Prime Minister Narendra
Modi's cabinet approved on Wednesday State Bank of India's (SBI) takeover of several
subsidiaries, a government official said, in a first move to consolidate the
country's struggling public sector banks.
As
earlier proposed, SBI was to take over five units that had been run at
arms-length, as well as state-run Bharatiya Mahila Bank, a bank for women set
up in 2013.
"The cabinet has
cleared SBI's acquisition of subsidiary banks," the official, who did not
wish to be named, said.
Policymakers want to
recapitalise and consolidate India's state-run banks so that they can extend
fresh credit and help drive an investment-led recovery in Asia's third-largest
economy that is now being buoyed by state and private consumption.
India's 27 public sector banks account for 70
percent of its banking sector assets, as well as the lion's share of the
country's $120 billion in troubled assets.
SBI
Chairman Arundhati Bhattacharya said the merger would help the country's
largest lender by assets expand scale and cut expenses through synergies.
"While
the network of SBI would stand to increase, its reach would multiply. One can
expect efficiencies to be created from rationalisation of branches, common
treasury pooling and proper deployment of a large skilled resource base,"
she said in an emailed statement.
SBI's
board had already approved the takeover of State Bank of Bikaner and Jaipur,
State Bank of Hyderabad, State Bank of Mysore and State Bank of Travancore, as
well as Bharatiya Mahila Bank.
Shares
in all the listed units rallied by between 19 and 20 percent in trading on the
National Stock Exchange in Mumbai on Wednesday.
Representative
Image
Source:
ANI
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