The 26 public sector banks (PSBs), which extended a golden handshake to their employees in fiscal 2001, saved a whopping Rs 2,105 crore during the year ended March 2002.
This is because salaries and wages of the banks, which saw 10 per cent of the staff opting for the voluntary retirement scheme (VRS), declined to Rs 18,745 crore in 2001-02 from Rs 20,850 crore in 2000-01, a drop of 10.1 per cent.
The saving would be, however, notional for the year as the banks have to provide Rs 2,346 crore as carried forward expenditure for VRS. In future, savings on salaries and wages will be around Rs 2,000 crore every year once the banks finish charging the entire VRS expense to their profit and loss account. Banks were allowed to amortise the VRS outgo over four years.
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The data of 22 public banks available with the BS Research Bureau shows that savings on account of salaries accounted for around 16 per cent of aggregate net profit of 2001-02. Further the ratio of staff expenses to operating expenses of 22 banks, declined sharply to 71.1 per cent in 2001-02 from 75.2 per cent in 2000-01. In fact, the ratio has been the lowest in five years.
State Bank of India has topped the gainers list with expenditure on account of salaries and wages (establishment cost) declining by Rs 1,079 crore to Rs 4,933 crore. In fact, the wage bill of SBI and associates banks have declined by Rs 1,286 crore to Rs 6,633 crore in 2001-02.
Bank of India being the second largest gainer with its staff expenses dropping by 252 crore to Rs 1,087 crore from Rs 1,339 crore. Punjab National Bank follows with saving of Rs 143 crore and Canara Bank Rs 131 crore.
Other banks that showed remarkable savings on staff expenses include Dena Bank with Rs 112 crore, Bank of Baroda Rs 89 crore, Bank of Maharashtra Rs 88 crore, Union Bank of India Rs 69 crore and Syndicate Bank Rs 66 crore.
The State Bank of India and its seven associated banks opted for the VRS. Among the 29 nationalised banks, only Corporation Bank did not introduce a VRS.