Manpower trends in the Banking Sector in India
Overview of the Indian Economy and Banking Industry:
The growth story of the Indian Economy is on course despite temporary setbacks owing to specific global and local factors. India has been growing at around 5% to 9% in the last few years while developed Western economies are growing at less than 4%. The period 2012-14 has been a challenge but consensus is that the next growth curve is ahead. India, along with emerging economies like China, Brazil and Russia are expected to power the global economy in the next few decades. Factors like liberalization, globalization and the emergencies of a strong and aspirational middle class are the key underpinnings of this development and these factors are here to stay. Such high economic growth will have a massive positional growth impact on the Banking Industry.
The pace of development for the Indian Banking Industry has been tremendous over the past decade. Many private sector banks have shown aggressive growth and achieved scale and visibility through customer focus and innovation. Many public sector banks have implemented clear transformation and growth strategies. The future growth prospects of India’s banking sector remain high, bolstered by sound economic growth prospects. The Banking Industry is expected to grow at a healthy rate of over 20% for the next 2 to 3 years. While Retail banking will be the key growth area for banks, other areas like Corporate Credit, SME Banking, cross selling of other financial products and services like Insurance, Mutual Funds, fee-based sources of income and technological upgradation will also be key growth drivers. The stress will be on expansion of branches and financial inclusion.
Manpower Requirement of the Banking Industry:
Banking, one of the fastest growing segments of the economy, too faces challenges of scarcity of resources and skilled manpower. Such skilled manpower is not easily available in adequate numbers to meet the growing requirements of the Banking Industry due to normal attrition, competition and faster growth in business. The position is going to exacerbate further for the banking system as a whole, due to retirement of many experienced bankers in the Public Sector during the current decade.
With only 30-35% of the population financially included, the Indian public is still underserved by formal banking. This will lead to issue of new banking licenses and formulation of innovation model to serve the people which are not covered by traditional banks. With the planned announcement of new licensing policy, more banks are expected to be established and requirements of manpower with the requisite skill set are expected to increase many-fold. There is thus a large current as well as the future demand for trained manpower in banking.
A quick look at the other factors driving Banking sector growth -
A. Establishment of new banks
Adopting liberalized & developmental policies by RBI, licenses to two new banks have recently been released.
B. A big push for banks financial inclusion
A new report from the RBI lobbies for a significant expansion of banking services to reach across the country. Access to banking services in rural areas is still constrained despite the size of the pie. Only 1 in 6 villages in India have access to banking services.( Source: RBI Vision Documents on Payment Systems)
C. Need for additional branches
There is a requirement of at least 40,000–50,000 additional branches and 160,000–190,000 additional ATMs in the coming decade. This will be 3 times more than the branches and ATMs launched in the last decade !
D. Infrastructural development
As India is poised for major economic growth, a significant proportion of the infrastructure investment though is expected to come from the private sector. Banks have been the mainstay of the infrastructure funding through direct and indirect routes to the private sector industry. This will create more new jobs in branch.
E. Emergence of new middle class
With a new middle class emerging with substantial purchasing power in hand, consumption levels are bound to grow phenomenally. Housing loans/consumer loans/vehicle loans through bank credit will further push up the demand for banking services.
CAREER OPPORTUNITIES ON THE RISE IN BANKING INDUSTRY
Public sector banks in India employ more than 700,000 people at present. Of these, a large number of people will be retiring in next 5-6 years. To fill this gap and to take up the growing business, the Banks are on a recruiting spree as can be seen in media and from vacancy announcements.
It is expected that Private Sector banks would add nearly 300,000 employees taking the total number to more than 1,000,000 employees. With branch expansion occurring at a high rate, demand for skilled manpower is expected to increase manifold. There is thus a large current as well as the future demand for trained manpower in banking.
The banks will require a large number of people trained not only for specific skills in the banking domain but more importantly in customer service skills, selling skill, banking application software skills and an infectious positive attitude. In short, a modern banking professional for the modern banking sector is the need of the hour.
CAREER ASPIRANTS LOOKING AT FINANCIAL SECTOR AS A TOP CHOICE
This has already been reflected in the career choices made by youngsters. The report below shows the preferred career choices as per Indian Bank Association report.
Source-Indian Banking 2020: Making the Decade’s Promises Come True - by IBA
Growth of Allied Industries:
Allied to the Banking Industry, India’s financial services sector will enjoy generally strong growth during coming years, driven by rising personal incomes, corporate restructuring, financial sector liberalization and the growth of a more consumer-oriented, credit-oriented culture. Large amount of savings are likely come to the capital markets through direct investments in equities or money flows through mutual funds as well as through insurance and pension products.
India’s Insurance sector has come full circle from being an open competitive market to nationalization and back to a liberalized market again. With the recent changes in the regulatory guidelines, the industry is maturing. Many private sector insurance players have broken even and moved to profits. Powered by an economy which is slated to grow at 7% to 9% and the fact that India is under-penetrated in insurance, this industry is also expected to have a healthy growth of over the next 3 to 4 years. The industry will witness extensive action to reach to large untapped markets and launch innovative products thus paving way for more trained insurance manpower.