Employees of five associate banks to be merged on April 1 would get 50% of the pay for the residual years of service

In a bid to trim the bloated workforce, State Bank of India (SBI) has tailored a golden handshake for employees of its five associate banks that would see an average payout of Rs 12 lakh to Rs 15 lakh.

Under the bank's voluntary retirement scheme (VRS), the employees would get 50% of the pay for the residual years of service, subject to a ceiling of 30 months of salary. Employees who have attained 55 years of age or completed 20 years of service can avail the scheme.

The move, aimed at correcting redundancies, is expected to find takers.

Though there is the prospect of salary upgradations matching the parent, the fear of relocations looms large on employees' minds.

The associate banks have a total strength of 73,268 employees while SBI's staff strength is at 200,820. SBI has a high attrition rate, with 12,748 leaving the bank during the current financial year. The bank has also recruited about 7,000 employees.

A senior SBI official told DNA Money, "The (proposed) scheme has gone to respective Boards and it will be handed out to the employees by the respective management post the merger. We have not undertaken any study on how many employees will be redundant. As the process of integration takes place, we will see how the scheme is taken by the employees."

Last week, SBI notified stock exchanges that it would merge five of its associate banks effective April 1, 2017. The SBI official said all associate bank branches would soon flaunt the SBI logo but the ATMs would take some time to undergo the change.

Though SBI said that they have no number in mind on how much staff they would like to reduce, it is but inevitable that the staff strength has to be pruned in such a big merger. The employee cost of the merged entity will certainly go up.

After the merger, SBI will have a combined balance-sheet size of Rs 41 lakh crore, with 22,500 branches and 58,000 ATMs servicing over 50 crore customers. SBI has 16,500 branches including 191 foreign offices spread across 36 countries. The associates have a total deposit base of Rs 5 lakh crore and 8,964 ATMs across India.

The five associate banks have cumulative stressed loans (gross NPAs and restructured loans) at a staggering Rs 35,396 crore level. While SBI's restructured and gross NPA was about Rs 1.42 lakh crore. The combined entity will have a stressed asset base of over Rs 1.77 lakh crore.

Following the merger, officers and employees with the exception of the Board of directors and executive trustees of the associate banks will become employees of SBI. The first step would be to enact the swap of shares for all the shareholders of the associate banks in 30 days.

For every 10 shares of State Bank of Bikaner and Jaipur, the shareholders will receive 28 shares of SBI. For every share of State Bank of Mysore and State Bank of Travancore, investors would get 22 shares of SBI. Subsequently, shares of the merged banks will be delisted from stock exchanges.