The collateral damage in the crackdown on loan frenzy, KYC

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Subscribe to enjoy similar stories. Mumbai: The Reserve Bank of India’s (RBI) push for stricter compliance with know-your-customer (KYC) norms, and its crackdown against the ‘exuberance’ in personal loans have had an unlikely fallout: a dip in demand for off-roll workers. 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. The BFSI sector is one of the biggest employers of third-party workforce provided by staffing firms.

FMCG , manufacturing, e-commerce and quick commerce companies also hire such off-roll staff in large numbers. These workers are typically lower in hierarchy and help a company stay cost efficienct. Sales teams at junior levels are often drawn from this pool.