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VRS to cost IDBI Rs 75 cr
Rajendra Palande in New Delhi |
December 03, 2004 13:37 IST
Industrial Development Bank of India Ltd will see an outgo of about Rs 75 crore (Rs 750 million) with 425 of its 2,800 employees having opted for a voluntary retirement scheme. IDBI will write-off this amount over five years.
The scheme, which closed on November 30, was targeted at around 15 per cent of its workforce.
"Most applications will be accepted. If any application involves critical operations, we might ask the concerned employee to reconsider it," O V Bundellu, executive director, said.
The VRS was part of the process of converting IDBI from a development finance institution into a bank.
The Industrial Development Bank Transfer of Undertaking Act that paved the way for the conversion, had provided employees with an exit option in the event that they did not wish to be a part of the new banking company. Each employee would get a separation package ranging from Rs 15 lakh (Rs 1.5 million) to Rs 18 lakh (Rs 1.8 million) depending upon their years of service and cadre.
Post merger of IDBI Bank with IDBI, the staff strength of the combined entity would be around 6,000.
"The cost to income ratio (of the merged entity) would be one of the lowest in the industry. IDBI would be one of the most efficient banks with greater deployment of technology as we increase business," Bundellu said.
Meanwhile, IDBI has shortlisted a few human resources consulting firms.
"The consultant will look into the changing structure, procedures and other related matters," Bundellu pointed out.
IDBI, earlier a development finance institution, followed the pay structure in line with that of the Reserve Bank of India, he added.
Bundellu said: "In terms of cost to company, employee benefits at IDBI and IDBI Bank are nearly on a par.
"The bank offers stock options, while IDBI's pay structure includes salary plus other benefits such as housing, medical, car loans among others.
"The HR consultant will also work on streamlining the compensation structure."
The due diligence for the merger is likely to be completed by end of December. "IDBI is undertaking a due diligence on IDBI Bank and vice versa," said Bundellu.
Plans are afoot to ramp up the branch network of the retail bank. Today, IDBI has 120 branches, while IDBI Bank has 110.
The branch network of both IDBI and the Bank will be mapped and rationalised.
The idea is to ramp up the branch network of retail banking so that it covers 60-70 per cent of deposit mobilisation centres in the country, Bundellu said.