The Hindu Business Line : More autonomy for SBI subsidiaries

7 subsidiaries
SBI's subsidiaries are State Bank of Bikaner & Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Saurashtra, State Bank of Indore, State Bank of Mysore and State Bank of Hyderabad.

New Delhi April 19 The Union Cabinet on Thursday agreed to grant greater autonomy to the boards of the seven subsidiary banks of the State Bank of India and bring them on a par with other nationalised banks for issuance of preference shares.

The decisions were taken in accordance with the suggestions of the Standing Committee of Parliament on Finance that had suggested several changes in the State Bank of India (Subsidiary Banks Laws) Amendment Bill, 2006. The Bill was introduced in the Lok Sabha in May 2006 while the Standing Committee had submitted its report in December 2006.

The Cabinet said that the provision would be inserted in the Bill to provide "adequate autonomy to the boards of the subsidiary banks." This would be done by amending Section 63 of the law relating to subsidiary banks that would empower the boards of the subsidiary banks to make regulations with the approval of the Reserve Bank of India.

Preference shares

On the suggestion of permitting the subsidiaries to issue preference shares, the Cabinet said that it has accepted the Standing Committee's recommendation. It said the proposed policy guidelines for issue of such shares by other State-owned banks and the General Regulations to allow nationalised banks to issue equity or preference shares on private placement or preferential allotment, being drafted by the RBI, would also be made applicable to SBI subsidiaries.

Appointments

The Cabinet also agreed with the Standing Committee to allow executives of subsidiary banks to be appointed as chairman of the bank. At present, the SBI Chairman is the ex-officio chairman of all the subsidiary banks.

The Committee's proposal to appoint an RBI nominee director on the board of the subsidiary banks has also been accepted. The pending Bill would be amended to enable "one director possessing necessary expertise and experience in matters relating to regulation or supervision of commercial banks to be nominated by the RBI."

An amendment to the Bill would also be carried out to enable the subsidiary banks to hold their board meetings through video conferencing.

The Cabinet feels that the proposed changes would not only grant greater autonomy to the banks but would alsoenhance their flexibility and corporate governance.

SBI's subsidiaries are State Bank of Bikaner & Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Saurashtra, State Bank of Indore, State Bank of Mysore and State Bank of Hyderabad.

More Stories on : Public Sector Banks | Financial Policy | State Bank of India

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Domestic demand for gold waning

Infosys BPO plans facility in Manila

Met dept sees slightly below average monsoon

Zydus Cadila acquires Japan's Nippon Universal

Fund to plug power sector investment gap likely

Govt lends a hand to exports

ACC clocks 54.5% rise in Q1 net

Gold trade bets on Akshaya Trithi for boost in sales

No relief from high edible oil prices

More autonomy for SBI subsidiaries

Govt asks public sector banks to moderate credit growth

DSL emerges as lead technology for broadband

Retailers hunt for right talent to man stores