Thursday , August 17 2017

SBI Merger with its Subsidiaries would Improve Bad Loan Scenarios

SBI Chairman Arundhati Bhattacharya affirms no more bad loan surprises after the subsidiary merger to the parent bank.

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Senior executives of State Bank of India told that the bank after merging five subsidiary banks with itself expects to see no bad loans in future. The nation’s top lender by assets, SBI made the deal of merging its subsidiaries in order to help it save costs and gain profit.

The government-driven merger of subsidiary banks of SBI State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore,  State Bank of Patiala and State Bank of Travancore that also owns the majority of stakes in the units can be considered as the commencement of India’s public sector banks union.

Furthermore, SBI also included Bharatiya Mahila Bank with a goal to strengthen the sector with fewer but better loan facilities and to minimise the impact of bad loans and generate capital.
SBI joins the club of the top 50 global banks by assets after this amalgamation and has 24,000 branches and 370 million customers.

The bank will be serving at 1,800 branches and might shuffle staff for cost cutting as told by Chairman Arundhati Bhattacharya and other senior executives. It has also instigated a voluntary retirement scheme.

After her association with the Bank in late 2013, Bhattacharya could effectively manage bad loans whereas the banks’ Associates had together summed up of India’s $149 billion soured assets stating that the subsidiaries have a higher bad-loan ratio than SBI.
SBI started preparing early, and has made additional provisions of about 86 billion rupees ($1.3 billion) over and above what it needed to make after the asset quality review ordered by the Reserve Bank of India, Bhattacharya said.

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