Merger of SBI associates on hold
The proposed merger of the State Bank of Indore with the parent State Bank of India (SBI) is on as per the plan, but the merger of other associate banks has been put on hold, official sources said here on Tuesday.
†State Bank of India initially had seven associates and with the merger of State Bank of Indore, the number would come down to five. Earlier in August 2008, SBI had merged State Bank of Saurashtra with itself. The sources said merger of other associate banks has been put on hold till further order. In June, State Bank of India† had announced its plans to merge its smallest associate, State Bank of Indore, after respective boards passed resolutions to this effect. The announcement was opposed by bank unions who have threatened to go on strike.
The proposal for the merger of State Bank of Indore is subject to approval by RBI and the government.
The decision came a couple of weeks after Finance Minister Pranab Mukherjee asked public sector banks to look at consolidation as a serious option in order to reduce risks to financial stability and to face competition. SBI holds 98 per cent stake in the State Bank of Indore.
The merger of all associates of State Bank with SBI will take the total assets of the combined entity to rupees eight lakh-crore, which will help the lender to become a global financial powerhouse.
Besides from State Bank of Indore, SBI has five other associates namely State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Hyderabad.