SBI merger with 5 arms gets Cabinet nod

The Union Cabinet approved SBI's acquisition of its five subsidiary banks, a move which is expected to accelerate consolidation in the banking space.

SBI chairman Arundhati Bhattacharyasaid, “The merger will result in creation of a stronger entity . This will minimise vulnerability to any geographic concentration risks faced by associate banks. This merger is an important step towards strengthening the banking sector through consolidation of public sector banks.“

The subsidiary 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 August last year, the SBI board had approved the proposal to merge five associate banks with itself .

The Cabinet also approved the introduction of a bill in Parliament to repeal the State Bank of India (Subsidiary Banks) Act, 1959 and the State Bank of Hyderabad Act, 1956.

The merger is likely to result in 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. Existing customers of subsidiary banks will benefit from access to SBI's global network.

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