CONTENT

Chapter 1

1.1 Overview
1.2 History
1.3 Different Services and product
1.4 Subsidiaries of SBI
1.5 Awards & Recognitions by SBI
1.6 Financial Analysis (2010)

Chapter 2

2.1 Various strategies adopted by SBI

2.2 Outcomes of change in strategies
2.3 Competitor in Banking Services
2.4 SWOT Analysis

Chapter 3

3.1 Findings and Suggestion

3.2 Conclusion
3.3 Bibliography
Acknowledgement
 Chapter 1

1.1 OVERVIEW

State Bank of India is the largest and one of the oldest commercial bank in India, in
existence for more than 200 years. The bank provides a full range of corporate,
commercial and retail banking services in India. Indian central bank namely Reserve
Bank of India (RBI) is the major share holder of the bank with 59.7% stake. The bank is
capitalized to the extent of Rs.646bn with the public holding (other than promoters) at
40.3%. SBI has the largest branch and ATM network spread across every corner of India.
The bank has a branch network of over 14,000 branches (including subsidiaries). Apart
from Indian network it also has a network of 73 overseas offices in 30 countries in all
time zones, correspondent relationship with 520 International banks in 123 countries. In
recent past, SBI has acquired banks in Mauritius, Kenya and Indonesia. The bank had
total staff strength of 198,774 as on 31st March, 2006. Of this, 29.51% are officers,
45.19% clerical staff and the remaining 25.30% were sub-staff. The bank is listed on the
Bombay Stock Exchange, National Stock Exchange, Kolkata Stock Exchange, Chennai
Stock Exchange and Ahmedabad Stock Exchange while its GDRs are listed on the
London Stock Exchange. SBI group accounts for around 25% of the total business of the
banking industry while it accounts for 35% of the total foreign exchange in India. With
this type of strong base, SBI has displayed a continued performance in the last few years
in scaling up its efficiency levels. Net Interest Income of the bank has witnessed a CAGR
of 13.3% during the last five years. During the same period, net interest margin (NIM) of
the bank has gone up from as low as 2.9% in FY02 to 3.40% in FY06 and currently is at
3.32%.

Key Areas of Operations:

The business operations of SBI can be broadly classified into the key income generating
areas such as National Banking, International Banking, Corporate Banking, & Treasury
operations.

1.2 HISTORY

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. Their evolution was, however, shaped by ideas
culled from similar developments in Europe and England, and was influenced by changes
occurring in the structure of both the local trading environment and those in the relations
of the Indian economy to the economy of Europe and the global economic framework.

SBI played an extremely important role in developing India's rural regions, providing the
financing needed to modernize the country's agricultural industry and develop new
irrigation methods and cattle breeding techniques, and backing the creation of dairy
farming, as well as pork and poultry industries. The bank also provided backing for the
development of the country's infrastructure, particularly on a local level, where it
provided credit coverage and development assistance to villages. The nationalization of
the banking sector itself, an event that occurred in 1969 under the government led by
Indira Gandhi, gave SBI new prominence as the country's leading bank.
1.2.1 Key Dates
1.2.2 Business

The business of the banks was initially confined to discounting of bills of exchange or
other negotiable private securities, keeping cash accounts and receiving deposits and
issuing and circulating cash notes. Loans were restricted to Rs.one Lakh and the period of
accommodation confined to three months only. The security for such loans was public
securities, commonly called Company's Paper, bullion, 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 woolens, cotton, cotton piece goods,
mule twist and silk goods were also granted but such finance by way of cash credits
gained momentum only from the third decade of the nineteenth century. All commodities,
including tea, sugar and jute, which began to be financed later, were either pledged or
hypothecated to the bank. Demand promissory notes were signed by the borrower in
favor of the guarantor, which was in 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 principal borrowers against deposit of Company's paper,
while the business of discounts on private as well as salary bills was almost the exclusive
monopoly of individuals Europeans and their partnership firms. But the main function of
the three banks, as far as the government was concerned, was to help the latter raise loans
from time to time and also provide a degree of stability to the prices of government
securities.

