Banks told to defer VRS-II

The wage negotiation process would pick up now that a new government was in place: Bankers.

The second voluntary retirement scheme (VRS) for public sector bank employees is expected to be put on the backburner with the finance ministry advising bankers against raising the issue for the time being.

Chairmen of several banks told Business Standard ministry officials had advised them to go slow since the Left parties were the most important allies in the new United Progressive Alliance government headed by Manmohan Singh.

Bank of India and Central Bank of India had indicated they would launch a second VRS for employees and were planning to recruit specialised manpower to deal with subjects like agricultural economics and treasury operations.

The scheme was delayed after the finance ministry last year advised banks to link it to the wage settlement negotiations.

Bankers, however, said the wage negotiation process would pick up now that a new government was in place. They are expecting a 10-12 per cent growth in remuneration following the agreement with the unions. They indicated a decision was expected in around a month.

It was, however, unclear if the Indian Banks' Association would accept the demand for a second pension option for employees, as demanded by the unions. The employee associations had also demanded restoration of recruitment and promotion in nationalised banks.

The public sector banks received 126,711 applications for VRS and the expenditure incurred was Rs 10,293 crore with a provision to amortise it over five years.

Bankers said they would now have to recruit specialised manpower despite being unable to get rid of additional employees, some of whom were not required due to automation of functions at the branch level.

They said the per head employee cost for the banks would increase substantially if they had to drop the VRS plan for the time being.

The Left parties have said that even in case of loss-making public sector enterprises, the government should first take care of the interest of employees when exploring the option of closure.