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Will the SBI merger result in job cuts?

Apr 21, 2017 15:14 IST

As proposed last year by the SBI Board, the largest lender of the country is soon going to subsume the five associate banks in its fold since the Finance Ministry has also approved of the same. This is going to create a combined entity that is going to have a balance sheet size of Rs 37 lakh crore and an employee base of around 3.25 lacs. The number of branches is expected to touch around 19000 in India and abroad for the new entity. This has created a fear in the minds of the employees that many will lose their jobs due to rationalisation of expenses and operational guidelines. However, both SBI and Finance Ministry have time and again reiterated that there will be no job loss due to a merger in the banking sector.

SBI Merger: The Real Picture

SBI is going to become a single entity with all the associate banks as well as Bharatiya Mahila Bank getting merged into it. It will create a balance sheet of 37 lakh crore for the combined entity and the real estate price will be 3500 crore to 4500 crore after the merger. Many are apprehensive about the merger thinking about the duplication of posts resulting in job loss. However, the scenario is completely different:

  • Retirement is going to eat a lot of skilled employees: Well not literally but if you look at the retirement picture in all these banks you will see a number close to 15000 retiring every year creating vacancy and these posts need to be filled up by the management.
  • Recruitment from market will decrease: This is going to be a reality since there will be surplus staff in the combined entity and this may affect further hiring from the market. There is a possibility that the vacancy decreased at the PO level for next few years.
  • Rationalization of branches: Branches need to be closed down in many areas since you will see many branches of both SBI and any of the associated bank together at a place and after the merger, these branches will have to be closed down resulting in less requirement of staff.
  • Customer base will increase and so more staff required: With the combined entity being the largest in India, the customer base will increase as well and serve them a huge number of employees will be required. However, with many more employees coming into the SBI fold, no fresh hiring is expected to meet this demand.
  • The SBI brand will attract more customers and more credit growth: With the combined entity being the largest, it will be able to provide more credit to customers as well more improved service to them. This can be done using the existing technology only and no need to do something in this regard.
  • There will be challenges at HR level: HR Level challenges will be the biggest ones due to this merger. They need to create new areas and designations to accommodate people. They need to come out with comprehensive VRS package to attract more employees towards it. HR needs to chalk out a strategy to close down branches and re-deployment of staff in other areas. It is not possible to please everybody but there should be enough on everyone’s plate so that nobody gets injustice.

The SBI Merger in the short run may decrease the level of recruitment done in the banking behemoth. It will take at least 1-2 years to sort out things after the merger so that the management can take a concrete decision regarding employee rationalisation in the new entity. In the short run, get ready for very few vacancy at SBI but with retirements coming up, this scenario is going to change very soon as well.

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