State Bank of India will merge one of its associate banks by the end of September, marking one more step towards creating a global-sized Indian bank.

In 1998, the RBI-appointed Narasimham Committee on banking sector reforms had recommended restructuring of the banking system to create three-four large banks, which could become international in character, and 8-10 national and local banks.

SBI, the country’s largest lender, is ranked 60{+t}{+h} globally.

SBI had earlier said it will absorb all the associate banks in a phased manner.

SBI has five associate banks — State Bank of Hyderabad, State Bank of Mysore, State Bank of Travancore, State Bank of Bikaner and Jaipur and State Bank of Patiala.

The outgoing SBI Chief, Pratip Chaudhuri, clarified that the bank to be absorbed now will definitely not be State Bank of Hyderabad because of the tense atmosphere in Andhra Pradesh over the bifurcation of the State.

“Since our retail deposit base is strong, we will absorb a bank whose retail base is weak,” Chaudhuri said.

He, however, did not name the subsidiary, which will be lapped up.

Sources, who did not wish to be named, said the bank which will merge with SBI could either be State Bank of Patiala or State Bank of Mysore.

satyanarayan.iyer@thehindu.co.in

(This article was published on August 12, 2013)
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