State Bank of India (SBI) is reportedly planning to merge its five subsidiary banks as part of its plan to fund the economy and boost operational capability.
SBI’s five subsidiaries include State Bank of Travancore, State Bank of Hyderabad, State Bank of Patiala, State Bank of Bikaner & Jaipur, and State Bank of Mysore.
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The consolidation will enable the public sector lender to boost its balance sheet and add 5,658 branches to its network of 15,143 branches, as reported by The Economics Times.
SBI chairman Arundhati Bhattacharya was quoted by The Economics Times as saying that the combined market share will rise to 24%from 19%, making it a formidable force.
According to an estimate, the state-dominated Indian banking system is small compared to developed markets, or China which has built up giant lenders in the past two decades.
The market capitalisation of the Indian banking industry is estimated at about $185bn, compared with China’s largest bank ICBC’s value of $217bn, data from Bloomberg shows.
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By GlobalData"Three of the top ten banks in the world are Chinese," said Bhattacharya. "Why did that happen? Because the Chinese economy grew and therefore the banks had to grow in order to provide credit."
"As India’s economy grows, the country will require bigger banks and building bigger banks organically is very difficult."
