The Hindu Business Line : SBI amendment Bill introduced

The Finance Minister, Mr P. Chidambaram, on Monday introduced the State Bank of India (amendment) Bill, 2006 that seeks to allow reduction in the Reserve Bank of India's shareholding (statutory minimum) in the country's largest commercial bank from 55 per cent to 51 per cent of the issued equity capital.

Currently, the RBI holds 59.73 per cent stake in State Bank of India (SBI). The Centre has already agreed in-principle to acquire the RBI's shareholding in SBI and indicated that it would maintain a minimum 51 per cent stake in SBI, as is the case with other public sector banks.

Proposals

The State Bank of India (amendment) Bill 2006 proposes to

allow SBI to issue preference and bonus shares. Although SBI can access the capital market by issuing equity shares or bonds, or by both equity share and bonds, there is currently no express provision under the SBI Act to enable SBI to issue preference shares and bonus shares.

Besides increasing the authorised capital of SBI to Rs 5,000 crore, the Bill also proposes to enable the bank to increase issued capital by preferential allotment or private placement of equity or preference shares.

Voting rights

The Bill proposes to restrict the voting rights of preference shareholders to resolutions directly affecting their rights. Moreover, such preference shareholder would not be entitled to exercise voting rights in respect of preference shares held by him in excess of ten per cent of the total voting rights of all the shareholders holding preference share capital only.

Nomination

The Bill also proposes nomination facility for shares held by individual or joint shareholders. It would also allow transfer of unpaid or unclaimed dividend of up to 30 days to `unpaid dividend account' and after seven years to the `Investor Education and Protection Fund' established under Section 205C of the Companies Act.

SBI's share opened at Rs 1,260 on the National Stock Exchange (NSE) on Monday and closed at Rs 1,269.30. It touched an intra-day high of Rs 1,281.70 and intra-day low of Rs 1,208.10 during today's trade.

The Central Board of the State Bank would be allowed to hold meeting through video conferencing or such other electronic means as might be prescribed by the regulations.

Administrator

The Central Government would also be empowered to supersede the Central Board in certain cases on the recommendations of the RBI and to appoint an administrator for the period during which the Central Board would stand superseded.

Besides abolition of the post of vice-chairman, the Bill would allow the Central Government to appoint not more than four managing directors in consultation with the Reserve Bank. Currently, the law provides for only two managing directors.

It is also proposed to entitle the shareholders present in an annual general meeting to `adopt' the balance sheet.

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