Merger to result in reducing cost of running operations: SBI

The State Bank of India (SBI), which has opened as one bank from April 1 after the merger with five associate banks and Bharatiya Mahila Bank, said that it would be better placed with rationalisation and reduction in the cost of running operations.

"The centralised processing centres will be rationalised, which will lead to cost savings for the group as a whole. Each bank had clearing cells, so that will not be required. We will have just one treasury. It will help in reducing cost of running operations," Dinesh Khara, Managing Director, SBI, told BTVi in an interview.

Khara said that bank is also attempting to rationalise the administrative offices structure.

"There would be duplicacy of control structure as we have branches spread universally. We are attempting to address the control structure where there may be duplicacy. We will rationalise the controlling structure and try and rationalise the costs there," he said.

With the merger, SBI has become one of the top 50 global banks.

"Because of our size and operating efficiency, we will be able to raise resources from international market at competitive prices. We are better placed post-merger on this," he said.

On the bank's non-performing assets (NPAs), Khara said that the concept of bad bank is good, provided there are investors who are willing to take considerable risks.

"The returns would be quite handsome. As a concept, it (bad bank) is good, but on ground turnaround of stressed assets is essential. There is also ambiguity on how to price these assets," Khara said.

"I think resolution mechanism is required for stressed assets to be turned around. In its absence, it becomes difficult for bank to pick up these assets," he added.

He said that the divestment plans for SBI in the current fiscal are still to be approved by the bank's Board.

"We have to go to our Board for divestment plans in the current year. We plan to go for IPO of SBI Life, but it has not been approved by the Board yet," he said.

--IANS

mm/vd