New Delhi, Aug. 24: The cabinet today approved the SBI (amendment) Bill that allows India’s number one bank to access the capital market and connect with small investors.

Parliamentary affairs minister Priya Ranjan Das Munshi said the bill would be introduced either in the current session or the next session of Parliament. He said by giving SBI greater control of its operations, the bill would allow the bank to discharge its functions more efficiently.

Meanwhile, the Rajya Sabha today passed by a voice vote a bill that gives more flexibility to the boards of public sector banks and improve corporate governance.

The banking companies (acquisition and transfer of undertakings) and financial institutions laws (amendment) bill, 2005, which includes the amendments suggested by the standing committee of Parliament, was passed by the Lok Sabha yesterday.

The proposed recast of SBI along with the bill that was cleared today by the Upper House will give PSU banks more teeth to fight growing competition.

The bill, cleared by the cabinet in May, will increase the number of whole-time directors from two to four and make government shares transferable.

SBI is the country’s largest commercial bank with a business turnover of Rs 38,000 crore through its 824 branches in the country.

About 60 per cent of the banks are in rural areas, underlining the significance of the bank in the country’s development.

The government has been able to improve the management of public sector banks, reflected in the lowering of their NPAs.

PLR hike

The SBI board expectedly endorsed the bank’s decision to raise its prime lending rate by 25 basis points.

On August 1, the benchmark SBI rate was revised upwards by 25 basis points to 11 per cent.

This pushed up the housing loans of banks by a quarter of a percentage point. Prior to the PLR hike, a five-year fixed rate home loan of the banks costs 9.50 per cent. For floating rates, the loans varied between 8.75 per cent and 9.75 per cent.

The board met today after the finance ministry directed all banks to get their rate hike, following the rise in RBI’s repo rates, endorsed by the boards.