Axis Bank, India’s third-largest private bank, has announced an early retirementoffer to its executives who are at the level of vice-president or above, aged over 40 years and have been with the bank for at least 10 years.
The scheme is being floated at a time when the bank is in the process of weeding out 200 executives who have been consistent underperformers, executives familiar with the matter said. The bank had floated a similar offer in 2013, but it received a lukewarm response, with only 25 executives opting for thescheme. “We periodically look at structures which need to be aligned according to the need of the bank,“ said Rajesh K Dahiya, group executive, human resources at Axis Bank.“We need to get a faster and quicker structure, a structure which is more customer-centric than hierarchy driven.“
Delivery channels for banking services are changing with the increased influence of social media and alternative channels like mobile and internet banking. In such an environment, banks prefer a younger and more agile workforce.
“Banks have established procedures for any human resource related action,“ said Abizer Diwanji, partner and national leader-financial services at EY India.
Unlike some of its peers such as ICICI Bank, the Shikha Sharma-led Axis Bank rolls out the early retirement scheme every 18 months to cut flab. “The launch of early retire options is not a trend among private sector banks. These banks are looking for younger people with the growing influence of digitisation,“ said EY’s Diwanji.
The scheme is employee-friendly, said Axis Bank’s Dahiya. “The employees get all the benefits -vested stock options, medical benefits as an employee, preferred benefits as an employee and retain all accumulated benefits. We do not have a target in mind but we expect 25-50 executives to take up the offer,“ he said.
Axis Bank has about 45,000 employees aged 30 years on average. The private lender plans to hire around 7,000 executives by the end of March 2015.
This is not the first time a private sector institution has announced an early retirement option.
In its earlier avatar as a financial institution, ICICI had introduced its first voluntary retirement scheme (VRS) in 1996-97 and the second in late 1999. In 2003, the KV Kamath-led ICICI Bank announced an early retirement offer. This VRS was largely targeted at erstwhile employees of the financial institution and Bank of Madura who could not cope with the changes and wanted a softer exit.
Source: The Economic Times
Date: 20th November, 2014