A REPORT ON STATE BANK OF INDIA
Submitted to:
Mrs. Pradeepika
Submitted by:
vishal 115 Jyoti-116 Parveen-117 Sapna-118
University school of management Kurukshetra
Introduction to State Bank of India:
State Bank of India is an India-based bank. In addition to banking, the Company, through its subsidiaries, provides a range of financial services, which include life insurance, merchant banking, mutual funds, credit card, factoring, security trading, pension fund management and primary dealership in the money market. It operates in four business segments: the treasury segment includes the entire investment portfolio and trading in foreign exchange contracts and derivative contracts; the corporate / wholesale banking segment comprises the lending activities of corporate accounts group, mid corporate accounts group and stressed assets management group; the retail banking segment comprises of branches in National Banking Group, which primarily includes personal banking activities, and other banking business. As of March 31, 2011, the Bank had a network of 18,266 branches including 4,724 branches of its five Associate Bank.
History :
The evolution of State Bank of India can be traced back to the first decade of the 19th century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was the first ever jointstock bank of the British India, established under the sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay (established on 15 April 1840) and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal. These three banks dominated the modern banking scenario in India, until when they were amalgamated to form the Imperial Bank of India, on 27 January 1921. An important turning point in the history of State Bank of India is the launch of the first Five Year Plan of independent India, in 1951. The Plan aimed at serving the Indian economy in general and the rural sector of the country, in particular. Until the Plan, the commercial banks of the country, including the Imperial Bank of India, confined their services to the urban sector. Moreover, they were not equipped to respond to the growing needs of the economic revival taking shape in the rural areas of the country. Therefore, in order to serve the economy as a whole and rural sector in particular, the All India Rural Credit Survey Committee recommended the formation of a statepartnered and state-sponsored bank. The All India Rural Credit Survey Committee proposed the take over of the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. Subsequently, an Act was passed in the Parliament of India in May 1955. As a result, the State Bank of India (SBI) was established on 1 July 1955. This resulted in making the State Bank of India more powerful, because as much as a quarter of the resources of the Indian banking system were controlled directly by the State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in 1959. The Act enabled the State Bank of India to make the eight former State-associated banks as its subsidiaries.
The State Bank of India emerged as a pacesetter, with its operations carried out by the 480 offices comprising branches, sub offices and three Local Head Offices, inherited from the Imperial Bank. Instead of serving as mere repositories of the community's savings and lending to
creditworthy parties, the State Bank of India catered to the needs of the customers, by banking purposefully. The bank served the heterogeneous financial needs of the planned economic development.
Subsidiaries
The State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries. Through the establishments, it offers various services including merchant banking services, fund management, factoring services, primary dealership in government securities, credit cards and insurance. The eight banking subsidiaries are:
State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of India (SBI) State Bank of Indore (SBIR) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT) State Bank of India (SBI) is the largest Indian banking and financial services company (by turnover and total assets) with its headquarters in Mumbai, India. It is state-owned. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banks, Bank of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of India. The government of Indianationalised the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. SBI has 14 Local Head Offices and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas. With an asset base of $352 billion and $285 billion in deposits, SBI is a regional banking behemoth and is one of the largest financial institutions in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans.The State Bank of India is the 29th most reputed company in the world according to Forbes. Also SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010. The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank, Punjab National Bank and HDFC Bankits main competitors.
