Parliament clears State Bank of India Amendment Bill -Angel Broking

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Parliament clears State Bank of India Amendment Bill
The parliament has cleared the State Bank of India Amendment Bill, bringing the affairs of
five State Bank of India subsidiaries directly under the government’s supervision. The
government will have control in fixing the authorised capitals of State Bank of India
subsidiaries, appointing managing directors and fixing their terms of office, salary and
allowances. The bill also provides for increasing State Bank of India’s authorised capital to
`5,000cr, raising capital by preferential allotment or by private placement, issuing bonus
shares, allowing reduction of government’s shareholding from 55% to 51% and restricting
the voting rights of those holding preference shares.
The move is expected to pave way for the bank to expand its capital base and make the
process of merger of the subsidiary banks with itself smoother. We reiterate our Buy
recommendation on the stock with a target price of `3,490