Cabinet confirms merger of SBI associate banks

The Finance Minister of India, Arun Jaitley announced on Wednesday that the Union Cabinet has approved the merger of State Bank of India and its five associate banks. State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Travancore, State Bank of Mysore and State Bank of Patiala will now be under the primary banner.

 

"The cabinet approved the merger into SBI of its five subsidiaries, namely, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Travancore, State Bank of Mysore and State Bank of Patiala," Jaitley told the reporters after the meeting.

 

"The merger will lead to far greater operational efficiency and synergy of operations within these banks. Obviously, with greater efficiency, if cost of operations is reduced, the cost of funds will also come down."

 

This move will definitely lead to the creation of a huge bank. This will have its effect globally as well as SBI has its foreign offices in 191 places in 36 countries across the globe.

 

"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," a press release from the Cabinet stated.

 

"Existing customers of subsidiary banks will benefit from access to SBI's global network. The merger will also lead to better management of high value credit exposures through focused monitoring and control over cash flows instead of separate monitoring by six different banks."