Credit growth unlikely to revive materially in near term: SBI

Credit growth in the country is unlikely to revive "materially" in near term as demand conditions are still acting as a laggard, says an SBI report.
The report noted that it is "too early and premature" to say about the credit growth picking up in the country.
In the fiscal 2015-16, the credit off-take showed some signs of improvement and was at 11.3 per cent as on March 18 2016. However, as on April 29, this year, credit growth has again declined to 9.2 per cent.
"Given that demand is still a laggard we are skeptical of credit growth picking up even as the banks are in the midst of balance sheet cleaning," SBI said in a research note.

According to the report, the supposed correlation between balance sheet cleaning and credit growth picking up will only happen once the growth cycle picks up significantly.
"In our view growth will now have to happen before credit growth."

Meanwhile, the yearly SBI Composite Index for May this year declined to 51.6, mainly due to lower credit growth.
The monthly index, however, jumped to 50.3 in May from 46.5 in April due to factors such as increase in commercial vehicle and consumer durables sales.
An index value of 42 to 46 means moderate decline, 46 to 50 (low decline), 50 to 52 (low growth), 52 to 55 (moderate growth) and above 55 (high growth), it added.

State Bank of India alone has nearly 16,500 branches,
including 191 foreign offices spread across 36 countries.
Out of the five subsidiary banks, SBBJ, SBM and SBT are listed.
The board of SBI earlier approved the merger plan under which SBBJ shareholders will get 28 shares of SBI (Re 1 each) for every 10 shares (Rs 10 each) held. Similarly, SBM and SBT shareholders will get 22 shares of SBI for every 10 shares.
The shares of the listed associates will be delisted from stock exchanges following the merger.
SBI had approved separate schemes of acquisition of State Bank of Patiala and State Bank of Hyderabad. There will not be any share swap or cash outgo as they are wholly-owned by SBI.

According to the scheme of merger, the pay and allowances offered to employees or officers of the five associates will not be less than what they would have otherwise drawn.
SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of Indore was merged with it.
Once the merger takes effect, existing customers of the subsidiaries will benefit from the access to SBI's global network. It will also lead to better management of high value credit exposure through focused monitoring and control over cash flows instead of separate monitoring by six different banks.
In 2015, Kotak Mahindra Bank completed acquisition of mid-sized private lender ING Vysya Bank for about Rs 15,000 crore. The deal was touted as India's biggest banking merger.

The merger catapulted the nation's fourth-largest private bank to an entity with nearly Rs 2 lakh crore balance-sheet.
With an over 200-year history, SBI has its origins dating back to 1806 when Bank of Calcutta (later called Bank of Bengal) was established. In 1921, Bank of Bengal and two other banks (Bank of Madras and Bank of Bombay) were amalgamated to form Imperial Bank of India.
In 1955, the Reserve Bank acquired the controlling interests of Imperial Bank of India and SBI was created by an Act of Parliament to succeed Imperial Bank of India.