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In this unit you
will study about
State Bank of India- Brief
History, Functions, structure
and Organisation; Working
and progress.
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Drawbacksof ImperialBank
Failure in
central
banking
function
Failed to
develop bill
market
Defective
Branch
Policy
Anti-Indian
Activities
Foreign
domination
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Introduction
» SBI was previously know as Imperial Bank. The imperial Bank had a very important place
in the Indian Banking system prior to its nationalisation.
» Prior to the establishment of Reserve Bank of India, it is used to perform central banking
functions.
» But after the establishment of RBI in 1935, the imperial bank gave up its central banking
functions and it became purely a commercial bank.
» That time it was the most powerful commercial banks of India.
» The ordinary public had full confidence in the bank. Despite this, the imperial bank
suffered from the many drawbacks, such as, foreign domination, Anti Indian Activities,
defective branch policy, failure to develop bill market and failure in central banking
function.
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» The origin of the State Bank of India goes back to the first decade of the nineteenth
century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806.
» Three years later the bank received its charter and was re-designed as the Bank of
Bengal (2 January 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 April 1840) and the Bank of Madras (1 July 1843) followed the
Bank of Bengal. These three banks remained at the apex of modern banking in India till
their amalgamation as the Imperial Bank of India on 27 January 1921.
» Primarily Anglo-Indian creations, the three presidency banks came into existence either
as a result of the compulsions of imperial finance or by the felt needs of local European
commerce and were not imposed from outside in an arbitrary manner to modernize
India's economy.
StateBankof India:History
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» State Bank of India (SBI), state-owned commercial bank and financial services
company, nationalized by the Indian government in 1955.
» The oldest commercial bank in India, SBI originated in 1806 as the Bank of
Calcutta. Three years later the bank was issued a royal charter and renamed the
Bank of Bengal. Along with the Bank of Bombay (founded 1840) and the Bank of
Madras (founded 1843), it was one of three so-called presidency banks, each of
which was jointly owned by the provincial government and private subscribers.
History
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» In 1921 the presidency banks were merged to form the Imperial Bank of India (IBI), which then
became the largest commercial enterprise in the country. In 1955 the government of India and
the country’s central bank, the Reserve Bank of India (founded 1935), assumed joint ownership
of IBI, which was renamed the State Bank of India.
» Four years later, by the State Bank of India (Subsidiary Banks) Act, banks earlier operated by
individual princely states became subsidiaries of SBI. The Reserve Bank’s share of SBI was
transferred to the government in 2007. Since nationalization, SBI has served the needs of Indian
economic development through rural-development initiatives and microcredit programs and by
financing major agricultural and industrial projects and raising loans for the government.
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Featuresof theStateBankof India
» It is India’s largest bank in terms of assets, net earnings, and number of branches, market capitalisation and market
share.
» It has a vast distribution network of over 21,500 branches in India and 172 overseas office in 37 countries.
» SBI is preferred vehicle of the Government of India for raising funds aboard by way of NRI bonds/ Indian millennium
deposit
» It has dominant corporate and retail banking franchise serving more than 90 Million customers.
» SBI also has 200 years of continuous profitability: Central bank prior to formation of RBI, it hold records of continuous
dividend payment.
» It is also positioned to leverage the resurgence in the Indian economy.
» Crtical size acheieved by the State Bank group- US $ 100 Billion plus size, and profit crosses US $1 Billion mark:
Consolidated group presents a formidable entity
» Five associate Banks (Abs) Considered together are the second largest bank in the country.
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Objectivesof thestatebankof India
Help in
establishment
of Licensed
godowns
Remittance
facilities
Government
partnership in
Cooperative
credit
Encouragement
to Saving
Financial
assistance of
SSI
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Featuresof Statebankof India
» It is India’s largest Bank in terms of assets, earnings, net earnings, and number of branches, market
capitalisation and market share.
» It has a vast distribution network of over 21500 branches in India and 172 overseas offices in 37 countries.
» SBI is the preferred vehicle of the Government of India for raising funds abroad by the way of NRI Bonds/
Indian Millennium deposits
» It has a dominant corporate and retail banking franchise serving more than 90 million customers.
» SBI also has 200 years of continuous profitability
» It is also best positioned to leverage the resurgence in the Indian economy.
