The Hindu Business Line : Bill to replace SBI ordinance introduced

New Delhi, Aug. 17 The Finance Minister, Mr P Chidambaram, on Thursday introduced a Bill in Lok Sabha that seeks to replace the Ordinance promulgated on June 21 to facilitate the Centre’s buyout of the entire Reserve Bank of India (RBI) shareholding in State Bank of India (SBI).

The Centre had on June 29 this year acquired 59.73 per cent stake of RBI in SBI against total payment of Rs 35,531.33 crore drawn from the Consolidated Fund of India.

The RBI has now returned this amount to the Centre as part of the transfer of surplus for its accounting year ended June 30, 2007.

In the current year’s Budget, a sum of Rs 40,000 crore was provided for this purpose.

In view of the large amount involved ( approximately Rs 40,000 crore), it was decided to complete the transaction before June 30, 2007 i.e. the date of closure of the annual account of the RBI.

An Ordinance was promulgated to complete the transaction as both the Houses of Parliament were not in session.

The Narasimham Committee-II on banking sector reforms had observed that it is inconsistent with the principles of effective supervision that the regulator is also the owner of a bank.

The RBI, therefore, accepted the recommendations of the committee for the transfer of its shareholding in SBI, NHB and NABARD to the Government.

In February 2007, the Centre approved the proposal for transfer of ownership of shareholding of RBI in SBI to the Government.

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