SBI to wrap up mergers by 2009
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SBI to wrap up mergers by 2009

By SiliconIndia   |   Wednesday, 26 December 2007, 08:00 Hrs
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Mumbai: State Bank of India (SBI) plans to merge all its associate banks with itself by March 2009. According to reports this step is to prepare SBI to face the intensely competitive banking environment in India.

The proposal for merger of State Bank of Saurashtra (SBS) with SBI will go before the Union cabinet, which is expected to give its nod soon.

"Once we get the cabinet nod for merger of State Bank of Hyderabad (SBH), it will set the ball rolling for the merger of the other associate banks," said O P Bhatt, Chairman, SBI.

Both the award and supervisory cadre association at SBS have favoured the merger with SBI. "The issue of consolidation of associate banks was taken up only by the boards of SBI and SBH. The boards of other banks have not been sounded about the merger plans," added Bhatt. The respective boards are likely to meet in January 2008 to dwell upon the merger proposal.

Once the SBI-SBH merger is through, the consolidation of other entities should not take long as most of the groundwork has been done and only the execution is left. “It has to happen before March 2009,” said the Chairman.

The associate banks have together posted a year-on-year growth of 16.85 percent in net profit at the end of September 2007. While the aggregate deposits grew by 20.71 percent, the advances rose by 26.84 percent.

They command a market share of 7.33 percent in deposits and 7.68 percent in advances. The capital adequacy of associate banks taken together stood at 12.44 percent. Their gross non-performing assets were 1.91 percent (2.34 percent in September 2006).

Dwelling on the credit growth of SBI in the third quarter, Bhatt said, It will grow at 25-26 percent (year-on-year) against 30 per cent last year. The growth picked up in November and December. The agriculture and SME segments have shown robust credit demand. The deposit growth is between 20-22 percent

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