State Bank of India’s mega merger with 5 Associate Banks: Cabinet gives green signal

New Delhi, Feb 16: The Union Cabinet on Wednesday approved the merger of State Bank of India with five of its associate banks including State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, and State Bank of Travancore.

The merger proposal was announced in May 2016 and was scheduled for March 2017.

While announcing the decision, Finance Minister Arun Jaitley said that the Cabinet had earlier given its in-principle approval for the merger, and then had sent it to the respective banks for their suggestions. These suggestions have been taken on-board, and the decision has been formally approved by the Cabinet.

“This will lead to far greater operational efficiency and synergy of operations within these banks,” Mr Jaitley said. “It will decrease the cost of operations, which will also result in a decrease in the cost of funds.”

“The merger is likely to result in recurring savings, estimated at more than Rs 1,000 crore in the first year, through a combination of enhanced operational efficiency and reduced cost of funds,” the government said in a statement. “Existing customers of subsidiary banks will benefit from access to SBI’s global network.”

Mr Jaitley also said that SBI, following the merger, will not only be a large domestic bank, but will also become a global player as well.