State Bank of Indore, State Bank of Patiala to merge with SBI

O.P. Bhatt, Chairman, State Bank of IndiaAfter having tested the waters with the merger of one of its unlisted associate banks, State Bank of Saurashtra, with itself, SBI is now preparing the ground for a merging the operatuions of  two more of its associate banks - State Bank of Indore and State Bank of Patiala.

The merger of these two SBI associate banks with the parent will begin after the government completes the groundwork.

The government would have to present a new bill called the SBI Subsidiary Bank Amendment Bill 2008 in Parliament before granting SBI final approval on the merger. The finance ministry is likely to introduce changes in the SBI Subsidiary Act through the proposed Bill to ensure no requirement for amendment in the Act each time a subsidiary is merged with the parent bank.

A finance ministry spokesperson said that the process will start once everything is stable and SBI is able to handle the pressures of integrating the operations of the associate banks with itself.

This will lead to the merger of other unlisted associate banks with SBI. The government, in the first phase is giving priority to the merger of only 100-per cent owned subsidiaries of SBI. Of the associate banks, SBI owns 98.05 per cent of State Bank of Indore, while it is 100 per cent in State Bank of Patiala and State Bank of Hyderabad. In other associate banks, it has diluted its stake through listing them on different stock exchanges.

A senior SBI official said that the bank had completed the integration process of SBS and after the integration of its other associates, would able to compete better with its global peers.
Earlier this year SBI successfully integrated State Bank of Saurashtra's operations with itself this year aftter the union cabinet's  aproval in August last year (See: Finance ministry clears SBI-SBS merger; bank employees plan protest