PSU banks employee costlier than their peers in private banks

Mumbai: State run banks will need about five lakh personnel over the next 10 years. This is not the only concern, the average cost per employee in Public Sector Undertaking (PSU) banks is higher than private banks, revealed a survey conducted by Boston Consulting Group.

The survey said that, the productivity of public sector banks has been extended and now its growth is only possible through recruitment of new employees. It is not only the staffing requirement which is a matter for concern for the PSU banks but the average cost of an employee of PSU banks is 5.6 lakh a year, compared to their contemporaries in private banks which cost 5.3 lakh a year to the private bank.

"The sector (PSU banks) thus faces twin challenges - the need to induct talent in large numbers and the need to contain staff costs," the report said.

After the recruitment process is completed, the cost of PSU banks is expected to come down. "The average cost per employee will come down because newer employees would be hired at lower salaries," said Saurabh Tripathi of BCG.

"The recruitment that takes place now will increasingly get committed to sales. To that extent revenue generating capability of PSU banks will be higher. Now that technology is in place, we should be able to ramp up productivity," said M.V. Nair, Chairman and Managing Director, Union Bank of India.

Union Bank is looking to recruit 2,500 this year and Bank of Baroda is also looking to add about 3,500 staff this year.