Calcutta, Sept. 17: The State Bank of India’s plans to merge with the State Bank of Saurashtra has thrown up the problem of staff integration.

On August 25, the SBI’s central board approved the merger to kickstart the consolidation of its subsidiaries with itself. The State Bank of Saurashtra is one of the three non-listed subsidiaries. The four other associate banks are listed on the stock exchanges.

The merger proposal needs the approval of the Union government and the Reserve Bank of India. SBI managing director T.S. Bhattacharya, however, is hopeful of getting it.

“The crucial issue is how to integrate the staff of the State Bank of Saurashtra with the SBI. The employees have to be brought under the pension scheme that the SBI employees enjoy,” Bhattacharya said on the sidelines of a CII meeting here today.

The SBI has more than two lakh employees. The management had to raise the monthly pension limit to 50 per cent of the last-drawn salary of up to Rs 21,040. Employees earning above Rs 21,040 a month would get 40 per cent on the excess salary.

Earlier, the limit was Rs 8,500. The SBI employees also get the benefits of contributory provident fund and gratuity, which other banks do not have.

After the merger, the SBI will also have to provide for the pension of more than 35,000 employees of the State Bank of Saurashtra.

The appointment of the senior management of the State Bank of Saurashtra in the SBI also poses a problem.

The SBI may also go slow with its plans to create a holding company to hive off its investments in insurance and asset management ventures.

“Let ICICI Bank first do it and raise money through an IPO. We will follow them,” Bhattacharya said.

K.V. Kamath, managing director and chief executive officer of ICICI Bank, said the Reserve Bank had come out with a discussion paper.

“The RBI will take a decision after it gets feedback on the paper. Let’s see what comes out of it,” Kamath said.