Banking Central | Why is toxic work culture on the rise in our banks?

One video, which surfaced on April 24, showed an online meeting where a Bandhan Bank officer named, Kunal Bhardwaj harshly reprimanded an employee for not meeting monthly targets. “Definitely correct sir?… Are you even ashamed of yourself? This is March.”

An officer of the state-run Canara Bank went further in reprimanding his junior. The May 4 video showed Lokapati Swain threatening his subordinates for their failure to meet recovery targets. “If you do not participate in recovery, including holidays, because you want time after working to travel with your family, then to hell with your family. What should I do? The bank has given you a job for work, and not for travelling with family. I don’t care about your family (since) I don’t care about my family also. I care about Canara Bank,” he said.

After the videos set off a storm in media circuits, both the banks issued statements denouncing such behaviour and assured corrective actions.

These were not isolated incidents in the banking sector. In June 2023, HDFC Bank suspended one of its officers in Kolkata for allegedly engaging in unruly behaviour with colleagues during an internal meeting. In a video that circulated on Twitter, the officer was heard shouting at junior colleagues for not selling enough banking and insurance products.

What’s driving seniors mad? A losing market share?

With simmering competition, there is a heightened pressure on bankers to meet their business targets. This pressure, while it was historically more common among private lenders, has begun affecting the state-run banks as well. In fact, industry sources confided that such incidents of using foul language and abusing in the open in public sector banks (PSBs) are rarely reported.

The pressure to meet targets and outcompete rivals originates from the top management and trickles down to lower-level employees. PSBs are under pressure as they lag behind private counterparts in growth and have been losing market share for years.

A report by rating agency Acuite Ratings indicates that the market shares of PSBs and foreign banks have contracted from 78 percent and 5.7 percent to 69 percent and 4 percent, respectively, as private banks corner larger slice of the pie. Private lenders are more efficient in deposit mobilisation, achieving above 85 percent in FY17, while new/incremental deposit mobilisation is nearly 80 percent for private banks and just 35 percent for the overall banking sector.

In FY24, private banks reported a higher net profit growth compared to their public peers. According to a Care Ratings report, the share of PSBs in total credit dropped to 58 percent as of December-end 2023 from 63.7 percent in March-end 2020. This consistent rise in pressure on employees to generate business seem to be contributing to an increasingly toxic work culture in banks.

Pressure to meet targets also often leads to cases of forced selling or misselling of products. In May 2023, the Reserve Bank of India conducted a meeting with the board of directors of all PSBs and private banks to discuss issues related to governance and ethics. Also, concerned over the rising incidence of mis-selling, the finance ministry has directed heads of PSBs to put in place strong mechanisms to avoid unethical practices for selling insurance policies to customers, for instance.

Read | Indian banks finally wake up to problem of mis-selling

Manpower crunch too may be a factor 

State-run banks are in throes of a dwindling manpower resource. The percentage of employees at PSBs has decreased from 73 percent in 2012-13 to 46 percent in 2021-22, according to a study by the Indian Institute of Banking and Finance. This scenario has worsened since. As of March 2023, the employee base of private sector banks stood at 745,000, just a few thousand fewer than PSBs.

Underperformance or non-performance in banks is not solely about not meeting business targets. In state-run banks, employees are often transferred to remote locations where they face language barriers and different work culture. But these factors are not considered in their performance assessments.

But there’s no room for toxicity

Whatever be the reason, nothing can really justify such toxic behaviour at the workplace. “Abusive culture is not accepted in banks, whatever the reason may be. The management should engage with officers’ associations to address such issues and find solutions,” said CH Venkatachalam, general secretary of the All India Bank Employees Association (AIBEA). The employee unions can play a key role in curbing the deterioration of work culture in banks.

The sad part is that typically, in banks, victims do not file formal complaints fearing retribution during promotions and performance assessments. This is another reason why such cases continue to occur. Whatever the reasons, this toxic culture needs to stop.

Banking Central is a weekly column that keeps a close watch on and connects the dots regarding the sector’s most important events for readers.