State Bank of India - The VRS Story

THE PROTESTS

The SBI was shocked to see the unprecedented outcry against the VRS from its employees. The unions claimed that the move would lead to acute shortage of manpower in the bank and that the bank's decision was taken in haste with no proper manpower planning undertaken.

In 2000, SBI had undertaken a large-scale clientele membership drive in some states to attract more customers. The unions opined that the VRS could prove to be counterproductive as the increased business might not be handled properly.

However, despite all the protests, SBI received around 35,000 applications for the VRS. Analysts pointed out that many bank employees opted for the VRS due to the better employment prospects with the NPBs. SBI had not anticipated such a huge response to the scheme. While the VRS was mainly aimed at reducing the clerical staff and sub-staff, the maximum number of optees turned out to be from the officer cadre. The clerical staff was reluctant to go for the VRS due to the low employment opportunities for them in the NPBs. According to reports, the number of applications from officers stood at 19,295, which meant that over 33 per cent of the total officers in the bank had sought VRS.

Following huge response to the VRS from officer cadre, SBI issued a circular stating that the management would relieve only those officer cadre applicants who had crossed the age of 55 years. The bank also issued a circular barring treasury managers, forex dealers and a host of other specialized personnel, from seeking VRS. Employees who had not served rural terms were also barred from opting for the scheme. The VRS was also not open to employees who were doctorates, MBA's, Chartered Accountants, Cost & Works accountants, postgraduates in computer applications. In another circular, SBI mentioned that any break in service (i.e. leaves availed on a loss of pay basis) would not be taken while calculating the service period. The bank also restricted the loan facilities to the personnel who had opted for the VRS. If an employee wished to continue a housing loan after accepting VRS, he was asked to pay interest at the market rate. After these restrictions were introduced, only 13.4% of the officers were left eligible for VRS instead of the earlier 33%.

The conditions laid down by the management faced strong criticism from the officers who had opted for the VRS, but who could not meet the prescribed criteria. They alleged that the bank was practicing discrimination in implementation of the scheme and that no other banks had implemented such policies and denied the opportunity of VRS to officers who were willing to avail the scheme.

Media reports also called SBI's decision to restrict the VRS as arbitrary, discriminatory and belying the voluntary character of the scheme. Unions argued that if the bank was so particular that only 10% of its staff leave under the VRS, it could have closed the scheme immediately after the required number of applications were received. The unions also argued that 35,000 applications (14% of the total workforce) could not be considered high when compared to the response received by other public sector banks such as Syndicate Bank (22%) and Punjab & Sind Bank (19%), where all the applications that were received were also accepted for VRS.

The officers who were denied the VRS formed an action group in March 2001. They claimed that SBI had violated the guidelines of the Government and the Indian Banks Association. According to the members of the group, any shortfall in the number of officers could easily be met by promoting suitable clerks. They also cited the example of Syndicate Bank, which promoted about 1,000 clerical staff to officer level. The group filed cases before High Courts in various parts of the country, challenging SBI's decisions. A delegation of VRS-denied officers even met the Finance Minister and also submitted a memorandum to the SBI management.

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