CASE STUDY ON SBI BRIEF EXPLAINATION OF THE CASE POST-SBI-VRS SCENARIO SBI-VRS is not as per expectation of management .. because STRATEGIES FOR PROPER STAFF COST REDUCTION Lessons from the case… CONCLUSION

1. CASE STUDY ON SBI

2. BRIEF EXPLAINATION OF THE CASE
 In 2001 SBI faced severe opposition from its employees
over VRS .
 The reason was THE INDIAN BANKING INDUSTRY
WAS OVER STAFFED BY 35%.
 The Govt. Of India wants to trim the work force and
reduce the staff cost
 As per the procedures, IBA formulated VRS package.

3.  SBI promoted the VRS plan suggested by
government.
 Employee Unions suggested that it is not a problem
of staff cost but it is a problem with NPA’’s.
 Employee Union argued that VRS might force the
closure of rural branches due to shortage of
manpower.

4.  In February 2001, SBI issued criteria for VRS.
 CRITERIA IS ONLY THOSE OFFICERS WHO HAD
CROSSED THE AGE OF 55 WOULD BE GRANTED
VRS
 12000 OFFICERS WERE REJECTED.
 Rejected employees formed an association to
oppose.

5.  The association claimed that SBI Management was
adopting discriminatory policies granting VRS.
 EFFECT :
Average estimated cost per head for implementation
of VRS for SBI and its 7 associated banks is 650000
and 570000 rupees.As a result SBI net profit
decreased from 2500 cr in 1999-00 to 1600 cr in
2000-01

6. POST-SBI-VRS SCENARIO
 FACTORS AFFECTING INTERNAL
ENVIRONMENT
SBI's total staff strength was expected to come down to
around 2,00,000 by March 2001 from the pre-VRS
level of 2,33,000 .
With an average of 5000 employees retiring each year,
analysts regarded VRS as an unwise move.

7.  By June 2001, SBI had relieved over 21,000
employees through the VRS.
 It was reported that another 8,000 employees were
to be relieved after they attained the retirement age
by the end of 2001.
 Analysts felt that this would lead to a tremendous
increase in the workload on the existing workforce.

8. SBI-VRS is not as per expectation of management
.. because
 Lead to acute shortage of manpower in the bank
 The threat of bringing down the retirement age from 60
years to 55 years was putting a lot of pressure on senior
bank officials to opt for the scheme.
 The Voluntary Retirement Scheme offered
by State Bank of India was not a compulsory
retirement scheme.
 Only those who wanted to get rid of their present
employment and venture into new field, had actually
sought benefit of this scheme.

9. STRATEGIES FOR PROPER STAFF COST
REDUCTION
 Paying The Right Price
 Decrease Cost of Facilities
 Decrease Cost of Human Resources
 Reconsider Your Cheaper Choices
 Renegotiate, Renegotiate and Renegotiate

10.  Focus on Cost of Risk and Funds
 Centralize
 Automate

11. Lessons from the case…
 A company should maintain a balance between
workforce.
 Predict the future problems and prepare for it.
 Company would have to take serious steps to
reorient its HRD policy to restore employee
confidence and retain its talented personnel.

12. 31-03-01 31-03-00 % change
Officers 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%
TABLE II
CHANGE IN SBI’s STAFF STRENGTH

13. CONCLUSION
 With the increasing pace of VRS implementation in
corporate world, the figure of legal issue is also
raised many folds.
 The various courts of India given judgements have
not only resolve the cases but also help to make VRS
more pronounced.
 Demoralize and demotivate the employees should
not be done at any point of time.