The Cabinet on Wednesday approved the merger of State Bank of India (SBI) and its associate lenders. This will make the state-owned lender a global-sized bank.
Last month, India’s largest lender SBI mooted the proposal for a merger of its five subsidiary banks with itself and the acquisition of the newly set up Bharatiya Mahila Bank.
SBI has five associate lenders – State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.
SBI Chairperson Arundhati Bhattacharya said the merger is a win-win for both the sides.
Currently, no Indian bank features in the top 50 banks of the world. With this merger, some visibility at the global level is likely to increase. The customers of associates and subsidiaries of the Bank will also be beneficiaries.Arundhati Bhattacharya, SBI Chairperson
She further said with this merger, the SBI network will increase and its reach will multiply. One can expect efficiency to be created through rationalisation of branches, common treasury pooling and proper deployment of a large skilled resource base, Bhattacharya said.
Any introduction of new technology by SBI would simultaneously be available uniformly. The scale of operations and common cost will get rationalised. Overall, the synergies being pooled at one place are going to be a big positive.
Among the associate banks, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed.
Their shares jumped nearly 20 percent on benchmark BSE on Wednesday and hit their respective upper circuit limits towards closing of the trading session. The SBI stock was up by 3.9 percent.
The merged entity will become a banking behemoth, which could compete with the largest bank in the world, with an asset base of Rs 37 lakh crore, 22,500 branches and 58,000 ATMs. It will have over 50 crore customers.
(With PTI inputs)
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