1.2.3 Management of SBI

The bank has 13 directors on the Board and is responsible for the management of the
Bank’s business. The board in addition to monitoring corporate performance also carries
out functions such as approving the business plan, reviewing and approving the annual
budgets and borrowing limits and fixing exposure limits. Mr. O. P. Bhatt is the Chairman
of the bank. The five-year term of Mr. Bhatt will expire in March 2011. Prior to this
appointment, Mr. Bhatt was Managing Director at State Bank of Travancore. Mr. Bhatt
has more than 30 years of experience in the Indian banking industry and is seen as
futuristic leader in his approach towards technology and customer service. Mr. Bhatt has
had the best of foreign exposure in SBI. We believe that the appointment of Mr. Bhatt
would be a key to SBI’s future growth momentum. Mr. T S Bhattacharya is the
Managing Director of the bank and known for his vast experience in the banking
industry. Recently, the senior management of the bank has been broadened considerably.
The positions of CFO and the head of treasury have been segregated, and new heads for
rural banking and for corporate development and new business banking have been
appointed. The management’s thrust on growth of the bank in terms of network and size
would also ensure encouraging prospects in time to come.

Board of directors (As on 13th May 2009)

Sr. No. Name of Director Sec. of SBI Act, 1955

Shri O.P. Bhatt
1. 19(a)
Chairman
Shri S.K. Bhattacharyya
2. 19(b)
MD & CC&RO
Shri R. Sridharan
3. 19(b)
MD & GE(A&S)
4. Dr. Ashok Jhunjhunwala 19(c)
5. Shri Dileep C. Choksi 19(c)
6. Shri S. Venkatachalam 19(c)
7. Shri. D. Sundaram 19(c)
8. Dr. Deva Nand Balodhi 19(d)
9. Prof. Mohd. Salahuddin Ansari 19(d)
10. Dr.(Mrs.) Vasantha Bharucha 19(d)
11. Dr. Rajiv Kumar 19(d)
12. Shri Ashok Chawla 19(e)
13. Smt. Shyamala Gopinath 19(f)

1.3 Different services provided by SBI:

DEPOSIT LOANS CARDS DIFFERENT CREDIT

CARDS
 Savings Account Home Loans Consumer Cards SBI International Cards

Life Plus Senior Loan Against Credit Card SBI Gold cards
Citizens Savings Property
Account
Fixed Deposits Personal Loans Travel Card SBI Gold Master cards
Security Car Loan Debit Cards Your City Your
Deposits Cards
Recurring Loans against Commercial Your City Your
Deposits Securities Cards Cards
Tax-Saver Two Corporate Partnership Cards
Fixed Deposit Wheeler Cards
Salary Account Pre- approved Loan Prepaid Card Partnership Cards
Advantage Woman Retail Asset Purchase Card
Savings Account
Rural Savings Far m er Distribution SBI Employee
Account Finance Cards Cards

People's Savings Business Installment Business Card SBI Advantage

Account Loans Cards

Freedom Flexi Cash Merchant SBI Advantage Cards

1.3.1 Other Services

State Bank of India Services offers the following products through its well managed,
efficient and deep-rooted network:

• Domestic Treasury.
• SBI Vishwa Yatra Foreign Travel Card.
• Broking Services
 • Revised Service Charge.
• ATM Services.
• Internet Banking.
• E-Pay.
• E-Rail.
• RBIEFT.
• Safe Deposit Lockers.
• Gift Cheques.
• MICR Codes.
• Foreign Inward Remittances.

1.4 Subsidiaries of SBI

State Bank of India Services are offered through the following subsidiaries and Joint
Ventures –

Banking Subsidiaries - State Bank of Bikaner and Jaipur (SBBJ), State Bank of
Hyderabad (SBH), State Bank of Indore (SBIr), State Bank of Mysore (SBM), State
Bank of Patiala (SBP), State Bank of Saurashtra (SBS) and State Bank of Travancore
(SBT).

Foreign Subsidiaries - State bank of India International (Mauritius) Ltd.,State Bank

of India (California), State Bank of India (Canada) and INMB Bank Ltd, Lagos.

