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Wednesday, March 22, 2017

Bharatiya Mahila Bank to merge with SBI

The Government of India has decided to merge the Bharatiya Mahila Bank (BMB) with the State Bank of India (SBI) to ensure greater banking services outreach to a larger number of women, at a faster pace. The objective is to offer affordable credit to women as well as propagate women-centric products, which need to be quickly achieved through a wider network and lower cost of funds.

The decision to merge BMB with SBI has been taken in view of the advantage of the large network of SBI among other things. In the three years since BMB was established, it has extended loans of Rs.192 crore to women borrowers, while the SBI group has provided loans of about Rs.46,000 crore to them. SBI has a large outreach of more than 20,000 branches, with lowest cost of funds in the sector.

Out of the total workforce of around 2 lakh employees in SBI, 22 percent are women. SBI group already has 126 exclusive all-women branches across the country, while BMB has only seven. The proportion of administrative and managerial cost in BMB is much higher to reach the same coverage.   For the same cost, a much higher volume of loans to women could be given through SBI.

However, Union Government is committed to enhance the access to financial services to the population at large and women in particular. Under the Pradhan Mantri Jan-Dhan Yojana, preference is given to women for overdraft facility. Pradhan Mantri Mudra Yojana had 73 percent women borrowers in the previous financial year.

Source : Financial Express
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Government to infuse capital in IDBI, Bank of Maharashtra and Dena bank

State-owned IDBI Bank, Bank of Maharashtra and Dena Bank will receive a capital infusion from the government in lieu of preferential allotment of shares. IDBI Bank will get Rs 2,500 crore funding from the government, subject to regulatory approvals. Board of directors of the bank at a meeting held today approved proposal to allot preference shares to the government.

“Board of directors of the bank has approved the proposal for preferential issue of capital to government and other financial institutions, if any aggregating up to Rs 2,500 crore,” IDBI Bank said in an exchange filing. IDBI Bank extraordinary general meeting is scheduled for April 27 for obtaining shareholders’ approval to allot preferential shares to the government.

Pune-based Bank of Maharashtra said board of directors will meet on Friday to consider the proposal of raising equity capital by preferential allotment of shares to the government. The bank said it has received communication from the government on March 16 for capital allocation plan of Rs 300 crore.

Dena Bank said in a separate filing to exchange, “We would like to inform you that the Board of Directors of the Bank approved raising of share capital of the Bank up to amount of Rs 800 crore.” The government has approved the second tranche of capital infusion in public sector banks to enhance their capital base.

The first tranche was announced in July with the objective of enhancing their lending operations and enabling them to raise more money from the market. It has already announced a fund infusion of Rs 22,915 crore, out of the Rs 25,000 crore earmarked for 13 PSBs for the current fiscal.

The second round of funding entailing about Rs 8,000 crore is based on strict parameters.

Source : Financial Express
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Branches of associate banks to operate as SBI branches from April 1

All the branches of State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT) will function as branches of State Bank of India from April 1, 2017.

All the customers including depositors of these banks will now be treated as customers of SBI from April 1.

The cabinet had approved the proposed merger of State Bank of India (SBI) and five subsidiaries in February this year.

Source : Economic Times
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How India switched to digital payment methods

After the government banned Rs 500 and Rs 1,000 notes in November’16, digital activity levels were low in the initial weeks as people were busy depositing or exchanging the banned notes. But it increased from December as remonetisation progressed.

Growth was good in October 2016, mainly on account of festive season. But it continued further from November 16 to January 17 as well. This was a positive fallout of demonetisation. However, the pace of growth moderated somewhat in February 2017.

Source : Economic Times
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SBI to shut down 47% of associate banks' offices post-merger

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 of the associate banks," SBI Managing Director Dinesh Kumar Khara told IANS in an interview.

"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," Khara said.

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

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; December 2016 ranking 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 told IANS that, post-merger, the bank will be at No. 45.

The move is to avoid overlapping 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 various 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 told IANS.

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 said.

"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," he told IANS.

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.

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.

Source : Economic Times
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