SBI merger with associate banks – Good or Bad?


Theme :-

  • State Bank of India’s five associate banks will be merged with SBI from 1st April, 2017. This is the biggest merger yet in the Indian banking industry.

Good :-

  • With this move, SBI’s assets will be 37 lakh crore rupees with nearly 50 crore customer base. Hence SBI’s rankings will go up in global banking stage.
  • Large international bank will be created in India.
  • Costs of operations will be reduced. Profits will be increased.
  • Consolidated SBI can secure a place in the global list of top 50 large banks.
  • Internationally sourced funds and domestic deposits will be increased.

Bad :-

  • Consolidated SBI will be too big, nearly four times to its next competitor. This will result in monopoly situation. Lack of competitive spirit may slow down the progress.
  • If SBI faces financial crisis, state will not be capable to provide the required capital, because SBI will be too big.
  • Due to its huge share in Economy, losses for SBI will have a significant negative impact on Indian Economy.
  • Merger will be an expensive and herculean task.
  • Future recruitment will slow down for the next 3 to 4 years.
  • Customers of associate banks may lose personalized service, because of impersonal nature of SBI.
  • Merger will deepen the problem of bad debts.

Conclusion :-

SBI merger with associate banks benefits Indian banking industry as well as Indian Economy. However the move has many challenges.

Also Read :  Impact of GST on Indian Economy

Your Turn…

Do you think SBI merger with associate banks is a good decision? Express your thoughts in the comment section below.

Photo credits: Peter Gibbons via Flickr under CC 2.0.

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1 comment

  1. According to me SBI merger is good. Bank establishment costs has been reduced and SBI property has been increased .Customer they have come under SBI banner.As a result SBI will earn more profit.

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