Nearly five percent of staff at the bank have quit in the past few months after the proposal to merge with IndiaBulls Housing Finance was turned down by the regulator, the official said. But despite the exits, the bank is facing about 10-12% rise in wage bill on account of Indian Banks’ Association’s (IBA) 15% wage hike proposal in bipartite wage talks with bank unions.
The bank’s staff expenses for the December quarter were Rs 105 crore. Payments to and provision for employees amounted to Rs 402 crore in FY19. The bank’s bad loan spiraled to as high as 23.27% and capital adequacy ratio fell to 3.46%, against the regulatory minimum of 9%. The Reserve Bank of India placed the bank under prompt corrective action in September last year.
When asked, interim chief executive officer S Sundar declined to comment on the action being taken on senior executives.
He, however, said that the bank does not want to go overboard in pruning staff strength and might have a re-look at hiring once the business volume rises.
He said about 250 people left the bank in the past few months from a tally of around 4,800.
Sundar said that despite the lower strength, the wage bill may rise as salary for about 60% of the LVB staff would be revised as per the bipartite talks between IBA and bank unions. They also get dearness allowances in periodic intervals while for remaining ones, there had been no increment for the last two years as the bank was facing financial stress.
“Wherever we found performance was less than expected, not question of non-performance, even when the performance was less than expected, we gave them some time and if they could not improve, then they have to leave," Sundar had told analysts in a post-earnings call on February 14 .
The expansion of the digital platform also helped the lender rationalize the staff requirement.
“Wherever we found in the administrative office, head office or regional office, we found staff strength is more, we are redeploying them to the branches because now my concentration goes to branches, we have given them good targets and this is being actively followed up for improvements on both advances and deposits,” Sundar had then said.
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