The merger of five associate banks of SBI with the parent bank (SBI) will start from 1 April, 2017. The move seems to be the largest consolidation of public sector banks in the history of Indian banking.
After the Government of India approved the proposed merger, the parent bank said in a regulatory filing “The assets of State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH) will be transferred to SBI from April 1, 2017”.The Union Cabinet accepted the merger of the five above-mentioned associate banks with the parent bank earlier this month.
Following the merger, all employees and officers of the associate banks, excluding the executive trustees and board of directors, will become employees of State Bank of India. The government has already issued five orders to make this merger effective as scheduled.
The merger will turn SBI into a large global-sized bank with an asset base of Rs 37, 00,000 crores, customer base of over 50 crores, 22,500 branches and 58,000 ATMs. The five associate banks have an employee base of 73,268 with a total deposit of over Rs. 5 lakh crores and 8,964 ATMs across India.
The merger will reduce vulnerability and risks faced by the associate banks, and help build a stronger presence of SBI across the globe. It is also likely to also result in enhanced operational efficiency and reduced operational cost.
The first merger of associate banks with SBI took place in 2008 when the parent bank merged State Bank of Saurashtra with itself.
With five associate banks namely – State Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Patiala, and State Bank of Hyderabad – the State Bank of India is currenly India’s largest public sector bank.