New Delhi: The government on Monday announced its decision to merge Bharatiya Mahila Bank (BMB) with State Bank of India (SBI) to ensure greater banking services outreach to more women at a faster pace.

“The decision to merge BMB with SBI has been taken in view of the advantage of the large network of SBI among other things," the finance ministry said.

In the three years since Bharatiya Mahila Bank was established, women have been extended loans of Rs192 crore by Bharatiya Mahila Bank and about Rs46,000 crore by SBI group. SBI has a wide reach of more than 20,000 branches and the lowest cost of funds among banks. Out of its 200,000 workforce, 22% are women. SBI group has 126 all-women branches across the country, while Bharatiya Mahila Bank has seven.

“The proportion of administrative and managerial cost in BMB is much higher to reach the same coverage. For the same cost, a much higher volume of loans to women could be given through SBI," the statement said.

“This merger will help SBI get paid capital worth Rs1,000 crore lying on the books of BMB," said Karthik Srinivasan, senior vice-president, Icra Ltd.

Bharatiya Mahila Bank had a loan book worth Rs620 crore and deposit base worth Rs927 crore at the end of March 2016.

“Although the addition of 103 branches of BMB and business of approximately Rs2,000 crore would not make significant impact on the branch network and business levels of SBI, it will be ensured that the merger strengthens and reinforces SBI’s focus on financing of women entrepreneurs in order to fulfil the objectives behind setting up of Bharatiya Mahila Bank," said a statement from SBI.

The government on 23 February said 1 April will be the record date for the merger of SBI with five of its associate banks—State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad and State Bank of Patiala.

All the shares of these associate banks would cease to exist as individual entities and would stand transferred to SBI.

The Reserve Bank of India on Monday said that all branches of associate banks will now function as branches of SBI.

After the merger with its associate banks, SBI is set to be among the top 50 large banks of the world. SBI was ranked 52 in the world in terms of assets in 2015, according to Bloomberg, and a merger will see it break into the top 50.

Gopika Gopakumar in Mumbai contributed to this story.

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