A 'virtual merger' of State Bank of India with its seven associate banks will take place within 6-12 months as part of the consolidation exercise.
SBI has also kept open options to acquire other banks if the deal is good, its chairman A K Purwar said in New Delhi on Thursday.
When asked whether SBI plans to physically merge the seven associate banks with itself, he said, "it will be different from branch merger."
Purwar did not give details but indications are that SBI and its associates will have the same technology and common treasury operations.
The ATM network of the SBI and its associates is also the same.
Moreover, both SBI and its arms would sell the same retail products, including the insurance policies of SBI Life and New India Assurance and mutual fund schemes.
At present, the associate banks -- State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Indore, State Bank of Saurashtra, State Bank of Mysore, State Bank of
Hyderabad and State Bank of Travancore operate through separate branches.
The identity of individual banks would continue but the financial operations may be merged for better synergies between the parent and the associates.
Purwar said there would be consolidation in the Indian banking sector and only 4-5 world-class banks will emerge in the country in the next few years, as against the 27 odd PSU banks operating now.
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