history of state bank of india

7/28/2019 History of State Bank of India

1/29

STATE BANK OF INDIA

Project Financing

.Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bankof Indiawas vested with extensive powers for the supervision of banking in India asthe CentralBanking System.During those days public has lesser confidence inthe banks. As an aftermath depositmobilisation was slow. Abreast of it thesavings bank facil ity provided by the Postal department was comparatively safer.Moreover, funds were largely given to traders.Phase II

Government took major steps in this Indian Banking Sector Reform afterindependence.In 1955, it national ised Imperial Bank of India with extensive

banking faci li ties on alarge scale specially in rural and semi-urban areas. It formedState Bank of India to actas the principal agent of RBI and to handle bankingtransactions of the Union and stategovernment all over the country.Seven banksforming subsidiary of State Bank of India was nationalised in 1960 on 19thJuly 1969, major process of nationalisation was carried out. It was the effort of thethenPrime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in thecountrywere nationalized.Second phase of nationalisation Indian Banking SectorReform wascarri ed out in 1980 with seven more bank s. Th is s tep

brought 80% of the banking segment in India under Government ownership.The following are the steps taken by the Government of India to Regulate

BankingInstitutions in the Country:

1.1949: Enactment of Banking Regulat ion Act .2.1955:Nat ional isat ion of State Bank of India.3.1959: Nat ional isat ion of SBIsubsidiaries.4.1961: Insurance cover extended to deposi ts .KLESs Institute of ManagementStudies and Research12

STATE BANK OF INDIA

Project Financing

.5.1969: National isat ion of 14 major banks.6.1971: Creat ion of credi tguarantee corporat ion.7.1975: Creat ion of regional rural

banks .8.1980 : National isat ion of seven banks with deposi ts over 200crores.After the nationalization of banks, the branches of the public sector bank Indiaraised toapproximately 800% in deposits and advances took a huge jump by 11000%.Bankingin the sunshine of Government ownership gave the public implicitfaith and immenseconfidence about the sustainability of these institutions.

Phase III


2/29

This phase has introduced many more products and facilities in the bankingsector in its reforms measure. In 1991, under the chairmanship of M Narasimham, acommitteewas set up by his name, which worked for the Liberalization of BankingPractices.The country is flooded with foreign banks and their ATM stations.Efforts are being put to g ive a s atisf actor y ser vice t o cust omers . Phon e

banking and net banking i s in troduced. The entire system became moreconvenient and swif t. Time is given moreimportance than money.The financialsystem of India has shown a great deal of resilience. It is shelteredfromany cris is t r igger ed by a ny extern al macroecon omics shock as other East AsianCountries suffere d. This is al l due to a f lexibleexc han ge rat e reg ime , the for eig n reserves are high, the capital account isnot yet fully convertible, and banks and their customers have limited foreignexchange exposure.Banking in India originated in the first decade of 18thcentury with The General Bank Of India coming into existence in 1786. This wasfollowed by Bank of Hindustan. Boththese banks are now defunct. The oldest bank in

existence in India is the State Bank OfKLESs Institute of ManagementStudies and Research13

STATE BANK OF INDIA

Project Financing

.India being established as The Bank Of Calcutta in Calcutta in June 1806. Coupleof Decades later, foreign Banks like HSBC and Credit Lyonnais Started theirCalcuttaoperations in 1850s. At that point of time, Calcutta was the mostact ive trading port,mainly due to the trade of British Empire and due to which

banking actively took rootsthere and prospered. The first fully Indian owned bank wasthe Allahabad Bank set upin 1865.By 1900, the market expanded with theestablishment of banks like Punjab NationalBank in 1895 in Lahore; Bankof India in 1906 in Mumbai-both of which were foundedunder priva te ownership.Indian Banking Sector was formally regulated by ReserveBank Of Indiafrom 1935. After Indias independence in 1947, the Reserve Bankwasnationalised and given broader powers.

HISTORY OF STATE BANK OF INDIA

The roots of the State Bank of India rest in the f i rs t decade of

19thcentury, when theB a n k o f C a l c u t t a , l a t e r r e n a m e d t h e B a n k

o f Bengal, was established on 2 June 1806. The Bank of Bengal and twoother

Presidency banks, namely, theBank of Bombay(incorporatedon 15 April
http://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bombay


3/29

1840) and theBank of Madras(incorporated on 1 July1843). All three

Presidency banks were incorporated as joint stock companies, a n d w e r e

t h e r e s u l t o f t h e royal charters. T he se th r ee banks r eceived the

exc lus ive rig ht to iss ue pap er cur ren cy in 186 1 with the Paper Currency

Act, a right they retained until the formationof theReserve Bank of India. The

Presidency banks amalgamated on27 January 1921, and the reorganized banking

entity took as its nameImperial Bank of India . T h e I m p e r i a l B a n k o f

I n d i a c o n t i n u e d t o remain a joint stock company.Pursuant to the provisions

of the State Bank of India Act (1955), theR e s e r v e B a n k o f I n d i a ,

w h i c h i s In dia 's central bank , a c q u i r e d a controlling interest in the

Imperial Bank of India. On 30 Apri l 1955 the Imperial Bank of India became the

State Bank of India. TheGovt.of Indiarecently acquired the Reserve Bank of India's

stake in SBI soas to remove any conflict of interest because the RBI is the

country's banking regulatory authority.Offices of the Bank of BengalIn 1959 the

Government passed the State Bank of India (Subsidiary Banks) Act, enabling

the State Bank of India to take over eight former State-associated banks as its

subsidiaries. OnSept 13, 2008,

Bank of Saurashtra,

on e of it s As so ci at e Ban ks , mer ge d wi th St at e Bank of India. SB I

has acq uired local b anks in resc ues. Fo r insta nce, in 1985, i t acquired

Bank of Cochin in Kerala, which had 120 branches. SBI wasthe acquirer as its

affiliate,State Bank of Travancore, already had anextensive network in Kerala.

