SBI plans merger of 5 associate banks in 12-18 months: Govt

The country’s largest lender, State Bank of India (SBI), is planning to merge the remaining five associate banks with itself in the next 12-18 months.

“The bank envisages consolidation of all subsidiary banks with itself within 12-18 months,” the finance ministry informed the Standing Committee on Finance. This was in response to a query — on the government’s stance on merging subsidiaries with SBI — raised by the parliamentary panel, headed by former finance minister Yashwant Sinha.

In the last two years, SBI has merged State Bank of Saurashtra and State Bank of Indore with itself. State Bank of Saurashtra’s amalgamation took place in August 2008, while State Bank of Indore merged with the parent last year. 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.

On the merger, the ministry said preparations for consolidation of the banking subsidiaries within the State Bank group had been systematically planned. It is to be done through bringing all associates banks and SBI under the same state-of-art core banking technology platform. All associate banks also have products, services and process broadly similar to that of SBI.

The consolidation was seen as the next logical step, so as to bring in economies of scale, reduce administrative overheads, re-deploy and channelise trained manpower to business development, the ministry told the panel. It said in this process, it would also reduce avoidable competition from different arms of the same group engaged in the same activity in the same segments and geographies.

“The consolidation is aimed at making the State Bank group a stronger and more resilient organisation,” the ministry said.