STATE BANK OF INDORE BRANCHES TO BECOME SBI UNITS FROM AUG 26

All branches of State Bank of Indore will function as State Bank of India units with effect from August 26, following the merger of the two lenders, the Reserve Bank of India (RBI) said.

This comes almost a month-and-a-half after the Union Cabinet approved the merger between State Bank of Indore with its parent SBI, a step intended to help the country's largest lender scale up operations and cut costs.

The government had in late July issued the 'Acquisition of State Bank of Indore Order, 2010', under the terms of which the process of amalgamation was to begin from August 26.

SBI holds a 98 per cent stake in State Bank of Indore, which has 503 branches, including 437 core banking branches and 66 branches for NRI services.

Last year, the central board of SBI gave approval for the merger. Following this, the Centre also gave in-principle approval.

SBI had announced a share swap ratio of 34:100 for the merger. This implied 34 shares of SBI would be given for every 100 shares of State Bank of Indore held by minority shareholders.

For this purpose, SBI would issue up to 1.16 lakh shares with a face value of Rs 10 each to minority shareholders of State Bank of Indore.

SBI had also said the issued capital of SBI would increase from Rs 634.96 crore up to a maximum of Rs 635.08 crore, subject to approval of the scheme of acquisition of State Bank of Indore by the government.

State Bank of Indore has a large number of branches outside Madhya Pradesh and Chhattisgarh. 
The merger will help avoid competition between the two entities and will give State Bank of Indore easier access to funds at competitive rates, compared to what it would have managed on the basis of its own growing balance sheet.

This will be the second merger of an associate bank with SBI after a similar exercise with State Bank of Saurashtra in August, 2008.

Following the merger, SBI will be left with five associate banks -- State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. 
Among these, the State Banks of Bikaner and Jaipur, Mysore and Travancore are listed companies.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/State-Bank-of-Indore-branches-to-become-SBI-units-from-Aug-26-/articleshow/6434466.cms