Government approves changes in law to prop up SBI subsidiaries

19 Apr 2007

Mumbai: The government has approved the State Bank of India (Subsidiary Banks Laws) Amendment Bill, 2006, aimed at improving business operations of the SBI''s subsidiary banks.

The meeting was presided over by prime minister Manmohan Singh approved changes to the banking law to impart greater operational freedom to SBI subsidiaries, a government spokeswoman said without giving details.

In May 2006, the government moved a bill in Parliament proposing the reduction of State Bank of India''s stake in its seven subsidiaries to 51 percent each from mandated level of 55 per cent.

The amendments also propose to ease restrictions on fund raising and individual share ownership. There was also a move to raise the voting rights of investors in SBI''s subsidiaries from the existing 1 per cent to 10 per cent.

The news boosted shares of three SBI subsidiaries, which rose between 4.3 per cent and 10 per cent on the Bombay Stock Exchange (BSE). State Bank of Mysore was up 10 per cent, State Bank of Travancore was up 5 per cent and State Bank of Bikaner & Jaipur rose 4.28 per cent at 2.25 p.m.

Four other subsidiaries are not listed on the stock exchanges.