Non- banking Subsidiaries - SBI Capital Markets Ltd (SBICAP), SBI Funds
Management Pvt Ltd (SBI FUNDS), SBI DFHI Ltd (SBI DFHI), SBI Factors and
Commercial Services Pvt Ltd (SBI FACTORS) and SBI Cards & Payments Services
Pvt. Ltd. (SBICPSL)

Joint Ventures – SBI Life Insurance company limited (SBI LIFE)

Global Presence - SBI has 92 branches, agencies or offices in 32 countries. -It has
branches of the parent in Colombo, Dhaka, Frankfurt, Hongkong, johannesberg,
 London and environs, Los Angeles, Male in the Maldives Muscat , Doha, New York,
Osaka, Sydney and Tokyo.

1.5 Awards & Recognitions by SBI

State Bank of India is India’s largest bank by market capitalisation, balance sheet, and
branch network. SBI is the flagship of SBI Group, which, with around 165 million
customers is one of the largest financial groups in Asia. SBI has a global network of more
than 12,500 branches and offices, and has strong relationships with approximately 80 per
cent of large Indian corporates

1.5.1 Only Indian bank in Top 100 banks of world holding 57 positions in the world best
banks.
1.5.2 No 1 in merger and acquisition deal
1.5.3 Business standard has awarded best banker of the year to Mr. O.P Bhatt
1.5.4 CNN IBN network 18 has awarded Mr. O.P Bhatt as Indian of the year
1.5.5 State Bank of India (SBI) has become the second bank in the world to have more
than 10,000 Branches

1.5.6
1.2.8 Financial Analysis (2010)
Revenue: $ 28.212 Billion

Profit: $2.473 Billion

Total Asset: $ 323.043 Billion

Total equity: $ 18.519 Billion

Owner: Govt. of India

Stake Reserve Bank of India: 60%

Total employee: 205,896

Stock Exchanges: Mumbai Kolkata Chennai Ahmedabad Delhi New York London
Chapter 2

2.1 Business Strategic adopted by SBI

Various strategies has been formed for improving knowledge of staff ,to face the
competition from private and foreign banks , to provide more facilities to customer in
terms of time shaving improved and fast services, technological advancement to use of
information technology providing ATM and net banking option to attract customers and
NRI’s

2.1.1 For enhance Staff Knowledge:

2.1.1.1 Institutions of advance learning:

The state bank academy (SBA) formerly known as State bank staff college was setup at
Gurgaon (Near to Delhi) on 18th Nov 1982, To provide state of the art training in
financial products to middle level and senior level executives from India and abroad .

The programmes at SBA Gurgaon have attained a steady - stream maturity over the
years. SBA has imparted training to over 19,000 managers during the past five years.

Gurgaon visualizes an unfolding opportunity in the use of new, technology enabled

training methods as a supplemental training medium.

This Endeavour is intended to deepen and lengthen the collective training exposure of
SBI managers.

2.1.1.2 Internal consultant/change agent:

To act as a catalyst for change in attitudes and orientation of banking staff and to provide
expertise and consultative support.
2.1.1.3 Think Tank: to provide expert and inform suggestions, model business
strategies, analysis of market developments from a banker perspective

2.1.2 for Improvement in Business Process and Customer Satisfaction:

2.1.2.1 Centralization and Decentralization:

It has a well defined system for decision making process. The financial decisions are
taken at various levels by different officials depending upon their positions and also
through committee approach.

The centralized credit processing cells are being formed at certain centers for sanction of
personal segment loans and under SBI segments. Its branches source the applications and
forward them to the respective credit processing sale for their consideration.

Regarding the sanction of loan each officer of the bank considers the loan proposals and
takes a decision in terms of scheme of delegation of powers, on merits of proposal. If the
bank needs to purchase any kind of equipment like computers or software branch
managers are required to take permission from high authority.

So in term of decision making centralization is high and low decentralization wherein

the managers have some powers to take decision but at a limited base.

2.1.2.2 The Restructuring:

To overcome the intense competition from private and foreign banks, SBI planned a
major organizational restructuring exercise to increasing customer satisfaction and
convenience, freeing up time for branch manager and branch staff to focus on sales and
marketing, simplifying process for employees, enhancing SBI's competitiveness in the
market, increasing the profitability through higher market share and improved process
efficiency. The key aspects involved:

• Redesigning of branches: includes facilitates IT infrastructures provide better

power backup.
• Providing alternate channels :
• Technological up gradation: A business process reengineering (BPR) team was
constituted in June 2003 with McKinsey & Company as consultants. The BPR's
basic goal was to create an operating architecture that would facilitate service
delivery of international standards.