ASSOCIATE BANKS OF STATE BANK OF INDIA
http://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Royal_charterhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Central_Bankhttp://en.wikipedia.org/wiki/Central_Bankhttp://en.wikipedia.org/wiki/Govt._of_Indiahttp://en.wikipedia.org/wiki/Govt._of_Indiahttp://en.wikipedia.org/wiki/Sept_13http://en.wikipedia.org/wiki/State_Bank_of_Saurashtrahttp://en.wikipedia.org/wiki/Keralahttp://en.wikipedia.org/wiki/Keralahttp://en.wikipedia.org/wiki/State_Bank_of_Travancorehttp://en.wikipedia.org/wiki/State_Bank_of_Travancorehttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Royal_charterhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Central_Bankhttp://en.wikipedia.org/wiki/Govt._of_Indiahttp://en.wikipedia.org/wiki/Govt._of_Indiahttp://en.wikipedia.org/wiki/Sept_13http://en.wikipedia.org/wiki/State_Bank_of_Saurashtrahttp://en.wikipedia.org/wiki/Keralahttp://en.wikipedia.org/wiki/State_Bank_of_Travancore


4/29

There are six associate banks that fall under SBI, and together thesesix banks

constitute the State Bank Group. All use the same logo of a blue keyhole and a l l

the associates use the "State Bank of"

namefollowed by the regional headquarters ' name. Original ly, the the

nseven banks that became the associate banks belonged

to princely statesuntil the government nationalized them between October, 1959and

May, 1960. In tune with the first Five Year Plan, emphasizing thedevelopment of

rural India, the government integrated these banksinto State Bank of India to

expand its rural outreach. There has been a

proposal to merge al l the associate banks in to SBI to crea te a

"mega b a n k " a n d s t r e a m l i n e o p e r a t i o n s . T h e f i r s t s t e p a l o n g t h e

s e l i n e s occurred on 13 August 2008 whenState Bank of Saurashtramergedwith

State Bank of India, which reduced the number of state banksf r o m s e v e n

t o s i x . F u r t h e r m o r e o n 1 9 t h J u n e 2 0 0 9 t h e S B I b o a r d a pp ro ve d

the merger of i ts subsidiary, State Bank of Indore , wi th itself. SBI

holds 98.3% in the bank, and the balance 1.77% is

owned b y i n d i v i d u a l s , w h o h e l d t h e s h a r e s p r i o r t o i t s t a k e o v e r

b y t h e government.T h e a c q u i s i t i o n o f S t a t e B a n k o f I n d o r e w i l

l h e l p S B I a d d 4 7 0 b r a n c h e s to i t s e x i s t in g n et w o r k o f 1 1, 4 4 8

. A l s o , f o l l o w i n g t h e acquisition, SBIs total assets will inch very close

to the Rs 10-lakhcrore mark. Total assets of SBI and theState Bank of Indorestood

atRs 998,119 crore as on March 2009.

GROWTH OF STATE BANK OF INDIA
http://en.wikipedia.org/wiki/Indian_Princely_Stateshttp://en.wikipedia.org/wiki/State_Bank_of_Saurashtrahttp://en.wikipedia.org/wiki/State_Bank_of_Indorehttp://en.wikipedia.org/wiki/State_Bank_of_Indorehttp://en.wikipedia.org/wiki/Indian_Princely_Stateshttp://en.wikipedia.org/wiki/Indian_Princely_Stateshttp://en.wikipedia.org/wiki/State_Bank_of_Saurashtrahttp://en.wikipedia.org/wiki/State_Bank_of_Indorehttp://en.wikipedia.org/wiki/State_Bank_of_Indore


5/29

S t a t e B a n k o f I n d i a h a s o f t e n a c t e d a s g u a r a n t o r t o t h e India

nGovernment, most notably duringChandra Shekhar's tenure asPrimeMinister of

India. With 11,448 branches and a further 6500+ associate bank branches, the SBI

has extensive coverage. State Bank of Indiahas electronically networked all

of its branches under Core BankingSystem (CBS). The bank has one of the

largestATMnetworks in theregion. More than 8500 ATMs across India. The

State Bank of Indiahas had steady growth over its history, though it was

marred by theHarshad Mehtascam in 1992. In recent years, the bank has sought

toexpand its overseas operations by buying foreign banks. It is the onlyI n d i a n

b a n k t o f e a t u r e i n t h e t o p 1 0 0 w o r l d b a n k s i n t h e FortuneGlobal

