Bank Layoffs: Why ICICI, HDFC, Axis and Kotak Cut 13,000 Jobs Despite Adding Branches

Four of India’s biggest private sector lenders - ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank - collectively reduced their employee strength by around 13,000 in FY26, even as all four continued to expand their branch networks. The numbers have raised questions about whether artificial intelligence and automation are beginning to reshape jobs in India’s banking sector.

However, the fall in headcount does not necessarily mean that 13,000 employees were laid off. Industry experts say slower replacement hiring, natural attrition, productivity improvements and a shift towards technology-enabled banking are major factors behind the decline.

Which Banks Cut The Most Jobs In FY26?

ICICI Bank recorded the sharpest decline in employee strength. Its permanent workforce fell by 5,148 to 1,24,029 as of March 31, 2026, compared with 1,29,177 a year earlier. Including non-permanent employees, its total workforce declined by 6,633. When Layoffs Hit Home: Why Displaced Tech Workers Are Turning to Entrepreneurship?

HDFC Bank's employee count dropped by 3,343 to 2,11,178 during FY26. Axis Bank's workforce declined by around 3,100 to approximately 1,01,300, while Kotak Mahindra Bank reported a reduction of 1,269 employees to 74,054.

The workforce reductions came despite continued physical expansion. ICICI Bank added 528 branches during the year, taking its network to 7,511. HDFC Bank added 234 branches to reach 9,689, while Axis Bank expanded by nearly 400 locations. Kotak Mahindra Bank added 128 branches. Axis Bank Cuts Workforce by 3,000 in FY26 As Technology Boosts Productivity.

Why Are Banks Cutting Jobs Despite Adding More Branches?

The role of a bank branch has changed significantly as customers increasingly use mobile banking, internet banking, UPI, ATMs and other self-service channels.

Routine activities such as account opening, document verification, payments, loan processing and customer-service requests can increasingly be handled digitally or through centralised operations. As a result, banks may not need to add large operational teams every time they open a new branch.

Instead, branches are becoming increasingly focused on customer acquisition, sales and relationship management.

"Private banks are increasingly focusing on productivity rather than headcount-led expansion," Balasubramanian A, Senior Vice President at TeamLease Services, told NDTV.

He said lenders are slowing replacement hiring while moving employees towards sales, advisory and customer-facing roles. This means branch expansion and workforce reduction can happen simultaneously.

Are Banks Actually Laying Off Employees?

A decline in annual headcount should not automatically be interpreted as mass layoffs.

Banks typically experience significant employee turnover every year. If fewer employees who leave are replaced, the overall workforce can decline even without a large-scale retrenchment programme.

Jayanth Neelakanta, Founder and CEO of Equip, said the trend is "mostly banks being cautious in a slower year, not machines taking jobs."

Kotak Mahindra Bank's numbers demonstrate why the distinction matters. The bank hired 28,846 employees during FY26 even though its overall workforce declined by 1,269. Its management attributed the workforce optimisation to process simplification, technology adoption and greater internal mobility.

Is AI Taking Banking Jobs?

AI and automation are changing the way banks operate, but experts caution against attributing the entire FY26 headcount decline to artificial intelligence.

Neelakanta said the AI impact is being overstated, arguing that automation is primarily affecting repetitive back-office functions rather than immediately replacing large numbers of frontline employees.

Balasubramanian also said AI and automation are "important but not the sole drivers." According to him, slower hiring, natural attrition, cost management and productivity gains following several years of aggressive recruitment are bigger factors behind the current workforce trend.

The shift is therefore less about banks suddenly replacing thousands of employees with AI and more about changing the type of work employees are expected to perform.

What Jobs Are Banks Hiring For?

As routine processes become automated, banks are placing greater emphasis on roles involving customer relationships and revenue generation.

These include relationship managers, wealth advisers, sales professionals, lending specialists, SME banking experts and customer acquisition teams.

Shailesh Khana, Business Leader at ManpowerGroup, told NDTV that modern branches are increasingly becoming "sales and relationship" centres. He said banks are focusing more on wealth management, lending, SME relationships, cross-selling and customer acquisition.

HDFC Bank's FY26 workforce data also points to this transition. While its overall employee count declined by 3,343, its managerial workforce increased, indicating that the reduction was not uniform across all categories of employees.

Why Are Banks Still Opening Branches If Digital Banking Is Growing?

Physical branches remain important for customer acquisition, deposits, loans, wealth management and SME relationships, particularly in smaller cities and towns.

The difference is that a modern branch does not necessarily require the same operational workforce as a branch did a decade ago.

ICICI Bank's branch network grew from 6,983 in March 2025 to 7,511 in March 2026. HDFC Bank added 234 branches during FY26, taking its network to 9,689.

Technology can handle much of the processing work in the background, allowing branches to operate as customer-facing points within a wider digital and centralised banking system.

What Does This Mean For Banking Jobs In India?

The FY26 numbers suggest that India's private banking sector is moving towards a more productivity-focused workforce model.

Axis Bank, for example, has indicated that its technology investments are beginning to generate productivity gains, with technology spending accounting for around 9-10% of operating expenses. At the same time, its workforce fell by roughly 3,100 during FY26.

Shailesh Khana estimates that around 70-80% of workforce changes are structural, with the rest linked to cyclical factors. He expects overall bank headcount to remain broadly flat or decline slightly in the near term, even as lenders continue selective hiring.

A pickup in credit growth could increase demand for frontline employees. But the traditional model in which every new branch automatically requires a large operational workforce is unlikely to return.

For bank employees and job seekers, the bigger change may therefore not be the disappearance of banking jobs, but a shift in which banking skills are in demand. Digital expertise, sales, advisory capabilities, relationship management and specialised financial knowledge are likely to become increasingly important as banks automate routine work.

(The above story first appeared on LatestLY on Aug 27, 2026 12:02 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).