Thiruvananthapuram: Senior CPI (M) Member of Parliament P. Karunakaran has cautioned the Centre against the move to merge the State Bank of India and its associate banks without taking Parliament into confidence.
In a recent letter to Finance Minister P. Chidambaram, Karunakaran pointed out that the Banking Regulation Act was clear that the associate banks could not be merged with SBI without amendments to the Act.
The views expressed by SBI chairman O.P. Bhatt in recent interviews to the media, that the SBI had the legal competence to go ahead with the merger was contrary to facts, deputy leader of CPI-M in the Lok Sabha Karunakaran said.
Both the Narasimhan Committee and the Leeladhar Committee, which studied issues of banking restructuring, had made it amply clear that amendments would be needed to have provisions enabling merger of associate banks either among themselves or with SBI, he said.
These committees had also pointed out that any amalgamation would affect the rights of shareholders and any negotiations for amalgamation would have to be initiated with the approval of shareholders, he added.