Branches of associate banks to become SBI branches from 1 April

The merger of SBI associate banks with SBI, the country's top lender, is final and all five remaining associate banks will merge with the parent from the beginning of the next financial year, Reserve Bank of India (RBI) stated in a release today.

NPA-laden State Bank of India (SBI) will merge with similarly-placed associate banks and the newly created Bharatiya Mahila Bank (BMB), in a move that would help the country's top bank dilute its mountain of bad debt.

All branches of State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT) will function as branches of State Bank of India from 1 April 2017, RBI stated in a release today.

Customers, including depositors of SBBJ, SBH, SBM, SBP and SBT will be treated as customers of State Bank of India with effect from 1 April 2017, RBI stated.

The government of India has issued the acquisition orders of the five banks, and these were published in the Gazette of India.

State Bank of India (SBI), which carries the heaviest load of non-performing loans, will be further constrained by its five associate banks reporting a combined loss of Rs3,096 crore in the second quarter ended September 2016, on a sharp rise in provisions for stressed loans.

However, the benefits of the merger would be huge. It would result in a huge reduction of lending costs by 100 basis points within a year post this merger,' SBI chairperson Arundhati Bhattacharya was quoted as saying.

The merger would also catapult SBI, India's largest commercial bank, to the top 50 banks in the world. It is currently ranked 67th among its global peers.