RBI brings State Bank of Sikkim under its regulatory purview

The Reserve Bank of India (RBI) has brought the State Bank of Sikkim under its regulation.

State Bank of Sikkim

• It is a state-owned banking institution.
• The headquarter of the bank is at Gangtok, Sikkim.
• It operates under the jurisdiction of the State of Sikkim.
• The bank handles the banking services as well as the treasury functions of State Government of Sikkim.
• The bank is an autonomous body working under the Government of Sikkim.
• It was established in the year 1968 five years before Sikkim was made a part of India in 1973.
• It was established by the State Bank of Sikkim Proclamation, 1968.
• It has currently 42 branch offices and it operates three revenue counters.
• It was not regulated by Reserve Bank of India unlike other banks until February 21, 2021.
• However, with this regulatory amendment, the structure of bank’s ownership will not change.

Why this bank was not regulated by RBI?

The state of Sikkim was made an associate state and then given the status of a state at a later stage. It was made a part of India following a referendum in the year 1973. Thus, this state enjoys a special status under article 371F. Following which, Banking Regulation Act 1949 and Companies Act does not extend to Sikkim. It still follows the old laws as per the Article 371F of the Constitution. Further, the central direct taxes are also not extended to Sikkim. As per Sec 10(26AAA) any income arising to the Sikkimese through any source in the State or through the dividend or interest on securities are not included in the total income. The people are also not subject to Income Tax. This, the RBI had limited agreement to manage the public debt of the bank.

Month: Current Affairs - February, 2021