The Union Cabinet on Wednesday approved merger of five subsidiaries of State Bank of India with the state-owned lender.
The state owned banking giant has three listed associate banks State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT) and two unlisted associate bank - State Bank of Patiala and State Bank of Hyderabad.
Finance Minister Arun Jaitley had earlier said the government will go ahead with the merger of associates banks and Bharatiya Mahila Bank with SBI as the proposal has been approved at the highest level by the Union Cabinet.
"All procedure will be followed. The government has already taken decision at the level of the Cabinet to fully support the proposal for the merger," Jaitley told reporters post the meeting with public sector banks for the first quarter performance review.
The approval does not come as a surprise, given the government’s stated intention of encouraging consolidation among state-owned banks (this came in this year’s Union budget) even as it looks to address the issues of rising bad debts in the banking system and, at the same time, ensure efficient utilization of capital.
SBI has around 16,500 branches, including 191 foreign offices spread across 36 countries. Globally, SBI will come at the 45th position in terms of asset size after the merger.
SBI had first merged State Bank of Saurashtra with itself in 2008. In 2010, State Bank of Indore was merged.