32,000 employees apply for SBI’s VRS

SBI, the largest commercial bank, was among the last public-sector banks to announce a VRS. It may be recalled that there has been an overwhelming response to the VRS offered by state-run banks. The cumulative number of VRS applications in Bank of India, Syndicate Bank, Punjab National Bank, Bank of Maharashtra, Indian Bank, Oriental Bank of Commerce, Bank of Baroda, Central Bank of India, Vijaya Bank, and Canara Bank have crossed 25,000.

Specific numbers on the response to SBI’s VRS were not available nor the cost to be incurred by the bank. But industry sources say that this could well be a very high amount to the tune of Rs 2,500 crore. Other banks have incurred a cost ranging between Rs 400-600 crore on their respective VRS offerings.

It is also felt that SBI’s VRS will affect its balance sheet to a great extent. The bank made a net profit of Rs 2,052 crore last year. SBI chairman Janaki Ballabh was quoted as saying that the mode of provisioning for the VRS expense will be decided after February 15, once the bank has processed all applications and after the time allowed for applicants to change their mind.

Ballabh had also declined to comment on whether the bank will take a one-time hit or amortise the cost over a few years. SBI has committed itself to pay the entire compensation in one shot, instead of offering bonds as some other banks have done.

Uco Bank’s voluntary retirement scheme, which is to close on January 31, has already attracted 5,228 applications against the management’s target of reducing headcount by 5,000. Of the total applications, 2,699 were from officers and the rest from award staff. Among the officer applicants, two are general managers, nine deputy general managers, 18 assistant general managers and 72 regional managers/ chief managers.

Others like Bank of India 7,800 (out of 51,900 employees) and Punjab National Bank 6,000 (out of 65,000) also got good response from their employees. "From general managers to peons down the line, employees from all categories responded to the VRS," said an official of Bank of India.

Bank employees who have either completed 15 years of service or attained the age of 40 years would be eligible to participate in the scheme. Compensation has been fixed at either 60 days’ salary for each completed year of service or salary for the number of months of service left, whichever is less. Salary would consist of pay plus dearness allowance. The employee would also be eligible for pension and gratuity.

Central Bank clears VRS: Central Bank of India’s board has cleared its voluntary retirement scheme (VRS) at its meeting held in Mumbai on Tuesday. The proposed VRS is likely start on February 14 and will remain open until February 28. The bank expects nearly 4,000 employees to opt for the scheme and sees expense on this account to touch around Rs 400 crore. CBI has a total staff strength of around 49,000, and expects around 4,000 applications. Sources said that the number of applicants may well be more than 4,000.