Employee Attrition and Its Impact on Organizational Productivity in Non-Banking Financial Companies in India

Abstract

The Non - Banking Financial Company (NBFC) sector is a critical component of India’s financial system, supporting financial inclusion, retail lending, and credit access to underserved segments. Operating in a competitive and RBI regulated environment, NBFCs are highly dependent on human capital for business generation and operational efficiency. However, rising employee attrition particularly in sales, credit, and operations roles has emerged as a significant challenge affecting organizational productivity.

This study empirically examines the relationship between employee attrition and productivity in Indian NBFCs using RBI aligned indicators, namely Assets Under Management (AUM) per employee, disbursement per employee, and cost to income ratio. A descriptive and analytical research design is adopted, utilizing primary data from structured questionnaires and secondary data from audited financial statements, RBI publications, and industry reports. Statistical tools including descriptive analysis, correlation, and multiple regression are employed.

The findings reveal persistently high attrition levels in NBFCs and a statistically significant negative relationship between employee attrition and productivity indicators, alongside a positive association with the cost to income ratio. Regression results confirm employee attrition as a significant predictor of productivity after controlling for organizational characteristics. The study highlights the strategic importance of workforce stability for improving productivity and cost efficiency in NBFCs and offers actionable insights for management and policymakers.