India’s Union cabinet has given the go-ahead to the merger of State Bank of India (SBI) and its five associate banks.
The associate lenders to be merged into SBI include the State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.
In addition to these five banks, the public sector Bharatiya Mahila Bank will also merge with SBI.
The cabinet approval comes a month after SBI approved the merger proposal. The merged entity will have a balance sheet of INR37 trillion, making it one of the top 50 banks in the world.
SBI chairman Arundhati Bhattacharya said: "The merger of SBI and its associate banks is a win-win for both. While the network of SBI would stand to increase, its reach would multiply. One can expect efficiencies to be created from rationalisation of branches, common treasury pooling and proper deployment of a large skilled resource base.
"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."
Commenting on the benefits of the merger, Bhattacharya added: "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."