500rating and various other rankings INTERNATIONAL PRESANCE OF SBI

The bank has 92 branches, agencies or offices in 32 countries. It

has branches of the parent in Colombo,Dhaka,Frankfurt,Hong

Kong,Johannesburg,Londonand envi rons ,Los Ang e le s ,Malei n t h e Maldives,

Muscat, New York ,Osaka,Sydney, a n d Tokyo. I t h a s offshore banking

units in theBahamas,Bahrain, andSingapore, andrepresentative offices

inBhutanandCape

Town.S B I o p e r a t e s s e v e r a l f o r e i g n s u b s i d i a r i e s o r a f f i l i a t e s . I n

1 9 9 0 i t established an offshore bank, State Bank of India (Mauritius). It

hastwo subsidiaries in North America, State Bank of India (California),and

State Bank of India (Canada). In 1982, the bank established itsCalifornia

subsidiary, named State Bank of India (California), whichnow has eight branches -

seven branches in the state of California

ando n e i n W a s h i n g t o n D C w h i c h w a s r e c e n t l y o p e n e

d o n 2 3 r d N ov e mb er , 2 0 09 . T he s e ve n b r an c he s i n t he st a te o f
http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Chandra_Shekharhttp://en.wikipedia.org/wiki/Chandra_Shekharhttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Automatic_Teller_Machinehttp://en.wikipedia.org/wiki/Harshad_Mehtahttp://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Colombohttp://en.wikipedia.org/wiki/Colombohttp://en.wikipedia.org/wiki/Dhakahttp://en.wikipedia.org/wiki/Frankfurthttp://en.wikipedia.org/wiki/Frankfurthttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Johannesburghttp://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/Los_Angeleshttp://en.wikipedia.org/wiki/Los_Angeleshttp://en.wikipedia.org/wiki/Malehttp://en.wikipedia.org/wiki/Maldiveshttp://en.wikipedia.org/wiki/Muscat,_Omanhttp://en.wikipedia.org/wiki/Muscat,_Omanhttp://en.wikipedia.org/wiki/New_Yorkhttp://en.wikipedia.org/wiki/Osakahttp://en.wikipedia.org/wiki/Sydneyhttp://en.wikipedia.org/wiki/Tokyohttp://en.wikipedia.org/wiki/Bahamashttp://en.wikipedia.org/wiki/Bahrainhttp://en.wikipedia.org/wiki/Bahrainhttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Bhutanhttp://en.wikipedia.org/wiki/Cape_Townhttp://en.wikipedia.org/wiki/Cape_Townhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Chandra_Shekharhttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Automatic_Teller_Machinehttp://en.wikipedia.org/wiki/Harshad_Mehtahttp://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/Colombohttp://en.wikipedia.org/wiki/Dhakahttp://en.wikipedia.org/wiki/Frankfurthttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Johannesburghttp://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/Los_Angeleshttp://en.wikipedia.org/wiki/Malehttp://en.wikipedia.org/wiki/Maldiveshttp://en.wikipedia.org/wiki/Muscat,_Omanhttp://en.wikipedia.org/wiki/New_Yorkhttp://en.wikipedia.org/wiki/Osakahttp://en.wikipedia.org/wiki/Sydneyhttp://en.wikipedia.org/wiki/Tokyohttp://en.wikipedia.org/wiki/Bahamashttp://en.wikipedia.org/wiki/Bahrainhttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Bhutanhttp://en.wikipedia.org/wiki/Cape_Townhttp://en.wikipedia.org/wiki/Cape_Town


6/29

Ca li fo rn ia ar elocated in Los Angeles, Artesia, San Jose, Canoga Park,

Fresno, SanDiego and Bak ersfield. The Canadian subsidiary too dates

to 1982and has seven branches, four in the greaterTorontoarea, and three inBritish

Columbia.In Nigeria, SBI operates as INMB Bank. This bank began in 1981

asthe Indo-Nigerian Merchant Bank and received permission in 2002 tocommence

retail banking. It now has five branches in Nigeria.I n N e p a l S B I o w n s 5 0 % o f

N e p a l S B I B a n k , w h i c h h a s b r a n c h e s throughout the country. In

Moscow SBI owns 60% of CommercialBank of India , w i t h Canara

Bankowning the rest . In Indonesiaitowns 76% of PT Bank Indo Monex.State

Bank of India already has a branch in Shanghaian d pl an s to open one up

inTianjin.[1]

JOURNEY AND VISION OF SBI

The State Bank of India, the countrys oldest Bank and a premier interms of

balance sheet size, number of branches, market capitalizationand profits is today

going through a momentous phase of Change andTransformation the two hundred

year old Public sector behemoth isto da y st ir ri ng ou t of it s Pu bl ic Se ct or

legacy and mo ving with an agility to give the Private and Foreign Banks a run

for their money.The bank is entering into many new businesses with strategic tie

ups Pension Funds, General Insurance, Custodial Services, Private

Equity,M o b i l e B a n k i n g , P o i n t o f S a l e M e r c h a n t A c q u i s i t i o n , A d v

i s o r y Services, structured products etc each one of these initiatives havinga huge

potential for
http://en.wikipedia.org/wiki/Torontohttp://en.wikipedia.org/wiki/Torontohttp://en.wikipedia.org/wiki/British_Columbiahttp://en.wikipedia.org/wiki/British_Columbiahttp://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/w/index.php?title=Commercial_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Commercial_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Commercial_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Shanghaihttp://en.wikipedia.org/wiki/Tianjinhttp://www.forbes.com/afxnewslimited/feeds/afx/2007/11/21/afx4365862.htmlhttp://en.wikipedia.org/wiki/Torontohttp://en.wikipedia.org/wiki/British_Columbiahttp://en.wikipedia.org/wiki/British_Columbiahttp://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/w/index.php?title=Commercial_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Commercial_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Shanghaihttp://en.wikipedia.org/wiki/Tianjinhttp://www.forbes.com/afxnewslimited/feeds/afx/2007/11/21/afx4365862.html


