HSBC India kicked off its second voluntary retirement scheme for banking assistants and non-clerical staff on Monday.

The scheme is open to those who have either completed 10 years of service or attained the age of 40.

Based on these eligibility criteria, as many as 50 per cent of the 1,600 staff at these levels qualify.

Industry sources said the bank is looking at bringing down the average age profile of its staff to less than 40 years.

Employees are being offered 10-year pay based on their gross salary against most banks' VRS package, which is based on basic plus dearness allowance.

As a result, HSBC employees opting for the scheme will not be able to get the Rs 500,000 income-tax rebate against the full sum, as has been allowed by the department in the case of other separation schemes.

"Having evaluated our package, and finding the scheme to be better than that outlined under the Income Tax Act, we did not need to go to the department for approval," HSBC spokesperson said. This means the entire severance package will be taxed at 30 per cent.

Even then, the HSBC's package has been described as the best in the industry in recent times with employees getting about Rs 10-35 lakh (Rs 1-3.5 million) each, net of tax.

A well-known investment professional said the package is 1.8 times better than any offered by other banks in the country.

Even at current interest rates, should employees put the entire sum in bank savings, they will still be able to get a monthly sum almost equivalent to their current salaries, industry sources said.

The response from the employees is expected to be favourable and there has been a huge number of employees rushing to take advantage of the early bird scheme.

This offers an additional few lakhs to those who avail of the scheme within the first week. Based on the response received, the management has told employees that the early closing date of the scheme could be July 19. Otherwise, the scheme will continue till July 31.

HSBC has undertaken this exercise to improve efficiency in the bank's operations. It has invited representatives from private sector insurance companies and direct marketing agencies to counsel employees who will be looking for jobs on leaving the bank.

"HSBC is a fair and reasonable employer. It may need to make changes in light of technology and development in the country," said a spokesperson of the bank.

Most foreign banks in the country have been cutting down on clerical staff and outsourcing various departments to other agencies.