INTERNATIONAL PRESENCE
The Israeli branch of the State Bank of India located in Ramat Gan. As of 31 December 2009, the bank had 157 overseas offices spread over 32 countries. It has branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Tehran, Johannesburg, London, Los Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town. It also has an ADB in Boston, USA. SBI operates several foreign subsidiaries or affiliates. In 1990, it established an offshore bank: State Bank of India (Mauritius). In 1982, the bank established a subsidiary, State Bank of India (California), which now has ten branches nine branches in the state of California and one in Washington, D.C. The 10th branch was opened in Fremont, California on 28 March 2011. The other eight branches in California are located in Los Angeles, Artesia, San Jose, Canoga Park, Fresno, San Diego, Tustin and Bakersfield. The Canadian subsidiary, State Bank of India (Canada) also dates to 1982. It has seven branches, four in the Toronto area and three in British Columbia. In Nigeria, SBI operates as INMB Bank. This bank began in 1981 as the Indo-Nigerian Merchant Bank and received permission in 2002 to commence retail banking. It now has five branches in Nigeria. In Nepal, SBI owns 55% of Nepal SBI Bank, which has branches throughout the country. In Moscow, SBI owns 60% of Commercial Bank of India, with Canara Bank owning the rest. In Indonesia, it owns 76% of PT Bank Indo Monex. The State Bank of India already has a branch in Shanghai and plans to open one in Tianjin In Kenya, State Bank of India owns 76% of Giro Commercial Bank, which it acquired for US$8 million in October 2005.
ASSOCIATE BANKS
Main Branch of SBI at Mumbai. SBI has five associate banks; all use the same logo of a blue circle and all the associates use the "State Bank of" name, followed by the regional headquarters' name;
State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore
Earlier SBI had only seven associate banks that constituted the State Bank Group. Originally, the then seven banks that became the associate banks belonged to princely states until the government nationalised them between October 1959 and May 1960. In tune with the first Five Year Plan, emphasising the development of rural India, the government integrated these banks into the State Bank of India system to expand its rural outreach. There has been a proposal to merge all the associate banks into SBI to create a "mega bank" and streamline operations. The first step towards unification occurred on 13 August 2008 when State Bank of Saurashtra merged with SBI, reducing the number of state banks from seven to six. Then on 19 June 2009 the SBI board approved the merger of its subsidiary, State Bank of Indore, with itself. SBI holds 98.3% in State Bank of Indore. (Individuals who held the shares prior to its takeover by the government hold the balance of 1.77%.) The acquisition of State Bank of Indore added 470 branches to SBI's existing network of 12,448 and over 21,000 ATMs. Also, following the acquisition, SBI's total assets will inch very close to the Rs 10-lakh crore mark. Total assets of SBI and the State Bank of Indore stood at Rs 998,119 crore as on March 2009. The process of merging of State Bank of Indore was completed by April 2010, and the SBI Indore Branches started functioning as SBI branches on 26 August 2010.
STATE BANK OF INDIA MUMBAI LHO.
Non-banking subsidiaries or GROUP COMPANIES: The group companies of SBI are 1. SBI Capital Markets Ltd. 2. SBI Mutual fund. 3. SBI Factors and Commercial Services Ltd. 4. SBI DFHI LTD. 5. SBI Cards and Payment Services Pvt Ltd. 6. SBI Life Insurance Co. Ltd. 7. SBI Funds Management Pvt Ltd. 8. SBI Canada.
Current Board of Directors
After the end of O. P. Bhatt's reign as SBI Chairman on 31st March, 2011, the post was taken over by Pratip Chaudhuri, who is the former Deputy Managing Director of the International Division of SBI. As on 4th August, 2011, there are twelve members in the SBI Board of Directors, including Subir Gokarn, who is also one of the four Deputy Governors of the Reserve Bank of India. The complete list of the Board members are: 1. 2. 3. 4. 5. 6. 7. 8. 9. Pratip Chaudhuri (Chairman) Hemant G. Contractor (Managing Director) Diwakar Gupta (Managing Director) A Krishna Kumar (Managing Director) Dileep C Choksi (Director) S. Venkatachalam (Director) D. Sundaram (Director) ParthasarathyIyengar (Director) G. D. Nadaf (Officer Employee Director)
1. Rash pal Malhotra (Director) 2. D. K. Mittal (Director) 3. Subir V. Gokarn (Director)
Branches of SBI
