State Bank of India – The VRS Story

By:Harshala Salunke (Roll No.86)Mahesh Toraskar (Roll No. 112)

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Overview Competition Right sizing Strategy (VRS) Reason for redesigning the VRS Post VRS Scenario Consequences Conclusion

Overview Origin – Establishment 1806 State bank group 1-State Bank of Bikaner and Jaipur (SBBJ)

2-State Bank of Hyderabad (SBH)3-State Bank of Indore (SBIR) 4-State Bank of Mysore (SBM) 5-State Bank of Patiala (SBP) 6-State Bank of Saurashtra (SBS) 7-State Bank of Travancore (SBT)

Overview

SBI India’s largest public sector bank

In terms of—Reach-Network of branches Customer Base-RevenueExperience-Workforce

Services Offered

Paradigm Shift

Technological Advancements -Computerization -Internet Banking -ATM’s Banking Dynamics

Competition

Comparison between SBI & some NPBs. Bank NPAs /NET

AdvancesProfit per employee(Rs.in mn)

SBI 7.18% 0.43

HDFC 0.77% 0.96

UTI 4.71% 0.69

ICICI 1.53% 0.78

GTB 0.87% 1.2

IDBI 1.95% 1.15

Right sizing Strategy (VRS)

To protect business To remain profitable To reduce cost of operations To get rid of the dead woods

VRS Package & response Eligibility – 15 Years of service /

greater than 40 years as on March 31,2000

60 Days of Salary for every completed year of service or salary to be drawn by for the remaining period of service whichever is lower.

Total 35,000 Applications 19,295 were officer ( 33 % of Total Officers)

Reason for redesigning the VRS

Reason To restrict the huge out flow of officers Competence gain by competitor To maintain balance between workforceProcess Fixing age bar (increased to 55yrs from 40 Yrs)

Eligibility criteriaCriticism Formation of SBIVRS optee Officers Association

Post VRS Scenario

SBI merge 440 loss making branches Reduced regional offices from 10 to 1 or 2 A single officer had to take care of 3 or 4

branches Acute manpower shortage in departments

like internal audit, monitoring, inspection of borrowers

Lost experts to competitors

31-Mar-01 31-Mar-00 % changeOfficers  52,558  59,474  -11.63%Clerical  103,993  115,424  -9.90%Subordinate  53,729  58,535  -8.21%Total  210,280  233,433  -9.92%

Consequences

VRS outcome

Stress Among employee

Required more Working capital

Reason

POOR HR POLICY

Conclusion

SBI objective of VRS were defeated1) To get rid of the dead wood2) Improve functioning of organisation The VRS strategy demoralized and

demotivated the existing employee by fear of increasing work load

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