State Bank of India (SBI), the largest public sector bank in India, is expected to initiate a merger with its 5 associate banks in accordance with the instructions of the government. This step would be in line with the Indian government’s efforts to implement consolidation among state-owned lending institutions such as SBI and its associates.
Though the talks have already started and the merger is said to have been pending for a while, it will be up to the State Bank of India to initiate the merger process beginning with the unlisted SBI Associate banks – State Bank of Hyderabad and State Bank of Patiala. The SBI group has seen mergers in the past as well, such as the 2010 merger of the State Bank of Indore with the parent SBI.
Currently, State Bank of India holds varying stakes in other SBI associates – 79% in State Bank of Travancore, 90% in State Bank of Mysore and 75% State Bank of Bikaner & Jaipur. SBI has so far put off the merger saying that it wants to continue its associates to function as strong independent entities. Though there is no surety that this merger will come to pass, those in favour of it feel that the measure would increase the efficiency of State Bank of India group as a whole.