Dubai: State Bank of India (SBI) and its associates expect to complete the merger by the end of the current financial year and will consolidate the operations of associate banks in the Gulf region in the near future, said senior management team from State Bank of India, State Bank of Hyderabad (SBH) and State Bank of Travancore (SBT).

“Non-resident Indian (NRI) customers will not be affected by the merger of SBI and its associates. Post-merger all customers of all associate banks will become customers of SBI with terms and conditions of deposits and loans remaining unchanged,” said CR Sasikumar, Managing Director of SBT.

SBT has a NRI deposit base of Rs340 billion (Dh18.35 billion) of which 85 per cent are from the GCC, while SBH and SBI have deposits of Rs50 billion and Rs18 billion NRI deposits, respectively.

The detailed merger plan, including financial implications, HR and asset-liability issues are being vetted by the Reserve Bank of India (RBI) and the approval from the central bank is expected anytime soon.

Earlier this year, the government cleared the proposal to merge SBI with its five associate banks — State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Mysore, State Bank of Patiala, State Bank of Hyderabad — and the new Bharatiya Mahila Bank (BMB).

With the merger of all the five associates and BMB, SBI will become a global-sized bank and could compete with the largest in the world, with 22,500 branches and 58,000 ATMs. It will have over 500 million customers.

While the merged entity will have a balance sheet size of Rs37 trillion, about one fifth the size of India’s GDP, the consolidation will elevate to the bank to the rank of one of the top 50 global banks.

Cost saving

Post-merger SBI will have more than 22 per cent market share in India’s banking sector with the government of India owning more than 60 per cent of the total shares of the banking behemoth.

“The merger and the consolidation will result in major cost savings in terms of capital expenditure on technology and global compliance costs,” said Santanu Mukherjee, Managing Director of SBH.

“In the Gulf region, post-merger, SBI will honour all local business agreements of associates such as SBH and SBT,” said PK Mishra, General Manager of SBI.

After the merger, City Exchange, a money exchange currently managed by SBT will come under the management of SBI. While the representatives offices of associate banks in the UAE will become representative offices of SBI, one of these will be relocated to Abu Dhabi. The status of SBI’s operations in the DIFC will remain unchanged and SBI’s all operations in the region will be brought under a single branding.

Regarding the impact of demonetisation of Indian rupee on NRI customers, SBI and its associate banks clarified that the concerns of NRIs have already been taken up with the RBI and any new development will be communicated officially.

Factbox: Merger implications

* Customers to benefit from SBI’s wider reach and branch network.

* Large scale business of SBI will lead to better pricing.

* No change in the branch network until consolidation and rationalisation takes place.

* Loan accounts will continue on contracted interest rates till maturity or new review, whichever is earlier.

* A few account holders to face change in account numbers.

* Existing cheques and debit cards will be valid for a specified period.