NEW MEASURES

New Delhi, April 19: The Union cabinet today cleared a bill seeking to bring the seven subsidiaries of State Bank of India on a par with other nationalised banks.

The State Bank of India (Subsidiary Bank Laws) Amendment Bill will now be introduced in Parliament.

The bill aims to give more power to the banks’ boards and improve corporate governance.

When the bill is passed, SBI’s subsidiaries will be allowed to hold board meetings through video conferencing.

An officer of the subsidiary bank will also be considered for the post of chairman of the bank, which is not possible now.

SBI will also come out with a follow-on public offer this fiscal to raise funds, chairman .P. Bhatt said.

The bank had said it was planning to offload about 5 per cent of its promoter’s stake to raise its capital adequacy ratio.

The Reserve Bank of India owns 59.73 per cent of SBI. The government plans to buy out this stake by June-end.

SBI is also planning to curtail its credit growth by about 3 per cent this fiscal following directions from the finance ministry.

“We are looking at a 25 per cent credit growth this financial year against 28 per cent last fiscal,” said Bhatt.

Finance minister P. Chidambaram wants the credit growth of 30 per cent in the industry to be moderated.

Bhatt said credit growth in the industry was moving down. “I am sure we will have more moderation this fiscal,” he added.

The SBI chairman also said hardening of the interest rate cycle has either peaked or nearly peaked. On liquidity tightening by the RBI, Bhatt said there was enough liquidity in the system.