The Cabinet on Wednesday gave a go-ahead to the merger of State Bank of India (SBI) and its associate lenders that would make the state-owned lender a global-sized bank.
Country's largest lender SBI had last month mooted the proposal for merger of its five subsidiary banks with itself and acquisition of the newly set up Bharatiya Mahila Bank.
SBI has five associate lenders-State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.
"Kindly await a structured briefing on that," Telecom Minister Ravi Shankar Prasad said when asked if the Cabinet approved the merger of associate banks with the SBI.
Meanwhile, SBI Chairperson Arundhati Bhattacharya said merger of SBI and its associate banks is a win-win for both the sides.
"Currently, no Indian bank features in the top 50 banks of the world. With this merger, some visibility at global level is likely to increase. Customers of associates and subsidiaries of the Bank will also be beneficiaries," she said.
She further said that with this merger the network of SBI will increase and its reach multiply. One can expect efficiencies to be created from rationalisation of branches, common treasury pooling and proper deployment of a large skilled resource base, Bhattacharya said.
"Customers of associates and subsidiaries of the Bank will also be beneficiaries. Any introduction of new technology by SBI would simultaneously be available uniformly. The scale of operations and common cost would get rationalised. Overall, the synergies being pooled at one place are going to be a big positive," she added.
Among the associate banks, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed. There shares jumped nearly 20 per cent on benchmark BSE on Wednesday and hit their respective upper circuit limits towards closing of the trading session. SBI stock was up 3.9 per cent.
The merged entity will become a banking behemoth, which could compete with the largest in the world, with an asset base of Rs 37 trillion (Rs 37 lakh crore) or over $555 billion, with 22,500 branches and 58,000 ATMs. It will have over 50 crore customers.
Presently, SBI has close to 16,500 branches, including 191 foreign offices spread across 36 countries.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged with it.