The total workforce of the country's largest lender -- State Bank of India (SBI) -- will see a reduction over the next two years, after the merger with six entities, owing to attrition, reduced hiring and digitisation, a top official said.

"Manpower will go down with the period of time. Around 10 per cent reduction in two years may be a possibility," Rajnish Kumar, SBI Managing Director, told in an interview.

The public lender currently has around 207,000 workforce and the merger of six entities -- SBBJ (State Bank of Bikaner and Jaipur), SBM (State Bank of Mysore), SBT (State Bank of Travancore), SBP (State Bank of Patiala) and SBH (State Bank of Hyderabad), Bharatiya Mahila Bank -- from April 1 will add approximately 70,000 employees.

"Post-merger we will be at 2,77,000 people in SBI. This may come down to 2,60,000 by March 2019. So it may be less than 10 per cent. Let us first merge and see the impact of the key process changes," Kumar said.

He said there would be some actual reduction in headcount along with re-assignment of the roles, but lay-offs are not an option.

"We have offered voluntary retirement scheme (VRS), there would be natural attritions and every year we may not replace head by head (replacement recruitment). Manpower will also reduce as a result of digital initiatives. There will be a combined effect," he added.

Ruling out layoffs, he said the question does not arise.

"Two years down the line, these efficiencies will start showing. Reduction in manpower will depend on efficiency of the merger and branch networks. Lot of duplication happening will be removed and we will have more feet on the street (customer outreach programmes)," Kumar said.

Hiring in SBI may not be halted, but will reduce by 50 per cent in a year, he said. In 2016-17, SBI hired 19,000 people.

"It will come down from the previous average of hiring. It could be reduced by 50 per cent. We will return to usual 5,000-6,000 recruitment every year," he said.

"We cannot stop new hiring because it creates a lot of gap in the middle management down the line. But full replacement may not be required. If 13,000 people retire in a year, we may recruit 7,000-8,000 in a year," he added.

Kumar said the bank will continue with its policy of branch expansion, and the associate bank branches will be merged.

"There is a policy of branch expansion, we are governed by that. We keep on opening new branches depending on the business potential, that will not stop. We are working on the plan as to how many branches we will open in next two years," he said.

SBI MD said there would be ample benefits from the merger in terms of cost-efficiency and rationalisation.

"Treasury integration, risk management optimisation will happen. It will result in efficiency gains for the bank. Continuously supporting them with capital will not be required. Initially, the costs may go up, but in the next two years... the rationalisation efficiencies will surface," he said.