Organizational Dynamics

Project Report on: State Bank Of India

Submitted to

Prof. Soorjith Karthikeyan

Submitted by

Group A11
Anoop Ambala (166016)
Prateek Samantaray (166111)
Shivang Sabharwal (166161)
Shubha Singh (166163)
Sumit Kumar (166177)

Section A
Submitted on
31.10.2016

Contents
History................................................................................................................... 1
Mission and Vision................................................................................................. 2
Organizational Hierarchy....................................................................................... 3
Strengths............................................................................................................... 4
Weaknesses........................................................................................................... 5
Opportunities......................................................................................................... 6
Threat.................................................................................................................... 7
Competitor Analysis............................................................................................... 7
Identified Problem and Opportunity for Growth.....................................................9
Bibliography......................................................................................................... 10

State Bank Of India

History
The State Bank of India has evolved over the past 210 years, from a small regional financial
service institution to one of the leading public sector banks, and the largest commercial bank
in the country. Originally established as Bank of Calcutta, it was later rechristened as the
Bank of Bengal, the first of the three Presidency Banks. These three banks were the primary,
and perhaps the only major players in the banking sector until well into the 20th century. The
three banks were combined in 1921 to form the Imperial bank of India. As a part of the First
Five Year Plan, the Imperial bank of India was transitioned to the State Bank of India, in
order to expand the rural outreach of banking services institutions in the country. Till that
time, the economy had primarily been focused on catering the needs of the urban populace. In
order to facilitate the handling of economic and financial services of the rural sector, it was
recommended that a state-owned bank is created to operate at all levels, thus culminating in
the formation of the State Bank of India in 1955.
SBI received a further boost in 1959, with the passing of the Subsidiary Banks Act, thus
including within its ambit 8 more banks as its associate banks. Thus, with a strong base of

480 offices inherited from the Imperial Bank, the State Bank of India worked towards
breaking the stereotypical assumptions of banks as mere repositories of wealth, and
establishing itself as a one-stop for solving the ever increasing financial and economic
requirements of the growing Indian economy.
With the advent of private banks, SBI has constantly worked towards improving its customer
relations and digitizing its operations and has been incredibly successful in this venture. With
18000 branches spread over the length and breadth of the country, and 191 offices in more
than 36 countries, SBI has truly diversified into a commercial bank in the true sense, while
still maintaining its core mission of Customer First. In keeping with another one of their
missions, SBI has constantly worked towards inculcating technology in their operations,
building up the largest ATM network in the country. At present, SBI has net assets valued at
almost 10 trillion, and an employee base of more than 220,000, making it one of the worlds
largest corporations.

Mission and Vision

The State Bank of India has a very well-crafted vision, which primarily revolves around the
customer and customer needs. It aims to be one of the foremost institutions in terms of
customer satisfaction, and has worked towards it with employee training programs like
Parivartan. The core mission listen by SBI are as below:
1. To be prompt, polite and proactive with clients.
2. To speak the language of young India.
3. To create products and services that will help customers to achieve their goals.
4. To go beyond the call of duty to make the customer feel valued.
5. To provide service in the remotest parts of the country.
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6. To offer excellence in the services to those abroad as much as to those in India.

7. To imbibe state of the art technology to drive excellence
The mission of SBI also includes being able to connect with the young populace of the
country, conceptualizing services that are in line with the requirements of the customers,
extending its services to the most isolated and remotest parts of the country, working towards
technological advancement in its operations, and providing similar services not only in India,
but in other countries as well. (SBI, n.d.)

Organizational Hierarchy
Keeping the large employee base and the size of the organization in mind, SBI has in place a
functional hierarchy. The departments are divided on the basis of their functional domain,
into Securities, Operations, Insurance, Planning, etc. As regards the decision-making process,
the top hierarchy comprises of a central board, which further consists of a corporate center,
which includes the chairman and the other CXOs in charge of various domains. This
corporate center is responsible for the major decisions to be taken at the national and
international level, which will impact the bank as a whole. Below them in the hierarchy, are
the Managing Directors of the banking domains, which include the Managing Directors of
Corporate Banking, National Banking, Associates and Subsidiaries, and Compliance and Risk
Portfolios. These Managing Directors handle domain level decision making and closely
coordinate with each other with respect to any business decision that may impact multiple
domains.
Since a majority of SBIs shares are held by the Government, it is but appropriate that most of
the top hierarchy are Government appointed posts. In the central board, The Chairman and
Vice Chairman and two managing directors are to be appointed by the Government after due
consultation with the RBI. Apart from the Central Board, there are several functional local
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boards, totaling 14. The Local Head offices are semi-autonomous bodies, with the heads
reporting only to the Chairman. At the State level, every Chief General Manager is assisted
by two general managers, handling personal and development banking, and commercial and
international banking respectively. The regional offices in the state are in charge of several
Assistant General Managers, who in turn are assisted by Tier III employees. As regards the
state as a whole, the bank operates in 58 modules, and each module in a state is handled by a
Deputy General Manager. Thus, SBI is seen to have in place a well-defined functional
hierarchy at the national level, supported by a strong organizational structure at the regional
levels too. Each subunit functions as a sort of strategic business unit itself, trying to expand
the outreach of the bank in their own areas.

