"Even if you do not think of an exit policy, we can have a VRS. It is an important item of cost reduction. "There will be a one shot cost escalation but the recurring cost burden can be got rid off," Pannerselvam says in an article. However, any staff reduction must follow privatisation, the IBA chief says in an article in "Focus", the bi-monthly corporate magazine of public sector Central Bank of India. On the second generation reforms, he feels hard decisions relating to an exit policy, re-capitalisation of good banks and disinvestment with an intention to privatise are required."These are all crucial decisions, requiring tremendous political will power, and the future reforms should be in this direction," he says.

While assigning a monitoring role for the IBA, its chief feels that the role of unions in running banks would further reduce in the days to come.

"The writing is on the wall. To say that unions are goingto run the banks in the country is now gone," says the IBA Chief, who also is chairman of Union Bank of India.