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SBI plans job cuts after IT project

State Bank of India, the country's largest commercial bank, will cut its huge workforce after introducing technology to link a third of its sprawling branch network, its chairman said on Monday.

State-run SBI, which accounts for a fifth of the Indian banking industry in terms of both deposits and loans, has nearly 200,000 employees at its 9,000 branches.

"There may be some redundancy, and a need to retrain and 'reskill' staff after the project is implemented in the next two to three years," Janki Ballabh told Reuters.

"The job losses are not going to happen in the next six months," he said, declining to say what percentage of staff would become redundant.

Analysts estimate about 30 per cent of its staff could lose their jobs after the technology project is implemented.

In contrast SBI's chief rival, tech-savvy private sector ICICI Bank, plans to hire more staff.

With an asset size one-third of SBI's Rs 3.16 trillion, ICICI Bank has just 7,800 employees but needs more to support its fast expanding retail operations.

NETWORK UPGRADE

Staff costs were 21 per cent of SBI's total expenditure in the nine months to December 2001, against an industry average of 18.5 per cent and compared to 3.6 per cent for new private banks such as ICICI Bank.

Earlier this month, SBI hired Tata Consultancy Services, Asia's largest software services firm, to upgrade technology and link 3000 branches at a cost of Rs 1.5 billion over three years.

Currently, about a third of its branches are computerised and only 800 are networked.

SBI plans to double its automated teller machines to more than 2,000 in the current year, and will spend another Rs 3.5 billion over the three to five years to network more branches and further expand its ATMs.

"SBI will try to rein in staff expenditure costs after spending such a huge amount on technology," an analyst in a foreign brokerage house said.

Last year SBI, which suffers a bloated workforce like all state-run banks, offered an early retirement scheme which saw 10 per cent of its staff leave.

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