It is a step aimed at strengthening the sector through consolidation of public banks.
Shares of SBI and its associates rose sharply by as much as 13.5 per cent today after the Cabinet approved their merger, a step aimed at strengthening the sector through consolidation of public banks. The scrip of State Bank of Mysore soared 13.54 per cent, State Bank of Bikaner and Jaipur zoomed 10.86 per cent, State Bank of Travancore jumped 10.54 per cent while SBI gained 3.10 per cent on BSE. Seeking to create a global-sized bank, the Cabinet yesterday gave the go-ahead to the merger plan of SBI and its five associates. However, no decision was taken on the proposal to merge the Bharatiya Mahila Bank with SBI.
The merger of associate banks is likely to result in recurring savings, estimated at more than Rs 1,000 crore in the first year, through a combination of enhanced operational efficiency and reduced cost of funds, an official statement said. The two unlisted associate banks which will be merged with SBI are State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH).