Parliament has approved the bill to merge six subsidiary banks with the State Bank of India (SBI) with the Rajya Sabha on Wednesday clearing the State Banks (Repeal and Amendment) Bill, 2017.

The bill repeals the State Bank of India (Subsidiary Banks) Act, 1959, and State Bank of Hyderabad Act, 1956 besides amending the State Bank of India (SBI) Act, 1955.

The State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore were constituted under the State Bank of India (Subsidiary Banks) Act, 1959.

The State Bank of Hyderabad and the State Bank of Patiala were wholly owned by the State Bank of India (SBI). The SBI had 90 percent shareholding in the State Bank of Mysore, 75.07 percent shareholding in the State Bank of Bikaner and Jaipur and 79.09 percent shareholding in the State Bank of Travancore.

For the purposes of "rationalisation of resources, reduction of costs, better profitability, lower cost of funds leading to better rate of interest for public at large, improved productivity and customer service," the SBI, with the sanction of the central government and in consultation with the Reserve Bank of India (RBI), entered into negotiations with these subsidiary banks for acquiring the business, including assets and liabilities.

The Union Cabinet granted its approval in February 2017, which allowed the SBI to acquire these subsidiaries.

"After the acquisition of the subsidiary banks by SBI, the subsidiary banks have ceased to exist and, therefore, it was necessary to repeal the State Bank of India (Subsidiary Banks) Act, 1959 and the State Bank of Hyderabad Act, 1956," the objectives of the Bill read.

"There are certain provisions in the State Bank of India Act, 1955, which apply to the subsidiary banks. After the acquisition of all the subsidiary banks by the SBI, it is not necessary to retain such provisions in the State Bank of India Act, 1955. Therefore, certain amendments are necessary in the said Act in so far as they relate to the subsidiary banks," it said.

The Bill was introduced in the Lok Sabha by the Finance Minister Arun Jaitley on July 21, 2017, and has been passed by the lower house.