Union Cabinet approves merger of five associate State Banks with State Bank of India (SBI), read the headline. The five associate banks are State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. The merger will create INR 37-lakh crore banking behemoth, with over 50 crore customers. According to a press release by SBI Chairperson, with this merger SBI will now get some global level visibility as the merged entity would now be in the top 50 banks of the world.
“The whole is other than the sum of its parts,” Gestalt psychologist Kurt Koffka.
As I was having my breakfast today, it stuck me that the sandwich that I was eating is representative of the merger of SBI and its existing associate banks! Why? Because a sandwich has different ingredients going into it: bread, butter, salt and pepper, vegetables, ketchup, and so on. The experience that I get if I were to eat each of them individually versus eating them as a sandwich, which is a blended form of ingredients, is entirely different.
Just like in a sandwich where the individuality of the ingredients is lost, with mergers and amalgamation the individuality of the associate banks is also lost. As in a sandwich, the bread defines what the amalgamated entity would be recognized as; in this case, SBI will be the defining entity of the merged banks.
All the associate banks were established during the pre-Independence era, with State Bank of Mysore being the earliest to have started in 1913. It was a common practice of the princely states to establish banks that would act as the central banker for their respective princely state. After independence, the banks came under the purview of the Indian government.
In a world, especially of finance, where bigger the better philosophy runs rampant, these associate banks that come with their own unique interesting story stand now at the gateway of losing their existence and identity. Just as Gestalt psychologists say, in the perceptual system the whole has an independent existence that is not sum of the parts, in this case, the amalgamated and merged State Bank of India has a different story to tell – the associate banks would soon become just another page in the history of one of the world’s top banks.