VOLUNTARY RETIREMENT SCHEME (VRS) IN PUBLIC SECTOR BANKS (PSBs) PARTICULARLY, THE STATE BANK OF INDIA (SBI)

Abstract

“Don’t simply retire from something; have something to retire to.”- Harry Emerson

Through the New Economic Policy of 1991, the Indian Government relaxed and removed restrictions on import and export. Significant changes in industrial and business sectors were observed. One of its important aspects is the Exit Policy, under which the business and industrial establishments are allowed to reduce their excess staff and employees. The Enterprise Reform Programme engendered downsizing bringing in its wake trauma for the employees. In order to allay the social impact caused and to eliminate unnecessary legal hurdles and complex procedures established under the Industrial Disputes Act 1947, the ‘Voluntary Retirement Scheme’ was introduced. It includes attractive severance package, training, retraining and redeployment programmes. The Narasimham Committee II came up with certain objectives for the banking reforms in India, and with this it also suggested introduction of Voluntary Retirement Scheme in the banks, wherever necessary, to reduce over manning. As a result, VRS was introduced in all public sector banks except Corporation Bank on non-discriminatory basis. This was accepted by more than one hundred thousand bank employees in different cadres and were allowed to retire. What makes the scheme a headline issue today are its contradictory objectives where on one hand it is spoiling the permanency of employment and on the other hand it takes about improved productivity and labor alignment. The impact of the scheme on employees, employers and on the society will be manifold and it will take decades to assess its real repercussions.