New Delhi: Government introduced on Monday the long-awaited banking reform legislation aimed at giving more autonomy to country's largest commercial bank State Bank of India's subsidiaries for raising authorised capital to Rs 500 crore.
The Bill, introduced by Finance Minister P Chidambaram, allows seven subsidiaries of SBI to raise capital by way of preferential allotment, private placement or public issue.
The State Bank of India (Subsidiary Banks Laws) Amendment Bill, 2006, seeks to amend the State Bank of Saurashtra Act, 1950, State Bank of Hyderabad Act, 1956 and the State Bank of India (Subsidiary Banks) Act, 1959.
The subsidiary banks include the State Bank of Patiala, the State Bank of Bikaner and Jaipur, the State Bank of Indore, the State Bank of Mysore and the State Bank of Travancore.
The acts contain provisions regarding constitution of banks, their capital, management and control and other connected matters.
Over 28 lakh private shareholders of the four subsidiary banks face difficulties due to certain restrictions imposed under the SBI (Subsidiary Banks) Act.
"In order to remove difficulties faced by shareholders of subsidiary banks and to facilitate increase of the capital of subsidiary banks to enable them to raise resources from the market and also to comply with certain guidelines issued by the SEBI, it has become necessary to amend" the acts, the statement of objects and reasons of the bill said.
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