New Delhi, July 15 (IANS) The government Thursday approved the merger of State Bank of Indore with its parent company, State Bank of India (SBI).
To enable the consolidation, a bill would be introduced in the Lok Sabha making amendments in the State Bank of India’s (subsidiary banks) Act, 1959, to remove references of State Bank of Indore, said Information and Broadcasting Minister Ambika Soni, after a cabinet meeting.
According to a finance ministry statement, the acquisition of State Bank of Indore by SBI would allow economies of scale in terms of footprint, manpower and other resources.
‘SBI is facing a situation where most of the branches of SBI and those of State Bank of Indore are competing for the same business in the same market, under the same brand. This has prevented SBI from fully exploiting its brand equity for driving business growth,’ the statement added.
SBI hopes to gain substantial cost saving by synchronisation between its own branches and that of the State Bank of Indore, including 83 branches located at different centres outside Madhya Pradesh and Chhattisgarh.
This is the second merger of this kind between SBI and one of its associate banks after State Bank of Saurashtra was merged with the public sector banking behemoth in 2008.
The other five associates are State Bank of Travancore, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, and State Bank of Patiala.