Strengths
State Bank of India is the banking behemoth of India with more than 17,000 branches across
the country. The banks foreign branches spread across 36 countries. Being the largest
government-owned bank, SBI has gained trust and highest market penetration
across the country. It has portrayed its image of a common mans bank since ages and holds
the strongest sustaining reach and customer confidence. SBIs mission has always been to
reach the most isolated and remote parts of the country. It has 49,577 ATMs and claims the
highest share in the market, revenue, and assets. Apart from the banking units, SBI also owns
non-banking subsidiaries like SBI Funds Management, SBI General Insurance, SBI Capital
Markets, SBI Life Insurance Company Ltd. Customers loyalty towards the brand associates
them not just with the banking facilities SBI offers, but also the non-banking sectors. State
bank of India has always been the first mover among the government-banking units. SBI was
the first bank to move in Core Banking Solution. This enabled the customers to avail banking
facilities across any bank in the network. The idea behind the move was to shift SBIs
mission towards brand as a whole rather than just an operational local branch. SBI offers
flexibility to its NRI users to operate their accounts and maintain tax-free savings in any
currency of their choice. Its not just the strong customer base but SBI also has the longest
serving loyal employee chain. Apart from all the monetary and prerequisites benefits which
the government provides, SBI offers the best promotion policies among all the public sectors
banks in India. It also provides challenging assignments to the top performers making it a
learning opportunity both at professional and personal level. Bank has been known for its
motivation initiatives by providing 3 % annual profit to its employees. This has made the
employee bond with the bank unbreakable and has resulted in the loyalty of the employee
towards the bank.

Weaknesses
With the increasing internet penetration in the country, SBI has not come up with the
adequate technical solutions to its customers. SBI lags in Internet banking, Mobile banking,
and other e-banking services when compared to other private banks. With the availability of
better technology-driven services, many firms have shifted their employee salary accounts to
other private sector banks. Being a public sector unit, SBI exhibits high power distance and
maintains the hierarchical structure. This results in multiple processes and approval stages for
any amendments in the policy of the bank, which is not the case with the other private banks.
This has reduced the adaptability quotient of the bank.

Opportunities
SBI is also known as the banker to RBI. Being the largest public lender of the country SBI
has a very good brand image and hence has the opportunity to reach all the hook and corner
of the country. Being a government organization SBI hasn't modernized all of its operations
and has a huge scope in improving its efficiency by the use of technology. After interviewing
branch manager and employees of SBI Udaipur we learned that the average age is 45 years
and only recent joiners are well versed with computers. If all the employees are made
comfortable with technology further new opportunities can be created. In the bank PO exams,
SBI is the most sought out bank for young graduates and attracts best of the talent. This might
again increase chances of providing improved customer service and enhancing efficiency.
The Recent merger of SBI with other five state banks like state bank of Hyderabad, state bank
of Partial, state bank of Bikaner and Jaipur, state bank of Mysore and state bank of
Travancore also presents an opportunity to cater to different customers. SBI also has the
opportunity to generate revenue from overseas. It has 150 offices in 32 countries which
contributes approximately 15% of its revenue. Being a public sector bank SBI has a very

strong government backing and hence it can use this opportunity to take decent amount of
risk for growth acceleration. Other opportunities are in the field of corporate banking. Being a
public sector bank SBI focuses more on retail banking and a huge market for corporate
banking is still untapped. After talking to the manager and employees of SBI Udaipur, we
learned that their happiness quotient and satisfaction level is quite high. The top management
can use this factor as an opportunity to increase the efficiency and productivity.

