Merger of SBI Commercial with SBI

The Union Cabinet has approved acquisition of the State Bank of India Commercial and International Bank Ltd. (SBICI Bank Ltd.) by State Bank of India (SBI), in terms of sub-section (2) of section 35 of the State Bank of India Act, 1955. SBICI, with two branches in Mumbai, is a wholly owned subsidiary of State Bank of India (SBI) and functions as a private sector bank offering an array of financial products and services. The terms and conditions for the acquisition have been approved by board of directors of both the banks and also by the Reserve Bank of India. It is hoped that the merger would help in eliminating the cost involved in maintaining the administrative structure of SBICI as both the branches of SBICI would be easily absorbed in the operations of the main bank.
Significance of the merger by the government: In the overall analysis, continuation of SBICI in its present form would not create a sustainable organization with a separate niche, able to hold on its own in the medium term. As an independent Bank also, SBICI has had to maintain a full-fledged, elaborate administrative setup to conform to regulatory requirements. The cost of maintaining such a structure is disproportionate to the level of operations of the SBICI. The proposed merger would help in eliminating the cost involved in maintaining the administrative structure of SBICI as both the branches of SBICI would be easily absorbed in the operations of the main Bank. While no present beneficiary of the State Bank of India would be affected, the number of beneficiaries would be the clients of SBI Commercial and International Bank Ltd. who will have access to the bigger network of State Bank of India.
SBICI:
SBICI Bank Ltd. is a wholly owned subsidiary of SBI, which was set up in 1994 after taking over the Indian operations of the erstwhile Bank of Credit and Commerce International Ltd. (BCCI), which went into liquidation in 1991. SBICI Bank Ltd. has only two branches, both in Mumbai.