Lok Sabha Current Affairs

Lok Sabha passes State Banks (Repeal and Amendment) Bill, 2017

The Lok Sabha has passed the State Banks (Repeal and Amendment) Bill, 2017. The bill seeks to repeal the two Acts namely State Bank of India (Subsidiary Banks) Act, 1959, and State Bank of Hyderabad Act, 1956.

It also seeks to amend the State Bank of India (SBI) Act, 1955 to remove references to subsidiary banks and powers of SBI to act as an agent of the RBI for subsidiary banks.

Key Facts

Repealing of SBI (Subsidiary Banks) Act and State Bank of Hyderabad Act: These two acts have established the State Bank of Bikaner, State Bank of Patiala, State Bank of Mysore, State Bank of Hyderabad and State Bank of Travancore.  These banks were subsidiaries of the SB). This repealing of two acts is consequent to the decision of the Union Cabinet February 2017 to approve merger of five subsidiary banks of SBI were merged with it.

Amendments to the SBI Act: The Bill removes references related to subsidiary banks from the parent Act. These references include the definition of a subsidiary bank and powers of SBI to act as an agent of the RBI for subsidiary banks.


The Union Cabinet had approved the merger of five associate banks along with Bharatiya Mahila Bank with SBI. The five banks were State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Travancore, State Bank of Mysore and State Bank of Patiala. After the acquisition by SBI, the subsidiaries banks have ceased to exist and, therefore, it was necessary to repeal the two Acts. The merger had made State Bank of India one of the 50 biggest banks of the world. The main motive behind the merger was to increase the capital base of the bank to enable it to disburse more loans.


Lok Sabha passes NABARD (Amendment) Bill, 2017

The Lok Sabha has passed the National Bank for Agriculture and Rural Development (Amendment) Bill, 2017 by voice vote. The Bill seeks to amend the NABARD Act, 1981.

NABARD is responsible for providing and regulating facilities like credit for agricultural and industrial development in the rural areas.

Key Features of the Bill

Increase in capital of NABARD:  The Bill allows Union Government to increase capital of NABARD to Rs 30,000 crore from Rs. 5000 crore. Further, it allows Union Government to increase it to more than Rs 30,000 crore in consultation with the RBI, if necessary.

Transfer of the RBI’s share to Union government:  The Bill provides that the Union Government alone must hold at least 51% capital share of NABARD. Further, it transfers share capital held by the RBI valued at Rs 20 crore to the Union Government. Currently RBI holds 0.4% of the paid-up capital of NABARD and the remaining 99.6% is held by the Union government and this causes conflict in the RBI’s role as banking regulator and shareholder in NABARD.

Adds Micro, small and medium enterprises (MSME) terms:  The Bill replaces the terms ‘small-scale industry’ and ‘industry in the tiny and decentralised sector’ with the terms ‘micro enterprise’, ‘small enterprise’ and ‘medium enterprise’ as defined in MSME Development Act, 2006.  Further, it allows NABARD to provide financial assistance to banks if they provide loans to the MSMEs.

Consistency with the Companies Act, 2013: The Bill substitutes references to provisions of the Companies Act, 1956 with references to the Companies Act, 2013. It includes provisions dealing with definition of a government company and qualifications of auditors.