Cabinet may decide on SBI-State Bank of Indore merger tomorrow

The Cabinet is likely to take up the proposal to merge State Bank of Indore with the parent State Bank of India (SBI) tomorrow.

According to the sources, the proposal would come up for discussion at the Cabinet meeting which will be held under the chairmanship of Prime Minister Manmohan Singh. If given the nod, this will be the second merger of an associate bank with the SBI after merger of State Bank of Saurashtra with itself in August 2008.

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 has already announced a share swap ratio of 34:100 for the merger. It has 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.

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 puliclly listed companies.