Govt may bank on RBI to push SBS merger with SBI

To get around the legal hurdles in way of merger between State Bank of Saurashtra (SBS) with State Bank of India, the government is planning to ask the Reserve Bank of India to introduce a scheme for the merger. Under the State Bank of Saurashtra Act, RBI can frame a scheme to enable merger with SBI, said a source. The Cabinet was expected to take up the terms and conditions of SBS merger last month.The approval of the terms and conditions for this merger will be crucial because similar conditions will be relevant for the subsequent merger of the remaining subsidiaries of SBI. The law ministry is of the view that the government cannot issue an executive order and repeal the specific legislations governing some of these associates, since they were created by an act of Parliament. In addition, all subsidiaries are also governed by the SBI Subsidiaries Act, 1959. The government needs parliamentary approval to make such changes. Given issues of legal amendments and rationalisation of staff, among others, the government first wants SBS to be merged and then take the experience forward to merge other subsidiaries. Indications are that the employees are on board for the merger as employees of the subsidiaries will be treated at par with SBI employees and will be given the third retirement benefit too, in addition to two, as a result of the merger.