SBI may soon get to merge its associate banks, BMB: Jaitley

The centre will soon approve State Bank of India's proposal to merge its five associate banks and Bharatiya Mahila Bank, finance minister arun jaitley said on the sidelines of a meeting with PSU bank executives in New Delhi today..

''The proposal is pending with the government. The government will respond shortly. Government policy by and large supports consolidation. I had indicated it in the Budget itself," Jaitley said after his quarterly performance review meeting with bank CEOs.

Asked if the centre had any other consolidation candidates before it, Jaitley replied in the negative. ''We are looking at SBI for the moment'', Jaitley said. .

The country's largest lender, State Bank of India, had on 27 May said it was seeking the centre's nod to merge its five associate banks and the newly created Bharatiya Mahila Bank with itself.

This follows the boards of the associate banks - State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore - approving resolutions on May 17 to pave the way for their acquisition by SBI.

SBI already fully owns State Bank of Hyderabad (SBH) and State Bank of Patiala (SBP) and has majority stakes in the other three - State Bank of Mysore (SBM), State Bank of Bikaner & Jaipur (SBBJ) and State Bank of Travancore (SBT) - associate banks.

BMB only started operations in 2013 and accounts for less than 0.1 per cent of SBI's total assets.

The merger, however, will compound bad loan problem and make it difficult to assess, although credit rating agency Moody's Investors Services had said that the proposed merger of six banks - five associate banks and Bharatiya Mahila Bank (BMB) - will have limited impact on SBI's credit metrics.

SBI, the nation's largest lender, also has the largest share of non-performing assets as per annual financial results released recently.