Country’s largest lender State Bank of India (SBI) may not go in for merger of any of its five existing associate banks with itself any time soon, as according to sources privy to the development, it may not even happen in the forthcoming FY15, owing mainly to the fact that the management is keen on internal consolidation.

Another significant reason being cited behind the delay are the forthcoming lok Sabha polls and sources added that a lot would depend also on the new Government, which comes to power in the Centre.

Though former SBI Chairman Prateep Chaudhuri had in August 2013 said that at least one associate bank would be merged during this fiscal, sources pointed out that the priorities changed after he retired on September 30, 2013 and was succeeded by the present incumbent Arundhati Bhattacharya. On her part, Bhattacharya has been of the opinion that the SBI itself first needs some internal consolidation before any such step is initiated.

In fact, during Chaudhuri’s tenure the SBI had even set up a committee to analyse as to which of the associate banks could be merged with it. The former Chairman had clearly hinted that a bank with a weak retail base could be merged, however, nothing of that sort happened.

Bhattacharya while interacting with mediapersons soon after taking over as SBI chief in  October 2013 had said that merger of an associate bank was a long drawn process and already half of the current fiscal had ended. She had at that time, not indicated any specific time line for the process to begin.

A source with direct knowledge of the developments related to the mergers exercise, told The Pioneer that it may not happen for at least another year. Apart from reasons like internal consolidation and impending lok Sabha polls, the not so enthusiastic economic growth during the  current financial year and higher staff expenses are also some of the key factors which are holding back the present SBI management from going ahead with the merger exercise, the source added.

In case a new bank is merged with SBI, the expenses would go up as higher salaries would have to be paid to the staff of the merged entity, they further said. SBI currently has five associate banks namely – State Bank of Patiala (SBP), State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM) and State Bank of Travancore (SBT). All these entities have been given the privilege of functioning as  independent financial bodies till the time they are merged with SBI.

State Bank of Saurashtra and State Bank of Indore had been merged with SBI in 2008 and 2010 respectively.