Lok Sabha passes bill approving merger of associate banks with SBI

New Delhi: The government on Thursday said the merger of the five associate banks with the SBI will lead to increased capital base and availability of loan, as the Lok Sabha passed the bill approving the amalgamation.

The Lok Sabha passed the bill to repeal the SBI (Subsidiary Banks) Act 1959, State Bank of Hyderabad Act 1956 and to further amend the State Bank of India Act, 1955, following the merger of five associates with the parent SBI.

Minister of State for Finance Santosh Gangwar said that with this merger, the SBI has come in the list of top 50 banks globally and is ranked at the 45th position. "The merger will bring about increased capital base and increased ability to give loans. Also, small banks will get access to products like mutual funds," he said.

During the last two years, 29 crore bank accounts were opened, of which 25 per cent were zero balance accounts, he said, adding that farm loans increased from Rs 3.5 lakh crore in 2009-10 to Rs 10.65 lakh crore in 2016-17. "We want every person to have access to banking services ...No bank branches will be closed down, rather wherever required, we will open branches," Gangwar said.

He said the merger will help increase SBI's scope of operation and will pose a challenge to private banks as it will work as per the requirements of the people. "The merger has been planned keeping in mind the benefit of people and going forward its benefits will be seen," he added.

According to the statement of object and reasons of the State Banks (Repeal and Amendment) Bill 2017, after the acquisition of the subsidiary banks by SBI, the subsidiary banks have ceased to exist and, therefore, it is necessary to repeal the State Bank of India (Subsidiary Banks) Act, 1959 and the State Bank of Hyderabad Act, 1956.

Five associates and the Bharatiya Mahila Bank became part of State Bank of India (SBI) beginning April 1, catapulting the country's largest lender to among the top 50 banks in the world. The five associates that were merged are State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT).

Following the merger, the total customer base of SBI increased to 37 crore with a branch network of around 24,000 and nearly 59,000 ATMs across the country.

The merged entity began operation with a deposit base of more than Rs 26 lakh crore and advances level of Rs 18.50 lakh crore.

As per the bill, after the acquisition of all the subsidiary banks by the SBI, it is not necessary to retain such provisions in the State Bank of India Act, 1955. "Therefore, certain amendments are necessary in the said Act in so far as they relate to the subsidiary banks. The amendments are consequential in nature," it said.

SBI had 90 per cent shareholding in the State Bank of Mysore, 75.07 per cent shareholding in the State Bank of Bikaner and Jaipur and 79.09 per cent shareholding in the State Bank of Travancore.