New Delhi: The Reserve Bank of India, which would have to transfer to the government 59.7 per cent stake in the country's largest commercial bank, State Bank of India, is currently working out modalities for this purpose with the Finance Ministry.
"It is a fact that the shares are being transferred to the government, we are working on modalities of share transfer," Banking Secretary, Ministry of Finance, Vinod Rai said after Cabinet decided to amend SBI Act to enable the bank to tap the capital market for raising funds.
He said, the proposed amendment seeks to empower the bank to issue preference shares and bonus shares.
Once the SBI Act is amended, the bank will be authorised to increase the number of managing directors and executive directors so that it can discharge its functions more efficiently since the operation of the bank has expanded manifold over the years, he said.
Currently, the bank has one Chairman and three Managing Directors. After the amendment is through, there would be no cap on the number of managing directors, he said.
In a bid to give more flexibility to Board of Directors and improve corporate governance standards in public sector banks, Parliament recently passed the Banking Companies (Acquisition and Transfer of undertakings) and Financial Institutions Laws (Amendment) Bill.
The Bill includes a number of provisions for giving greater flexibility to the board of directors and improve corporate governance norms in state-run banks and also envisages increasing the number of whole-time directors from two at present to four, besides making the government share transferable.
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