Small finance banks begin poaching from private and foreign ones

Nupur Anand & M Saraswathy/Mumbai 04 Feb 16 | 06:24 PM

Small finance banks (SFBs) that are aiming to start operations in this financial year have begun the hiring process and have turned to private sector and foreign lenders to source talent from. Human Resource consultants that have been given the mandate to hire believe that the number of people that these new niche banks are looking at hiring could go up to 20,000.

Ajay Shah, Assistant Vice President, Team Lease Services said that small finance banks looking to hire 15,000-20,000 people in the next 12 months. "For senior roles, for which these banks will be hiring first, the talent will be taken in from top private banks. Hence, private banks have already started looking at retention plans to ensure that their high performers stay with them," he said.

Experts believe that since most of the players that have been granted the SFB licence are microfinance players, they are already well equipped with a workforce that can qualify as feet on the street. Therefore, at present the hiring from most of the private and foreign banks will be at the managerial level.

Consultants explain that private banks--ICICI Bank, HDFC Bank, Axis Bank, YES Bank, IndusInd Bank among others-- have emerged as the most obvious choice as they believe that they will be in a better position to adapt themselves to a start-up bank culture than employees from public sector banks. Officials also added that from a new bank perspective, private banks employees would see more opportunities with the line of business being similar to what the new players would be playing in.

"For rural and semi-urban areas, they already have the requisite manpower and would also hire locally. But for senior levels, private bankers are the closest match," an HR consultant said.

On the other hand even foreign banks are turning out to be a good poaching ground, explain experts.

Kamal Karanth A, Managing Director-India, Kelly Services & Kelly OCG said that small finance banks will find it easier to hire from MNC banks since these banks have been facing pressures globally leading to a headcount squeeze. He added that those from global banks would be easier to hire with an average 20 per cent hike.

"Even though our banks are going to be focusing on financial inclusion, not all branches will be focused on the hinterland. We will also be focusing on urban exclusion and therefore for such roles it has been easier to tap people from private banks," said R Baskar Babu, Chief executive Officer, Suryoday, which has been grated in-principle licence for SFB by Reserve Bank of India. They are looking at hiring up to five hundred people in the coming months.

Sunil Goel, Director, GlobalHunt said that poaching of talent from other banks could be seen as the small finance banks will hire 20-25 per cent of their total talent from the existing banks. He also added that with thin margins, to retain talent these banks may offer non-cash incentives.

 However, the banks dismiss it as a natural attrition process and do not think this will lead to a talent crunch.

"This is a part of the process. Moreover, the new niche banks will not take away talent from the top management level but it will be more at the mid to lower level which anyway sees attrition on a regular basis. So we are not alarmed by it," said one of the human resource manager of a mid-sized private bank.

Last year, the Reserve Bank of India had granted SFB licences to 10 of the 72 applicants. These SFBs will be similar to existing commercial lenders and will undertake basic banking activities such as accepting deposits and lending to the un-served and under-served sections. Their loan size and investment limit exposure to single and group obligators cannot be more than 10 per cent and 15 per cent of their capital, respectively.

Also, at least 50 per cent of their loan portfolio has to include loans and advances of up to Rs 25 lakh. The regulator has said in time, small banks could convert themselves into universal banks, though the transition would depend on RBI's approval.