The State Bank of India (Subsidiary Banks Laws) Amendment Bill, 2006 has got the Union Cabinet’s approval on April 20. The motto behind the amendment is to give the SBI’s seven subsidiaries the flexibility and authority to raise resources from the market.

State Bank of India has its seven subsidiary banks such as the State Bank of Saurashtra, the State Bank of Hyderabad, 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.

According to the report, the bill maintains that the SBI should reduce its shareholding in its 7 subsidiaries from a minimum of 55 per cent to 51 per cent.

Further, the bill allows the subsidiaries banks to raise funds from market through preferential allotment or private placement or public issue.

Earlier, the bill was tabled in the Parliament in May last year. If the bill would take a form of the act, the flexibility of the board of directors would be enhanced, corporate governance of all subsidiaries banks would be developed and the boards of the subsidiary banks will have the powers to frame necessary regulations.

A Parliamentary standing committee earlier had recommended the necessary amendments in the governance of SBI and its seven subsidiary banks. It is being said that the amendments would bring the functioning of subsidiary banks according to the changed scenario and modern business practices in the banking sector.

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