New Fiscal Year will bring another change in the banking sector in India. State Bank Of India, the banker to every Indian is all set to merge with five of its associate banks.
According to gazette notifications, the government said the entire undertakings of State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore. State Bank of Patiala and State Bank of Hyderabad shall stand transfered to and vested in State Bank of India from April 1, 2017.
Parent Bank SBI, separately informed stock exchanges about the effective date of merger. The merger will lead to a bigger SBI that will account for nearly a quarter of all the outstanding loans in the country. SBI is already the largest bank in India and the combined entity will have a network of nearly 23 thousand branches.
Among the banks that will merge-State bank of Patiala and State Bank of Hyderabad are unlisted while among the ones listed SBI holds 75 per cent stake in State Bank of Bikaner and Jaipur, 90 per cent in State Bank of Mysore and 79 per cent in State Bank of Travancore.
The union cabinet earlier this month approved the merger and the government had earlier said the SBI merger was an important step towards strengthening the banking sector through consolidation of public sector banks. The government has taken this step to reduce the NPA’s
The merger is expected to result in recurring savings at more than Rs. 1000 crore in the first year through a combination of enhanced operational efficiency and reduced cost of funds.