7/29

growth.T h e B a n k i s f o r g i n g a h e a d w i t h c u t t i n g e d g e t e c h

n o l o g y a n d innovative new banking models, to expand its Rural Banking

base,looking at the vast untapped potentia l in the hinter land and proposes to

cover 100,000 villages in the next two years.It is also focusing at the top end of the

market, on whole sale bankingcapabili ties to provide Indias growing mid /

large Corporate with acomplete array of products and services. It is consolidating

its

globalt r e a s u r y o p e r a t i o n s a n d e n t e r i n g i n t o s t r u c t u r e d p r o d u

c t s a n d der ivative inst ruments . Today, the Bank is the larges t

provider of infrastructure debt and the larges t arranger of external

commercial borrowings in the country. It is the only Indian bank to feature in

theFortune 500

list.T h e B a n k i s c h a n g i n g o u t d a t e d f r o n t a n d b a c k e n d p r o c e s s e s

t om o d e r n c u s t o m e r f r i e n d l y p r o c e s s e s t o h e l p i m p r o v e t h e

t o t a l customer experience. With about 8500 of its own 10000 branches

andanother 510 0 branches of i ts Associ ate Banks alr eady networked , t

oday i t offers the largest banking network to the Indian

c us to me r. T h e B a n k i s a l s o i n t h e p r o c e s s o f p r o v i d i n g c o m p l e t e

p a y m e n t solution to its clientele with its over 8500 ATMs, and other

electronicchannels such as Internet banking, debit cards, mobile banking, et

With four nat ional level Apex Training Colleges and 54

learningCentres spread all over the country the Bank is continuously

engagedi n s k i l l e n h a n c e m e n t o f i t s e m p l o y e e s . S o m e o f t

h e t r a i n i n g programmes are attended by bankers from banks in

other countries.The bank is also looking at opportunities to grow in size in


8/29

India

asw e l l a s I n t e r n a t i o n a l l y . I t p r e s e n t l y h a s 8 2 f o r e i g n o f f i c e s i n

3 2 countries across the globe. It has also 7 Subsidiaries in India

SBICapital Markets , SBICAP Securi t ies , SBI DFHI, SBI Fac tors,

SBIL i f e a n d S B I C a r d s - f o r m i n g a f o r m i d a b l e g r o u p i n t h

e I n d i a n Banking scenario. It is in the process of raising capital for its growthand

also consolidating its various holdings.Throughout all this change, the Bank is also

attempting to change oldmindsets, attitudes and take all employees together on

this

exciting r o a d t o T r a n s f o r m a t i o n . I n a r e c e n t l y c o n c l u d e d m a

s s i n t e r n a l communication programme termed Parivartan the Bank

rolled outover 3300 two day workshops across the country and covered

over 130,000 employees in a period of 100 days using about 400

T r a i n e r s , t o d r i v e h o m e t h e m e s s a g e o f C h a n g e a n d i n c l u s

i v e n e s s . T h e workshops fired the imagination of the employees with

some other banks in India as well as other Public Sector Organizations seeking

toemulate

the programme.T h e C N N I B N , N e t w o r k 1 8 r e c o g n i z e

d t h i s m o m e n t o u s transformation journey, the State Bank of

India is under taking, andhas aw ar de d th e p re s t ig io us In di an of th e

Y e a r B u s i n e s s , t o i t s Chairman, Mr. O. P. Bhatt in January 2008

EVOLUTION OF SBI

The origin of theState Bank of Indiagoes back to the first decade o f t h e

n i n e t e e n t h c e n t u r y w i t h t h e e s t a b l i s h m e n t o f t h e B a n k


9/29

o f C a l c u t t a i n C a l c u t t a o n 2 J u n e 1 8 0 6 . T h r e e y e a r s l a t e r t h e

b a n k received its charter and was re-designed as the Bank of Bengal

(2January 1809). A unique institution, it was the first joint-stock bank of British India

sponsored by the Government of Bengal. The Bank of Bombay (15 Apr il 1840)

and the Bank of Madras (1 July 1843)follo wed the Ban k of Ben gal .

