With nine months to go to complete the merger process involving its associates, SBI is working on details of the amalgamation proposal, which will be submitted to the government soon for approval.
The Cabinet earlier this month gave in-principle approval to merger of the five associate banks and Bhartiya Mahila Bank with the State Bank of India.
“The bank has started negotiation process with the six different entities after getting in-principle clearance from the Cabinet. Once the amalgamation plan is ready, it will be submitted to the government for the final nod as per the Section 35 of SBI Act 1955,” a senior government official said.
Section 35 states terms and conditions relating to such acquisition, if agreed upon by the Central Board of the State Bank and the directorate or management of the banking institution concerned and approved by the Reserve Bank, shall be submitted to the central government for its sanction and that Government may by order in writing accord its sanction.
It is expected that they should submit the detailed plan in the next few weeks as a dedicated team from SBI is working on this, the official said.
The entire merger process should complete in this financial year, the official said.
SBI has five associate banks — State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. Of these, State Bank of Patiala and State Bank of Hyderabad are unlisted.
The proposed merger will likely create one of the largest lenders in Asia.
The merged entity will create a banking behemoth, which can compete with the largest in the world, with an asset base of Rs 37 lakh crore or over USD 555 billion. SBI alone has close to 16,500 branches, including 191 foreign offices, spread across 36 countries.
SBI could consider merging all the lenders with itself at one go or stretch the process with one lender at a time, the official said, adding that those details are being worked out.
The last merger of its associate State Bank of Indore took about 55 weeks, but it would be significantly less this time, the official added.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged.