Putting all speculations to rest, Union Cabinet on Wednesday approved the takeover by country’s largest lender—State Bank of India (SBI) of several subsidiaries to strengthen struggling public sector banks.
As earlier proposed, SBI was to take over five units that had been run at arms-length and the government-owned Bharatiya Mahila Bank, a bank for women established in 2013.
India’s 27 public sector banks account for 70 percent of its banking sector assets, as well as the lion’s share of the country’s $120 billion in troubled assets.
Financial experts and policy makers wanted to consolidate the state banks to enable them extend fresh credit and help drive an investment-led recovery in Asia’s third-largest economy that is now being buoyed by state and private consumption.
Notably, SBI’s board had already gave a green signal to takeover of State Bank of Bikaner and Jaipur, State Bank of Hyderabad , State Bank of Mysore and State Bank of Travancore, as well as Bharatiya Mahila Bank.