01 November, 2020

A Run On Banks

The immediate aftermath of the VRS has been bleeding bottomlines and a manpower shortage

Gireesh G.V
A Run On Banks
When the government rammed through a voluntary retirement scheme (vrs) in public sector banks in early 2001, several experts had feared that the scheme may boomerang on these resource-scarce, slothful organisations. Only a few months on, the stress is showing in most banks as they desperately try to cope with the hard life after vrs.

While bank managements are trying to tackle the sudden shortage of finance and manpower, employees are faced with an uncertain future. Even those who took the golden handshake are rechecking the fine print in their retirement documents, and some are still awaiting part of the bonanza.

Most public sector banks have been working with slim bottomlines—for some, even these small margins would disappear were one to take into account the non-performing assets (NPAS, bad debts in simple English). True, some banks have experienced a drop in operating costs after vrs but overall efficiency levels and output have been hit. The ex-gratia outgo on vrs has taken the bottom out of their reserves. In fact, the total cash outgo of all banks on account...


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