Threat
The biggest threat to SBI is the complacent work culture. Being a government organization
things dont move as efficiently as it moves in private banks. Technological advantage can
also act as a threat if not worked upon. If porters five force analysis is done, we can consider
five threats Threat of new entry, the threat of substitution, supplier power, buyer power and
competitive rivalry. Among these five threats threat of new entrants can be rejected because
of the size and reach of SBI. Supplier power is same for all the banks. SBI can face the threat
of substitution from other private as well as public banks. PNB and BoB act as biggest public
sector banks after SBI while HDFC and ICICI are the biggest private sector lenders. The rate
at which private banks innovate and adopt new technologies, it is creating a huge threat of
substitution and is also increasing competitive rivalry. Buyer power determines which bank
has the maximum market share. As customer seeks ease of banking and convenience SBI can
face threat if they dont adopt the latest technologies. Many private and foreign banks offer
sophisticated financial products these days which are mostly not on offer by SBI. The online
wallet is another threat to SBI. It has replaced almost all small online transaction and is
growing rapidly.

Competitor Analysis
State Bank of India is the largest public-sector financial services organization in the country
having a market capitalization of 20 per cent in deposits and loans category. The bank faces
competition from large private sector banks such as ICICI Bank, Punjab National Bank and
Bank of Baroda.
ICICI Bank: It is the second largest bank in the country in terms of assets and third in terms
of market share. The bank has a total of 4,450 branches and 13,995 ATMs in the country. It is
the first Indian bank to be listed on the New York Stock Exchange.
Use of premium technology has helped ICICI Bank to position itself as a customer-friendly
bank that uses advanced technology to serve its customers. The bank targets mid to highincome group. The bank gains an edge over SBI in the marketing department. The key
strength of ICICI Bank is its aggressive and innovative marketing strategy. The bank provides
high-quality internet banking services to customers. It is considered as the pioneer of internet
banking services in India. ICICI Bank is the only Indian bank with high ratios of female
employees at all levels. The presence of women in the top management promotes entry and
retention of talented female talent of the country. In ICICI Bank, power distance is also less
as compared to a public sector bank like SBI which follows a strictly vertical hierarchy. All
these factors contribute to a high level of employee satisfaction and loyalty and thus helping
the organization to serve its customers better. (ICICI, n.d.)
ICICI Bank does not have government backing which makes it riskier when compared to a
public sector bank like SBI. ICICI Bank focuses only on the high-end customers and
therefore its market capitalization is lower than that of SBI.

Punjab National Bank: The bank aims to be a household brand with pan India footprints. It
is the second largest state-owned commercial bank in India and is considered to be one of the
top four banks in the country alongside SBI, ICICI Bank and Bank of Baroda.
The bank has 6,968 branches and over 9,656 ATMs all over the country serving over 80
million customers. It provides complete banking solutions with international banking as the
prime target segment. The bank has highly diversified operations with strong IT operations.
As compared to SBI, the bank has less market penetration due to insufficient marketing and
branding. (PNB India, n.d.)
Bank of Baroda: Bank of Baroda is one of the biggest names in public sector banking in
India with a total of 5,326 branches in the country. The bank targets middle-income group
and positions itself as the financial organization that provides international level services in
the Indian way. The biggest strength of the bank is its large international presence which is in
sync with its tagline Indias international bank.
The weakness of Bank of Baroda is the lesser branches when compared to banks like SBI and
Punjab National Bank. A lesser number of branches impact the market share, and thus the
bank has a lot of ground to cover in order to catch up with the State Bank of India. (Bank of
Baroda, n.d.)

Identified Problem and Opportunity for Growth

The major problem and scope of improvement lie in the technology-driven services of State
Bank Of India. Delay in technological up gradation might result in loss of market shares.
Private competitors of SBI are focusing more towards digitalization of the entire banking
services. This is the area where SBI lags behind and requires to shift its mission towards
technological advancement which includes net banking, mobile banking, and easily
accessible customer support to digital services.
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Bibliography
Bank of Baroda. (n.d.). Retrieved from http://www.bankofbaroda.com/aboutus.asp

ICICI. (n.d.). Retrieved from https://www.icicibank.com/aboutus/about-us.page?

PNB India. (n.d.). Retrieved from https://www.pnbindia.in/corporate-mission.html

SBI. (n.d.). State Bank of India. Retrieved from

https://www.sbi.co.in/portal/web/about-us/mission-vision-values

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