State Bank of India and its Associate Banks

State bank of India is a nationalized bank owned by the government of India. Since its merger in 2017, SBI has become the largest bank in India. There are five associate banks of SBI and the sixth one is Bharatiya Mahila Bank. The evolution of SBI in recent years has been noticeable. It is one of the oldest banks operating in India.

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State Bank of India

Associate Banks

The State Bank of India began it’s functioning with the establishment of Bank of Calcutta in 1806. Three years later in 1809, it was redesigned as the Bank of Bengal.

This was later on followed in the form of Bank of Bombay and Bank of Madras. These all banks were later unified to form the Imperial Bank of India.

One of the important points in the history of SBI is the formation of the 1st five-year plan in 1951.

To serve the economy and the rural sector as a whole, an all India rural credit survey committee was formed. This was done with the help of states.

Subsequently, SBI was formed four years later in 1955. The objective of both these committees was the same. Later in 1959, an act was passed which enabled SBI to form eight subsidiaries into one.

Learn more about Functions of State Bank of India here in detail.

Associate Banks of State Bank of India

On 1st April 2017, SBI merged with 5 of its associate banks and one other bank. This brought into SBI the 50 largest banks in the world.

These associate banks included State Bank of Jaipur, Bikaner, Mysore, Travancore, Hyderabad, and Patiala. The sixth bank was the Bharatiya Mahila Bank. Although the banks were merged, the shares of this associate were termed as individual entities.

There are many reasons that were cited for the merger. Some of these are: this merger will decrease the unhealthy competition in the PSBs.

Further, it was difficult for smaller banks to sustain competition and various risk norms. Also, due to the changes in regulations in the form of Basel III, risk norms there was a requirement of compliance and technology.

With the merger, the asset size of SBI became the largest in the world. Banks are now able to focus more on defaulters. Because of the merger, the multiple recoveries can be made easier.

Status and Criticism of SBI after the Merger

SBI under its entity has now more than 23000 branches and employs more than 270,000 people. The deposit of the SBI has also increased up to 26 lakh crores.

There are now more than 35 crores of the customer base for SBI and almost 60000 ATMs for SBI. Also, in terms of its asset size, SBI was ranked 52 in the world by Bloomberg in 2015. This merger helped it become the bank with the largest asset size in the world.

This merger has also caused a lot of criticism for SBI. Some of them are as follows. All the associate banks were once ruled by its owners. For example, State Bank of Hyderabad.

Now, due to the merger, this bank has lost its glory. Due to merger news, the employees of State Bank of Travancore observed a strike against it.

It was to oppose the move for the merger. This was done because the State Bank of Travancore was the only bank with its headquarters in Kerala.

Practice Questions

Q. The origin of the SBI is associated with the establishment of which of the following banks?

A. Bank of Madras

B. Bank of Calcutta

C. Bank of Bengal

D. Bank of Bombay

Answer: B. Bank of Calcutta

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