These three banks remained at

t h e a p e x o f m o d e r n b a n k i n g i n I n d i a t i l l t h e i r a m a l g a m a t i o n a s t

h e Imperial Bank of India on 27 January 1921.Primari ly Anglo-Indian crea tions,

the three presidency banks

camei n t o e x i s t e n c e e i t h e r a s a r e s u l t o f t h e c o m p u l s i o n s o f i m p

e r i a l finance or by the felt needs of local European commerce and

weren o t i m p o s e d f r o m o u t s i d e i n a n a r b i t r a r y m a n n e r t o m o d e r n

is eIndia ' s economy. Thei r evolut ion was , however , shaped by

id ea sculled from similar developments in Europe and England, and

wasinfluenced by changes occurring in the structure of both the

localt r a d i n g e n v i r o n m e n t a n d t h o s e i n t h e r e l a t i o n s o f t h e I

n d i a n e c o n o m y t o t h e e c o n o m y o f E u r o p e a n d t h e g l o b a l e c

onomicframework

ESTABLISHMENT

T h e e s t a b l i s h m e n t o f t h e B a n k o f B e n g a l m a r k e d t h e a d v e n t o f


10/29

limited liability, joint-stock banking in India. So was the associatedinnovation in

banking, viz. the decision to allow the Bank of

B e n g a l t o i s s u e n o t e s , w h i c h w o u l d b e a c c e p t e d f o r p a y m e n t o f p

ub l i crevenues wi thin a res t r ic ted geographical a rea . This r ight of

note issue was very valuable not only for the Bank of Bengal but also

itst w o s i b l i n g s , t h e B a n k s o f B o m b a y a n d M a d r a s . I t m

e a n t a n a c c r e t i o n t o t h e c a p i t a l o f t h e b a n k s , a c a p i t a l

o n w h i c h t h e proprietors did not have to pay any interest. The concept

of deposit banking was also an innovation because the practice of

a c c e p t i n g m o n e y f o r s a f e k e e p i n g ( a n d i n s o m e c a s e s , e v e n i n v e s t

m e n t o n behalf of the clients) by the indigenous bankers had not spread as

ag e n e r a l h a b i t i n m o s t p a r t s o f I n d i a . B u t , f o r a l o n g

t i m e , a n d especially upto the time that the three presidency banks had a

rightof note issue, bank notes and government balances made up the bulk of the

investible resources of

the banks.T h e t h r e e b a n k s w e r e g o v e r n e d b y r o y a l c h a r t e r s , w h i c h

w e r e revised from time to time. Each charter provided for a share capital,four-fifth of

which were privately subscribed and the rest owned bythe provincial government.

The members of the board of directors,which managed the affairs of each

bank, were most ly proprietarydirec tors representing the large European


11/29

managing agency

housesi n I n d i a . T h e r e s t w e r e g o v e r n m e n t n o m i n e e s , i n v a r i a b l y

c i v i l servants, one of whom was elected as the president of the board.

BUSINESS

The business of the banks was initially confined to discounting of

bills of exchange or other negotiable private securities, keeping cashaccounts and

receiving deposi ts and issuing and circula t ing

c as hn o t e s . L o a n s w e r e r e s t r i c t e d t o R s . o n e l a k h a n d t h e p e r i o d

o f accommodation confined to three months only. The security for

suchloans was public s ecuri t ies , commonly cal led Company's Paper, b

ullion, treasure, plate, jewels, or goods 'not of a perishable nature'and no

interest could be charged beyond a rate of twelve per cent. Loans against goods

like opium, indigo, salt woollens, cotton, cotton piece goods, mule twis t and silk

goods were also granted but suchfinance by way of cash credits gained

momentum only from thethird decade of the nineteenth century. All

commodities, includingtea, sugar and jute, which began to be financed

later , were

ei ther pledged or hypotheca ted to the bank. Demand promissory note

swere signed by the borrower in favour of the guarantor, which wasin turn

endorsed to the bank. Lending against shares of the banks or on the mortgage of

houses, land or other real property was, however,forbidden.Indians were the

pr incipal borrowers agains t deposi t of Company's paper, while the business

of discounts on private as well as salary bills was almost the exclusive

monopoly of individuals Europeansand their partnership firms. But the

main function of the three banks,as far as the government was concerned, was to help


12/29

the latter raiseloans from time to time and also provide a degree of stability to

the prices of government securities.

ASSOCIATE BANKS OF SBI AND IT

,S

BUSINESSState Bank of India

has the following s ix Associate Banks (ABs) with controlling interest ranging

from 75% to 100%.1. State Bank of Bikaner and Jaipur (SBBJ)

2. State Bank of Hyderabad (SBH)3. State Bank of Indore (SBIr)4. State Bank of Mys

ore (SBM)5. State Bank of Patiala (SBP)6. State Bank of Travancore (SBT)The s ix

ABs have a combined n etwork of 4 502 branches in India which are

fully computer ized and 2410 ATMs networked with SBI ATMs, providing

value added services to clientele.The combined net prof it of these banks

increased by 12% over the pre viou s year to reach Rs.22 77.69 cror es.

Deposi ts and advances grew by 19% and 22%, respectively, during the year. The

combined Net NPA ratio of all ABs was at 0.61% as on 31st March

2008.Thehighlights of performance of the six ABs for the year 2007-08 are

asfollows:

(Rs. In crores)

D e p o s i t s 2 3 4 1 6 8 L o a n s

1 7 8 3 7 6 I n v e s t m e n t s 7 5 1 4 7 T o t a l

A s s e t s 2 6 8 2 8 5 R e t u r n o n Assets0.86% N o .

o f Branches4502


13/29

SBICI Bank Ltd (Banking Subsidiary, fully owned by SBI)

SBICI Bank Ltd has two branches, fully computerised, operating inMumbai. The

Bank recorded a net profit of Rs.12.85 crores during2007-08. Deposits, Loans

and Investments were at Rs.522.01

c r o r e s , R s . 3 5 4 . 9 9 c r o r e s a n d R s . 1 4 3 . 5 9 c r o r e s , r e s p e c t i v e l y , a s a t

3 1 s t M a r c h 2 0 0 8 . R e t u r n o n A s s e t s w a s a t 1 . 1 2 % w h i l e

C a p i t a l Adequacy Ratio stood at 27.36% as on 31.3.2008.

