State Bank of India would finally be acquiring its associate bank, State Bank of Indore. The Cabinet has finally approved the merger.

The cabinet would be introducing a Bill in the Lok Sabha to facilitate the consolidation. The bill would aim at making amendments in the State Bank of India's (subsidiary banks) Act, 1959, to remove references of State Bank of Indore, said Information and Broadcasting Minister Ambika Soni.

The finance ministry said that the acquisition would facilitate economies of scale in terms of manpower, footprint and resources.

'SBI is facing a situation where most of the branches of SBI and those of State Bank of Indore are competing for the same business in the same market, under the same brand. This has prevented SBI from fully exploiting its brand equity for driving business growth,' it read.

The merger is the second of its kind with SBI and its associate banks. The first such merger was of SBI with State Bank of Saurashtra in August 2008.