Cabinet nod for stock split of SBI subsidiaries

In a move to help State Bank of India (SBI) raise funds through stake sale in seven associate banks, the union cabinet today cleared a proposal to amend the SBI (Subsidiary Banks) Act, 1959 to provide for stock split of these banks and greater participation by retail investors.

This was announced by Commerce Minister Kamal Nath after the cabinet meeting chaired by Prime Minister Manmohan Singh.

The amendment is aimed at reducing the face value of equity shares from Rs 100 to Rs 10 or less in the seven associate banks of SBI, and relax the limit on maximum number of shares that can be held by an individual. As per the SBI (Subisidiary Bank) Act, a shareholder cannot hold more than 200 shares.

The move is being interpreted by the industry as a precursor to public offers by the seven subsidiary banks of SBI of which four are unlisted.

While State Bank of Travancore, State Bank of Bikaner and Jaipur and State Bank of Mysore are listed entities, State Bank of Hyderabad, State Bank of Patiala, State Bank of Indore and State Bank of Saurashtra are unlisted.