FOREIGN SUBSIDIARIES

SBIInternational(Mauritius)Ltd.,OffshoreBank

(A subsidiary of State Bank of India)State bank of India International

(Mauritius) Ltdi s o n e o f t h e f i r s t offshore banks to be established in Mauritius

in 1990, with a paid upcapital of USD 10 Million. The Bank has had a

consistent record of having earned profits since its very first year of

opera t ions .SBI IML , w i th the exper t i se o f i t s management and pe r s

o n n e l , i s customer focussed, and offers to all its clients, all over the world,

highquality, cost effective professional services and innovative products. The

Bank lays emphasis on technology, which is an integral part of itsoperations having

a significant impact on services rendered. It has, presently, clients spread over

40 countries.The principal activities include:

Acceptance of deposits in foreign currencies mainly US Dollar,Pound Sterling, Euro

and also other currencies. Attractive ratesof interest are offered.


14/29

I n t e r n a t i o n a l r e m i t t a n c e s i n a l l m a j o r c u r r e n c i e s t h r o u g h S

WIFT, quickly and effectively.

L o a n s / s y n d i c a t i o n s i n m a j o r c u r r e

n c i e s , l i k e Euro/Dollar/Japanese Yen.

T r a d e S e r v i c e s , i n c l u d i n g i s s u a n c e o f / n e g o t i a t i o n s u n d e r

documentary letters of credits and issuance of bank guarantees.

H e d g i n g o f e x c h a n g e a n d i n t e r e s t r a t e r i s k s o n b e h a l f o f c

ustomers.

S a l e s a n d P u r c h a s e s o f f o r e i g n c u r r e n c i e s i n t h e S p o t a n d

Forward Market.

Rendering custodial services for offshore funds registered inMauritius.

Products tailored to suit the requirements of customers.

T h e B a n k a d o p t s t h e b e s t C o r p o r a t e G o v e r n a n c e p r a c t i c e s , a n d

c o m p r e h e n s i v e r i s k m a n a g e m e n t p o l i c i e s a n d s y s t e m s e n s u

r e effective control of risks. A strong capital base, and near zero

non- p e r f o r m i n g a s s e t s f u r t h e r a d d t o t h e s t r e n g t h a n d s t a b i l i t y

of theBank.


15/29

STATE BANK OF INDIA (CALIFORNIA)

State Bank of India (California) , a wholly owned subsidiary

in California is a California State Chartered Bank and a member of

t h e F e d e r a l D e p o s i t I n s u r a n c e C o r p o r a t i o n . W i t h e i g h t f u l l s e r v i

ce branches , the Bank ca ters to the Banking needs of the

community, e t h n i c a n d n o n - e t h n i c a l i k e , t h r o u g h v a r i o u s

d e p o s i t a n d l o a n schemes. SBIC takes prides in providing state-of-the-

art remittancefacility to its customers. The Bank also provides Internet

Banking,Tele-Banking, ATM service and Credit Cards.

STATE BANK OF INDIA (CANADA)

State Bank of India (Canada) - a wholly owned subsidiary of

StateB a n k o f I n d i a - h a s b e e n o p e r a t i n g i n C a n a d a a t f o u r l

o c a t i o n s T oron to ,Vancouver, Sur rey and Miss i s sauga , extend ing va

riousfacilities to the Indians settled in Canada such as remittance of fundsthrough a

network of over 9000 off ices of State Bank of India, thelargest

commer cial bank i n Indi a and throu gh the branc hes o f its Associate

Banks. SBI(C) has also been instrumental in fostering tradeties between India and

Canada by extending f inancial, advisory and logistic support to Canadian and

Indian corporate.

SBI Life Insurance Company Ltd (SBI LIFE)SBI Life Insurance

, Indias largest private life insurance, is a jointventure between State Bank of

India and BNP Paribas Assurance

SBIo w n s 7 4 % o f t h e t o t a l c a p i t a l a n d B N P P a r i b a s A s s u r a n

c e t h e remaining 26%. SBI Life Insurance has an authorized capital of


16/29

Rs.2,000 crore and a paid up capital of Rs 1,000 crores.BNP Par ibas Assurance is

the insurance arm of BNP Paribas - EuroZones leading Bank. BNP Paribas,

part of the worlds top 10

groupso f b a n k s b y m a r k e t v a l u e a n d p a r t o f E u r o p e t

o p 3 b a n k i n g companies, is one of the oldest foreign banks with a presence in

Indiadating back to 1860. BNP Paribas Assurance is the fourth largest lifeinsurance

compa ny in F rance , and a world wide l eader in Cred itor insurance

products offering protection to over 50 million clients. BNPParibas Assurance

operates in 41 countries mainly through the bancassurance and partnership

model.SBI Life Insurances mission is to emerge as the leading

companyo f f e r i n g a c o m p r e h e n s i v e r a n g e o f L i f e I n s u r a n c e

a n d p e n s i o n products at competitive prices, ensuring high standards of

cus tomer service and world class operating efficiency.SBI Life has a unique

multi-distribution model encompassing

Bancassurance, Agenc y and Corporate Solut ions. SBI Life extens ivel

yleverages the SBI Group relationship as a platform for cross-

sellinginsurance products along with its numerous banking product

packagess u c h a s h o u s i n g l o a n s a n d p e r s o n a l l o a n s .

