Decks have been cleared for the merger of State Bank of Indore with its

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parent State Bank of India, with the Cabinet approving the consolidation of the country's largest lender today.

"Cabinet gave its nod to the merger of State Bank of Indore with SBI," Information and Broadcasting Minister Ambika Soni told reporters.

This will be the second merger of an associate bank with the SBI after a similar exercise with the State Bank of Saurashtra in August 2008.

The merger proposal was approved by the central board of SBI last year. Following this, the Centre also gave an in-principle approval. SBI holds 98 per cent stake in State Bank of Indore.

SBI has already announced a share swap ratio of 34:100 for the merger. It has agreed to give 34 shares of SBI for every 100 shares of State Bank of Indore held by minority shareholders. For this purpose, SBI would issue up to over 1.16 lakh shares of face value of Rs 10 each to minority shareholders of State Bank of Indore.

SBI had also said that the issued capital of SBI would increase from Rs 634.96 crore to a maximum of Rs 635.08 crore after the merger.

Following the merger, SBI will be left with five associate banks

State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. Among these, the State Banks of Bikaner and Jaipur, Mysore and Travancore are publicly listed companies