Following the conclusion of VRS on March 31, the bank is left with 1,370 employees out of a total strength of 2,700. Over the past few years, the bank has been able to shed around 2,000 employees through voluntary retirement schemes.

Christened early separation scheme (ESS), the package offered an average retiral benefit of Rs 17.5 lakh. The minimum retiral benefit received by the unionised staff was Rs 6 lakh, while the maximum benefit was to the tune Rs 23 lakh. For managerial staff, maximum benefit was Rs 24 lakh. StanChart's human resource chief Mohan Kumar attributes the success of VRS to the `human approach' of the bank. "We did sensitivity analysis ofthe situation, advised employees on how to invest the money and in certain cases, helped them in placements elsewhere through recruitment agencies," Kumar told The Financial Express. "There were large-scale protests against the VRS externally from various unions. However, within the bank, it was a smooth affair with employees voluntarily retiring and investing money through tax advisers that the bank had hired," Kumar pointed out.

The bank floated two schemes, one for those who completed 10 years of service or reached 40 years of age,the second for those who have not completed 10 years of service or 40 years of age.

"The ESS was the result of a global policy of the bank to divide the banking business into three compartments, sales and marketing, products division and the service division. This has resulted in redefining certain parameters like the number of people, skills of employees and nimbleness of the employees to be redeployed," Kumar said. StanChart had started technological upgradations at a costof Rs 400 crore from 1997 as a prelude to the VRS.

INSIGHT

This is the second attempt by Stanchart' to reduce its work force. Citibank is also reported to be looking at reducing its work force by 11 per cent. The MNC banks are sending a signal that profit margins will increasingly come under pressure in the future. But it is the public sector banks that really need to restructure their operations and reduce their bloated work force. The pinch of tighter spreads will be first felt here. The ability to restructure their workforce will be the crucial factor for the long-term survival of these banks.