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PSU insurers may reject some VRS applications

C. Shivkumar

"If the exit of some personnel is injurious to the organisation, we have the option of rejecting them."

Bangalore , Jan. 30

ALARMED by the response to the voluntary retirement scheme (VRS), the four public sector insurance companies have indicated that some of the applications may not be accepted.

The four companies — New India Assurance Company Ltd (NIACL), National Insurance Company Ltd (NICL), United India Insurance Company Ltd (UIICL) and the Oriental Insurance Company Ltd — had notified the VRS early this month , with the intention of shedding at least 10 to 12 per cent of the 78,000-strong workforce.

The offer is valid for 60 days, till the end of next month. But within the first 15 days almost 8,500 applicants opted for the VRS, which is close to the target.

What has made them nervous is that about 60 per cent of the applicants are from officers / technical cadres, critical to the growth of the respective organisations. Officers comprise about one third of the employee strength. Only the remaining 40 per cent of the applicants are from the clerical and administrative staff.

The primary purpose of the VRS was to effect a reduction in this category.

Speaking to Business Line, Mr H.S. Wadhwa, Chairman and Managing Director of NICL and Chairman of the General Insurers Public Sector Association (GIPSA), said, "If the exit of some personnel is injurious to any of the organisations, we have the option of rejecting them." What has also made the insurers sit up was the fact there were a large number of applicants from the Mumbai, Delhi, Chennai and Ahmedabad regions. At least 30 per cent of the business volumes come from the Mumbai region, where the private sector has failed to make a dent.

Fearing that the exodus would impact future business growth, at least one of the insurance companies has begun pushing for a foreclosure of the offer. However, Mr V. Jagannathan, Chairman and Managing Director of the UIICL, said: "Where is the need for foreclosure? " Any foreclosure at this stage, he said, would defeat the fundamental purpose of the offer he added. He said only after all the applications had been made would the insurers be in a position to "cherry pick."

Initial estimates made by the GIPSA were that the bulk of the employees in the age category of 55 plus would prefer an exit. These included employees who had opted for the pension schemes. But industry sources said applicants so far were officers above 40 years but below 55 years. As a result, two of the public sector companies have initiated "stop loss" measures to ensure retention of their respective skill pools. This included working out accelerated promotions for the experienced/skilled personnel and more favourable compensation package after the conclusion of wage negotiations.

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