The Reserve Bank of India (RBI) reported high employee attrition among private sector and small finance banks (SFBs). It has grown by 25%, posing a significant risk to operational activities.
This increased employee attrition can significantly disrupt customer services, result in a loss of institutional knowledge, and increase recruitment costs. The RBI stressed on several occasions that reducing employee attrition is crucial for private and small finance banks.
It said in the report that they can utilise strategies like improved onboarding processes and offer extensive training, career development opportunities, mentorship programmes, and competitive benefits. Most importantly, banks should provide a supportive workplace culture to their employees to reduce attrition.
The RBI has requested supervised entities to comprehensively review their policies and practices on granting loans to identify all the gaps and take appropriate measures to fix them. Supervised entities were especially advised to monitor their gold loan portfolios and ensure proper controls over outsourced activities and third-party service providers.
The report shared by the RBI said climate change risks are expected to impact the profitability of banks, growth prospects, and inflation dynamics. So, ensuring financial stability and price stability are important.
Strengthened regulatory and supervisory frameworks are crucial to assess these concerns. For that, financial institutes should utilise better risk management guidelines, disclosure requirements, periodic stress testing, and stipulating reasonable verification and assurance functions, the RBI shared in the report.
