Billed as the second largest staff reduction exercise in the Indian financial sector, the scheme is estimated to cost the four PSU general insurance companies a cool Rs 1,100 crore, industry sources say. Top sources in the industry told FE that: the draft scheme called the General Insurance Emplo-yees Special Voluntary Retire-ment Scheme, 2003 has been approved by the board of all the four PSU non-life companies.
The scheme, once notified by the finance ministry, will benefit nearly 10 per cent to 15 per cent of the 80,000 odd employees of the four companies, the sources said.
The scheme, once notified, would be open for a period of sixty days.
As per the draft scheme, employees opting for the special VRS would be entitled to an ex-gratia of 60 days salary for each completed year of service or salary for the number of months of remaining service. Salary would include basic pay, dearness allowance and fixed personal allowance.
Besides, they are entitled to other benefits such as provident fund, gratuity, pension and leave encashment. Permanent full-time employees who have crossed 40 years of age are eligible to opt for the scheme.
According to sources, the scheme if implemented, would entail an average outgo of Rs 6 lakh to 7 lakh per employee. This would translate into an overall outgo of Rs 1,100 crore for all the four companies if the number of VRS applications are on expected lines.
The compensation to the VRS optees would be provided in parts. About 50 per cent of ex-gratia would be paid in cash and the balance would be paid either in cash in full or in instalment or in the form of bonds or fixed deposits, depending on the respective boards decision. The ex-gratia would be paid to the optee within 45 days from the date of his/her relieving.