SBI expects 50% staff to opt for VRS after mega-merger

29 Mar 2017


State Bank of India, the country's largest lender, is expecting to see 50 per cent or about 6,000 employees opting for its voluntary retirement scheme (VRS) during the merger of its associate banks with it.

A senior executive of SBI said, "The employees opting for VRS is on expected lines. We have estimated about half or 50 per cent of the employees taking that option. You can say about 6,000 employees may opt to take it up."

The VRS has been offered to about 12,000 employees of the associate banks.

"The scheme will be on offer till 5 April and those employees who have opted or applied for the VRS can withdraw it thereafter in a week's time … so we have to wait and see how many apply," Dinesh Khara, managing director at SBI, told CNBC-TV18.

The eligibility criteria for the proposed VRS are: employees who are on the payrolls of the bank should have put in 20 years at the bank or be above 55 years.

Eligible employees will be paid an ex-gratia sum amounting to 50 per cent of the salary for the residual period of service, subject to a maximum of 30 months' salary.

SBI will be merging its five associate banks with itself from 1 April to become the 45th largest bank in the world.

The five associate banks of SBI are State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Patiala and State Bank of Hyderabad.

The associate banks have a total strength of 73,270 employees while SBI has a total staff of 200,820. SBI has a high attrition rate, with 12,750 leaving the bank during the current financial year.

Earlier, SBI chairman Arundhati Bhattacharya had said there would be about 26,000 employees retiring in the next two years.

The bank has also recruited about 7,000 employees.

Post the merger, SBI will trim its new hiring to 50 per cent from about 10,000 on an average annually.

SBI will also shut 47 per cent of its associate bank offices to avoid duplication and overlapping of the services in the same regions.

Out of the five head offices of the associate banks, only two will exist. The remaining three will be eliminated along with 27 zonal offices, 81 regional offices and 11 network offices of the associate banks.

About 1,107 employees are estimated to be directly affected by these shutdowns and will be redeployed, mostly in customer-interface operations.

According to Khara, many may not be willing to relocate and some may not be comfortable with the changes in the bank. The VRS in the subsidiary banks would help SBI limit its staff costs from rising after the merger.

SBI's staff expense in the quarter ending December 2016 was Rs7,137 crore, rising 16.5 per cent year-on-year.

Its pension obligation is estimated to be around Rs3,500 crore. This would increase once associate bank employees come under the SBI fold.

Reports suggest SBI is likely to see an average payout of Rs12 lakh to Rs15 lakh on the VRS applications.

The five associate banks will cease to exist as legal entities and become a part of SBI from 1 April, but the various data and other merger processes will start only after 24 April, once the balance sheets of the five entities are audited and added.

After the merger, SBI will have a combined balance-sheet size of Rs41 lakh crore, with 22,500 branches and 58,000 ATMs servicing over 50 crore customers.

Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more