Govt to soon clear merger of SBI & associates, says FM Jaitley

New Delhi: Favouring consolidation in the public sector banking space, Finance Minister Arun Jaitley said the government as of now is looking only at SBI merging 5 subsidiaries as well as Bharatiya Mahila Bank with itself and a decision on this will be taken soon.

“We are looking at SBI (proposal) at the moment. It is with the government and (it) will respond. The government’s policy by and large supports consolidation. I have indicated that in the budget itself,” he said after a meeting with the heads of public sector banks and financial institutions here.

“We are expecting (approval) shortly,” he said when asked as to how soon the government nod is expected. Last month, SBI cleared proposal for merger of subsidiary banks and Bharatiya Mahila Bank. It sought government’s approval for the merger.

The country’s largest lender has five associate banks – State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.

Among these, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed. The merger will create Rs 37-lakh crore banking behemoth with over 50 crore customers.

SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged. SBI has maintained since then that it would merge others as well but none of its moves fructified due to lack of capital (which was pegged at least Rs 2,000 crore each for per bank) and stiff opposition from employee unions.

The merged entity will create a banking behemoth, which can compete with the largest in the world, with an asset base of Rs 37 trillion (Rs 37 lakh crore) or over $555 billion, with 22,500 branches and 58,000 ATMs as of December 2015. SBI alone has close to 16,500 branches, including 191 foreign offices spread across 36 countries.

According to sources, a Cabinet note has been moved with regard to the merger of associate banks of SBI with itself. The merger proposal may be taken up by the Cabinet towards the end of this month.

Once the government nod is given, the process of merger of associates would start. Easier candidates for the merger are the unlisted entities – State Bank of Patiala and State Bank of Hyderabad, sources added.

Besides, the listing of PSU general insurance companies is also on the anvil. There are four public sector general insurance companies – New India Assurance Company Ltd, National Insurance Company Ltd, Oriental Insurance Co Ltd, United India Insurance Co Ltd.

Besides, there are two specialised insurers – ECGC and AIC – one life insurance insurer, LIC.