SBI, which has already merged State Bank of Saurashtra last fiscal, is making moves to merge six of its associate banks by September 2009.
The six associate banks are State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, and State Bank of Travancore. State Bank of Indore and State Bank of Travancore are to be merged with SBI in the first phase.
Industry exerts opine that the move will bolster the bank’s balance sheet as well as improve operating efficiency. SBI and its associates already manage about 25% of Indian banks’ deposits and loans.
During a meeting with Indian Finance Minister, OP Bhatt, Chairman of SBI said: “As far as inorganic growth is concerned, our first priority is domestic. Even in domestic, our priority is whether or not we can go ahead with further consolidation and amalgamation of our own associates,” reported Reuters.
Pranab Mukherjee, Finance Minister of India, said: “State-run banks should look at consolidation as a serious option in order to reduce risk to financial stability and to face competition. Any consolidation initiative in the banking sector would be viewed positively and government, as a majority shareholder, would continue to play a supportive role in this process.
