HDFC Bank has reduced its workforce by 3,343 employees in FY26 as it accelerates automation and AI adoption.

The bank’s total workforce dropped to 211,178 by March 31, down from the year before. New hiring also slowed, with 3,811 fewer new employees added.

Within that total, non-supervisory staff, workers in clerical, operational, and back-office roles, saw an even bigger drop, falling by over 8,000 to 162,797. This suggests the bank cut jobs mainly in support and back-office functions rather than management roles.

The bank’s shares fell as much as 1.7% soon after markets opened on Monday, but recovered some ground to end down just 0.5%. Overall, the stock has lost about 17% of its value this year, a much steeper fall than the Nifty Bank index, which is down only 3% in the same period.

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AI rising, momentum falling at HDFC bank

Banks globally, including in India, are increasingly using artificial intelligence and automation to streamline routine processes while redirecting employees to higher-value customer and advisory functions.

Executives from JPMorgan Chase & Co., Citigroup Inc. and Standard Chartered Plc have warned that AI will eventually reduce the need for some roles while boosting productivity.

“As we accelerate the transformation toward becoming a technology-led, customer-centric bank, employees need to keep pace,” HDFC Bank Chief Executive Officer Sashidhar Jagdishan said in the annual report.

The lender’s middle- and junior-level headcount increased by 1,252 and 3,543, respectively, according to the annual report. There were 15 additions to the senior management.

Governance crisis still casts a shadow

The bank, which counts foreign institutional investors among its major shareholders, plunged into a crisis in March after its part-time chairman, Atanu Chakraborty, stepped down abruptly, citing “certain happenings and practices” at the lender that were not in line with his “personal values and ethics.”

His resignation triggered investor worries and wiped out billions of dollars from HDFC Bank’s market value.

HDFC Bank subsequently appointed domestic and international law firms to independently review governance concerns raised following Chakraborty’s resignation, and found no evidence to substantiate his allegations.

Jagdishan called Chakraborty’s resignation a “challenging event” for the bank. He added: “The board also constituted a special committee comprising solely of independent directors, to provide oversight on the legal review and ensure appropriate and timely flow of information between the bank and the law firms, in relation thereto.”

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FAQs

Q1: Why is HDFC Bank’s stock underperforming?

Weak price momentum, heavy foreign investor selling, and a soft broader market.

Q2: What caused the governance crisis in March?

Chairman Atanu Chakraborty resigned abruptly, citing practices at odds with his personal values and ethics.