The largest bank in the country, State Bank of India (SBI) pressurizes its associate banks to pay royalty for using the SBI logo. SBI demands for 1% of the net profits of the associate banks as the royalty. It threatens to withdraw the logo on failure of receiving the fee.
The bank's threat to withdraw the logo was made on the confrontation of two associate banks to pay the royalty. The boards of State Bank of Patiala and State Bank of Bikaner and Jaipur refused to pay the fee and also said that SBI can take the desired action.
The demand made by the parent is believed to be based on the suggestions extended by an internationally reputed consulting firm that it has been engaged with for several years.
Industry analyst said that the demand to pay a royalty on the logo is a strategy used by the SBI to force the associate banks to merge with the SBI. The bank unions have been opposing the merger plans and therefore SBI is taking moves that would compel the associate banks to agree on the parent's decision on merger.
Recently SBI has merged its smallest associate bank, State Bank of Saurashtra (SBS) with itself. The parent now wants to consolidate more associate banks within the group but the employees union is not favouring the merger plans and also going on strikes to protest the move.
In January, SBI deferred its meager plans and said that it would concentrate more on maintenance of its financial position and overcoming slowdown.
SBI has six associate banks that include State Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Hyderabad, State Bank of Indore and State Bank of Patiala.