Mumbai, Sept. 16: Bank of India (BoI) plans to kick-off its second voluntary retirement package by the end of this calendar year, with over 10 per cent of its existing staff expected to participate.
Informed sources said the bank is looking at ways to make the scheme more attractive this time around. The package will be introduced by late-November or early December after receiving various approvals.
Under the norms announced by the Indian Banks Association (IBA) last August, all permanent employees with 15 years of service or 40 years of age will be eligible to avail of the VRS. The association had then said that such a package should consist of an ex-gratia amounting to 60 days’ salary (pay+stagnation increment+ special allowance plus dearness allowance) for each completed year of service or salary for the number of months of service left, whichever is less.
Apart from BoI, other leading nationalised banks like the State Bank of India (SBI) and Bank of Baroda (BoB) are also understood to be weighing a second VRS, though a final decision on the issue is yet to be reached.
BoI currently has more than 45,000 employees and the bank, in its first golden handshake last year, brought down its staff strength by 7,000, an exercise that cost it over Rs 1,000 crore. The cost per employee of BoI was then pegged at Rs 6.5 lakh.
The VRS scheme implemented in 2000-01, saw a total of 1,26,282 applications being received by 26 public sector banks. This represented close to 15 per cent of the total strength of 8,63,117 and the average per head estimated cost was Rs 5.93 lakh.
According to a study conducted by the Federation of Indian Chambers of Commerce and Industry (Ficci), the scheme resulted in nationalised banks successfully bringing down their cost to income ratio to 52 per cent during the fiscal. Further, these 26 banks also posted massive savings to the tune of Rs 2,100 crore.
The study added that expenditure on account of salaries and wages of these banks declined to Rs 18,745 crore from Rs 20,850 crore. This had an impact on the ratio of staff expenses to operating expenses that declined to 71 per cent from 75 per cent.
Sources said that the banks’ plan to go for a second VRS comes at a time, when some of them are simultaneously planning huge investments in technology.
Reports quoting senior SBI officials in this regard said the bank is likely to face surplus in the next few years as it puts in place a detailed technology plan. Currently, the SBI has a staff strength of over 2 lakh.