SBI to Shut Down Half of Associate Banks’ Offices After Merger  

After the merger with five of its associate banks, State Bank of India will be among 50 biggest banks in the world.

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State Bank of India (SBI), which will see five associate banks merge into it on April 1, has decided to shut down almost half the offices of these banks, including the head offices of three of them. This process will start from April 24.

Out of the five head offices of the associate banks, we will retain only two. Three head offices of the associate banks will be unbound along with 27 zonal offices, 81 regional offices and 11 network offices.
Dinesh Kumar Khara, SBI Managing Director

“We will keep their structure in place till April 24 and, post that, we will start dismantling the associate banks’ controlling offices, which includes head offices, regional offices, zonal offices and network offices,” he added.


The five associate banks that will merge with SBI are State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH).

SBI is India’s largest bank with assets of Rs 30.72 lakh crore and figures at no. 64 in the global ranking of banks as of December 2015 (the ranking for December 2016 is still awaited).

Post merger, with assets of approximately Rs 40 lakh crore, it will be among the top 50 banks in the world. SBI Chief Economist Soumya Kanti Ghosh said that post merger, the bank will stand at no. 45 among banks globally.

The shut-down move is to avoid overlapping of offices in the same area and "we intend to remove any kind of duplicacy in the controlling structure", Khara said.

The five associate banks will cease to exist as legal entities and become a part of SBI from April 1, but the merger processes will start only after April 24, once the balance sheets of the five entities are audited and added.

“We will have to get the balance sheets of the associate banks audited a day prior to the merger, that is, on March 31. The balance sheets of the banks will be drawn up and added; it takes 15-20 days. Soon after the audit is done, the branches will be completely merged with SBI,” Khara said.


More Than 1,000 Employees Affected

There are currently 550 SBI offices, while its associate banks have 259. The target for the number of controlling offices after the merger is 687 – a reduction of 122 offices.

Employees directly affected by these shutdowns – estimated at 1,107 – will be redeployed, mostly in customer-interface operations, Khara said.

“The net result is that people in controlling functions will be available for deployment on the ground for improving reach to the consumer,” he added.

“There are about 5-7 people in every regional office and 20-odd people in each zonal office. One regional office controls 30-40 branches, while 4-5 regional offices are controlled by one zonal office,” Khara said.


The associate banks have also offered a voluntary retirement scheme (VRS) to employees who do not wish to relocate. "VRS is only an option, else they will be relocated. They will have a different role," he said.

Data Merger of Five Entities

Along with the winding-up of these offices, a number of merger processes will come into effect simultaneously, including the data merger of the five entities.

"Data merger will also start from April 24 and we will finish it by May-end. That is the plan of action," he said, adding that the bank had given itself six months to complete all merger-related processes.


"I would rather say that within a quarter, all the things should be in order. Ideally, we would like to have it in one quarter, but it will not spill over beyond the second quarter," Khara said.

SBI says the merger will be done seamlessly as it has the experience of two earlier mergers. State Bank of Indore was merged with SBI in 2010, while State Bank of Saurashtra was merged in 2008.

(This article has been published in arrangement with IANS.)

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