State Bank of India has 137 foreign offices in 32 countries across the globe. SBI has about 25,000 ATMs (25,000th ATM was inaugurated by the then Chairman of State Bank Shri O.P. Bhatt on 31 March 2011, the day of his retirement); and SBI group(including associate banks) has about 45,000 ATMs. SBI has 21,500 branches, including branches that belong to its associate banks. SBI includes 99345 offices in India. India's number one ADB is in Bellary i e State bank of India Bellary ADB
Symbol and slogan
The symbol of the State Bank of India is a circle and not key hole and a small man at the centre of the circle. A circle depicts perfection and the common man being the centre of the bank's business. Slogans : "Pure banking nothing else"
Loan to NTPC On 8th July, 2011, SBI agreed to give a loan of Rs 10,000 crore to NTPC (National Thermal Power Corporation), making it the largest loan SBI had ever given to any single customer in its entire 200 year history. The loan had a "door-to-door" maturity period of 12 years, accompanied by a drawdown period of four years. An NTPC press release said at the time of the declaration of the loan that "The loan shall be utilized for financing the capital expenditure of ongoing and new projects." NTPC chairman at the time, Arup Roy Choudhury clarified that the loan amount would be used to add 128,000 MW capacity by the end of year 2032 (NTPC'c capacity at the time of the declaration of the loan was 34,584 MW). This loan was offered amidst declining finance for power projects in India, which were a direct result of the lending constraints placed by the Reserve Bank of India and the increased risk awareness of power projects. It will also help minimize the shortfall of around Rs 4.51 Trillion that the Power Ministry of India expected to incur in achieving the objectives of the Eleventh Five Year Plan (This plan targeted an addition of 78,577 MW or power generation capacity which would require an investment of Rs 10.3 Trillion). Recent awards and recognitions
Best Online Banking Award, Best Customer Initiative Award & Best Risk Management Award (Runner Up) by IBA Banking Technology Awards 2010 The Bank of the year 2009, India (won the second year in a row) by The Banker Magazine Best Bank Large and Most Socially Responsible Bank by the Business Bank Awards 2009 Best Bank 2009 by Business India The Most Trusted Brand 2009 by The Economic Times Most Preferred Bank & Most preferred Home loan provider by CNBC Visionaries of Financial Inclusion By FINO Technology Bank of the Year by IBA Banking Technology Awards SKOCH Award 2010 for Virtual corporation Category for its e-payment solution
Products
Advantage (Khata) Advantage Plus (KhataPlus) CINB (Saral) Privilege (Vyapaar) Freedom (Vistaar) Electronic Vendor Finance Electronic Dealer Finance Direct Debit E-Collection
Services
Access to multiple users Account view / Statement Funds Transfer Third party funds transfer (RTGS/NEFT) Demand Draft request Utility Bill Payment Bulk transaction through file upload Direct and indirect tax payment SMS/Email alerts User hierarchy with discretionary access/rights to accounts MIS reports Host to Host integration Demat View facility
Products AndServices
Personal Banking
SBI Term Deposits SBI Loan For Pensioners SBI Recurring Deposits Loan Against Mortgage Of Property SBI Housing Loan Loan Against Shares & Debentures SBI Car Loan Rent Plus Scheme SBI Educational Loan Medi-Plus Scheme
ATM services
SBI provides easy access to money to its customers through more than 8500 ATMs in India. The Bank also facilitates the free transaction of money at the ATMs of State Bank Group, which includes the ATMs of State Bank of India as well as the Associate Banks State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also transact money through SBI Commercial and International Bank Ltd by using the State Bank ATM-cumDebit (Cash Plus) card.
Management - SBI Name PratipChaudhuri A Krishna Kumar Ashok Jhunjhunwala r S Venkatachalam G D Nadaf ParthasarthyIyengar SubirVithalGokran Name Hemant G Contractor Diwakar Gupta Dileep C Choksi D Sundaram Rashpal Malhotra D K Mittal Director Director Director Director Designation Managing Director Managing Director Director Director Non Official PartTime Director Director Designation Chairman / Chair Person Managing Director Directo
As of October 4, 2010
SWOT SBI Objective of SBI: Purposeful banking sub serving the growing and diversified financial needs of planned economic development of the country
SWOT analysis: Strengths: BRAND NAME: SBI Bank has earned a reputation in the market over the period of time(Being the oldest bank in India tracing history back to 1806) Market Leader: SBI is ranked at 380 in 2008 Fortune Global 500 list, and ranked 219 in 2008 Forbes Global 2000. With an asset base of $126 billion and its reach, it is a regional banking behemoth.
