Kolkata, December 9: The Associate Banks of State Bank of India (SBI) have started preparations to unveil voluntary retirement schemes (VRS) for their employees before the proposed merger with the parent bank.
State Bank of Hyderabad (SBH) board has approved the VRS while other associate banks will place the scheme before their boards in the next few days, according to two senior SBI group officials.
The VRS in associate banks would help SBI curb in staff cost escalation after the merger. SBI’s staff expense was Rs 6,853 crore in the September quarter, rising 11.6% year-on-year. SBI’s pension obligation is estimated to be around Rs 3,500 crore. This would rise once associate bank employees come under SBI fold.
SBI has nearly 2.02 lakh employees while its associate banks have a cumulative headcount of 70,000. SBH, the largest among all the five associate banks, has around 18,000 employees. State Bank of Patiala has around 15,000.
The details of VRS is not known as yet. Sources in the SBI said all associate bank employees opting for it would get similar benefits. A good chunk of them are likely to go for VRS as there has been apprehensions across levels about their pecking order under the State Bank of India.
The government approved the merger in August while the exercise is likely to be over by March 2017. The integration of IT platform-- a key aspect to SBI’s merger with associate banks State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore– is in the final stages.
SBI chairman Arundhati Bhattacharya earlier said there would be no pay cut and job loss for associate bank employees after the merger. At the time of State Bank of Saurashtra and State Bank of Indore's merger with SBI, there were allegations that fairness was compromised demotivating associate bank employees.
As on September 30, associate banks cumulatively have Rs 5,21,344 crore of deposits and Rs 3,92,436 crore in advances. This will get added to SBI’s Rs 18,58,999 crore of deposits and Rs 14,81,832 crore of advances, making the group's total business nearly five times of ICICI Bank's business of Rs 9,03,371 crore.
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