Saturday, June 14, 2014

SBI set to merge five subsidiary banks into one to fund the economy

SBI chairman A Bhattacharya
THE nation's biggest lender State Bank of India (SBI) will begin the process of consolidation in the banking industry by combining its five associate banks. The move aims at funding the economy in a bid to take the economy into the path of growth. The process will enhance...

the asset base of the lender to Rs 21.9 lakh crore, and add 5,658 branches to its 15,143 branches and will enhance its combined market share by 24 percent, from 19 percent. No doubt this will be a force to reckon with in the banking market.
SBI chairman Arundhati Bhattacharya has recently said that time is ripe now for the merger which was long awaited by the tens of thousands of employees of the associate banks.
India’s state-dominated banking system is dwarf compared to giant Chinese markets. There are some big state-owned banks in China which have over a period of time evolved into a force to reckon with.
The market capitalisation of the Indian banking industry is estimated at about $185 billion, compared with China's largest bank ICBC's value of $217 billion. In fact three of the top ten banks in the world are Chinese.
SBI's five associates are State Bank of Travancore, State Bank of Hyderabad, State Bank of Patiala, State Bank of Bikaner and Jaipur and State Bank of Mysore.
Though the proposal for consolidation was mulled first about a decade ago, there was hardly any concrete step with the staff unions being a stumbling block, and the previous United Progressive Alliance's policy paralysis.
Earlier, SBI integrated two associates — State Bank of Saurashtra and State Bank of Indore.

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