DSIJ Mindshare

Merger talk: Come April 1, SBI will be the real boss of India's banking sector

India’s largest commercial bank, State Bank of India (SBI) will merge its five associate banks into itself from April 1, which will the biggest consolidation exercise ever undertaken in the Indian banking industry, said in an Exchange filing.

In an official notification it has been said that, all the SBI associates like State Bank of Bikaner & Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Patiala and State Bank of Hyderabad will be transferred to and vested in the State Bank of India from April 1, 2017.

However, merger of Bhartiya Mahila Bank has not been cleared at this moment.

This merger, biggest in the country's banking history, is certainly going to create a banking behemoth with over USD 500 billion in assets, 22500 branches, around 58000 ATMs and lastly a customer base of over 50 crore. State Bank of India will be counted amongst the top 50 global banks post the merger.

However, with merger comes challenges for the state run bank as it will have to integrate the operations of all the babies, streamline operations, remove duplication process and also rationalise bank branches with the associates. Bank will also need to see to the asset quality woes of its associates.

Time taken to integrate with itself will be a long-drawn process given the complexities and process, therefore it will slowly and gradually reflect in the SBI’s numbers.

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