Call for all

Calcutta, March 6: The finance ministry has set the ball rolling for amendments to the SBI Act and the SBI (Subsidiary Banks) Act so that State Bank can take over private banks, other banking companies and regional rural banks.

?We are keen to take over banks as part of a consolidation exercise. Unless the two acts are amended, we cannot go ahead with our plans. Talks are being held with the finance ministry on the issue,? senior officials of SBI told The Telegraph from Mumbai.

Talks have been initiated after finance minister P. Chidambaram announced he would push bank consolidation. Explaining just why it was necessary, he had said the banking sector presented a picture of paradox. There are many in the country but none among the top 20 in the world. The country?s largest bank, State Bank of India, ranks 82 in terms of business.

?It is universally acknowledged that the key drivers of the banking sector in future will be competition, consolidation and convergence. The Reserve Bank has prepared a roadmap for banking sector reforms and will unveil it soon. Most proposals will be implemented by the central bank, but some legislative changes are required,? the minister had said while laying out the blueprint.

The amendments now under consideration would facilitate the merger of State Bank and its seven subsidiary (associate) banks. Currently, the two sets of laws do not allow SBI to take over associate banks, other banks or regional rural banks.

According to finance ministry officials, it is necessary to expand the definition of ?banking institution? in the SBI Act and the SBI (Subsidiary Banks) Act to include the public sector banks, subsidiaries of SBI and banking companies. This will go a long way in facilitating the much-needed consolidation.

On a larger canvas, the government is also considering amending the Bank Nationalisation Acts of 1970 and 1980 to give a wider definition to the term ?banking institution? with the aim of facilitating mergers. The proposal is to define ?banking companies? to include not only commercial banks but other institutions such as RRBs and financial institutions (FIs) as well.

The ministry has said the lack of a definition of the term ?banking institution? in the two acts ? the Banking Companies (Acquisition and Transfer of Assets) Act, 1970 and 1980 ? has come in the way of facilitating mergers in the banking industry. The two nationalisation acts may be amended to empower the Reserve Bank and the government to frame schemes for mergers of banks with entities governed by other laws.

Home loans

State Bank?s Maharashtra and Goa circles have reported a 41 per cent growth in home loans to Rs 3,873 crore till February. Their total loan disbursals was Rs 12,450 crore, a rise of nearly 38 per cent over Rs 9,164 crore in the corresponding period last year.