Cabinet approves State Bank of India's merger with 5 subsidiary banks

India`s union cabinet has approved top lender State Bank of India`s (SBI) planned merger with its five subsidiary banks, Finance Minister Arun Jaitley said on Wednesday.

SBI is merging with State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.

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SBI has said the merger will help the country`s largest lender by assets increase its scale and cut expenses through synergies.

New Delhi expects the move to result in savings of more than Rs 1,000 crore ($149 million) in the first year of the merger.

Policymakers want to recapitalise and consolidate the country's state-run banks so they can extend fresh credit and help drive an investment-led recovery in Asia`s third-largest economy.

The country's 27 public sector banks account for 70% of its banking sector assets, as well as the lion`s share of the country`s $120 billion in troubled loans.

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