Paving the way for the seven State Bank of India subsidiaries to tap the capital market, the Union Cabinet today approved an amendment to the SBI (Subsidiary Banks) Act, 1959. This will enable the seven subsidiary banks to to go for a stock split. It would also allow SBI to pare its holding in the associate banks to 51 per cent from a 55 per cent limit now.SBI chairman AK Purwar said the seven banks can raise up to Rs 500 crore each from the capital market, post amendments. While three subsidiary banks are already listed, the remaining four banks will go for a public offer soon.Shares in SBI, which owns between 75 per cent and 100 per cent of its seven associate banks, jumped 2.8 per cent to Rs 974.70, while its three listed subsidiaries rose between 5 per cent and 20 per cent. The amendment would also raise the voting rights cap for the shareholders in the three banks to 10 per cent from 1 per cent. A cap on individuals holding no more than 200 shares in the subsidiaries would also go, the officials said.In another decision, the Banking Regulation (Amendment) Bill 2005, that was introduced in the Lok Sabha in May 2005, is being further amended. I&B Minister Priyaranjan Dasmunshi said, ‘‘The present provisions in the Banking Regulation Act of 1949 were inadequate for the reforms taking place in the financial sector. These amendments will enable RBI to lay down policy and issue directions to monitor them’’.Another Cabinet decision about the banking sector was the Amendment to the RBI (Amendment) Bill of 2005. The amendments deal with the definitions of the expressions ‘repo’ and ‘reverse repo’, which are being modified to bring about conformity with market usage and international practices.The Cabinet also approved the National Institutes of Technology Act 2006 that will bring 19 National Institutes of Technology within the ambit of the Act. A Bill to enact the legislation will be tabled in Parliament this year. “This would enable the National Institutes of Technology to become centres of excellence like the IITs,” Dasmunshi said. The Cabinet Committee on Economic Affairs also met today and has decided to extend the controversial Duty drawback scheme called Duty Entitlement Passbook Scheme (DEPB) for another year.
