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A B S T R A C T
The advanced nations have adequate social security measures including unemployment insurance. As
such their voluntary retirement schemes have a smooth sailing. Further, in these countries, greater
transparency is clearly visible in the implementation of VRS. But in developing countries like — India,
the above stated elements are absent due to various reasons and also due to the special circumstances
prevailing here. (U.P.)
INTRODUCTION developed and developing nations like — USA, Canada,
It is estimated that, out of the 8.83 Iakhs employees Japan, India etc. opened up their economies to the
in 27 Public Sectors Banks, 2.5 lakhs are surplus. The market forces resulting in free flow of trade among the
federation of Indian chambers of commerce (ICC) and countries. India also is in tune with the global trends
Industry stated that the banking industries were over and undertook reforms process which is popularly
staffed by 35%. The Govt’s own estimate put the figure known as Liberalization, Privatization and Globaliza-
at around 30%, Hence, the major options before the tion in the early nineties. With the introduction and
PSB’s are retrenchment or VRS. But the policy of re- implementation of these reforms, the Indian industries
trenchment has practical limitations and more painful in general and the public sector banks in particulr have
due to the fact that, prior consent of the appropriate been witnessing keen competition from private sector
authority provided in the Industrial Disputes Act is a banks. The nationalized banks have seen their market
must. According to many, VRS is the only option as it share declining from 48.5% to 46.9% in advances and
offers attractive package of benefits. It also enables from 53.8% to 53.6% in deposits between March 1999
firm to rationalize labour, strength, attain cost effec- and 2001. During the same period, the private sector
tiveness and go well into strides once again. In this banks raised their share from 10.7% to 12.3% in deposits
paper. We would like to highlight the impact of VRS on and from 7.8% to 8.1% in advances. So, the real chal-
Public Sector Banks in India The entire World is under- lenge to the PSB’s market share comes from the new
going transition. The fall of Soviet Union, the merger private sector banks most of which are going retail and
of East Germany with West Germany amply proves the are in a major expansion mode. In terms of net profit also,
same. Another important aspect of this transition is public sector banks as a whole has declined by 16%
that, various economies in the world are moving to- from Rs.5116 crores to Rs.4316 crors. According to
wards capitalism from their either present communism Narasimham Committee, the banks have authority of
or socialism, during this transition process, structural redeployment of staff, cut in operating cost and reduc-
disturbances naturally take place resulting in severe tion of work force. It is estimated that, out of 8.83 lakh
losses to the economies concerned. Besides this, vari- employees in 27 public sector banks, 2.5 lakh are sur-
ous countries in the world started reforms process plus. The Federation of InJian Chambers of Commerce
during the late eighties. As part of reforms, process the and Industry, also announced that the banking indus-