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Our Bureau

New Delhi, July 24 With the Left parties no longer in the picture and new allies coming into its fold, the UPA Government has been encouraged to take a legislative route to facilitate State Bank of India’s (SBI) acquisition of State Bank of Saurashtra (SBS), the smallest of its associate banks.

The Union Cabinet on Thursday gave its nod for issuing an order sanctioning the acquisition transaction under the aegis of State Bank of India Act, 1955. It also approved the introduction of a Bill in Parliament for repealing the State Bank of Saurashtra Act, 1950.

“The merger of State Bank of Saurashtra with State Bank of India (SBI) would enable it to scale up in terms of footprint, manpower and other resources. It would also enable it to face competition arising from globalisation of the economy, apart from augmenting efficiency and enabling better management of risk”, Mr Priyaranjan Dasmunshi, Information & Broadcasting Minister, told reporters here after the Cabinet meeting.

The Bill to be introduced in Parliament for the repeal of the State Bank of Saurashtra Act will be called State Bank of India (Subsidiary Banks) Amendment Bill 2008. This Bill would also make consequential amendments in the State Bank of India (Subsidiary Banks) Act 1959 to remove references to State Bank of Saurashtra in the legislation. The boards of both the banks had earlier approved the proposal.

SBI unions, reacting to the development, said they would meet in Patna on July 31 to decide the future course of action. They have opposed the merger . The SBI-SBS transaction is an important test case in the consolidation efforts of the SBI group.

More Stories on : Public Sector Banks | Mergers & Acquisitions | State Bank of India

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