In a move aimed at consolidating India's struggling public sector banks, the cabined today approved the takeover by State Bank of India (SBI) of several subsidiaries.
As proposed earlier, SBI was due to take over five units that had been run at arms-length, as well as state-run Bharatiya Mahila Bank, a bank for women set up in 2013.
SBI 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.
The merged entity will create a banking behemoth, which can compete with the largest in the world with an asset base of almost Rs 37 lakh crore, with 22,500 branches and 58,000 ATMs as on December 2015. SBI alone has close to 16,500 branches, including 198 foreign offices spread across 36 countries.
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 initiatives fructified due to lack of capital — which was pegged at least Rs 2,000 crore for each bank — and stiff opposition from the employee unions.
Last month, Minister of State for Finance, Jayant Sinha, had said, " We have 27 public sector banks right now. When the dust settles, I think we will have, may be, 8-10 very competitive banks. Some of them are going to be large scale global players, while some are going to be differentiated banks."