Voluntary Retirement & Sabbatical Scheme for Public Sector Banks:
From the banknetindia team
VRS in Banks was formally taken up by the Government in November 1999. According to Finance Ministry on the basis of business per employee (BPE) of Rs. 100 lakhs, there were 59,338 excess employees in 12 nationalised banks, while based on a BPE of Rs. 125 lakhs the number shot up to
Finally now Government has cleared a uniform Voluntary Retirement Scheme (VRS) for the banking sector, giving public sector banks a seven-month time-frame. The IBA has been allowed to circulate the scheme among the public sector banks for adoption. The scheme will remain open till March 31, 2001. It would become operational after adoption by the respective bank board of directors. No concession has been made to weak banks under the scheme. The scheme is envisaged to assist banks in their efforts to optimise use of human resource and achieve a balanced age and skills profile in tune with their business strategies.
As per estimates the average outgo per employee under the banking VRS scheme would range between Rs. 3 lakhs and Rs. 4 lakhs. However, the aggregate burden on the banking industry is difficult to work out, as one cannot estimate how many employees would finally opt for the scheme. To minimise the immediate impact on banks, the scheme has allowed them the stagger the payments in two instalments, with a minimum of 50 per cent of the amount to be paid in cash immediately. The remaining payment can be paid within six months either in cash or in the form of bonds.
As per the scheme all permanent employees with 15 years of service or 40 years of age will be eligible to avail of it with ex-gratia amounting to 60 days salary. Employees eligible for VRS, but who do not want to avail themselves of the scheme, have been provided with the option of choosing to go on a sabbatical for 5 years While the right of refusal to give voluntary retirement has been granted to the bank management, recruitment against vacancies arising through the VRS route has been disallowed. Banks have been asked to undertake a complete manpower planning exercise before offering the VRS scheme.
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