2.1.2.3 New Business Undertaking by SBI:

Due to competition from the private banks and in order to serve the customers need as
well for the development of the economy SBI has been entered into new market and
started some of new services

SBI Life Insurance

SBI Mutual Fund

SBI medical Insurance

2.1.2.4 Alliances and tie ups:

To boost its business, SBI entered into several alliances and tie-ups with automobile,
insurance, mutual fund, project finance and medical equipment companies For example:
Unlike other competitors that relied on reduced interest rates to get business, SBI
extended the tenure of car loans from five to seven years, thereby lowering the monthly
debt repayment burden of the loan seeker. SBI entered into a tie- up with Maruti, the
largest automobile manufacturer in India, to provide loans for purchase of Maruti cars at
the rate of 10.05 per cent and 11.25 per cent for three years and above three years
respectively. After the scheme was introduced, SBI emerged as the largest financier for
Maruti cars in India and the number of Maruti vehicles financed grew by 17 per cent in
the fiscal 2003-04 over fiscal 2002- 03.

2.1.2.5 The Marketing Initiatives

SBI carried out various marketing initiatives to enhance its reach. They included
segregating and targeting existing high value customers,
• Cross sales of other products
• Setting up call centers and outbound sales force to secure new customers.
• Plans were also made to utilize database marketing to pursue large and medium
sized corporate, government and trade finance customers
• Database marketing was expected to draw increased revenue from cross selling,
lower costs and increased customer loyalty.
SBI also introduced various other ways of reaching out to customers like extension of
hours of work (SBI increased daily working hours by two hours and Sunday banking
was introduced) and Aggressive marketing through print and television and media.

2.1.2.6 Technological advancement (Implementation of SAP & ERP ):

State Bank Group aims to respond faster to market demands, enable real-time
information access and assign the right people to the right positions at the right time.

On Implementation of mySAP ERP help State Bank Group drive advancement and
innovation in areas of human capital management and enterprise resource planning such
as e- learning, virtual classrooms, career development and successing planning,
competency assessment, performance management and property management

2.2 Result of strategies change in SBI:

 • SBI's restructuring exercise and growth strategies resulted in an increase in profits
for the fiscal 2003-04. Net profits stood at Rs 36.81 BN for the fiscal ended 2003-
04 as against Rs 31.05 BN the previous fiscal, an increase of 18.55 per cent.
Operating profits stood at Rs 95.535 BN compared to Rs 77.754 BN in the fiscal
2002-03.
• In spite of SBI's efforts to reduce workforce, staff costs rose by 13.3 per cent,
mainly due To additional contribution to pension fund and provision for leave
encashment.
• The net NPA level came down from 4.5 per cent in the fiscal 2002-03 to 3.5 per
cent in 2003-04. SBI aimed at 2 per cent NPA by 2004-05
Till June 2004, Two thirds of their branches were in rural and semi-urban areas
and it was believed to be a profitable business,
• Among the factors that will help in realizing this full potential were access to
institutional credit to more farmers and appropriate quantity and quality of
agriculture credit. Since the Seventies, the decadal average growth rate of the
volume of short-term institutional credit to agriculture has stagnated at around 15
per cent, while the growth rate of the volume of long-term credit has in fact
declined from 20.2 per cent in the 1970s to11.9 per cent in 1990s.
• On technological up gradation, all the 13,650 branches of the bank were fully
computerized, also they increased fully integrated ATM network from 4,000 in
2004 to 6000 today across the country. SBI in its own quiet manner is trying to
provide world- class services
• Customers of State Bank of India can expect to have a positive experience when
they visit branches. They can be sure that they’ll be welcomed courteously,
greeted with a smile, attended to promptly and their grievances listened to
carefully.

• Increased market share

2.3 Competitors
Top Performing Public Sector Banks

Andhra Bank

Allahabad Bank

Punjab National Bank

Dena Bank

Vijaya Bank

Top Performing Private Sector Banks

HDFC Bank

ICICI Bank

AXIS Bank

Kotak Mahindra

Top Performing Foreign Banks

Citibank
Standard Chartered
HSBC Bank
ABN AMRO Bank
American Express
2.4 SWOT Analysis

2.4.1 Strength

• 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
bank(Subsidiaries).

