RBI action on personal loans, KYC takes toll on off-roll work

The Reserve Bank of India's (RBI) push for stricter compliance with know-your-customer (KYC) norms, and its crackdown on the surge in personal loans have had an unlikely fallout: a dip in demand for off-roll workers.

- Shayan Ghosh & Devina Sengupta

These are employees who work for banks and non-bank lenders but are on the payrolls of large staffing companies that supply such workers. The RBI's strictures have had a two-pronged impact on such hiring, industry officials and a banker said.

First, the regulator wants KYC to be more of an in-house activity, lowering demand for off-roll staff. Second, curbs against unsecured loans have also meant fewer third-party workers are needed to act as feet-on-street on behalf of the lenders.

"When a regulator comes down on a sector, the direct impact is on the jobs that are getting created," said Lohit Bhatia, president of workforce management at staffing company Quess Corp. According to Bhatia, the regulator's decision to plug the flow of unsecured loans from fintechs and NBFCs (non-banking financial companies) to new-to-credit customers may not have the desired effect as such borrowers may move towards money lenders and unorganized players.