fintech companies.

Banks hire front-end staff through staffing companies or their subsidiaries. Any agreement that banks might have among themselves doesn’t apply to staffing companies. There is a constant churn happening at this level, said Krishnendu Chatterjee, business head at BFSI, TeamLease Services Ltd.

India’s largest private-sector lender, HDFC Bank, saw its attrition rise to 34.15% in FY23 from 19.1% in FY22. According to its annual report, attrition was the highest in non-supervisory roles, which include sales officers.

At IDFC First Bank, attrition in account-opening and other junior roles was 39%, middle management 18%, and senior management 10%, according to its annual report.

IndusInd Bank and ICICI Bank reported attrition of 51% and 30.9%, respectively, in the same period.

Since front end employees are not on the rolls of banks and instead on the rolls of their subsidiaries or staffing companies, the attrition numbers are partially reported by banks.

According to data provided by recruitment company TeamLease, attrition among private sector banks touched 98.4% at the end of December, compared to 89.2% at the end of March 2023.

The data also showed that attrition was different for different units. For instance, the highest attrition was seen among employees in the home-loan business, which stood at 143%, followed by credit card business, which stood at 120%, according to Teamlease data.

Speaking at a Business Standard event last year, RBI Governor Shaktikanta Das said that there are a slew of opportunities in banking, non-banking finance companies and the fintech sector, which are attracting talent, but added that RBI prefers leaving it to the management to deal with the issue, rather than prescribing anything.

“We are also looking as a part of our supervision, the rate of attrition, which is seen to be high in certain private sector banks, and we have asked them to look at it,” Das said.

“… we are looking at it very closely because we find that the times have changed, and banks also need to give greater focus on this rate of attrition,” he added.

The non-compete clause, mainly signed in promoter-led companies, is typically restricted to senior talent. But these clauses are more of a gentleman’s agreement. This is because Section 27 of the Indian Contract Act, 1872, forbids any agreement that restrains anyone from practising a lawful profession or trade, and such clauses in employment contracts are not legally enforceable.

In the IT sector, the non-compete clause contract breach flared up when Wipro and Infosys alleged breach of contract against their senior talent who joined rival Cognizant.