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Bank merger: a theory that has divided many

R.Ramabhadran Pillai
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SBI-SBT meger picks up wind

There are developments, which when strung together, cement the belief that SBT could merge with SBI during this financial year
There are developments, which when strung together, cement the belief that SBT could merge with SBI during this financial year

With the Union government gunning for two or three world-size banks in India, the merger of Kerala-based State Bank of Travancore with the State Bank of India is an eagerly awaited development in banking circles.

While bosses in the two banks don’t deny the prospect of a merger, its timing remains a million dollar question. There are developments, which when strung together, cement the belief that merger could happen during this financial year.

One of the key developments that props up the merger theory is the ongoing incorporation of computer software on human resource management in SBT. The project is being undertaken by TCS. Once the software is installed, it will make the human resource management accessible to SBI, which is following the same system. The common platform will make it easier for the decision-makers to chalk out strategies before and after the merger. The software installation has been going on for some time, says a senior official of SBI. But he refused to ascribe a merger motive behind it.

K.S. Krishna, a bank union leader, says that SBT recently prepared a new logo. If the bank is set for a merger now, why should it make a new logo, he asks. But he admitted that the two banks have been increasingly adopting a common platform in various operations. The procedures for payment of salary in SBT are akin to that of SBI, he says. The bank has been expanding its branch network even in areas where SBI has presence, he points out.

At least one Central minister has expressed solidarity with the anti-merger stance of bank unions in Kerala. Their argument is that a united entity will not do justice to Kerala in terms of credit.

Parliament will have to amend the SBI (Subsidiary Banks) Act, 1959, under which the associated banks were established, says the SBI official. Mr. Krishna is doubtful whether the government will antagonise the bank unions in an election year. Though the State Bank of Saurashtra and the State Bank of Indore merged with SBI in 2008 and 2010, the strengths of SBT can’t be compared with those banks, he says.

SBI top brass, including its Managing Director, are expected to meet in Kochi at the end of the month. SBT officials are also scheduled to meet the SBI executives and merger is likely to be discussed.

While technology upgradation to execute the merger is not a huge task for the parent bank, the real issue would be at the grassroots level, assessing the realities at the human resources level. It will be a challenge for the decision-makers to embark on a programme in a State where trade union activity is strong.

The installation of an HR software in SBT, akin to that in SBI, has given credence to the merger theory.

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