Wide Distribution Network:
Excellent penetration in the country with more than 10000 core branches and more than 5100 branches of associate banks (subsidiaries). Diversified Portfolio: SBI Bank has all the products under its belt, which help it to extend the relationship with existing customer.SBI Bank has umbrella of products to offer their customers, if once customer has relationship with the bank. Some Products, which SBI Bank is offering are: Retail Banking Business Banking Merchant Establishment Services (EDC Machine) Personal loans & Car loans Insurance Housing Loans Government Owned: Government owns 60% stake in SBI. This gives SBI an edge over private banks in terms of customer security. Low Transition Costs-SBI offers very low transition costs which attracts small customers. Weaknesses: The existing hierarchical management structure of the bank, although strength in some respects, is a barrier to change. Though SBI cards are the 2nd largest player in the credit card industry, it has the highest non performing assets (NPAs) in the industry, which stand out to be at 16.28 % (Dec 2007). Modernisation: SBI lags with respect to private players in terms of modernisation of its processes, infrastructure, centralisation, etc.
Opportunities: Merger of associate banks with SBI: Merger of all the associate banks (like SBH, SBM, etc) into SBI will create a mega bank which streamlines operations and unlocks value. Planning to add 2000 branches and 3000 ATMs in 2008-2009. This will further increase its reach. Increasing trade and business relations and a large number of expatriate populations offers a great opportunity to expand on foreign soil. Threats: Advent of MNC banks: Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government. This can increase the level of competition and prove a potential threat for the market share of SBI bank. Consumer expectations have increased many folds in last few years and the bank has not been responsive enough to meet them on time. Private banks have started venturing into the rural and semi-urban sector, which used to be the bastion of the State Bank and other PSU banks Employee Strike: There was an employee strike in the year 2006 which disrupted SBIs activities. This can be repeated in the future
ACHIEVEMENTS: 1. Lipper Award-The Lipper India Awards 2008. 2. ICRA-Mutual Fund Awards 2008 3. Outlook Money-NDTV profit Awards. 4. AwaaZ Consumer Awards 2007 and many more.. Planning Scenario planning is SBI's tool of choice for developing corporate and other high-level strategies. Why scenario planning? Because the future is inherently uncertain! In the face of an uncertain future, the best one can do is: 1. Consider a wide range of possible developments. 2. Consider many strategic alternatives. 3. Decide on a course of action. 4. Monitor actual developments. 5. Make the inevitable strategic adjustments sooner rather than later. SBI's approach to scenario planning covers items 1, 2, and 3 above. Our road mapping service sets the stage for items 4 and 5. SBI's Approach SBI began developing its scenario planning more than 25 years ago and remains a leader in helping clients apply the approach to their businesses. Our multidisciplinary consulting team works with clients to identify and focus critical strategic issues, create relevant scenarios that capture the important uncertainties in the external environment, and then develop the best strategy on the basis of an evaluation of competing alternatives. Client engagements ideally follow the illustration below. Creating scenarios is a disciplined process that surfaces critical dynamics in the external environment that are highly uncertain and may have a significant impact on the outcome of strategic decisions. The result is a set of several entirely disparate scenarios that describe how the future will unfold and what important events will take place. Once constructed, scenarios are best used for developing strategy by identifying, testing, and modifying various alternatives in order to select the best strategy to carry forward.
