The Union Cabinet today on 16 June, 2016 Thursday gave a principle approval to a proposal for the merger of five associate banks with State Bank of India (SBI). But the proposal may come up for final clearance again as some legal issues need to be worked out.
The State Bank of India (SBI) merger with five of its associates — State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Bikaner and Jaipur (SBBJ), State Bank of Patiala (SBP), State Bank of Travancore (SBT) will see the new entity entering the list of the world’s top 50 banks in terms of assets.
Finance Minister Arun Jaitley had said at the second edition of the Gyan Sangam meet held in March That, “The country needs stronger banks rather than a large number of lenders”
Last month, SBI’s board had submitted a proposal to the government for merging five associate banks.
finance ministry said, “The idea to merge the five banks at the same time makes sense as they are on the same technology platform which the SBI has That makes the task easy”
The merger will create a behemoth with an asset base of Rs 37 lakh crore, with 22,500 branches and nearly 60,000 ATMs. SBI alone has 16,500 branches including 199 offices in 36 countries.
The merger will result in the combined entity commanding a deposit base of over Rs 21.5 lakh crore — just over a fifth of the total deposit base of the banking system, of Rs 97 lakh crore.
Currently, Finance Minister Arun Jaitley had said that the center is evaluating the merger proposal and will bring the move to the Cabinet soon “as the government supports merging, and this was part of my Budget speech”.
Mr Jaitley Conduct a meeting with heads of public sector banks and financial institutions last week.
The move is facing conflict from employee unions of banks. They had called for a strike on June 28 and 29 to protest against the move.
The merger move is likely to meet political opposition as Left parties control the bank associations. Communist Party of India (CPI) general secretary S Sudhakar Reddy had announced currently that the Telangana assembly would pass a resolution opposing the merger.
The Left Democratic Front (LDF) Kerala government too is under pressure because State Bank of Travancore is part of the merger exercise.
This post has been seen 186 times.