VRS Story

When the Indian Banks’ Association decided to rightsize its overstaffed member banks, it never expected an overwhelming response to the banks’ voluntary retirement schemes (VRS). As it has turned out, bank employees have opted for the VRS in large numbers. The unforeseen success of the VRS scheme is leading some banks to persuade their younger employees who have offered to quit to stay back. The unions that have been vehemently opposing downsizing and the voluntary retirement schemes too have been nonplussed by their members’ evident enthusiasm for the golden handshake. The banks that successfully downsize will find themselves better equipped to use their resources for investing in technology and modernising themselves. This will also assist the process of consolidation that is gathering pace in the banking industry, with banks becoming more attractive acquisition propositions.

The public sector banks have among them some 8.83 lakh employees. The banks are offering liberal schemes to reduce their surplus staff. The early response to the schemes has been quite remarkable. For 11 banks that have gone through the initial phase of implementing their VRS, out of their total strength of 3,01,000 employees, around 38,000 or 12.6 per cent have put in applications for voluntary retirement. For the biggest bank of all, the State Bank of India, whose VRS is on till the end of this month, the response from employees has been embarrassingly enthusiastic. With 12 days to go for the scheme to close, 23,000 of the bank’s 2,35,000 employees had applied for voluntary retirement. What has also to be borne in mind is that the public sector bank employees who are opting for VRS have no reason to feel insecure about their present jobs. It is not as if they are choosing the VRS package they have been offered after balancing it against the possibility that sometime later they may actually stand to lose their jobs on less attractive terms.