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NEW DELHI, MAY 12: The merger proposal of the State Bank
of India (SBI) and its seven associate banks may finally concretise by the end
of the current financial year. Speaking
to FE, a senior government official stated that the proposal never took shape
due to various internal problems but now with the renewed thrust on
consolidation and merger in the sector, this particular proposal of merging SBI
with its associate banks may see the light of the day in a few months. The
associate banks of SBI include the State Bank of Patiala, Mysore, Hyderabad,
Travancore and Saurashtra among others.
We will seriously look into the proposal and chalk a
feasible plan to facilitate the merger. The merger is the only solution as they
cannot co-exist as competitors in the market, particularly at the wake of
globalisation and foreign competition, a senior finance ministry official
indicated.
An SBI official pointed out that the boards of these banks
have also shown an eagerness to merge with the mother entity, which will boost
the banks bottomlines. The finance ministry official added merging the
associate banks with SBI will be a natural process as they share the same work
culture.
There would be no clash of interest among the banks, he
noted. However SBI and the associate banks are expecting the unions to oppose
the move. We are aware of that and we will have to tackle it, the official
observed.
Meanwhile, the finance ministry is planning to set up a
committee to study the consolidation and merger procedure in the banking
sector. The committee will study the sector closely and then come to a possible
solution to deal with this tricky issue.
The committee will also look at the possibility of merging
the rural banks and set up a national rural bank to provide assistance to the
rural markets, which are currently not being looked after by the bigger banks.
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