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PSU banks can offer second round of VRS

Sidhartha

The government has given the go-ahead to public sector banks to offer a second voluntary retirement scheme to their employees, and decided to leave it to individual banks to decide on the details.

The Indian Banks' Association is now planning to organise a meeting with employees' unions to discuss manpower deployment issues, especially that of a second round of VRS only 18 months after over 100,000 employees opted out.

Officials in banks and the finance ministry said it was likely the package would be the same as the previous VRS, with banks permitted to modify it marginally. Finance ministry officials said the government had decided to leave it to individual banks to decide on the compensation package, and whether they wanted to offer a second VRS. "Boards are competent to take such decisions," said a senior official, adding that only the better performing banks with healthy bottomlines were in a position to offer another round of VRS.

Sources also said the decision to leave it to bank boards to decide on a VRS was taken as manpower rationalisation would be needed from time to time with the increased use of technology.

While State Bank of India had already announced its intention to come out with a scheme, sources said Bank of India and Central Bank of India had also decided to launch a second VRS.

While Bank of India chairman, K V Krishnamurthy, could not be contacted for comments, Central Bank chairman Dalbir Singh said the bank would offer the scheme only in areas where productivity was low, and would keep the scheme open for a limited period. He said about 10 per cent staff was surplus at present.

Employees of Corporation Bank, the only public sector bank not to offer a VRS in the first round, and those of Bank of Baroda, are already demanding that a scheme be launched. In the case of banks where specialists were not permitted to opt for the scheme in 2000, the management has already started receiving petitions.

In the first round, the Indian Banks' Association package was open to employees who had completed 15 years of service, or were over 40 years of age. They were entitled to 60 days compensation for each year of service rendered, or salary for the remaining years of service, whichever was less, with a part of the payment in cash and the remaining amount in five-year bonds. Employees were also permitted to go on lien to other organisations.

The public sector banks received 1,26,711 applications, and the expenditure incurred amounted to Rs 102.93 billion, with a provision to amortise the expenditure in five years.

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