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`SBI associate banks must merge'

Special Correspondent

JAIPUR: : The Chairman of the State Bank(SB) group, A. K. Purwar hinted on Saturday that sooner or later the associate banks of State Bank of India would have to merge into a single entity.

The additional capital requirements of the banks in the changed economic scenario within the country and outside had left the SB group subsidiaries with no other option than a merger in the long run, he said.

"The long-term solution is only a merger. As for the immediate concerns, a virtual merger is already taking place with integration in information technology, treasury operations, accounting practices, systems and procedures and market information sharing,'' Mr. Purwar said talking to mediapersons. "I personally advocate merger,'' he said.

Mr. Purwar, who was here to preside over the 44th annual general meeting of State Bank of Bikaner and Jaipur (SBBJ), said a strong synergy had developed among State Bank of India and associate banks in cross-selling products of insurance, mutual funds and credit cards. Close cooperation was there in human resources development, and deputation of senior officials.

"Legal merger can wait while the banks cooperate amongst themselves at the virtual level. The associate banks are doing well. As of now we have enough headroom," Mr. Purwar said.

The State Bank group commanded about one-fourth of the market in India while in Rajasthan it had a market share of 42 per cent in deposits and 34 per cent in advances, he said. The operating profit of the group stood at Rs. 15,201 crores in 2004-05, while the net profit was Rs. 5,465 crores.

The chairman said the SB group which would enter its 200th year on June 2, had a unique track record of 200 years of profitability. The group, which acquired one bank in Mauritius the past year, would take over two foreign banks — one in Asia and another in Africa — this year, he disclosed. He refused to divulge their identity.

On a question whether his name was being tipped for the post of the Reserve Bank Governor, he quipped, "I am very happy with SBI chairmanship. Let me do this job."

The total business of the bank increased by Rs. 5,837 crore to Rs. 31,294 crore.

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