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Objectivesof theStatebankof India
Financial
assistance to
small sale
industries
Government
Partnership in
Cooperative
credit
Encouragement
to saving
Help in the
establishment
of licenced
godowns
Remittance
facilities
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Functionsof thestatebankof India
Ordinary
banking
function
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CentralBankingfunctions
It act as the
government
banker It act as the
Bankers bank
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OrdinaryBankingFunction
Receiving deposits
from the public
Investment in
securities
Loans and advances
to businessman
Foreign Banking
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Miscellaneousfunction
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Differenttypeof Product&Serviceoffered bySBIServices
» DomesticTreasury
» SBIVishwaYatra ForeignTravel Card
» Broking Service
» ATM Services
» Internet Banking
» E-Pay
» E-Rail
» RBI-EFT
» Safe Deposit Lockers
» Gift Cheques
» MICR Codes
» Foreign Inward Remittance
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Structureof statebankof India
Branches
Zonal
Office
Local
Head
office
Central
Office
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Organisationof StateBankof India
Symbol and
slogan
Office of the
state bank
Management
Capital
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Roleof Boardof Directors
» Establish vision, mission and values.
» Set strategy and structure
» Delegate to management
» Exercise accountability to shareholders and be responsible to relevant stakeholders
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Roleof SBIinadevelopingeconomy
» Promoting capital formation
» Encouraging innovation
» Monetisation
» Influence economic activity
» Facilitator of monetary policy
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Affiliatesof StateBankof India
» Affiliate is a type of Inter-company relationship in which one of the companies owns less than a majority of the other
company’s stock, or a type of inter company relationship in which at least two different companies are subsidiaries of
a larger company.
» Affiliates of state bank of India includes: Affiliates of State Bank of India
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• State Bank of
Bikaner and Jaipur
• State Bank of
Hyderabad
• State Bank of
Mysore
• State Bank of
Patiala
• State Bank of
Travancore
• SBI International
Mauritius Ltd.
• State Bank of India
California
• State Bank of India
Canada
• State Bank of India
INMB Bank Ltd
Lagos
• State bank of India
Indonesia
• SBI Life
• SBI Capital Markets Limited
(SBICAP)
• SBI DFHI Ltd.
• SBI Cards and Payments
Services Pvt. Ltd
• SBI Mutual Funds
Management
• SBI factors and commercial
services pvt ltd
• SBI General Insurance
company limited
• SBI Life
insurance
company ltd
• SBI General
insurance
company
limited
• Sbi sg global
securities
services
private limited
Subsidiaries Foreign Subsidiaries Non Banking Subsidiaries JointVenture
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Principleof statebankof Indialendingpolices
» Safety
» Liquidity
» Profitability
» Purpose of loan
» Principle of diversification of risk
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Workingareasof abank
Associates
and
subsidiary
Treasury
Operations
International
banking
National
Banking
Corporate
Banking
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CorporateBanking
» This segment of the bank has total business of around Rs 1, 193 billion. SBI has created various Strategic Business
Units in order to streamline its operations.These SBUs are as follows.
» Corporate Accounts:This SBU is important for the bank as its loan portfolio constituted about 27.05% of the bank’s
commercial and institutional non-food credit and 12.85% of the total domestic credit portfolio as on 31 march 2006.
» Leasing:This SBU is not writing any leases since the past few years as unfavourable business climate and availability
of alternative funding options at cheaper cost.As at the end of the March 2006, the disbursements and capitalisation
were zero and profit amounted to 245.9 Million
» Project Finance:This SBU focuses on funding core projects like power, telecom, roads, ports, airports, special
economic zones and others.
» Mid-Corporate Group:THE Mid-corporate Group created in June 2004 has 7 MCG Regional offices controlling 28 large
branches with high concentration of Mid-corporate business.
» StressedAssets Management: During FY06, the banking industry witnessed a major policy initiative by Reserve Bank
of India with the opening up of Sale/ Purchase of Non performing assets to Banks, Fis and Non-Banking Finance
Companies.
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PersonalBanking
» Personal banking SBU
» Small and Medium Enterprise
» Agriculture Banking
» Government Banking
» International banking
» Associates and Subsidiaries
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Achievementsof theStatebankof India
» Development of banking facilities
» Facilities of rural credit
» Village adoption
» Integrated rural development programme
» Financial aid to small scale industries
» Regional rural banks
» Gramodaya scheme
» Financing of foreign trade
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Roleof SBIinadevelopingeconomy
Monetisation
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