SBI's subsidiary banks to enjoy more autonomy

New Delhi, May 15 (UNI) The Lok Sabha today passed a bill seeking to bring the seven subsidiary state banks on par with the State Bank of India (SBI) and to accord greater autonomy to them to function virtually as nationalised banks.

Winding up the discussion on the State Bank of India (Subsidiary Banks Laws) Amendment Bill, 2006, Finance Minister P Chidambaram said the new legislation did not have any provision that restricted the autonomy of the subsidiary. Nor did it seek to take away their public sector character.

"It is my intention to allow them to grow in full measure and compete effectively with the nationalised banks," he said.

Mr Chidambaram dismissed the suggestion of some members to merge into one entity the subsidiary banks of the SBI-- State Bank of Saurashtra, State Bank of Hyderabad, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Indore, State Bank of Mysore and the State Bank of Travancore.

He said the Bill also sought to deposit the unpaid dividend of the subsidiary banks of the SBI into an "Investor Protection Fund." Mr Chidambaram said the Bill was no different from the Bills on other nationalised banks passed by the House earlier. Some of the recommendations of the Parliamentary Standing Committee, to which the bill was referred after its introduction last year, had made several recommendations and many of them were incorporated in the final.

The Bill allows the Chairman of the SBI to nominate an official of the SBI as the Chairman of a subsidiary bank, with the approval of the RBI.

Mr Chidambaram said the shareholders in the subsidiary banks could elect up to a maximum of three directors.

Ruling out the possibility of privatisation of the subsidiaries, he clarified that the term private placement in the Bill did not mean placing the banks in private hands. This was just a method of allocating shares.

Regarding the provision for supression of the board of directors of the subsidiary banks, he said if the board indulged in default or negligence, it could be superceded for a period of six months on the recommendation of the SBI by the RBI.

Earlier, participating in the discussion, Opposition members opposed scaling down the SBI shares in the subsidiaries from 55 per cent to 51 per cent and feared there was a move for privatisation of the subsidiary banks. They felt there was no need for amendment to the existing Bill and wanted it to be withdrawn. Congress members, however, supported the Bill.

Those who participated included Mr Amitabh Hanoi, Dr B Mehtab, Mr K S Rao, Mr V P Singh, Mr Sudhakar Reddy and Mr Varkala Radhakrishnan.

UNI