Banking Sector Update: The Central Bank of India and Bank of Baroda top the list of public sector banks with the most vacant positions.
Public Sector Banks (PSBs) in India are grappling with a significant staffing shortage, with 32,567 out of 7,91,023 assessed positions remaining vacant as of June 30, 2025. This shortfall has led to an increased reliance on contractual and outsourced workers, affecting over 1 lakh employees across various PSBs.
The root cause of this manpower deficit is multifaceted. Over the last five years, PSBs have recorded a 4% reduction in workforce, with retirements, voluntary exits, and delays in filling positions contributing to the gap. The operational demands from government flagship welfare programs, such as Jan Dhan accounts and pension disbursements, also consume significant manpower without commensurate returns, diverting regular staff from commercial banking tasks. Additionally, recruitment lags persist despite ongoing efforts.
This reliance on contractual workers signals a potential informalisation trend in PSB employment, which could impact job security, employee morale, institutional knowledge retention, and service quality. However, it allows PSBs to sustain high-volume government-mandated services, ensuring financial inclusion and social welfare delivery continue uninterrupted.
Despite these challenges, PSBs have taken steps to address the manpower gap. They have recruited nearly 1.5 lakh employees during 2020-25 and are in the process of hiring another ~48,570 for 2025-26 to reduce dependence on contractual hires.
The State Bank of India (SBI) leads the pack with 64,995 contractual workers, followed by Canara Bank with 6,538, Indian Bank with 5,118, and Union Bank of India with 5,627. Other PSBs, such as Bank of Maharashtra, Bank of Baroda, Indian Overseas Bank, Punjab & Sind Bank, UCO Bank, and Central Bank of India, also employ substantial numbers of contractual workers.
Contractual workers are primarily engaged in non-core banking activities such as housekeeping, security, and ATM guarding. However, this trend of relying on contractual and outsourced workers indicates a potential systemic informalisation of the public banking workforce.
Despite these challenges, PSBs have shown robust financial performance in FY 2024-25, posting record net profits. However, the reliance on outsourced personnel may raise concerns about long-term human resource sustainability as well as operational risks.
In conclusion, the persistent staffing shortages in PSBs are driven by retirements, operational demands from social schemes, and recruitment lags. The implications include workforce informalisation, sustained delivery of government mandates, and potential risks to long-term efficiency and employee welfare. The government and PSBs are actively addressing this through large-scale recruitment programs, yet contractual workers remain essential to PSB operations as of mid-2025.
- The increased reliance on contractual and outsourced workers in Public Sector Banks (PSBs) could potentially lead to an informalization trend in bank employment.
- The financial sector, including banking and insurance, has employed substantial numbers of contractual workers, such as those found at institutions like the State Bank of India, Canara Bank, Indian Bank, and Union Bank of India.
- Contractual workers are primarily engaged in non-core banking activities like housekeeping, security, and ATM guarding, but their growing presence indicates a potential systemic informalization of the public banking workforce.
- Despite the persistent staffing shortages, PSBs have demonstrated strong financial performance, posting record net profits in FY 2024-25, however, the use of outsourced personnel raises concerns about long-term human resource sustainability and operational risks.
- In dealing with staffing shortages, the government and PSBs are implementing large-scale recruitment programs, but these efforts have yet to fully address the current dependence on contractual hires as of mid-2025.
