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SBP: Early retirement incentive scheme

It appears that SBP's management has decided to infuse young and highly qualified personnel in the Bank

By Abdul Rahman
Sep 11 - 17, 2000

Downsizing or rightsizing of staff is talk of the day. Government is trying to reduce the staff employed in the Government Departments to curtail administrative expenditure so as to narrow the gap between its earnings and spending. During the past three decades a substantial portion of appointments were made on political grounds. It was then customary to make appointments against existing vacant posts in the Government Departments or even to make appointments by creating superfluous posts at the recommendations of Elected Representatives of constituent Assembly of the ruling party. Further in general all the elected Governments of the past tried to accommodate candidates of opposition party and offered them or their relative's lucrative jobs in Government Departments to acquire political gains at the cost of countries hard earned Resources. These activities almost continued for three decades and adversely affected country's economic growth. With the lapse of time the gap between Income and Expenditure widened and it became necessary for the country borrow more and more from abroad and International Agencies like IMF and World Bank, to contain Budget deficit. Due to piling up of Foreign Debt it has almost become impossible now to obtain further debt at soft terms. Institutions like IMF and World Bank are now reluctant to release any aid package free of any terms and conditions. Downsizing of the Staff and Restructuring of the staff has also been suggested by IMF. for controlling the budget deficit.

Present Government from the very beginning is paying acute attention for re-structuring and downsizing of staff in the Government Departments and Government owned organizations.

State Bank on the analogy of the Government also worked out an "Early Retirement Incentive Scheme" for its employees/officers with a view to reduce the number of employees of the Bank. The Scheme was very wisely prepared and introduced which offered minimum benefits to employees/officers opting for early retirement under the scheme.

Main features

1) Employees were offered at maximum 2 years salary in advance who had leave balance of two years or more. The benefit was however subject to adjustment according to leave balance available in an employee account, if his leave balances is less than 2 years.

2) Employees who had completed 25 years service were allowed to make voluntary option for early retirement under the scheme.

3) Employees leaving more than two years remaining service were not allowed any extra benefit for the remaining service. In the previous Golden Handshake Scheme of the Bank the benefit of remaining service was allowed to the retiring employees.

4) Employees retiring under the Scheme were also allowed for encashment of Medical facilities, Benevolent Fund Grant and others as follows:

a) Medical Facilities = Full Monetized Salary x 10.

b) Benevolent Fund Grant in lump sum for a period of ten years.

c) A wristwatch worth Rs.6600/- or Prize Bonds of the same value at the option of retiring employee.

d) Officers Gr.4 and above were also allowed post retirement benefits viz. Rent ceiling, Petrol ceiling, cost of newspapers etc.

The Scheme had mixed impact as only 280 options were received by the Bank out of which 274 options were accepted. However, the presumption that all the officers of 58 years age would opt for the scheme went wrong. As a number of officers, who had attained the age of 58 years and had sufficient leave balance at their credit did not opt under the above scheme.

A rough break-up of employees relieved under the above scheme is as under:

1) Assistant Directors / Asstt. Chief Managers 89
2) Dy. Directors / Dy. Chief Managers 8
3) Joint Directors 10
4) Director / Additional Directors 9
5) Officer Gr. 2 and Below 158

The break-up of approximate additional benefits excluding the normal retirement Benefits offered to the different grade officers is indicated below:











Critical assessment

The scheme can be termed as most successful from the Bank's point of view as it offered minimal financial benefits to the retiring employees. The benefit of encashment of Leave standing at the credit of the retiring employee subject to maximum of two years formed the major portion of financial benefit. Despite a little extra benefit was offered by the Bank, it was successful to reduce 274 members of its staff.

All the employees voluntarily opted for premature retirement. However, it is strange to note that on the one hand the bank is introducing early retirement scheme and on the other hand recruitment of officers is continuing. It appears that State Bank's management has decided to infuse young and highly qualified personnel in the Bank. It is premature to say at this juncture what would be the outcome of this scheme. Only time will tell what impact the scheme had on overall efficiency of the bank's personnel.