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Asset Quality of State Bank of India During the Pre and Post-Merger Period

In: Proceedings of the 3rd International Conference on Reinventing Business Practices, Start-ups and Sustainability (ICRBSS 2023)

Author

Listed:
  • S. Sasikala

    (Alagappa University, Research Scholar, Department of Banking Management)

  • B. Sudha

    (Alagappa University, Professor, Department of Banking Management)

Abstract

The State Bank of India is an Indian multinational public sector bank with a 23 percent market share of assets, and 25 percent of total loans and deposits on 25th March 2022. The associates of SBI viz., State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Hyderabad, State Bank of Travancore, State Bank of Patiala, and Bharatiya Mahila Bank were intermingled with SBI on 1st April 2017. For the first time, SBI came the third lender and seventh Indian company with a Rs.5 trillion market capitalization on the Indian stock exchanges on 14 September 2022, HDFC bank and ICICI Bank achieved this corner before. Asset quality is the major concern of the merged entity. The asset quality of the SBI is badly affected after the merger due to the huge NPAs of the associate banks. The huge provisioning for NPAs erodes the capital base. In this backdrop, the study concentrated on the asset quality of SBI during the pre and post-merger period. The asset quality refers to the loan quality of the banks. The standard assets include loans that are being repaid on time. The net NPA to advances ratio, net NPA to total assets ratio, and total investments to total assets ratio are the metrics used to determine the asset quality of SBI. For the purpose of analysis, the period from 2012-13 to 2016-17 was taken as the pre-merger period and the data from 2017-18 to 2021-22 was taken as the post-merger. The descriptive statistics and paired sample t-tests have been employed. The study reveals that the NPA has dropped from Rs 110,854.7 crore in 2017-18 to Rs. 27,965.71 crore in 2021-22. This trend of lower NPAs increased the asset quality of SBI in the post-merger period.

Suggested Citation

  • S. Sasikala & B. Sudha, 2024. "Asset Quality of State Bank of India During the Pre and Post-Merger Period," Advances in Economics, Business and Management Research, in: Meena Rani Nimmagadda & Catherine S. & Praseeda Challapalli & V. Sasirekha (ed.), Proceedings of the 3rd International Conference on Reinventing Business Practices, Start-ups and Sustainability (ICRBSS 2023), pages 324-331, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-374-0_28
    DOI: 10.2991/978-94-6463-374-0_28
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