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| State Bank of Indore to become SBI branches from Aug 27 |
| Press Trust of India / Mumbai Aug 24, 2010, 22:11 IST |
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All branches of State Bank of Indore will function as those of State Bank of India (SBI), with the merger between the two taking place effective August 27.
"All branches of State Bank of Indore will function as branches of State Bank of India from August 27, 2010. Customers, including depositors of State Bank of Indore will be able to operate their accounts as customers of State Bank of India with effect from August 27," the Reserve Bank of India said in a statement.
This comes almost a month-and-a-half after union cabinet approved the merger between State Bank of Indore with its parent SBI, a step intended to help the country's largest lender scale up operations and cut costs.
"The order of acquisition will be effective on and from the close of business on August 26, 2010," the central bank added.
The government had in late July issued the 'Acquisition of State Bank of Indore order 2010', under the terms of which the process of amalgamation was to begin from August 26.
SBI holds 98 per cent stake in State Bank of Indore, which has 503 branches, including 437 core banking branches and 66 branches for NRI services.
Last year, the central board of SBI gave approval for the merger. Following this, the Centre also gave an in- principle approval. SBI holds a 98 per cent stake in State Bank of Indore.
SBI had announced a share swap ratio of 34:100 for the merger. It had agreed to give 34 shares of SBI for every 100 shares of State Bank of Indore held by minority shareholders.
For this purpose, SBI would issue up to over 1.16 lakh shares of face value of Rs 10 each to minority shareholders of State Bank of Indore.
SBI had also said the issued capital of SBI would increase from Rs 634.96 crore up to a maximum of Rs 635.08 crore, subject to approval of the scheme of acquisition of State Bank of Indore by the government.
State Bank of Indore has a large number of branches outside Madhya Pradesh and Chhattisgarh.
The merger would also avoid competition between the two entities and lead to easier access to funds at competitive rates, compared to what State Bank of Indore would have managed for its growing balance sheet.
This will be the second merger of an associate bank with SBI after a similar exercise with State Bank of Saurashtra in August 2008.
Following the merger, SBI will be left with five associate banks -- State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.
Among these, the State Banks of Bikaner and Jaipur, Mysore and Travancore are listed companies.
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