Nod for SBI, SBS merger

By OUR CORRESPONDENT

New Delhi/Hyderabad

July 24: The Union Cabinet on Thursday approved merger of State Bank of Saurashtra with its parent bank State Bank of India.

The proposal had so far remained stuck because of strong opposition from the Left-backed trade unions which had also called for a strike against the move.

"The merger of State Bank of Saurashtra with SBI would enable it to upscale in terms of footprint, manpower and other resources. It would also enable it to face competition arising from globalisation of the economy," information and broadcasting minister, Mr Priyaranjan Dasmunsi, told reporters after the Cabinet meeting.

The merger will set the stage for SBI to merge its other subsidiaries. SBI plans to merge the three unlisted associate banks, starting with SBS, before merging the remaining four associates. State Bank of Hyderabad and State Bank of Patiala are the other unlisted associate banks.

SBS is the smallest of State Bank Group.

Recently, SBI chairman, Mr O.P. Bhatt, had reporters that the SBS merger will be the test case. "Once the merger process with SBS is complete, we will decide about how to consolidate the SBI Group." He had also said that the bank planned to complete the merger within a period of two to three months after receiving the necesaary clearance.

Reacting to the decision, SBH managing director, Ms Renu Challu said the consolidation of the State Group will help it to face the growing competition in the banking industry.

On the opposition of merger by the employees of associate banks, she said they will soon realise that the merger with the parent bank is in their interest also.

Reacting angrily to the decision, SBI employees decided to hold a meet on July 31. SBI unions would meet in Patna this month-end, to decide the future course of action on the issue, All India State Bank Officers Federation’s general secretary, Mr G.D.Nadaf said threatening a strike against the move.

In a separate decision, the government will introduce amendments in the State Bank of India (Amendment) Bill introduced in the Lok Sabha in December 2006. As a result, RBI’s nominee director would be replaced by an official with "experience and expertise" in banking regulation.

(With agency inputs)