FUTURE PLANS
State Bank of India plans to raise Rs 10,000 crore (US$2.5 billion) State Bank of India plans to raise Rs 10,000 crore (US$2.5 billion) by December 2007, either through a follow-on public issue or a rights issue. SBI would have to raise at least a part of the required capital by way of a rights issue, as at the prevailing share price, it can raise only Rs 4,042 crore by diluting the government holding to 55 per cent. The government holding in SBI stands at 59.73 per cent. The bank has room to dilute only 4.73 per cent as the government holding cannot fall below the stipulated 55 per cent. This will be State Bank's first equity offering since it raised $350 million in October 1996. Indian banks have been raising funds to meet the demand for loans from consumers and corporates in Asia's third-largest economy, which grew 9.4 percent in the fiscal year to March 2007. ICICI Bank had made the biggest offering by an Indian company by mobilizing over Rs 20,000 crore ($4.9 billion) through a follow-on public offer and American depository receipts issue. while HDFC Bank raised $698 million by selling American Depositary Shares (ADS) to strengthen its capital base and to support future growth.
As per a leading daily, India's largest lender SBI is aiming to grow at 25% over the next few years. To achieve this strategy, the bank has major hiring plans this year. The bank plans to recruit more than 27,000 people this year. Of this 20,000 22,000 people will be in the clerical post while 5,500 people will be at probationary officer level. Besides this the bank plans to go for lateral hires at middle management level. As part of its rural strategy, the bank aims to deploy around 2,000 probationary officers at its rural branches. The bank plans to open 1,000 branches this year bringing its total branches to 13,000 while it plans to scale up its ATM network to 25,000. While the higher loan growth may be achievable in the medium term, SBI's cost efficiency may be impacted
State Bank of India speeds up expansion plans Indias biggest lender, State Bank of India (SBI), has kicked off the new year with a number of announcements designed to aid an ambitious target of achieving 25 percent business growth over the next few years. In particular SBI said it would: Speed up its branch expansion and recruitment drive; Seek a partner to grow its point-of-sale (POS) terminal business; Rapidly expand its ATM network; Hasten the consolidation process of the Indian banking sector; and Launch wealth management services for the high net worth segment, possibly involving a partnership with an international banking partner. In 2009, SBI opened 600 net new branches and plans to open another 200 by the end of February this year to reach 12,000 outlets. By the end of 2010, it aims to have over 13,000 units while its ATM network will grow to 25,000 up from 17,000.
The bank is also looking at the possibility of installing low-value ATMs for rural areas, which at a cost of about INR150,000 ($3,285) per unit are around one-third the cost of regular ATMs. A separate project, to ensure that around 7,000 of its ATM network can be used by blind customers will be completed in the first quarter. To aid its expansion programmed, SBI will employ an additional 30,000 employees to add to the 22,000 personnel recruited during 2009. We are targeting a mean growth rate of 25 percent in business over the next few years. Our goal is to have a growth rate that is 2 percent to 3 percent more than the competition, said SBI deputy managing director Anup Banerji. He added that international expansion would follow the banks business model in Singapore, where it has a qualified full bank status, which it aims to replicate in other markets including Canada and West Asia. To grow its POS terminal business, it is looking for a vendor partner and has shortlisted three to four potential players for the venture. It has plans to acquire around 600,000 POS terminals over the next five years. The bank had previously announced plans to acquire 150,000 POS terminals during 2010 to 2011. While the bank remains positive about its prospects, chairman OP Bhatt has warned that the sector faces pressures on profitability and interest margins, and rising non-performing assets (NPAs), especially in the SME segment. NPAs in the banking system are increasing and may continue to rise for the next one to two quarters due to the lag effect, said Bhatt. Demand for bank loans in India has been sluggish in the second half of 2009, with the sector as a whole unlikely to meet the Reserve Banks projected 18 percent growth in loans for 2009 to 2010. Annual loan growth at the start of January was 13.7 percent after slipping to 9.7 percent in October.
Bhatt said further challenges included the threat of rising cost-income ratios and pressure on current and savings account deposit balances. On consolidation, Bhatt said SBI has kick-started the process. There are other banks in the country which recognise the need to consolidate the sector, to provide scale and make credit more widely available, but, he said, progress was slow. Analysts forecast SBIs fourth-quarter results, to be posted towards the end of January, to show a drop in earnings largely due to treasury losses and higher loan-loss provisions.
Bibliography
www.sbi.co.in www.google.com www.scribd.com www.wikipedia.com
