Govt seeks details on SBI, State Bank of Indore merger

Govt seeks details on SBI, State Bank of Indore merger

New Delhi: The government has sought some clarifications on issues such as workforce integration from State Bank of India on its proposal to merge State Bank of Indore with itself.

Issues such as cost benefit analysis on merger of the associate bank with the parent entity and employee integration among other things require clarity and were discussed with SBI, an official said.

Besides, sources said, the government would also like to know the experience with regard to merger of the State Bank of Saurastra that was merged with parent SBI in August 2008.

For merger to take place, both the banks have to obtain permission from the sector regulator Reserve Bank of India.

The boards of the respective banks have already given in-principle approval for the merger in June this year.

SBI initially had seven associates and with the merger of State Bank of Indore, the number would come down to five. State Bank of Indore is the smallest associate bank of the SBI Group after the merger of State Bank of Saurashtra.

Besides State Bank of Indore, the other SBI associates are State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Hyderabad.

SBI holds 98% stake in the State Bank of Indore that posted a net profit of Rs279 crore in 2008-09. At the same time total business of the bank stood at Rs49,432 crore with the capital adequacy of 13.4% at the end of March 2009.

SBI chairman O.P. Bhatt had said, “Once we get the signal (from the government), the process will not take more than three to six months... we have taken initiative on our own for the merger."

Favouring consolidation in the banking sector, Bhatt had said the country needs at least five banks of the size of SBI to service the growing needs of the Indian economy.

“One way of getting size would be consolidation. We need to kick in consolidation as quickly as possible and we should have at least 3-5 banks as size of State Bank of India," he had said.