IDBI board clears VRS

The board of the Industrial Development Bank of India has cleared a voluntary retirement scheme (VRS) for its employees.

The institution may also clean up its balance sheet by transferring its non-performing asset portfolio of around Rs 15,000 crore to an asset reconstruction company.

The VRS will be targeted at all employee levels. IDBI has around 2,900 employees, of which 1500 are Class III and Class IV employees.

The VRS, which is structured on the lines of those offered by banks, will be applicable to employees above 40 years or who have put in 15 years of service. They will be eligible for two months' salary for every completed year of service.

The IDBI board cleared the proposal with the provision that the chairman can activate the scheme as when he thinks fit.

The government has, however, not given its approval for the VRS scheme till now.

"There is a feeling that only around 400-500 officers are needed for running the institution. The VRS could be targeted at the senior management of the institution. IDBI is top heavy," industry sources pointed out.

IDBI has around 1,400 officers. It has six executive directors, 25 chief general managers, 65 general managers, 160 deputy general managers and 250 assistant general managers.

This could come down to one or two executive directors, four chief general managers, 15 general managers and 60 deputy general managers. Around 80 per cent of IDBI's officers are eligible for VRS.

It is felt that rightsizing is the only way to prepare the institution for a merger with a bank. Public sector banks have only one executive director and around a dozen general managers.

The IDBI (Transfer of Undertaking and Repeal) Bill 2002 was cleared by the Rajya Sabha today. A special board meeting of the board has been called on December 19 to discuss steps for conversion of IDBI into a bank.

Incidentally, even as the Bill was cleared in the Lok Sabha, no commitment has been given by the Government to maintaining its stake in the bank at 51 per cent. The government currently has a 58.47 per cent stake in IDBI.

The NPAs of around Rs 15,000 crore are likely to be transferred out of the institution as and when a merger with a bank takes place.

The government's stake in the FI could come down after a merger with another public sector bank. There have been talks of IDBI being merged with one of the following banks--Bank of Baroda, Punjab National Bank, Indian Bank and Canara Bank.

Last week NS Sisodia, secretary, financial sector, Ministry of Finance had said that the government is looking at options of merging IDBI with a public sector as a part of its restructuring progress.

Shedding flab

• The institution may also clean up its balance sheet by transferring its non-performing asset portfolio of around Rs 15,000 crore to an asset reconstruction compan
• The VRS will be targeted at all employee levels
• The ICAI seeks a review of the operation of certain multinational entities engaged in accounting services in the country