A case study on SBI

I.EXECUTIVE SUMMARY:
A.SITUATION ANALYSIS: Employee unions suggested that it is
not a problem of staff cost but it is a problem with NPA’S. Employee
union argued that VRS might force the closure of rural branches due
to shortage of manpower.
B.STATEMENT OF THE PROBLEM: The government of India
wants to trim the work force and reduce the staff cost, IBA formulated
VRS package, SBI promoted VRS plan and SBI seen a decline in the
net profit.

C.LIST OF CRITICAL FACTORS:

 By June 2001, SBI had relieved over 21,000 employees through

the VRS.
 It was reported that another 8,000 employees were to be
relieved after they attained the retirement age by the end of
2001.

C.ASSUMPTIONS:

 Paying the right price

 Decrease cost of human resources

D.SWOT ANALYSIS:

Strengths- SBI is India’s biggest bank in terms of market share, sales,

and reserves.
Weaknesses - The banks pay a large sum on their leased houses.

Opportunities - Mergers would result in a rise in market share to

protect its number one spot.
Threats - Net profit of the year decreased from 9166.05 in the year
2010 to 7.370.35 in the year 2011.

E.SOLUTIONS:

A bank should maintain a balance between workforces. Predict the

future problems and prepare for it.

F.CONCLUSION - with the increasing pace of VRS implementation

in corporate world, the figure of legal issue is also raised many folds.
Demoralize and demotivate the employees should not be done at any
point of time.

A. SITUATIONAL ANALYSIS

In 2001 SBI faced severe opposition from its employees over VRS.
The reason was the INDIAN BANKING INDUSTRY was over
staffed by 35%. The govt of India wants to trim the work force and
reduce the staff cost. SBI promoted the VRS plan suggested by
government. Employee unions suggested that it is not a problem of
staff cost but it is a problem with NPA’S. Employee union argued that
VRS might force the closure of rural branches due to shortage of
manpower. In February 2001, SBI issued criteria for VRS. Criteria is
only those officers crossed the age of 55 would be granted VRS. The
association claimed that SBI management was adopting
discriminatory policies granting VRS. The Effect is average estimated
cost per head for implementation of VRS for SBI and its 7 associated
banks is 650000 and 570000 rupees. As a result, SBI net profit
decreased from 2500 crore in 1999-2000 to 1600 crore in 2000-2001.
VRS is not as per expectation of management because it led to acute
shortage of manpower in the bank. The threat of bringing down the
retirement age from 60years to 55years was putting a lot of pressure
on senior bank officials to opt for the scheme. The voluntary
retirement scheme offered by state bank of India was not a
compulsory scheme. Only those who wanted to get rid of their present
employment and venture into new field, had sought benefit of this
scheme.

B. STATEMENT OF THE PROBLEM (OR) FORMULATION

OF THE PROBLEM

The government of India wants to trim the work force and reduce the
staff cost, IBA formulated VRS package, SBI promoted VRS plan
and SBI seen a decline in the net profit.

C. LIST OF CRITICAL FACTORS (OR) FACTS

1) SBI total staff strength was expected to come down to around
2,00,000 by March 2001 from the pre-VRS level of 2,33,000.

2) with an average of 5,000 employees retiring each year, analysts

regarded VRS as an unwise move.

3) By June 2001, SBI had relieved over 21,000 employees through the
VRS.

4) It was reported that another 8,000 employees were to be relieved

after they attained the retirement age by the end of 2001.

5) Analysts felt that this would lead to a tremendous increase in the

workload on the existing workforce.

D. ASSUMPTIONS
I feel some of the strategies can be used for proper staff cost reduction

1) Paying the right price

2) Decrease cost of facilities

3)Decrease cost of human resources

4) Centralize

E. SWOT (OR SWOC) ANALYSIS

Strengths
1) SBI is India’s biggest bank in terms of market share, sales, and
reserves.

2) SBI has been ranked in the Fortune Global 500 list.

3) According to recent reports, the bank has more than 22141

branches and 58555 ATM’S.

4) The owner of the SBI is govt of India.

Weaknesses

1) The lack of adequate technology-driven infrastructure relative to

private banks.

2) The banks pay a large sum on their leased houses.

3) SBI has the largest number of employees in the banking sector, so

that it uses most of the amount for the salary of employees.

Opportunities
1) The merger of SBI with five other banks, namely the state bank of
Hyderabad, the state bank of Patiala, the state bank of Bikaner and
Jaipur, the state bank of Travancore and the state bank of Mysore, is
at the approval stage.

2) Mergers would result in a rise in market share to protect its number

one spot.

3) SBI aims to expand and invest in foreign activities due to a strong

inflow of capital from the Asian economy.

Threats

1) Net profit of the year decreased from 9166.05 in the year 2010 to
7.370.35 in the year 2011.

2) This indicates that the market share of its close rival ICICI is that.

3) Customers prefer to switch to private banks and financial service

providers for loans and mortgages, as SBI involves strict verification
procedures and takes a long time to process.

F. Solutions for the questions in the case study

A bank should maintain a balance between workforces. Predict the

future problems and prepare for it. Company would have to take
serious steps to reorient its HRD policy to restore employee
confidence and retain its talented personnel.

G. CONCLUSION

1) with the increasing pace of VRS implementation in corporate

world, the figure of legal issue is also raised many folds.
2) The various courts of India given judgements have not only resolve
the cases bust also help to make VRS more pronounced.

3) Demoralize and demotivate the employees should not be done at

any point of time.

H. REFERENCES

https://www.slideshare.net

I. APPENDIX