The Union Cabinet on Wednesday approved the merger of State Bank of India and its five associate banks, paving way for bolstering the business operations of the state-run lending behemoth.
The merger of SBI with its associates will lead to operational efficiency within banks and will lead to reduced cost of funds, Finance Minister Arun Jaitley said at a press briefing. “SBI will become a global player post associate bank merger,” he said.
Jaitley said the proposed merger of Bhartiya Mahila Bank into SBI is still under consideration and the Cabinet did not take a decision on the matter today.
State Bank of India is the country’s largest bank, and has five associate banks, namely, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Travancore, State Bank of Mysore and State Bank of Patiala.
Earlier last year in March, SBI announced that it would merge its five subsidiaries and Bharatiya Mahila Bank (BMB) once it gets the government approval.
You may also like to watch:
The merger was expected to be completed by March 2017, but it got delayed and is now expected in the first half of next financial year. The five associate banks recorded a combined loss of Rs 789 crore in the latest quarter, widening from Rs 181 crore in the year-ago period.
SBI Managing Director P K Gupta said in an interview with ET Now that the merger would benefit the bank as there is lot of duplicity and lots of processes are same among all the companies. “There are other savings that will happen,” Gupta said to ET Now, adding that there will be more flexibility in merging of branches and merging of other operations.
As for achieving a global scale, Gupta said that SBI is still not among the top 50 banks, and even after the merger, it would be at about the top 45.