Centre rejects SBI’s IT subsidiary proposal

New Delhi, Aug 26: THE Centre has spiked a proposal by State Bank of India (SBI) to set up an IT subsidiary on the ground that it would be a ‘digression’ from the bank’s main activities.

“The matter was considered by the government and it was felt that setting up an information technology subsidiary would be a digression from the Bank’s main activity and envisaged role,” sources said.

Earlier, SBI had approached Reserve Bank of India (RBI) for setting up an IT subsidiary to assist the bank in implementation of computerisation, networking of its branches for various banking activities, treasury solutions, risk managment and better managed information services and to meet the requirements of the financial industry and financial sector.

Since the activities proposed to be undertaken by SBI’s IT subsidiary were not covered by Section 6 of Banking Regulation Act, 1949, RBI had recommended to the government to grant necessary approval of the same under Section 19 (1)(C) of the Act.

“The matter was considered by the government and it was felt that the bank should attempt to build upon existing strength rather than make tentative forays into areas that have witnessed major debacles,” sources said. Sources said that it was also felt that the objectives of information technology upgradation of SBI could be easily met by existing arrangements, and added that following these considerations, the approval to the proposal has not been granted.

The bank has undertaken a massive upgradation programme aimed at automating all the business of the bank, network its branches and open new delivery channels.

The upgradation programme would envisage bank-wide networking, internet banking, ATM connectivity, centralised core banking, trade finance and treasury among others.

(PTI)