New Delhi : In a move that would turn the State Bank of India into a global-sized bank, the union cabinet has given an in principle approval for the merger of five associates – the State Bank of Bikaner and Jaipur, the State Bank of Travancore, the State Bank of Patiala, the State Bank of Mysore and the State Bank of Hyderabad — into a single entity.
The merged entity will have an asset base of Rs 37 lakh crore, with 22,500 branches and nearly 60,000 ATMs. SBI alone has 16,500 branches, including 199 offices, in 36 countries. This merger decision comes on the heels of an SBI proposal last month along with the acquisition of the newly set up Bharatiya Mahila Bank.
Bank consolidation is a part of the government’s overall approach to this crucial sector, and this idea had been mentioned by the union finance minister Arun jaitley in his budget speech. Though bank sources assert that the merger can be completed within four to five months, it would not be a smooth sailing affair. It is facing dissent from employee unions. They had called for a strike on June 28 and 29 to protest against the move. It is also likely to face political opposition as the Left parties control the bank associations.
Meanwhile, SBI Chairperson Arundhati Bhattacharya has said that the merger of SBI and its associate banks is a win-win situation for both the sides. “Currently, no Indian bank features in the top 50 banks of the world. With this merger, visibility at the global level is likely to increase. Customers of associates and subsidiaries of the Bank will also be beneficiaries,” she added.
Bhattacharya said that this merger will increase SBI’s reach and it can be expected to create efficiencies because of rationalisation of branches, common treasury pooling and proper deployment of a large skilled resource base. “Customers of associates and subsidiaries of the Bank will also be beneficiaries. Any introduction of new technology by the SBI would simultaneously be available uniformly. The scale of operations and common cost would get rationalised. Overall, the synergies being pooled at one place are going to be a big positive,” she added.
