Moving ahead with the long-pending reform of consolidation in the banking sector, the government on Wednesday cleared State Bank of India’s acquisition of five subsidiary banks.

“State Bank of India will become a global player after the merger. The exercise will also lead to reduced cost of funds,” said Finance Minister Arun Jaitley after the meeting of the Union Cabinet, which approved the proposal. The subsidiaries to be merged include State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Travancore, State Bank of Mysore and State Bank of Patiala.

An official statement said this will strengthen the banking sector and improve its profitability and efficiency, as well as create a stronger entity post merger. The merger will help save over ₹1,000 crore in the first year.

The Cabinet also approved the introduction of a Bill in Parliament to repeal the State Bank of India (Subsidiary Banks) Act, 1959 and the State Bank of Hyderabad Act, 1956.

Jaitley said that the proposal for merging Bharatiya Mahila Bank with SBI is under consideration.

Oil fields In another significant decision, the Cabinet Committee on Economic Affairs approved the award of contracts under the discovered small field bid round. Contracts would be awarded in 31 contract areas, which would include 23 onshore and eight offshore discovered small fields of ONGC and Oil India.

The proposal for the National Health Policy that seeks to guarantee universal access to health facilities was, however, not taken up, Jaitley said.

Meanwhile, to improve the collection of statistics across the country, the Cabinet also approved amendments to the Collection of Statistics Act, 2008. This would extend the Act to Jammu and Kashmir and strengthen the data collection mechanism in the State.

The Cabinet also approved the setting up of a Food Legumes Research Platform at Amlaha in Madhya Pradesh.

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