Bill passed for greater control on SBI subsidiaries

August 11th, 2011 - 6:55 pm ICT by IANS  

State Bank of India New Delhi, Aug 11 (IANS) A legislation that allows the government full control of subsidiary banks of the State Bank of India (SBI) from the Reserve Bank of India was passed by the Lok Sabha Thursday.

Minister of State for Finance Namo Narain Meena tabled the State Bank of India (Subsidiary Banks Law) Amendment Bill, 2009, amending the State Bank of Hyderabad Act, 1956, and the State Bank of India (Subsidiary Banks) Act, 1959.

The bill empowers the government to increase or reduce the authorised capital of a subsidiary bank, issue bonus shares to the existing equity shareholders, permits the chairman of the State Bank to nominate an official as the chairman of the board of a subsidiary bank, appoint the managing director, fix the term of the office, salary and allowances and removal of the managing director.

The powers to fix the capital and appoint top officials of the SBI subsidiary banks vested with the Reserve Bank of India (RBI).

The ownership of these banks was transferred to the central government from the RBI few years ago.

“Due to change in ownership, those provisions need to be suitably modified to reflect the change in the ownership,” according to the statement of objects of the bill.

The bill confers these powers “on the central government instead of the Reserve Bank, but after consultation with the Reserve Bank,” according to the statement.

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