Bharatiya Mahila Bank tobe merged with SBI

State Bank of India, which is merging all its five associate banks, will also be merging the Bharatiya Mahila Bank (BMB), in line with the government's move to support consolidation in the banking sector.

BMB, started with much fanfare by finance minister P Chidambaram to nurture the entrepreneurial skills of women, failed to deliver.

With about 103 branches and a business of approximately Rs2,000 crore, the all-women bank will now be part of the larger SBI.

In the three years since its inception, Bharatiya Mahila Bank has extended Rs192 crore in loans to women while SBI group has provided about Rs46,000 crore to women entrepreneurs.

SBI has a wide reach of over 20,000 branches and the lowest cost of funds among banks. Out of its 200,000 workforce, 22 per cent are women.

SBI group has 126 all-women branches across the country, while Bharatiya Mahila Bank has seven.

''The proportion of administrative and managerial cost in BMB is much higher to reach the same coverage. For the same cost, a much higher volume of loans to women could be given through SBI,'' the statement said.

Bharatiya Mahila Bank had a loan book worth Rs620 crore and deposit base worth Rs927 crore at the end of March 2016.

Employees of BMB were all employees of various public sector banks who had joined the bank on deputation. These employees will now be relocated to their respective banks.

The finance ministry said in press release late on Monday that the government has approved the merger of BMB with SBI.

"The decision to merge them has been taken in view of the advantage of the large network of the SBI, among other things," the statement added.

''Although the addition of 103 branches of BMB and business of approximately Rs2,000 crore would not make significant impact on the branch network and business levels of SBI, it will be ensured that the merger strengthens and reinforces SBI's focus on financing of women entrepreneurs in order to fulfil the objectives behind setting up of Bharatiya Mahila Bank,'' SBI stated.

SBI is in the process of merging its own five associate banks with itself. From 1 April, six banks - the five associate banks and BMB - will be merged with SBI.

The government is in the process of identifying smaller banks to be merged with bigger banks for a stronger thrust, especially in the semi-urban and rural areas.