Clearing the deck for the merger of State Bank of India (SBI) and its associate, State Bank of Indore, the Reserve Bank of India (RBI) is understood to have approved the amalgamation proposal.
The central bank has given approval for the merger, sources said.
However, official confirmation could not be immediately obtained from State Bank of India.
Last year, the central board of the bank gave approval for the merger. Following this, the Centre also gave in- principle approval for the proposal. SBI holds a 98 per cent stake in State Bank of Indore.
SBI has already announced a share swap ratio of 34:100 for the merger. It has agreed to give 34 shares of SBI for every 100 shares of State Bank of Indore held by minority shareholders.
For this purpose, SBI would issue up to over 1.16 lakh shares of face value of Rs 10 each to minority shareholders of State Bank of Indore.
SBI had also said that 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.
This will be the second such merger between SBI and its associate banks. In August, 2008, the bank had merged State Bank of Saurashtra with itself.
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 on the stock exchanges.
