The Federal Home Loan Bank Board, as expected, took the first formal step yesterday toward giving federally chartered savings and loan associations broader powers through subsidiary service corporations.

The board took the action just prior to reporting a slowdown in deposit growth and mortgage lending activity in January.

Deposits at federally chartered S&Ls rose by $1.8 billion for the month, compared to $4.7 billion in December. Withdrawals exceeded new savings by $300 million in January, down from $1.7 billion a month earlier.

The Bank Board asked for public comment on proposed regulations that would authorize S&Ls to engage in a broad group of business activities including the operation of brokerage firms and money market funds through their service subsidiaries.

Public comment will be received during the next 60 days on the proposals which would bring federally chartered S&Ls in direct competition with commercial banks and brokerage firms.

Bank Board officials estimate that the proposals could be approved as regulations three to four months from now.

Some powers contained in the proposals would also be authorized by legislation pending in the Senate Banking Committee. Bank Board Chairman Richard T. Pratt stressed that the agency's proposal is not a substitute but that it "dovetails" with legislative efforts being made in Congress.

A major change proposed by the Bank Board would allow service corporations to engage in securities activities. They could establish money market mutual funds and sell and purchase securities for customers.

The Glass-Steagall Act generally prohibits depository institutions from selling or underwriting securities. However, the Bank Board maintains that service corporations aren't covered by Glass-Steagall because they are separate entities.

Other major proposed powers would allow service corporations to underwrite property, casualty and life insurance; engage in commercial lending without restriction; offer debt collection services; trade financial options on organized exchanges and issue letters of credit.

Service corporation activities currently are limited to those which are "reasonably" related to the activities of parent S&Ls. At the same time, S&Ls are limited to investing no more than 3 percent of their assets in service corporations.

Pratt said the board has no plans at present to increase the asset limit which was established by statute. He also recalled that pending legislation which would restructure the industry contains a provision to raise the limit to 5 percent.

The 3 percent limit shouldn't hamper S&Ls, however, said Pratt, because service corporations are expected to participate in joint ventures which would allow them to spread the asset limit.

Pratt said the new proposals reflect the board's belief "this needs to be addresed if the public is to be served and if these are to be viable institutions."

Initial reaction in Congress was sharp opposition to the Bank Board's proposal. Rep. John Dingle (D-Mich.), chairman of a House committee which has jurisdiction over securities and exchanges, called it "patently illegal."

House Banking Committee Chairman Fernand J. St Germain (D-R.I.), called it "an overzealous effort to circumvent the Congress."

Trade groups representing S&Ls indicated support for the proposal to expand service corporation powers. However, the American Bankers Association predictably expressed opposition.