State Bank of India on Monday ruled out a spike in bad loans following the mega merger that has catapulted the country's largest lender into the top 50 globally with close to $500 billion balancesheet.

"Increase in NPAs is not necessary (post-merger) as associate banks had a number of accounts which were standard, but those were already NPAs with us. So, to that extent, those things have been put on the same platform," Chairman Arundhati Bhattacharya told reporters here on Monday.

Effective April 1, the five associate banks — State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore — as well as Bharatiya Mahila Bank have been merged with SBI, creating a global banking behemoth.

She said the bank has undertaken an asset quality review (AQR) on its own, apart from the one mandated by the Reserve Bank in December 2015, in respect of all the common accounts as part of the merger process.

"All the stressed assets to the extent possible, where we had common exposures, are aligned now. We had taken more than INR 8,600 crore of additional provisions," she added.

"We believe that even though numbers look bigger, we now have much better ability to resolve them as the day we resolve our NPAs, those will also get resolved. So, there will be much more control on resolution going forward." 

It can be noted that while SBI contained its bad loans in the December quarter most of the five associates saw the same soaring. While gross NPA of SBI rose to 7.23 per cent in the December quarter from 5.10 per cent a year ago, its net NPA firmed up to 4.24 per cent from 2.89 per cent.

But State Bank of Mysore saw its gross NPA soaring to 14.46 per cent and net NPA to 9.22 per cent while SBBJ's gross NPA rose to 11.19 per cent and net NPA to 8.26 per cent. As for SBT, its gross NPA jumped to 12.22 per cent and net NPA to 8.03 per cent. SBH's net NPA more than trebled to 8.03 per cent from 2.46 per cent a year earlier.

Bhattacharya said SBI has created a CBS database of about 500 tera byte, which is likely to be the biggest Oracle database in the world.

"We've accomplished it in the past 48 hours. I don't think anybody in the world would have attempted and completed such a mass mission, a six-way merger of such a magnitude," she said.

Post-merger, SBI will join the league of top 50 banks globally in terms of assets worth Rs.37 trillion and customer base of 370 million.

She said the focus in the first quarter will be more on consolidation, which is expected to be over by May 27, and the branch rationalisation will start from the second quarter onwards. "Once audits are completed, from April 24 onwards, every weekend, data of one bank to be merged will be taken and will be merged with SBI," she said.

"So, within May 27, the entire granular level data merger will be completed," she said further, adding that in the case of Bharatiya Mahila Bank and the treasury, the granular data merger has already been completed.

Talking about the voluntary retirement scheme introduced for employees of five associate banks, Bhattacharya said that out of the 12,500 eligible staffers, 2,800 have already opted for the scheme that closes on April 5.

She claimed that the merger will benefit associate banks' customers in terms of lower interest rates and an additional bouquet of products and services. "As a result of merger, borrowers can expect lower interest rates at renewal or at time of origination of the loan," the chairman said.

Managing Director for national banking group, Rajnish Kumar said there is also a rationalisation at the level of DGMs and regional manager offices, "which will bring in a lot of efficiency at administrative level and on the cost front".

The bank has identified nearly 1,800 branches in close proximity that will be relocated depending on the business potential, he said.

According to Bhattacharya, after merger, the number of branches has gone up to 24,013 and the headcount to 2,70,011, which includes 69,191 from the associates and BMB.