The Union Cabinet on Wednesday approved the merger of five of SBI with State Bank of India subsidiaries to create a global player
Under Prime Minister Narendra Modi the Union Cabinet on Wednesday decided to have the merger plan of State Bank of India with its five associate banks to create a global sized bank.
With the merge of SBI with all the five associates, it is expected to become a very large scale bank with an asset base of Rs 37 trillion (Rs 37 lakh crore) or over $555 billion, 22,500 branches and 58,000 ATMs. Moreover, It will have over 50 crore customers. At present SBI has about 16,500 branches, including 191 foreign offices spread across over 36 countries.
Initially, in 2008 SBI first merged State Bank of Saurashtra. After two years, State Bank of Indore was merged with it.
The Cabinet had a discussion regarding the merger proposal. It had gone to the boards of associate banks which have granted the proposals. The recommendations of the boards were considered today and the Cabinet cleared the proposal,” said Finance minister Arun Jaitley. He added that the merger will not be detrimental to the services of any employee, “It will be a smooth arrangement.”
The banks which will be merged with State bank of India are State Bank of Hyderabad, State Bank of Travancore, State Bank of Mysore, State Bank of Patiala, and State Bank of Bikaner and Jaipur. Moreover, the proposal to merge SBI with Bharatiya Mahila Bank is of under consideration and didn’t make any decision now said, Arun Jaitley. He also added that the Cabinet also approved to the introduction of a bill in the Parliament to repeal the State Bank of India (Subsidiary Banks) Act, 1959 and the State Bank of Hyderabad Act, 1956.
During the merge plan, SBI formerly approved, that SBBJ shareholders will get 28 shares of SBI (Rs 1 each) for every 10 shares (Rs 10 each) held. Similarly, SBT and SBM shareholders will get 22 shares of SBI for every 10 shares.
The merge of SBI with associate banks results in periodic savings, and it also estimated to have more than 1,000 crores in the first year, through a combination of greater operational efficiency which results in the cost of reduction of funds.