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MUMBAI (Reuters) - India's union cabinet has approved top lender State Bank of India's (SBI) planned merger with its five subsidiary banks, Finance Minister Arun Jaitley said on Wednesday.
SBI is merging with State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore.
SBI has said the merger will help the country's largest lender by assets increase its scale and cut expenses through synergies.
New Delhi expects the move to result in savings of more than 10 billion rupees ($149 million) in the first year of the merger.
Policymakers want to recapitalise and consolidate India's state-run banks so they can extend fresh credit and help drive an investment-led recovery in Asia's third-largest economy.
India's 27 public sector banks account for 70 percent of its banking sector assets, as well as the lion's share of the country's $120 billion in troubled loans.
($1 = 66.9350 Indian rupees)
Reporting by Promit Mukherjee; Editing by Mark Potter