The board of the largest state-run lender, State Bank of India (SBI), on Tuesday have sought “in principle sanction” of the central government to merger of its five associate banks and newly created Bharatiya Mahila Bank (BMB) with itself, including assets and liabilities.
“This discussion is purely exploratory at this stage and not certain. A proposal seeking an in-principle approval to start negotiations with associate banks will be submitted to the central government,” SBI said in a statement.
“No decision has been taken at this stage approving one or more of the aforesaid acquisitions and the same will be taken by the bank’s board upon evaluating all the relevant considerations, it added
However, in an interaction with a TV channel, SBI chairperson Arundhati Bhattacharya said that the overall size of the consolidated balance sheet after the merger would be Rs 37 lakh crore against the current size of Rs 28 lakh crore. The lender also expects the merger to bring down the cost of funds, while also rationalising the number of branches.
SBI’s associate banks include State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.
In addition to these five banks, the SBI board members also discussed the possibility of acquiring India’s first bank targeted to women – Bhartiya Mahila Bank (BMB). SBI would explore this acquisition once the central government gives an in-principle approval to start negotiations with BMB.
Meanwhile, the All India Bank Employees’ Association (AIBEA) has called a strike on May 20 opposing the decision of boards of directors of five associate banks of SBI to close down and merge with SBI.