Voluntary Retirement For Govt Bank Employees Before Privatization? Is This Fair?
In an effort to trim the fat, two state-owned banks set to be privatised will likely offer a voluntary retirement scheme (VRS).
The scheme is not intended to force employees to leave but rather provides an option to retire early with financial benefits.
This practice has been done in the past before some PSBs were consolidated.
The Niti Aayog has put forward some names for privatisation in front of a Cabinet Secretary Rajiv Gauba-headed panel.
The Deciding Panel
The esteemed panel includes high-profile position holders such as economic affairs secretaries of revenue, expenditure, corporate affairs, legal affairs, Department of public enterprises, secretary department of Investment and Public Asset Management (DIPAM) and the secretary of administrative department.
The recommendations include Central Bank of India, Indian Overseas Bank, Bank of Maharashtra and Bank of India.
The onus lies with the Core Group of Secretaries on Disinvestment to consider the entities to be privatised.
After the Core Group settles on a name, the next step is to go to the Alternative Mechanism (AM) for clearance.
The final step is the Cabinet headed by Prime Minister Narendra Modi who will eventually decide on a candidate.
After the final nod, some regulatory changes will have to be made so as to expedite privatisation.
RBI will also be involved in discussions with the govt on the matter.
Rs 1.75 lakh crore has been budgeted from the sale of stake in PSUs and financial institutions in the current financial year.
The amount has taken a dip from the Rs 2.10 lakh crore which was raised in the previous fiscal from Central Public Sector Enterprises (CPSE) disinvestment.
IDBI Bank Next To Be Sold
Along with PSBs, IDBI Bank will also be put up for sale.
The Union Cabinet gave its approval for strategic disinvestment of IDBI Bank and control of its management to be transferred.
The Indian govt and LIC combined own 94% of equity of IDBI Bank. LIC itself owns stake of 49.21% as promoter with management control.
Bank Unions Oppose Decision
Bank unions have challenged privatisation by going on a two-day strike in March.
They have also gone on social media and have slammed privatisation as a retrograde move by the govt.
The unions are of the opinion that public sector banks do have a place in today’s world as they have had a hand in the success of national schemes such as demonetisation, Jan-Dhan Yojana, Mudra Yojana and PM SVANidhi (Street Vendor’s AtmaNirbhar Nidhi).
PM SVANidhi is a micro-credit scheme which assists street vendors in procuring loans with low interest rates for a year.