The Indian banking sector experienced divergent employment trends in fiscal 2025, with private sector banks reducing their workforce while public sector banks expanded their employee base, according to data released by the Reserve Bank of India on Monday.

The contrasting hiring patterns reflect different strategic priorities across banking segments, with the overall banking system still managing to achieve net employment growth driven primarily by smaller financial institutions.

Employment Trends Across Banking Segments

The employment data reveals significant variations between different categories of banks during fiscal 2025:

Public sector banks demonstrated modest growth, increasing their workforce by 1,626 employees to reach 7,57,641. In contrast, private sector banks reduced their employee count by 7,257, bringing the total to 8,38,150 in fiscal 2025.

Major Bank Performance

Among the largest lenders, employment changes varied significantly based on individual bank strategies and operational requirements:

State Bank of India, the country's largest lender, reported an increase in overall employees to 2,36,226 from 2,32,296 in the previous year. HDFC Bank's workforce grew marginally to 2,14,521 in fiscal 2025 from 2,13,527 in fiscal 2024.

ICICI Bank, the country's second-largest private sector lender, showed the most significant decline, reducing its employee base to 1,30,957 from 1,41,009 in fiscal 2024.

Small Finance Banks Drive Growth

Small finance banks emerged as the primary driver of employment growth in the banking sector, adding approximately 16,000 employees to reach a total workforce of 1.77 lakh people. This segment's expansion significantly contributed to the overall positive employment trend in the banking system.

AU Small Finance Bank stands out as the largest employer among small finance banks with 50,946 staff members. The bank, which received in-principle approval to convert into a universal lender, had 29,738 employees at the end of fiscal 2024. The merger with Fincare SFB, which started from April 1, 2024, added 15,329 employees to its workforce.

Banking Sector Employment Overview

The overall banking system's employee count increased to 18.08 lakh from 17.87 lakh in the year-ago period, representing net growth of 21,000 jobs despite the reduction in private sector bank employment. This growth pattern indicates the evolving landscape of India's banking sector, where smaller financial institutions are expanding their operations and workforce while some established private banks are optimizing their employee structures.

The Reserve Bank of India's latest report on banking trends for FY25 reveals a notable shift in India's financial infrastructure, with ATM numbers declining while bank branches continue expanding. The comprehensive analysis highlights how digital payment adoption is reshaping the country's banking landscape as of March 31, 2025.

ATM Network Contracts Amid Digital Surge

The total number of ATMs across India declined to 2,51,057 units as of March 31, 2025, down from 2,53,417 in the previous year. This decline was primarily driven by strategic decisions from both public and private sector banks to reduce their ATM footprints by shutting down offsite ATMs.

The RBI attributed this decline to the "increase in digitalisation of payments" which has "reduced the customers' requirement of transacting with ATMs." While both public and private sector banks contributed to this reduction, independently-run white label ATMs showed growth, increasing from 34,602 to 36,216 units.

Geographic Distribution Patterns

The report highlighted distinct deployment strategies across different bank categories. Public sector banks maintained an even distribution of ATMs across rural, semi-urban, urban, and metropolitan areas. In contrast, private sector banks and foreign banks concentrated their ATM networks primarily in urban and metropolitan regions, reflecting their customer base preferences.

Branch Network Expansion Continues

Despite the rise of digital banking channels, physical bank branches experienced robust growth of 2.80%, reaching 1.64 lakh branches nationwide in FY25. This expansion contradicts expectations that digital alternatives would reduce the need for physical banking infrastructure.

Public sector banks drove this growth aggressively, with their share of new branch openings increasing significantly. The distribution of new branch openings showed a marked shift in strategy:

Banking Access and Account Growth

The banking sector continued expanding financial inclusion through various initiatives in FY25. Basic Savings Bank Deposit Accounts (BSBDAs) grew by 2.60% to reach 72.40 crore accounts, while the aggregate balance in these accounts increased substantially by 9.50% to ₹3.30 lakh crore.

The report emphasized that a majority of BSBDAs continue operating through the business correspondent model, demonstrating its effectiveness in reaching grassroots customers across the country.

Deposit Insurance Coverage Analysis

From a deposit insurance perspective, coverage remained comprehensive with 97.60% of accounts protected under the current framework as of end-FY25. However, when measured by insured deposit value, the coverage ratio decreased to 41.50% from 43.10% in the previous year, indicating growth in higher-value deposits that exceed the ₹5.00 lakh coverage limit per account.

The findings reflect India's evolving banking ecosystem, where digital payments are reducing ATM dependency while physical branches remain crucial for comprehensive banking services, particularly in rural and semi-urban markets.