Specialist in Indian Banking and Economic Research

Hemindra Hazari

Is a Securities & Exchange Board of India (SEBI) registered research analyst with over 25 years experience in the Indian capital markets with a specialization in banking and economy research and has managerial experience of establishing profitable equities business, leading and mentoring analysts.  He has worked with prominent foreign and domestic capital market firms such as UBS, Societe Generale, HSBC, ASK Raymond James  and Karvy Stock  Broking and is a regular guest on business media channels and is respected for his non-consensus view on stocks and the market.

Axis Bank: Toxic Workplaces Don’t Bring In More Business

Axis Bank’s Toxic Call to Staff to Fight, Abuse, and Undermine One Another in Pursuit of Business

Axis Bank Placement - Well Flagged, past Deals Have Done Well

Axis Bank Stops Sharing 30+ Days Past Due Data: When Sudden Silence Tells a Tale

Axis Bank Q4FY21 Results – Corporate and SME Asset Quality in Focus

Gravity Works As WeWork Doesn't; Now Plan B

While <a href="https://www.smartkarma.com/entities/axis-bank-ltd" target="_blank" data-smartkarma-citation="entities:768:1" rel="noopener">Axis Bank Ltd (AXSB IN)</a>  has recovered from its corporate non-performing asset (NPA) crisis, it seems to be in the midst of a management attrition problem, partly explained by significant <a href="https://thewire.in/banking/will-axis-bank-right-the-ship-with-its-mid-level-management-shake-up" target="_blank" rel="noopener">sackings</a> in FY2020. Staff turnover levels have been steadily rising in FY2018 – FY2020 (data for FY2021 not yet released). What is worrying is the attrition is across management strata, and covering all age groups. In our sample of banks ( <a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN)</a> , Axis Bank, <a href="https://www.smartkarma.com/entities/indusind-bank-ltd" target="_blank" data-smartkarma-citation="entities:1558:1" rel="noopener">Indusind Bank (IIB IN)</a> and <a href="https://www.smartkarma.com/entities/yes-bank-ltd" target="_blank" data-smartkarma-citation="entities:767:1" rel="noopener">Yes Bank (YES IN)</a> ) which disclose this data, only Yes Bank has worse attrition than Axis Bank, which is understandable given Yes Bank’s precarious situation till FY2020.It is commendable of both Axis Bank and Yes Bank to have voluntarily provided detailed disclosure of attrition (unlike <a href="https://www.smartkarma.com/entities/icici-bank-ltd" target="_blank" data-smartkarma-citation="entities:547:1" rel="noopener">ICICI Bank Ltd (ICICIBC IN)</a> and <a href="https://www.smartkarma.com/entities/kotak-mahindra-bank-ltd" target="_blank" data-smartkarma-citation="entities:126:1" rel="noopener">Kotak Mahindra Bank (KMB IN)</a> , which provided no disclosures in this regard), enabling a meaningful analysis. The consistent rise in attrition in Axis Bank is a serious human resource (HR) problem reflecting on the bank’s <a href="https://www.axisbank.com/media-centre/board-of-directors" target="_blank" rel="noopener">board of directors</a>. Responding to a query posed by this analyst on this subject, the bank has stated that it “does not comment on internal administrative matters”. This analyst believes the high attrition can be attributed to (i) sackings, (ii) poor selection practices by the Human Resources division (responsibility of <a href="https://www.linkedin.com/in/rajesh-dahiya-4911961/?originalSubdomain=in" target="_blank" rel="noopener">Rajesh Dahiya</a>  since June 2010) in identifying appropriate candidates (especially at the entry level of sales where attrition was a shocking 69% in FY2020), (iii) excessive pressure to meet over ambitious targets, (iv) difficult working conditions, (v) poor training and (vi) inadequate resources for its staff.Axis Bank’s FY2020 annual report maintains that “its employees remain the most critical drivers for growth and success” and are the “catalyst which builds talent”. However, inexplicably, the board of directors have presided over large-scale staff attrition and allowed the attrition to keep rising. Amitabh Chaudhry took over as Chief Executive Officer (CEO), Axis Bank on January 1, 2019, and in the first week of April, 2019  <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/axis-bank-asks-more-than-50-mid-level-managers-to-leave/articleshow/68731729.cms?utm_source=whatsapp_app&amp;utm_medium=social&amp;utm_campaign=socialsharebuttons" target="_blank" rel="noopener">media reports</a> indicated significant forced removals. It is surprising that lower levels of management bore the brunt while senior executives closely associated with the previous CEO’s strategy got away. Banking is all about trust, and customers become uncomfortable when there is a constant churn of staff who service them. Nor is it healthy for any institution to have a high and consistently increasing attrition, which is a symptom of an underlying problem and signifies waste of expenditures incurred in hiring and training staff. It is also surprising that credit rating analysts have not red flagged this development. These issues can no longer be tucked away in some obscure corner in a company’s website, but will have to be mandatorily included in company’s annual reports from FY2023 as per SEBI’s <a href="https://www.sebi.gov.in/media/press-releases/may-2021/sebi-issues-circular-on-business-responsibility-and-sustainability-reporting-by-listed-entities-_50097.html" target="_blank" rel="noopener">recent</a>  business responsibility social reporting (BRSR).  By then one hopes the board of directors at Axis Bank would have woken up and addressed this critical issue.

