Small Finance Banks (SFBs) have become the biggest job creators in India's banking world, hiring 26,736 new employees in the last financial year – the highest level in five years.
Why SFBs are hiring so aggressively
These banks are chasing fast growth and want to expand their reach, especially in semi‑urban and rural areas. Their goal is to eventually get a universal banking licence, which allows them to offer a full range of banking services.
Key hiring figures
- Net hiring in FY25: 26,736 jobs (a five‑year high).
- Private sector banks reduced staff by 7,257 in FY25 after hiring 75,000‑100,000 each year for the three years before.
- Total headcount at SFBs grew to 180,000 in FY25, up from 95,249 in FY20 – a compound annual growth rate (CAGR) of about 13.3%.
- The overall banking workforce rose 4.3% per year, reaching 1.81 million employees.
Business growth behind the hiring
Even though SFBs hold just over 1% of total credit and deposits, their numbers are expanding quickly:
- Credit grew at a CAGR of roughly 25% from FY20 to FY25.
- Deposits grew even faster, at about 34% CAGR over the same period.
- For comparison, the whole banking system’s credit and deposit growth averaged 11‑13% per year.
Hiring continues into FY26
Eight of the 11 listed SFBs have already hired around 9,000 people in the first half of FY26, keeping the momentum strong.
Universal banking licences in the pipeline
The RBI recently approved AU Small Finance Bank to become a universal bank. Other SFBs are also moving forward:
- Ujjivan Small Finance Bank applied for a licence in February 2024.
- Jana Small Finance Bank submitted an application in June 2024.
- Equitas Small Finance Bank has expressed interest in the licence.
What this means for investors
The hiring boost signals that SFBs are investing heavily in branch networks and distribution channels. Faster growth can lead to higher loan books and deposit bases, potentially improving profitability and share price performance. However, investors should watch credit quality and regulatory approvals closely.
Disclaimer
Remember, this is perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.