SBI’s merger with 5 associate banks will make it a very large bank, bring down cost of funds

New Delhi, Feb 16 (KNN) Cabinet’s approval to merge State Bank of India (SBI) and its five associate banks will make SBI a very large bank and would also help bring down cost of loans.

"The Cabinet had earlier in-principle cleared the (merger) proposal. It had gone to the boards of various banks which have granted the approvals. The recommendations of the boards were considered today and the Cabinet cleared the proposal," Finance Minister Arun Jaitley said.

The associate banks which will be merged with SBI are: State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH).

"With this merger, the SBI, with all these five subsidiaries merging in it, will also become a very large bank, not merely from a domestic point of view but actually a global player in its very size," the minister said after the Union Cabinet meeting.

It will, he added, "certainly lead to far greater efficiency. It will lead to synergy of operations within these banks...it will cut down the cost of operations. The cost of funds itself will come down".

With the merger of all the five associates, SBI is expected to become a global-sized bank with an asset base of ₹37 trillion (₹37 lakh crore) or over $555 billion, 22,500 branches and 58,000 ATMs. It will have over 50 crore customers.

On the proposal to merge Bharatiya Mahila Bank with SBI, Jaitley said, "It is under consideration as of now. We have not taken any decision related with that today."

About the specific date on which the merger of five associate banks with the SBI would become effective, the he said, "We will inform you about the specified date when the merger will come to the effect."

Jaitley also said that merger will not be detrimental to the services of any employee, "It will be a smooth arrangement."