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The Lok Sabha has given its nod for a Bill to enable the subsidiary banks of State Bank of India (SBI) to raise capital through public issue route or through preferential allotment/private placement of equity shares.
Once the Bill is enacted into law, the Centre, instead of the Reserve Bank of India, will have the power to approve issuance of bonus shares by SBI's subsidiary banks to its existing shareholders. However, the Bill provides that the Centre's approval will be given only after consultation with the RBI.
This Bill, namely, the State Bank of India (subsidiary banks laws) Amendment Bill 2009, was passed by voice vote after the Minister of State for Finance, Mr Namo Narain Meena, assured the Lower House that the Government does not intend to privatise any of the state-owned banks.
‘Not about privatisation'
“This Bill is not about privatisation. The Government does not intend to privatise public sector banks”, Mr Meena said. The Left parties however staged a walkout as the Minister moved the Bill for passage.
The Bill also seeks to empower the Centre to approve increase in or reduction of the authorised capital of a subsidiary bank, as also permit the SBI Chairman to nominate an official of the State Bank or the subsidiary bank as the Chairman of the Board of a subsidiary bank.
The Centre will also have the power to supersede the board of directors of subsidiary banks in public interest or for depositors' interest on the recommendation of the RBI.
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