State Bank of India said on Thursday the finance ministry has approved the merger of State Bank of Saurashtra with itself.
"The ministry of finance has passed an order for acquiring of State Bank of Saurashtra by State Bank of India," SBI said in a filing to the Bombay Stock Exchange.
The merger would be effective from the 'date as may be notified by the Govt of India in the official Gazette', the filing added.
Earlier this month, the Union Cabinet had approved the merger of SBS with SBI. The boards of both the banks had given their approval for the merger in August last year. SBS is a wholly-owned subsidiary of the State Bank of India.
After getting Cabinet approval, the finance ministry has finished the groundwork for repealing the State Bank of Saurashtra Act, 1950 and amending the SBI Subsidiary Act, 1959to affect the merger.
Government would have to present a new bill called the SBI Subsidiary Bank Amendment Bill, 2008,in Parliament during the monsoon session for final approval on the merger. All the references to the SBS Act would be deleted from the SBI Subsidiary Act, 1959, through the proposed Bill.
Themerger would pave way for the amalgamation of other six associate banks of SBI with itself and help the country's largest lender take on the competition, particularly from private and foreign lenders, in a better manner.
Themerger would also enable State Bank to scale up its business in terms of footprint, manpower and resources.
Shares of SBI were trading at Rs 1,495.90, down 3.82per cent in the morning trade on the BSE.