Three trends defined hiring trends in India’s banking sector even as overall job creation grew, data released by the Reserve Bank of India (RBI) showed.

Private banks reduced their workforce in FY25 while public sector lenders added employee count for the first time in five years.

The big push in staff additions came from small finance banks (SFBs) as some of them expanded operations as preparatory ground for transitioning to universal banks.

Despite job cuts at private banks and marginal staff increase in state-owned banks, the total number of employees in India’s banking system increased to 18.08 lakh in FY25 from 17.87 lakh a year earlier.

ICICI Bank tops the list as private banks trim staff

ICICI Bank, the country’s second-largest private sector bank, led the workforce reduction trend even as the total number of employees at private banks declined by 0.86% to 8,38,150 in FY25 from 8,45,407 a year ago.

Private sector banks, which were adding employees for the last four years, saw a headcount drop as they increased focus on efficiency drives and adopted strategies to meet the changing business needs. Technology and artificial intelligence (AI) moves are set to further impact jobs in the banking sector in FY26.

ICICI Bank brought down its workforce by 7.13% as staff strength fell to 1,30,957 in FY25 from 1,41,009 in the earlier year, RBI data showed. This pulled down the overall private bank headcount.

India’s largest private lender HDFC Bank, however, increased its employee strength to 2,14,521 from 2,13,527 a year earlier, in line with its branch expansion drive. Axis Bank added 121 staff members to take employee count to 104,453.This is how the total headcount at private banks looked over the years. In FY21, the number of employees The broader trend among private banks, however, was to moderate staff strength.

Marginal hiring increase in PSU banks

Public sector banks increased their total number of employees to 7,57,641 in FY25 from 7,56,015 a year ago, a rise of 0.22%.

Though a marginal shift, it signalled a positive trend after five years of de-growth. As they have got out of the integration process due to consolidation and their balance sheets have become healthy, they have started hiring. Most banks, however, would follow restrained recruitment as AI and digital banking expand.

The encouraging sign is that State Bank of India (SBI), the country’s largest lender, increased its employee count by 3,930 to 2,36,226 from 2,32,296 in the previous year.

SBI’s staff increase by 1.7% indicates that hiring will be needed in the banking sector as branches are added, especially in semi-urban and rural areas. Punjab National Bank also added 397 employees to take its total count to 102,746 in FY25.

In the current fiscal, SBI has recruited over 1,000 probationary officers. The bank's chairman CS Setty has said that plans are on to hire 18,000 people in FY26, out of which 13,500 will be for clerical posts and 3,000 will be probationary officers and local-based officers.

Despite the expectation that public sector banks will boost their employee count in FY26, a boom hiring phase is perhaps over.

Small finance banks give push to job growth

The job growth in the banking sector was largely driven by SFBs, which added nearly 16,000 employees during the year. The total workforce at SFBs increased to 1.77 lakh as they expanded their retail lending and financial inclusion activities.

Among SFBs, AU Small Finance Bank was the largest employer with a base of 50,946 staffers in FY25. The bank, which has received in-principle nod from the RBI to convert into a universal lender, had 29,738 employees as of FY24-end.

The merger of Fincare SFB, effective 1 April 2024, helped in AU SFB significantly expanding its workforce. Fincare SFB had 15,329 employees.

If this hiring trend continues, job seekers will find more catchment space in public sector banks and smaller lender outfits.