State Bank of Saurashtra (SBS) will become the first of State Bank of India (SBI) subsidiary banks to merge with SBI, as it begins the process of merger of its seven banking subsidiaries.
The next on SBIs agenda is the three unlisted subsidiaries called State Bank of Hyderabad, State Bank of Indore and State Bank of Patiala and then follow it up with mergers of the listed State Bank of Bikaner & Jaipur, State Bank of Mysore and State Bank of Travancore. Most mergers are likely to be completed in the next six months.
The boards of SBI and SBS met in Mumbai and passed resolutions to merge, a step that could be the beginning of the process of consolidation among public sector banks.
After the merger of all the seven subsidiary banks, SBI’s net worth would rise by about Rs 43,000 crore. ICICI Bank’s net worth has doubled to over Rs 40,000 crore after its recent follow-on public offer, overtaking SBI’s by over Rs 31,000 crore.
SBI and SBS would now have to complete the formality of seeking approvals from the government and the Reserve Bank of India (RBI). The merger would benefit over 7,000 employees of SBS as their pay scales would rise and they would also be entitled to retirement benefit of pension, in addition to provident fund and gratuity.