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The State Bank of India has chalked out plans to merge all its subsidiaries with itself in the next 10 years. India’s largest bank will merge one subsidiary every two years.
“It will take two years to digest a merger, as we have to work on branch rationalisation and various issues,” said Pratip Chaudhuri, Chairman, SBI.
Following a merger, there will be certain practical issues, he said. For instance, “State Bank of Hyderabad has got 1,200 branches in Andhra Pradesh alone, while SBI has 1,300 branches there. You can’t have 2,500 branches under one local head office as it will become unmanageable. So, we need two-three local head offices. All these need to be worked out,” he said.
However, in the next 10 years, all the five subsidiaries — State Bank of Hyderabad, State Bank of Mysore, State Bank of Travancore, State Bank of Bikaner and Jaipur and State Bank of Patiala — will be merged with SBI, he added.
First merger
Chaudhuri, who was at Suranam village in Sivaganga district to launch SBI’s 15,000{+t}{+h} branch, said a decision on the first merger will be taken after a detailed report on State Bank of Hyderabad is received.
“As there is a peculiar political situation in Andhra Pradesh, the merger report from SBH is delayed by a few weeks now. We expect that in the next couple of weeks. Once that comes to our hands, we will be able to decide the order in which the subsidiaries can be merged,” he said.
On SBI’s performance, he said the bank is expecting Rs 16,000-crore capital infusion in the current financial year. Of this, around Rs 12,000 crore will be from its own profits and around Rs 4,000 crore will come from the Government.
NPA scene
On the bank’s non-performing assets, he said gross NPAs currently rule at around 5 per cent.
“NPA does not mean that the money is lost. It only means that the account is running behind schedule, and we should not blow it out of proportion. Every year from our bad loans we recover at least Rs 1,300 crore,” he explained.
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