Modern banking institutions recognize employee engagement and retention as critical to achieving long-term goals. These elements influence productivity, innovation, and customer satisfaction. Public and private sector banks adopt different strategies shaped by political culture, regulatory environments, and competitive dynamics. Public Sector Banks (PSBs) offer job security, structured career growth, and welfare benefits, fostering stability and long-term commitment. These factors contribute to employee motivation and consistent performance but may limit agility and innovation. In contrast, Private Sector Banks (PvSBs) emphasize performance-based incentives, career mobility, and a dynamic work environment. While these strategies enhance engagement and drive results, they can also lead to stress and higher employee turnover. Organizational culture, compensation, career development, work-life balance, and employee well-being play significant roles in shaping these outcomes. This review compares engagement and retention strategies across both sectors, identifying the strengths and challenges of each. A hybrid approach—combining financial rewards, career development opportunities, and wellness initiatives—is recommended to enhance satisfaction and commitment across the board. By refining these strategies, both PSBs and PvSBs can develop a more engaged and resilient workforce, ultimately supporting long-term organizational success and stability.