A clampdown on fresh personal loans, credit cards and auto loans is taking a toll on direct selling agents hired by banks to push these products. According to estimates, banks have reduced the number of DSAs by 15-25 per cent, while marketing expenses are 35-40 per cent lower.

For instance, ICICI Bank [Get Quote], the country's second largest lender, has reduced the number of DSAs this year, while pruning the marketing expenses on these channels by 40 per cent to Rs 228 crore (Rs 2.28 billion) at the end of the first quarter.

"The number of DSAs for the bank has been brought down this year, which has helped in reducing the marketing expenses. We are not hiring as many DSAs as we used to hire till last year. The bank cannot have complete dependence on DSAs now. We are changing our sourcing model and focusing on other channels for selling loans, without affecting the bank's growth," a bank executive said, without divulging details.

Citibank, which was till recently the most aggressive player among foreign banks, has slashed the number of DSA-managed sales staff by about 15 per cent over the last 18 months.

"While the number of DSA-based sales staff has been reduced, the bank is also not keen on hiring new DSAs for selling credit cards and generating personal loans. The bank is now depending upon alternative customer acquisition channels for direct selling of its loan products," said a source.

Another foreign bank HSBC has pared its DSA base from 4,000 last year to 3,000 now. "It doesn't make sense to hire more DSAs now, with the given slowdown in credit growth for small-ticket loans. The banks will try to carry on with their available resources rather than hiring new DSAs during this high interest rate and default rate scenario," Naina Lal Kidwai, group general manager and country head, HSBC India, said.

HSBC India is currently associated with 60-65 DSAs, each with 50-60 sales staff. A top executive at HSBC said the bank has tied up with only four to five new agencies this year, as against about 10 new associates last year.

For lenders like HDFC Bank [Get Quote] and Axis Bank reliance on DSAs is very small as they generate most of the business through in-house sales teams.

It's not that only banks or agencies that work with lenders alone are doing with fewer employees now, agents are themselves quitting with volumes coming down. A reason for higher attrition at agencies is lower earnings for their employees, who generate loans as their earnings are based on incentives linked to fresh loans.

"The attrition rate of staff within DSAs has increased to around 90 per cent compared with about 60 per cent till last year," said Dheeraj Dikshit, head of consumer assets, HSBC India. Now, the bank's personal loan portfolio is increasing by Rs 100-150 crore (Rs 1-1.5 billion) a month compared with Rs 250-300 crore (Rs 2.5-3 billion) a month last year.

"Many DSAs have shut down their operations and some are thinking of changing their line of business. But the present uncertain business outlook is making any shift difficult," said Mansur Singh, who was earlier working for ICICI Bank, but has now shifted his agency to HDFC Bank.