Par Panel for clear policy on PSU banks merger

Accusing government of adhocism, a Parliamentary Committee today demanded a clear policy on mergers and consolidation in the public sector banks, including amalgamation of associates with the State Bank of India (SBI).

"There is a strong element of adhocism in the policy stance and approach of the government in brining in legislative changes in the Acts regulating the SBI and its subsidiaries in particular," Standing Committee on Finance headed by former Finance Minister Yaswant Sinha said in its report tabled in Parliament today.

It is also imperative to assess in clear terms, the reasons for rising NPAs in the SBI Group of banks as well as the desirability of pursuing the policy of merging the subsidiary banks with SBI, particularly in the light of issues relating top manageability of large sized banks, it noted.

It is appropriate on part of the government to make an in-depth analysis of issues relating to mergers and consolidation of the public sector banks in general, it said.

"The Committee expects the government to spell out the policy-related aspects in this regard, it said.

Meanwhile, it cleared the State Bank of India (subsidiary banks laws) Amendment Bill, 2009 for passage by Parliament.

The amendment proposals of the State Bank of India (Subsidiary Banks Laws) Amendment Bill, 2009 have been necessitated owning to transfer of ownership of SBI from Reserve Bank to central government, it said.

It also suggested amendment in the SBI Pension Fund Rules, which is detrimental to the retirees of the merged subsidiary banks.

The panel expects the government to expeditiously act on these matters.

The Bill, which, seeks to empower the government to fix the authorised or the issued capital of a subsidiary of the SBI or to appoint its top officials, was referred to the panel on December 18, 2009 for examination.

Once passed, the bill would empower the Centre to increase or reduce the authorised capital of a subsidiary bank, fixation and raising of issued capital, issuing bonus shares to shareholders and appointment of managing director, among other things.

The legislation would amend the State Bank of Hyderabad Act and the SBI (Subsidiary Banks) Act to incorporate these provisions.