Financial Daily from THE HINDU group of publications
Thursday, Feb 26, 2004
Money & Banking - Manpower
Insurance VRS optees to be relieved from tomorrow
Bangalore , Feb. 25
APPLICANTS for the voluntary retirement scheme (VRS) in the four public sector insurance companies are likely to be relieved starting this Friday.
Industry sources said that in the first phase, class three employees (clerical staff) would be relieved. In the second phase, beginning all officers who had opted for the VRS would be relieved.
All the settlements would be made in cash by the four insurance companies - New India Assurance Company Ltd, United India Insurance Company Ltd, National Insurance Company Ltd and Oriental Insurance Company Ltd.
To meet the required funds to pay the VRS commitment, the PSU insurers have already liquidated some of their equity investments during the peaking periods of the equity markets. The sources said the general insurers were sellers of pivotals after the Sensex crossed the 6000-mark. The payment liabilities are unlikely to exceed Rs 500 crore for all the four insurers, the sources said. In fact all of them had already made large provisions during the last financial year itself. Consequently, the payouts were unlikely to impact the bottom lines this year, the sources said.
However, what was worrying the management was the composition of the VRS optees, which in this case saw more officer level cadre opting for the scheme as against clerical staff what the companies had preferred.
Of the total 80,000 employees in the four companies, VRS option was restricted exclusively to 68,000 employees. Around 12,000 Development Officers were kept out of the VRS scheme. Of the total staff, only 8,500 opted for VRS from the four companies.
Of the total 13,500 officers in the four companies, 34 per cent opted for VRS as against only 11 per cent of the 36,000 clerical staff.
Some of the officers, who had opted for voluntary separation, were located in key centres such as Mumbai, Delhi, Chennai and Kolkata. Bulk of the premium collection for the general insurers was from these regions.
Consequently, the business generation from the centres was likely to be jeopardised, especially at a time, when some of the large policies were coming for renewals, the sources added.
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