Agency Channel ,comprising of the most productive force of over

68,000 InsuranceAdvisors, offers door to door insurance solutions to

customers.SBI Lifes Key Accomplishments

B a g g e d t h e c o v e t e d p e r s o n a l f i n a n c e a w a r d -

O u t l o o k M o n e y N D T V Profit best Life Insurer

2008. G l o b a l l y t o p p e d a t t h e p r e s t i g i o u s M D R T 0 9 , i n


17/29

t e r m s o f n u m b e r o f Million Dollar Round Table (MDRT)

members. F i r s t l i f e i n s u r e r t o r e c e i v e C R I S I L s h i

g h e s t f i n a n c i a l r a t i n g A A A / S t a b l e . I C R A t o o h a s a s s i

g n e d i A A A r a t i n g i n d i c a t i n g highest claims paying ability to SBI Life

Insurance. R e t a i n s I S O 9 0 0 1 : 2 0 0 0 c e r t i f i c a t e f o r s u p e

r i o r c l a i m s e t t l e m e n t process

Non banking subsidiary

The Bank has the following Non-Banking Subsidiaries in India :1.SBI Capital

Marke ts Ltd 2.SBI Funds Manag ement Pvt Lt d3.SBI Factors &

Commercial Services Pvt Ltd4 . S B I D F H I L t d

SBI Capital Markets Ltd (SBICAP)

SBICAP undertakes merchant banking activities, advisory services, project appraisal,

credit syndication and securities broking.SBICAPs current focus is on infrastructure

project advisory andsyndication mandates, particularly in sectors, such

as, urbaninfrastructure and power, which are reckoned as the growth drivers.The other

focus areas are public issues of equity, book-buildingissues, debt placements, broking,

and sales and distribution.During the year, SBICAPs forged ahead in issue

management, projectadvisory and structured finance, sales & distribution. It

focused oninfrastructure project advisory and syndication mandates, particularlyin the

energy sector, which is reckoned as the critical growth driver inthe growth of the

economy.On the international front SBICAPs bagged an infrastructure

(water)advisory assignment from the Ministry of National Economy, Oman


18/29

and was an integral part of the team effort for SBIs first acquisitionof a bank

overseas. It was also associated with SBI for providingadvisory in respect of

participation of Societe Generale AssetManagement, France in SBI Mutual Funds.It

handled seven public issues out of the thirty four issues, which hitthe primary market

during the period. The Company recorded animproved financial performance during

the year with gross incomeamounting to Rs.175.06 crore as against Rs.142.75 crore in

the previous year, a y-o-y growth of approx. 23%. PAT of Rs.88.12 croreas against

Rs. 63.23 crore in the last year shows a y-o-y growth of approx.40%.

SBI Funds Management Pvt Ltd (SBI FUNDS)

SBI FUNDS is the Asset Management Company (AMC) set upfor managing the

affairs of SBI Mutual Fund.During 2003-04, SBI FUNDS reported a total inflow of

Rs.12,450crore in the open-ended funds. Total redemption amounted toRs.10,523

crore, leaving a net inflow of Rs.1,927 crore for the year asagainst a net inflow of

Rs.686 crore in the previous year. The total netassets of domestic funds under

management stood at Rs.5,340 croreas on the 31st March 2004 as against Rs.3,312

crores as on the 31stMarch 2003.SBI FUNDS recorded a profit after tax of Rs.10.09


19/29

crore in 2003-2004, as against Rs.6.21 crore in the preceding year and paid adividend

of 10%. The Bank holds 100% equity of the Company.

SBI DFHI Ltd (SBI DFHI

SBI DFHI, a Primary Dealer (PD), undertakes trading in Governmentand Non-

Government securities, in the Debt

Markets.S B I D F H I L t d c a m e i n t o e x i s t e n c e i n A p r i

l 2 0 0 4 w i t h t h e amalg amatio n of Dis cou nt an d Fina nce Hou se

of In di a (D FH I) , asubsidiary of RBI & SBI Gilts Ltd, a subsidiary of SBI.