• Diversified Portfolio: SBI Bank has all the products under its belt, which help it to
extend the relationship with existing customer’s 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. Continued effort to increase low cost deposit would ensure
improvement in NIMs and in hence earnings.

2.4.2 Weaknesses:
 • 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 % in 2007.

• Modernization: SBI lags with respect to private players in terms of modernization

of its processes, infrastructure, centralisation, etc.

• SBI is currently operating at a lowest CAR (8%). Insufficient capital may restrict
the growth prospects of the bank going forward.

• Delay in technology up gradation could result in loss of market shares.

• Management indicated a likely pension shortfall on account of AS-15 to be close

to Rs50bn.

• Contribution of retail credit to total bank credit stood at 26%. Significant thrust on
growing retail book poses higher credit risk to the bank

2.4.3 Opportunity
• 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
unlock value.

• Planning to add 2000 branches and 3000 ATMs in 2010. 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.
 • Global expansion: SBI already has expanded globally and start its operations
internationally in 32 countries like Australia, Bangladesh, etc.... and has more
plans of expansion in other global markets.

• Growing retail & SMEs thrust would lead to higher business growth.

• Micro Finance: there is a lot of growth opportunity in the area of micro finance.
Strong economic growth would generate higher demand for funds pursuant to
higher corporate demand for credit on account of capacity expansion.

2.4.4 Threat
• 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 SBI’s activities. This can be repeated in the future.

• Stiff competition, especially in the retail segment, could impact retail growth
of SBI and Hence slowdown in earnings growth.

• Slow down in domestic economy would pose a concern over credit off-take
thereby impacting earnings growth.
 • The changing interest rates and the changing policies of RBI

3.1 Findings and suggestion:

From the analysis of the projects we found that a lot of bank increasing in India with
different product and services, but people have still trust only in brand SBI where the
safety and security of money is matter.

From the analysis part it can be conclude that customers have a good respond towards
SBI advance products in India. SBI is in 1st position having large number of customers &
providing good services to them. The bank has a wide customer base, so the bank should
concentrate on this to retain these customers.

In present scenario SBI is the largest advance product issuer in India. Within a very short
period of time the achievement made by SBI is excellent, what a normal bank cannot
expect, but it is being done by SBI. It happens due to employee dedication towards the
organization, fastest growing Indian economy, & brand image.

Suggestion:

To be the largest advance product issuer, SBI should focus on-

• Launch Innovative product and informed to all costumer to make product popular, we
found people don’t know about various schemes and products of SBI.

• Fastest customer’s problem solving techniques

• Has to Provides more ATM , better Net banking facilities in small cities and towns so
that people can save time from longs queue.

• In the rural areas customers are not getting the monthly statements to know their
balance or deduction if any.
3.2 Conclusion:

Banking sector in India has gone through a metamorphosis change in its concept
perception and outlook quantitative expansion with quality has been a phenomenon in the
operations of the banking system bank being a service selling show has to meet the need
of the customers which vary from place to place, time to time and purpose to purpose and
also at the same time it has to sustain the tough competition coming from all the four
ends.

An increase in the income and saving of the urban population has raised hopes for
banking institutions to fill up the gaps by catering to the need of the potential customers
and also penetrate into new target markets like rural sectors through its innovative
financial products like micro finance and SBI is doing the same and this has been proved
by so many awards it has achieved in the recent past, A few of them being most preferred
bank as declared by CNBC in Aug 2007.

State bank of India earlier known as Imperial Bank has proved its existence through
introducing various innovative schemes and that also are considered as competitive in
present market.

In this span of time, they have also come up with new strategies so as to compete in this
fiercely competitive market where every next day a new scheme is introduced so as to
grab the market shares.

It follows a centralized system, so as to bring synchronization in the decision making

process which helps the organization to create better strategies so as to focus on the
overall functioning and growth prospects of the bank.

At the same time it can be concluded that they need to focus on the human resources in
Order to achieve the maximum market share
3.3 Bibliography

www.sbi.co.in

www.onlinesbi.com

www.scribd.com/doc/18090861/internet-banking-of-sbi

www.scribd.com/doc/30293245/State-Bank-of-India

www.scribd.com/doc/25961830/State-Bank-of-India-Strategy-Analysis

http://managementfunda.com/state-bank-of-india/