Funds needed for SBI merger with arms, says MD

Says funds will be needed for absorption of costs related to the merger

State Bank of India’s (SBI’s) merger with its subsidiaries would be good for the company, a top official said on Saturday.

“It is a question of scalability and viability. Additional capital would be needed in that case. So, we have to see when the merger happens whether that much of funds are available that time,” Managing Director and Group Executive (national banking) B Sriram told reporters here.

Stating that discussions were going on over the matter, Sriram said they had not yet decided how and when to go for the merger.

"It would be useful because we are duplicating certain things within ourselves. For example three to four branches of our group companies are there in the same locality which can be merged into a single larger entity," he said.

The finance ministry had recently said they had appointed SBI Capital Markets to undertake a study on mergers as well as recapitalisation of state-owned banks and the report is likely to be finalised within a month. The country's largest lender has 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 growth, Sriram said they were expecting 20-25 per cent growth in the retail banking sector.

He was in Kolkata to inaugurate the bank's seventh digital banking initiative called 'sbiINTOUCH'. "Based on feedback from customers we will plan a national roll-out of this service," Sriram said, adding the investment in the digital banking imitative would be recovered in two years.