Cabinet approves SBI merger with 5 associate banks
- Author: Leroy Wright Feb 16, 2017,
Feb 16, 2017, 8:51
Of the three listed subsidiary banks among the five: State Bank of Mysore stock closed 0.47 per cent down at Rs 561.65 apiece; State Bank of Bikaner and Jaipur down 0.51 per cent at Rs 718 and the share of State Bank of Travancore fell 0.91 per cent down at Rs 559.95. "The matter is under consideration but no decision was taken", Finance Minister Arun Jailtey told reporters after the Cabinet's meeting.
4,42,31,510 equity shares of SBI for every 100 crore equity shares of Bhartiya Mahila Bank.
The approval does not come as a surprise, given the government's stated intention of encouraging consolidation among state-owned banks (this came in this year's Union budget) even as it looks to address the issues of rising bad debts in the banking system and, at the same time, ensure efficient utilization of capital.
Previous year in March, SBI had announced merger of its five associate banks and newly-formed Bharatiya Mahila Bank into itself.
The merged entity will create a banking behemoth, one-fourth of market share in India's banking sector (in terms of loans and deposits), with an asset base of about Rs 40 lakh crore from Rs 23 lakh crore. "The recommendations of the boards were considered today and the Cabinet cleared the proposal", Jaitley was quoted by PTI as saying.
With this merger, the SBI will also become a very large bank, Jaitley noted.
"A formal notification in this regard is awaited from Government of India wherein the effective date of merger will be indicated", SBI said in a statement. "Existing customers of subsidiary banks will benefit from access to SBI's global network". "It will lead to synergy of operations within these banks". It will have over 50 crore customers. SBI now has about 16,500 branches, including 191 foreign offices spread across 36 countries.