It is a major parti cipan t in the wholes ale Debt Mar ket both in th e

Primary andSecondary Market segment with an outright turnover of

GovernmentSecurities and Treasury Bills in 2007-08 at Rs.54, 919.39 crores

andRs.5, 428 crores respectively.SBI DFHI Ltd is also active in retailing of

Governme nt securi t ies , including small lots, and are the distributors of Mutual

Fund productsof all leading funds, actively participating in the domestic interest

ratederivatives and equities/equity futures markets.SB I DFH I posted a post- tax

profi t of Rs .85.68 crores for the year 2007-08 and paid a dividend of

10 %. Th e St at e Ba nk Gr ou p ho ld s 67% of the companys share

cap i t a l . I t pos ted an impress ive tu rnover o f G o v e r n m e n t S e c u r i t i e

s a n d Treasury Bills in 2007-08 at Rs.54,919.39 crores and Rs.5,428

croresrespectively. SBI Factors and Commercial Services Pvt Ltd (SBI

FACTORS)


20/29

SBI Factors, a subsidiary of State bank of India (SBI) is one of theleading factoring

companies in India with an asset base of Rs. 700.10crores as on 30.09.2005. It was

established in February 1991 with the primary objective to provide domestic factoring

services to Small andMedium Enterprises (SMEs). Factoring is a Collection

and financeservice designed to improve the cash flow position of SMEs byturning

their credit invoices into ready cash. The major strength of thecompany is that it

has put in place a technology driven platform for offering integrated receivables

management. SBI and its AssociatesBanks hold 70% stake in SBI Factors.SBIF offers

Domestic Factoring With Recourse and WithoutRecourse. Purchase Bill Factoring,

Factoring of Usance Bills Under LC, Channel Financing of Dealers / Distributors and

Export FactoringFacilities. All its products have been well received by its

clients.SBIF has ten branches all over the country and it has plans to openthree more

branches during the year. It has achieved a turnover of Rs.1489.54 Crores with

Prepayment Outstanding of Rs. 459.35 crores for the year ended 31.03.2005. The

profit before tax was Rs. 9.64 croresand PAT Rs. 6.12 Crores for the year 2004-05. It

has recorded a NIL NPA position as at 31.03.2005. It has declared a dividend of

8%during the year 2005. It has a market share of 40.30% as on30.09.2005.

SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

1. Launch of SBI Delhi, SBI Hyderabad and SBI Bangalore cityaffinity cards.

2. Launch of Flexi pay, an instalment loan programme.3. Market leadership in

VISA petrol spends in India.4. Launch of e-bill payment of SBI Credit Card for SBI

accountholders.5. Launch of Elite card which is offered by invitation only.6. Ten per

cent maiden dividend declared


21/29

Credit Risk Management in State Bank Of India

Daily limit of US $ 1000 or equivalent at the ATM and US $ 1000 or

equivalentat Point of Sale (POS) terminal for debit transaction

Purchase Protect ion*up to Rs. 5000/- and Person al Accidentco ve r* up to Rs .2,00,000/-

Charges for usage abroad: Rs. 150+ Service Tax per cash withdrawal Rs.15 +Service Tax per enquiry.State Bank ATM-cum-Debit (State Bank Cash plus) Card

:Indias largest bank is proud to offer you unparalleled convenience viz. State Bank

ATM-cum-Debit(Cash Plus) card. With this card, there is no need to carry cash inyour wallet.You can now withdraw cash and make purchases anyt ime youwish to with your ATM-cum-Debit Card.Get an ATM-cum-Debit card with whichyou can transact for FREE at any of over 8000ATMs of State Bank Group within ourcountry.SBI GOLD INTERNATIONAL DEBIT CARDS

KLEs Institute of Management Studies and Research, Hubli36


22/29


23/29


24/29


25/29


26/29


27/29

Credit Risk Management in State Bank Of IndiaE-PAY

Bill Payment at Online SBI (e-Pay) will let you to pay your Telephone,Mobile,Electricity, Insurance and Credit Card bills electronically over our OnlineSBI website

E-RAILBook your Railways Ticket Online.

The facility has been launched wef Ist September 2003 in association withIRCTC.The scheme facilitates Booking of Railways Ticket Online.The salient features of the scheme are as under:

All Internet banking customers can use the facility.

On giving payment option as SBI, the user will be redirected to onlinesbi.com.Afterlogging on to the site you will be displayed payment amount, TID No. andRailwayreference no.

. The ticket can be delivered or collected by the customer.


28/29

The user can collect the ticket personally at New Delhi reservation counter .

The Payment amount will include ticket fare including reservation charges,couriercharges and Bank Service fee of Rs 10/. The Bank service fee has beenwaived unto

31st July 2006.

KLEs Institute of Management Studies and Research, Hubli37

Credit Risk Management in State Bank Of IndiaSAFE DEPOSIT LOCKER

For the safety of your valuables we offer our customers safe deposit vault orlocker facilities at a large number of our branches. There is a nominal annual charge,

whichdepends on the size of the locker and the centre in which the branch is located.NRI HOME LOAN

SALIENT FEATURESPurpose of Loan

Loans to NRIs & PIOs can be extended for the following purposes.

To purchase/construct a new house / flat

To repair, renovate or extend an existing house/flat

To purchase an existing house/flat

To purchase a plot for construction of a dwelling unit.

To purchase furnishings and consumer durables, as a part of the project costAGRICULTURE / RURAL

State Bank of India

Caters to the needs of agriculturists and landless agriculturallabourers through anetwork of 6600 rural and semi-urban branches. here are 972specialized brancheswhich have been set up in different parts of the country exclusivelyfor thedevelopment of agriculture through credit deployment. These branches include427Agricultural Development Branches (ADBs) and 547 branches withDevelopmentBanking Department (DBDs) which cater to agriculturists and 2Agricultural BusinessBranches at Chennai and Hyderabad catering to the needs ofhitech commercialagricultural projects.


29/29

history of state bank of india

Documents