Cabinet clears SBI's merger of associate banks, BMB
15 June 2016
The union cabinet today gave the go-ahead for the merger of the State Bank of India (SBI) and its five subsidiaries and the newly-created Bhartiya Mahila Bank, in a move to create a banking behemoth with a presence in every nook and corner of the country.
The five subsidiaries include State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore. The Bhartiya Mahila Bank is a new outfit created exclusively for women with the government subscribing Rs1,000 crore to its capital.
The merged entity will have an asset base of Rs37,00,000 crore (over $555 billion), 22,500 branches and 58,000 ATMs and a customer base of over 500 million.
At present, SBI has close to 16,500 branches, including 191 foreign offices spread across 36 countries.
SBI is reported to have already moved ahead with the plan for merger of its five subsidiary banks with itself and acquisition of the newly set up Bharatiya Mahila Bank.
"Kindly await a structured briefing on that," telecom minister Ravi Shankar Prasad said when asked if the cabinet approved the merger of associate banks with the SBI.
The merger would create a global-sized bank, creating a win-win situation for both SBI and the merged banks, according to SBI chairperson Arundhati Bhattacharya.
"Currently, no Indian bank features in the top 50 banks of the world. With this merger, some visibility at global level is likely to increase. Customers of associates and subsidiaries of the Bank will also be beneficiaries," she said.
The merger will help SBI further increase the network and multiply its reach. Besides, she said, rationalisation of branches, common treasury pooling and proper deployment of a large skilled resource base will create efficiencies, Bhattacharya said.
"Customers of associates and subsidiaries of the Bank will also be beneficiaries. Any introduction of new technology by 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.
Among the associate banks, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed.
The merged entity will become a banking behemoth, which could compete with the largest in the world, with an asset base of Rs 37 trillion (Rs 37 lakh crore) or over $555 billion, with 22,500 branches and 58,000 ATMs. It will have over 500 million customers.
Presently SBI has close to 16,500 branches, including 191 foreign offices spread across 36 countries.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged with it.