The merger of State Bank of Indore with State Bank of India will come into effect from August 27. Following this, all branches of State Bank of Indore will function as those of SBI.

"All branches of State Bank of Indore will function as branches of State Bank of India from August 27, 2010. Customers, including depositors of State Bank of Indore will be able to operate their accounts as customers of State Bank of India with effect from August 27," the Reserve Bank of India said in a statement.

"The order of acquisition will be effective on and from the close of business on August 26, 2010," the central bank added.

SBI holds 98% stake in State Bank of Indore. The merger had received approval from the board of SBI last year itself.

The merger would act to the benefit of both banks by reducing competition between the two and better access to funds at competitive rates.

Following the merger, SBI will be left with five associate banks -- State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.