The Reserve Bank of India kicked off a voluntary retirement scheme -- christened Optional Early Retirement Scheme -- on August 16.

Even though the RBI has not indicated the target for the OERS, sources said the central bank is likely to shed flab from its highly over-manned currency department.

All employees of Class I, III and IV are eligible for the scheme. It is applicable for employees who have completed 25 years of full-time regular service and also completed 50 years of age as on August 1, 2003.

However employees who have executed bonds for  serving the bank for specified number of years will not be covered under the scheme if they have not completed the bond period.

The scheme was introduced on August 16 on an experimental basis. The scheme does not have a closing date but the RBI can withdraw the scheme after watching the response for some time and after giving a minimum one-month notice.

Besides the regular superannuation benefits such as pension, gratuity, the employees who will opt for OERS will get 60 days of salary for every completed year of service or the basic pay and dearness allowance for the entire residual service  -- whichever is less. Income tax will be deducted at source on the entire amount payable as ex-gratia.

As the RBI intends to control the outflow according to its requirements, it retains the discretion to limit the number of employees allowed to retire in each category of staff (officers/ Class III and IV employees) to be covered under OERS.

As retirement under OERS is optional, the employees seeking retirement under the scheme will not be eligible for any retrenchment compensation payable under the provisions of the Industrial Disputes Act.

An internal RBI note said in the case of an employee whose application for retirement under OERS is accepted, the employee will be permitted to retain the bank's leased flat beyond the date of retirement for a maximum three months. The ex-gratia amount and other dues will be paid only after the employee hands over vacant possession of the flat.