Acquisition of SBICI Bank Ltd Approved
SBICI Bank Ltd. is a wholly owned subsidiary of SBI, which was set up in 1994 after taking over the Indian operations of the erstwhile Bank of Credit & Commerce International Ltd. (BCCI), which went into liquidation in 1991.
SBICI Bank Ltd. has only two branches, both in Mumbai. Its performance over the period of its existence has not been consistent. It has not paid any dividend since inception and its net worth stood at only Rs.128.74 crore as on 31st March, 2010 on a capital base of Rs.100 crore. As on 31st March, 2010, the Bank had a total business (deposits + advances) of less than Rs. 700 crore. The Return on Assets of the Bank was 0.49% as on that date. In terms of RBI guidelines for ownership in private sector banks, the Bank's capital is to be raised to Rs. 300 crore. The existing business model of the Bank and the returns generated by it over the years do not justify additional capital infusion.
Recently, the Union Cabinet has approved acquisition of the State Bank of India Commercial and International Bank Ltd. (SBICI Bank Ltd.) by State Bank of India (SBI), in terms of sub-section (2) of section 35 of the State Bank of India Act, 1955.