Nearly three weeks after the Union Cabinet approved the merger of State Bank of Saurashtra with its parent State Bank of India, the Reserve Bank today said all SBS branches will now operate as SBI branches.

"All the branches of SBS from August 13 will function as branches of SBI. Customers, including depositors, of SBS will now be able to operate their accounts as customers of SBI," the Reserve Bank said in a release here.

The Cabinet had given its approval for the merger late last month. It had also approved introduction of a new Bill in the Parliament to repeal the SBS Act, 1950.

Earlier in the day, the Finance Ministry had passed the order paving the way for SBI to acquire SBS.

"The Ministry of Finance has passed an order for acquiring of State Bank of Saurashtra (SBS) by State Bank of India," SBI said in a filing to the BSE.

The merger would be effective from the "date as may be notified by the Govt of India in the official Gazette," the bank said.

Recently, SBI Chairman O P Bhatt had said the merger with SBS could be completed in a period of three months once the necessary approvals were obtained.

The boards of both banks had approved the merger in August 2007. SBS is the smallest amongst State Bank's group of associate banks.

Government would have to present a new Bill called the SBI Subsidiary Bank Amendment Bill, 2008, in Parliament during the monsoon session for final approval on the merger. All the references to the SBS Act would be deleted from the SBI Subsidiary Act, 1959, through the proposed Bill. Bhatt had said the merger of SBS with SBI would pave way for the amalgamation of its other six associate with itself.

"This would be a good learning experience for the bank and for the industry," Bhatt said.

The merger of its associates is expected to help the country's largest lender effectively face the challenges from its competitors, especially from private and foreign banks.

The merger would also enable SBI to scale up its business in terms of footprint, manpower and resources.

The remaining associate banks are State Bank of Mysore, State Bank of Hyderabad, State Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of Patiala and State Bank of Indore.

State Bank employees, however, are opposed to the merger and reaffirmed their decision to go ahead with the strike on August 18 to protest the merger.