Three years after it was formed, the government has approved merger of the Bharatiya Mahila Bank (BMB) with the country's largest lender State Bank of India (SBI) to ensure greater banking outreach to women.
"The proportion of administrative and managerial cost in the BMB is much higher to reach the same coverage. For the same cost, a much higher volume of loans to women could be given through the SBI," it said.
The ministry said there was a need to achieve the objectives of affordable credit to women as well as propagation of women-centric products quickly through a wider network and lower cost of funds.
"The Government of India has decided to merge the BMB with the State Bank of India to ensure greater banking services outreach to a larger number of women, at a faster pace," the ministry statement read.
The SBI has a large outreach of more than 20,000 branches and lowest cost of funds in the sector. Of the total workforce of around 2 lakh employees in the SBI, 22 per cent are women.
The BMB, set up in 2013, has 103 branches with its presence in almost all the states. The total business of the bank is about Rs 1,600 crore.
The Union Cabinet had last month approved amalgamation of five associate banks of SBI with the parent and their integration will start from April 1 as part of the largest consolidation exercise in the banking history of India.
The branches of 5 associate banks -- State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore -- will start functioning as SBI branches from April 1.
With the merger of all the five associates, SBI is expected to become a lender of global proportions with an asset base of Rs 37 lakh crore or over $555 billion, 22,500 branches and 58,000 ATMs. It will have over 50 crore customers.
"The Union government is committed to enhancing the access to financial services to the population at large and women in particular," the ministry said.
Under the Pradhan Mantri Jan Dhan Yojana, preference is given to women for overdraft facility. Pradhan Mantri Mudra Yojana had 73 per cent women borrowers in the previous financial year, it added.
The stock of SBI closed at Rs 274, down 0.04 per cent, on the BSE.