While Axis Bank Ltd (AXSB IN)  has recovered from its corporate non-performing asset (NPA) crisis, it seems to be in the midst of a management attrition problem, partly explained by significant sackings in FY2020. Staff turnover levels have been steadily rising in FY2018 – FY2020 (data for FY2021 not yet released). What is worrying is the attrition is across management strata, and covering all age groups. In our sample of banks ( HDFC Bank (HDFCB IN) , Axis Bank, Indusind Bank (IIB IN) and Yes Bank (YES IN) ) which disclose this data, only Yes Bank has worse attrition than Axis Bank, which is understandable given Yes Bank’s precarious situation till FY2020.It is commendable of both Axis Bank and Yes Bank to have voluntarily provided detailed disclosure of attrition (unlike ICICI Bank Ltd (ICICIBC IN) and Kotak Mahindra Bank (KMB IN) , which provided no disclosures in this regard), enabling a meaningful analysis. The consistent rise in attrition in Axis Bank is a serious human resource (HR) problem reflecting on the bank’s board of directors. Responding to a query posed by this analyst on this subject, the bank has stated that it “does not comment on internal administrative matters”. This analyst believes the high attrition can be attributed to (i) sackings, (ii) poor selection practices by the Human Resources division (responsibility of Rajesh Dahiya  since June 2010) in identifying appropriate candidates (especially at the entry level of sales where attrition was a shocking 69% in FY2020), (iii) excessive pressure to meet over ambitious targets, (iv) difficult working conditions, (v) poor training and (vi) inadequate resources for its staff.Axis Bank’s FY2020 annual report maintains that “its employees remain the most critical drivers for growth and success” and are the “catalyst which builds talent”. However, inexplicably, the board of directors have presided over large-scale staff attrition and allowed the attrition to keep rising. Amitabh Chaudhry took over as Chief Executive Officer (CEO), Axis Bank on January 1, 2019, and in the first week of April, 2019  media reports indicated significant forced removals. It is surprising that lower levels of management bore the brunt while senior executives closely associated with the previous CEO’s strategy got away. Banking is all about trust, and customers become uncomfortable when there is a constant churn of staff who service them. Nor is it healthy for any institution to have a high and consistently increasing attrition, which is a symptom of an underlying problem and signifies waste of expenditures incurred in hiring and training staff. It is also surprising that credit rating analysts have not red flagged this development. These issues can no longer be tucked away in some obscure corner in a company’s website, but will have to be mandatorily included in company’s annual reports from FY2023 as per SEBI’s recent  business responsibility social reporting (BRSR).  By then one hopes the board of directors at Axis Bank would have woken up and addressed this critical issue.

Why Are Axis Bank’s Directors Mum About the Extraordinary Staff Churn?