State Bank of Indore recommends merger with SBI

Paving way for further consolidation of State Bank of India (SBI), State Bank of Indore today proposed merger of the bank with the parent SBI.

The decision comes a couple of weeks after Finance Minister Pranab Mukherjee asked public sector banks to look at consolidation as a serious option in order to reduce risks of financial stability and to face competition.

"The board of Directors of State Bank of Indore has passed a resolution recommending the merger or acquisition of State Bank of Indore with or by State Bank of India," SBI informed the Bombay Stock Exchange.

The decision to this effect was taken by the central board of the bank today.

The proposal for the acquistion of State Bank of Indore by the SBI will be subject to approval by RBI and the governemnt, it said.

State Bank of Saurashtra (SBS), the smallest associate bank of SBI, was merged in August 2008.

Currently, SBI have six associate banks namely State Bank of Indore, State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Hyderabad.

Last week, SBI Chairman O P Bhatt had said, "once we get the signal (from the government), the process will not take more than three to six months... We have taken initiative on our own for the merger."