Cabinet clears merger of State Bank of Saurashtra with SBI
24 Jul 2008
Mumbai: The union cabinet has approved the merger of State Bank of Saurashtra with its parent State Bank of India to help the smaller bank face challenges in a globalised world better.
For the merger to be effective, the government would have to repeal the State Bank of Saurashtra Act, 1950 and thereafter amend the SBI Subsidiary Act, 1959 to remove references to the SBS Act wherever it occurs.
The government will soon introduce a new bill in Parliament, to be called the SBI Subsidiary Bank Amendment Bill, 2008.
''The merger of State Bank of Saurashtra with State Bank of India will enable it to scale up in terms of footprint, manpower and resources,'' information and broadcasting minister P R Dasmunsi said after the cabinet meeting.
The boards of SBI and SBS had approved for the merger plan in August last year and is awaiting government nod. The merger is expected to kick start the process for merging six other associate banks with SBI.
State Bank of Saurashtra is a 100 per cent subsidiary of SBI and the merger is only a technical process.
SBI employees, meanwhile, have reacted angrily to the merger proposal and have threatened a nation-wide strike. They said the merger proposal is against the interests of employees and will leave many jobless. They have planned a meeting on 31 July to decide the future course of action..
State Bank of Saurashtra is SBI's smallest subsidiary and had posted a net profit of Rs51.98 crore in FY08 as against Rs87.43 crore in the previous fiscal.
