A senior bank executive said the VRS is one of the ways of tackling theproblem of "surplus man power and boosting productivity" over the next twoto three years. The work force at the country's largest financialintermediary accounts for one-fourth of the industry strength.

The bank intends to reduce its manpower by adopting different strategies ofrestructuring and re-engineering," the official said adding that theproposed technology plan, which will be initiated soon, will supplement thebank's efforts.

The bank's work force will shrink by 38,000 to 1,99,000 by 2006 as a sizablechunk of employees will retire by then. "We would not like to fill theposts," the official said. Without revealing the finer details of theproposed VRS, he pointed out that the bank has not set a target forretrenchment.

"A clear picture will emerge only after the bank initiates branch-wisere-engineering and restructuring after its technology plan is in place. Theproposed foray into insurance business will also absorb more than 20,000employees," the official said.

The bank is planning to train its staff to improve their communicationskills, knowledge and attitude and boost productivity. It plans to appoint aconsultant in each of these areas to reorient the work force. Of the2,37,000 employees, there are 60,000 class officers, 1,20,000 class-IIIstaffers and another 60,000 class-IV staffers.

The finance ministry had recently directed all public-sector banks to drawup a VRS in a bid to reduce their establishment expenses by 20-50 per centand increase business per employee. "As state-run banks have the highestestablishment expenses as percentage to total expenses and lowest businessper employee compared to foreign and private-sector banks, these banksshould frame strategies to cut staff and reduce establishment costs," theministry note said.

According to the ministry, the VRS should cover those employees who have putin at least 10 years of service and aged below 50 years.

SBI plans Rs 1500cr bond issue in Feb
The State Bank of India is planning to mobilise around Rs 1,500 crorethrough a 66-month bond issue. The subordinate debt issue, which will boostthe bank's tier-II capital, is slated to be floated in February.

The capital-raising exercise is necessary to maintain the bank's capitaladequacy ratio (CAC) above 12 per cent.