Announcing this at a press conference here on Sunday, UBI chairman & managing director Biswajit Choudhuri said the total cost on this account is estimated to be around Rs 200 crore. UBI will start receiving applications for the scheme from January 1, 2001 and the process will continue till January 31, 2001.

The bank is celebrating its golden jubilee year.According to Mr Choudhuri, 50 per cent of the VRS payment will be made in cash instantly to those opting for it, while the remaining 50 per cent will be made through bonds bearing an annual interest rate of 10 per cent.

However, Mr Choudhuri made it clear that UBI will not be able to pay immediately the arrears due following the recent bipartite wage agreement.

"The arrear payment has been deferred for two years," he said. The total arrear burden on UBI is Rs 75 crore.

The Bank Employees Federation of India (Befi) recently threatened to sue the UBI management if they officially announced the VRS before clearing the arrears. A similar warning has been given by Befi to the management of Uco Bank. The union has already filed a suit against Indian Bank, immediately after its management declared the VRS. All three are weak PSU banks.

Mr Choudhuri said apart from the proposed VRS, the bank will have to incur a hefty expenditure under two other heads namely meeting capital adequacy requirement and technological upgradation. The UBI management has earmarked Rs 300 crore for meeting the capital adequacy ratio and Rs 180 crore for technological upgradation.

To partially meet expenses, the UBI management has sought recapitalisation to the tune of Rs 300 crore from the Union government, Mr Choudhuri said.

The rest will be met through internal generation, he said.The UBI CMD said the bank has set a target of closing down around 55 loss making branches throughout the country over three years. "Out of that target, 11 branches have already been closed down, of which five are in West Bengal", he added.

During the period April-November 2000, UBI's operating profit went up to Rs 81 crore from Rs 21 crore in the corresponding period of the previous year. Deposits of the bank at the end of November 2000 crossed Rs 18,000 crore, a growth of 7.9 per cent during the period April-November 2000 or 15.5 per cent year on year (YoY) basis.

UBI's advances as of November 2000 went up to nearly Rs 6,500 crore, a growth of 17.3 per cent during the period April-November 2000 or 24.4 per cent on YoY basis. According to Mr Choudhuri, the bank's net non performing assets were reduced from 12 per cent as at the end of March 2000 to 9.6 per cent at the end of November 2000.

UBI's business per employee increased from Rs 1 crore at the end of March 2000 to Rs 1.11 crore as at the end of November 2000.

According to Mr Choudhuri, UBI's main thrust is on the reduction of NPA and recovery of overdues, besides continuous improvement of customer service and meeting the needs of retail customers in the areas of customer loans, personal loans, housing finance, educational loans and trade loans.