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M. Ramesh

Scheme open from April 1-7

Chennai , March 20

South Indian Bank has announced a `voluntary retirement scheme,' to further reducing the average age of its employees. The scheme would be open between April 1 and 7, Dr V.A. Joseph, the bank's Chairman, told Business Line today.

The bank has around 4,000 people and the average age is 45 years. With the introduction of core banking technology (Finacle) across 325 of its 435 branches, there is some redundancy in staff.

Last year, the bank brought in a scheme under which an employee could take an early retirement and get his son or daughter a job with the bank as compensation.

Some 60 people left the bank under this scheme. There was not only a saving in wage costs (as the new comers cost less), but there was also an increase in productivity, Dr Joseph said.

But this year, it is going to be a VRS. Dr Joseph did not want to guess how many employees could take the offer, but noted that the bank was not too overstaffed for the growth envisaged. In the current year, the bank expects to achieve a turnover of Rs 16,000 crore, with advances accounting for 75 per cent of it. Profits are likely to be good: in the first three quarters of the current year, the bank's net profit was Rs 34 crore, against Rs 8.7 crore in 2004-05 and growth has sustained through the fourth quarter.

The bank should get Rs 22.83 crore for its shares of Bharat Overseas Bank from Indian Overseas Bank — if the money comes in this year, it will be a bonanza.

For 2006-07, the bank has set itself a target of Rs 20,000 crore, which Dr Joseph describes as "difficult but not impossible." Dr Joseph said that the recent public issue had raised its capital adequacy ratio to 12.51 per cent.

In the current year, its networth will cross the Rs 600-crore mark and there will be further help from the transfer of Rs 82 crore of `Investment Fluctuation Reserve' to Tier-I capital. On capital adequacy, "we are very comfortable for the next two years," he added.

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