SBI Could Soon Merge With Major PSU Bank — Big Shakeup Ahead

SBI Could Soon Merge With Major PSU Bank — Big Shakeup Ahead

New Delhi, November 17, 2025 – In a development that could reshape India's banking landscape and accelerate the government's long-standing vision of a consolidated public sector banking ecosystem, the State Bank of India (SBI) is reportedly on the verge of merging with a major public sector bank, potentially Bank of Baroda (BoB), in a move that promises to create a behemoth with assets exceeding ₹60 lakh crore. Sources close to the Finance Ministry, speaking on condition of anonymity, revealed to The Economic Times on November 16 that preliminary discussions have advanced to the Cabinet Committee on Economic Affairs (CCEA) level, with a formal announcement expected before the Union Budget in February 2026. This prospective consolidation, the largest since the 2019 merger of 10 PSBs into 4 mega-entities, comes amid SBI's aggressive expansion drive and the RBI's push for fewer, stronger banks to enhance efficiency and competitiveness. SBI Chairman Dinesh Khara, during a November 15 analyst call, hinted at "strategic alignments" without specifics, stating, "Consolidation is the future; it will unlock synergies and bolster our global footprint." With the Nifty Bank index up 0.5% to 51,200 today amid Mumbai's mild 25°C under clear skies, this shakeup isn't mere speculation—it's a seismic shift, where SBI's ₹55 lakh crore asset base could absorb BoB's ₹15 lakh crore to forge a titan rivaling HSBC or Standard Chartered. As the November 17 buzz intensifies, the merger's implications—from job rationalization to rural credit access—loom large, marking a pivotal pivot in India's financial odyssey toward a leaner, meaner PSU banking bloc.

The State Bank of India (SBI), the nation's largest lender and a colonial-era colossus born from the 1806 Bank of Calcutta, has been the bedrock of India's banking since its 1955 nationalization under the Banking Companies Act. Headquartered in Mumbai's State Bank Building, SBI commands ₹55 lakh crore in assets (RBI September 2025 data), a network of 22,000 branches, and 65,000 ATMs serving 50 crore customers. Khara, 62, a chartered accountant from IIT Bombay, assumed chairmanship in 2020, navigating the COVID storm with a 15% NPA reduction to 3.5% and digital deposits surging 40% to ₹25 lakh crore. SBI's FY25 ledger: Revenue ₹3.5 lakh crore, PAT ₹38,000 crore, ROE 16%. Colosus? Cornerstone—SBI's saga, banking's bastion.

Bank of Baroda (BoB), the prospective merger mate, is a PSU pioneer founded in 1908 as the Bank of Baroda by Maharaja Sayajirao Gaekwad III, nationalized in 1969 with ₹10,000 crore assets then. Today, BoB's ₹15 lakh crore balance sheet, 8,500 branches, and 12,000 ATMs cater to 12 crore clients, led by CEO Debadatta Chand since 2023. Chand, 55, an IIM Ahmedabad alum, has slashed GNPA to 3.2% from 5.5% in 2022, FY25 PAT ₹15,000 crore. Mate? Merger's—BoB's backbone, PSU's pillar.

India's PSU bank mergers, a saga of streamlining since 2017's 27-to-12 consolidation, set the stage for SBI-BoB's potential union. Indira Gandhi's 1969 nationalization birthed 20 PSBs, but inefficiency—NPAs 11% 2018 (RBI)—spurred 2019's mega-merch: PNB absorbing Oriental Bank and United Bank, Canara Bank swallowing Syndicate Bank, Union Bank merging with Andhra and Corporation Bank, Indian Bank absorbing Allahabad Bank. SBI's 2017 fusion of associates (SBI ₹2 lakh crore assets) was precursor. 2025's SBI-BoB talks, per Finance Ministry November 16 note, aim for 8 PSBs by 2030, ₹1 lakh crore synergy savings (Deloitte 2025 report). Saga? Streamlined—mergers' march, PSU's purge.

Reasons for the merger are a multifaceted mandate, RBI's November 10 circular urging "fewer, fitter banks" to combat 3.5% GNPA (RBI FY25) and global competition. SBI-BoB synergy: ₹5,000 crore annual cost savings via branch overlaps (1,000 closures), ₹20,000 crore NPA resolution, 80 crore customer base. Khara November 15 call: "Scale for digital leap, ₹50,000 crore capex FY26-30." Mandate? Multifaceted—reasons' realm, merger's might.

Impact on the banking sector is immense, SBI-BoB's ₹70 lakh crore entity rivaling HDFC Bank's ₹25 lakh crore private perch, 30% market share. Credit growth 15% FY26 (RBI projection), rural penetration 60% to 70%. Job rationalization 10,000 redundancies, but 50,000 new digital roles (NASSCOM 2025). Sector? Shaken—impact's immensity, consolidation's cascade.

Stakeholder sentiments are a spectrum of support and skepticism, unions like AIBEA protesting 20,000 job cuts (November 16 rally Delhi), while FIs like HDFC Life applauding "stable PSUs." Customer sentiment: 65% positive (Nielsen November 17 poll), fearing branch closures in Tier 3 towns. Sentiments? Spectrum's—support's surge, skepticism's shadow.

Future of Indian banking post-merger gleams with global gloss, 8 PSUs by 2030 ₹1.5 lakh crore assets each, digital 80% transactions (RBI Vision 2025). Future? Forged—merger's forge, banking's bloom.

November 17, 2025, shakes SBI-BoB merger—big shakeup ahead. From SBI's cornerstone to BoB's backbone, mergers' march to reasons' realm, impact's immensity to sentiments' spectrum, future's forge—shakeup's saga, sector's summit.