The public sector banks are going in for VRS to shed the flab. This move should not be taken as a one off exercise. Rather it should be the first step in the process of attaining the long-term objective of strengthening the banking system.

Come April 2001 the employees of some of the public sector banks would be finding themselves working in a very different environment. Conspicuous by its presence would be the technology infrastructure. Technology gives a competitive edge. It reduces the cost of operations at a time when margins are decreasing. At the same time, it provides the crucial value additions to the customers and clients. This overnight change would not have come about without VRS (Voluntary Retirement Schemes) undertaken by these banks. This move to become trimmer and leaner would go a long way in developing strong financial systems, which are globally competitive.

It is expected that the VRS would be opted by 20 percent of the employees costing the banks crores of rupees. Even if 10 percent of the employees were given the handshake, it would mean 90,000 employees taking the exit route and a bill for Rs. 72,000 crore. The percentage of officers applying for VRS is far larger than the clerical staff. The number of officers applying for VRS is around 30 percent. While the clerical grade has very few takers for the scheme. The reasons are obvious. The clerical staff has limited employment opportunity while the officers can find alternate job easily. These officers are induced and wooed by private and foreign banks with attractive compensation packages of 3 to 4 times their present scale. The distribution of the number of people taking VRS is also different across the states. Some of the industrialized states like Maharashtra and Gujarat have seen many employees going for the VRS, while Bihar and Orissa have witnessed a small percentage opting for it. This shows a clear link between opportunity and economic development.