Parliament Enacts Law to Repeal State Bank Subsidiary Acts and Amend SBI Act

An Act of Parliament, titled The State Banks (Repeal and Amendment) Act, 2018, received the President's assent on August 2, 2018, and was subsequently published for general information. This legislation was enacted with the primary objective of repealing the State Bank of India (Subsidiary Banks) Act, 1959, and the State Bank of Hyderabad Act, 1956, while also introducing amendments to the State Bank of India Act, 1955. The Act was deemed to have come into force retrospectively on April 1, 2017.

The core of the new enactment involved the outright repeal of two significant pieces of legislation that governed the operations of subsidiary banks. Specifically, the State Bank of India (Subsidiary Banks) Act, 1959, which provided the framework for several associate banks, and the State Bank of Hyderabad Act, 1956, which governed the State Bank of Hyderabad, were both repealed. Despite this repeal, a crucial savings clause was included to ensure continuity and legal validity. It stipulated that any action taken or agreement entered into under the provisions of the repealed Acts by the State Bank of Hyderabad, the State Bank of Bikaner and Jaipur, the State Bank of Mysore, the State Bank of Patiala, and the State Bank of Travancore would continue to remain in force and have effect as if the new Act had not been enacted. This provision safeguarded past transactions and legal commitments made by these entities. Furthermore, the Act introduced several amendments to the State Bank of India Act, 1955. These amendments primarily involved the omission of specific clauses and phrases that referred to "subsidiary banks" or "a director of a subsidiary bank" from various sections, including sections 2, 18, 31, 31A, 32, and 36 of the principal Act. These changes effectively removed all statutory references to subsidiary banks from the State Bank of India's foundational legislation.

The legislative intent behind The State Banks (Repeal and Amendment) Act, 2018, was to streamline the statutory framework governing the State Bank of India, reflecting a significant shift in the structure of public sector banking in India. The earlier legal position involved a distinct statutory framework for the State Bank of India and its various subsidiary banks, each operating under their respective enactments. The existence of separate Acts for subsidiary banks, such as the State Bank of India (Subsidiary Banks) Act, 1959, and the State Bank of Hyderabad Act, 1956, created a multi-layered and, at times, complex operational and regulatory environment. The repeal of these Acts and the subsequent amendments to the State Bank of India Act, 1955, addressed these statutory gaps and limitations by consolidating the legal framework. This move was a direct consequence of the merger of these subsidiary banks with the State Bank of India, rendering their individual governing Acts redundant. The legislation provided: “The State Bank of India (Subsidiary Banks) Act, 1959 and the State Bank of Hyderabad Act, 1956 are hereby repealed.” This central action aimed to create a unified and more efficient structure for the State Bank of India, eliminating the need for separate provisions related to subsidiary entities. The amendments to the State Bank of India Act, 1955, were designed to align its text with the new, consolidated reality, ensuring that all references to the now-integrated subsidiary banks were removed, thereby reflecting the single, expanded entity.

Keywords: State Banks Repeal, SBI Amendment, Banking Legislation, Indian Parliament, State Bank of India, Subsidiary Banks, Financial Law, 2018 Act Geo Tags: India District: Not Applicable