State Bank of India (SBI), the nation's biggest lender by assets, will gain USD120 billion in assets following its merger with associate banks and Bharatiya Mahila Bank, the lender said in a statement on Saturday.
In a first move to consolidate India's struggling public sector banks, SBI's board on Thursday approved share swap ratio for the proposed takeover of five units that had been run at arms-length, as well as state-run Bharatiya Mahila Bank, a bank for women set up in 2013.
Policymakers want to recapitalise and consolidate India's state-run banks so that they can extend fresh credit and help drive an investment-led recovery in Asia's third-largest economy that is currently getting a boost from state and private consumption.
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 USD120 billion in troubled loans.
SBI said the merger would expand its assets by 36 percent to about USD447 billion.
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