Union cabinet has taken a delayed but right decision by clearing merger of State Bank of Indore with the parent organisation State Bank of India. Rather it is time that all subsidiaries of State Bank of India should be merged with State Bank of India in one go. Thereafter process of merging of comparatively smaller banks in four major nationalized banks should begin after careful planning. Reducing number of banks will largely reduce need of clearing-operations where funds could be transferred by bank-transfers rather than clearing.
Bulk of banking-business is in urban areas with many branches of various public-sector banks have negligible business because of too many bank-branches in the vicinity. Reducing overheads by merger of public-sector banks will increase their profitability thereby contributing more for national resources and to check tax-burden. With secured service or suitable compensation through Voluntary Retirement Scheme, employees of nationalized banks have no reason to oppose merger of public-sector banks.