Financial Analysis OF State Bank of India

FINANCIAL ANALYSIS
OF
STATE BANK OF INDIA
Submitted to:
V.K. Nangia
Professor and Head,
Department of Management Studies,
Indian Institute of Technology Roorkee.
Abhishek
Ajay Kumar
Amanjyot Singh
Amit Joshi
Amitesh Jasrotia
Anand Meena
Anisha Khanna
Anupriya Munjal
Apar Bansal
BANK INFORMATION
Head /Corporate office: New Administrative Bldg.

Madam Cama Road,
Mumbai– 400021.
Incorporation year: 1955

Ownership group: State Bank of India Group
Main activity: Banking services
Listed on: Bombay Stock Exchange (BSE)

Calcutta Stock Exchange
London Stock Exchange (FTSE)
National Stock Exchange (NSE)
STRUCTURE
SBI Group
SBI Group consists of,
A) Seven Associate Banks
• State Bank of Hyderabad
• State Bank of Indore
• State Bank of Mysore
• State Bank of Patiala
• State Bank of Saurashtra
• State Bank of Travancore
• State Bank of Bikaner and Jaipur
B) One Wholly Owned Banking Subsidiary
• SBI Commercial and International Bank
C) Seven Non Banking Subsidiaries
• SBI Capital Markets Merchant banking, lease and hire purchase
• SBI Funds Management Mutual fund
• SBI Gilts Govt. Securities
• SBI Factors & Commercial Service Factoring Services
• SBI Securities Investment banking
• SBI Cards and Payment Services Ltd
• SBI Life Insurance Company Ltd
E) Six Overseas Subsidiaries/Joint Ventures
• SBI(Canada)
• SBI(California)
• SBI International (Mauritius) Ltd.
• Indo-Nigerian Merchant Bank Ltd.
• SBI Finance Inc., New York
• SBI Servicos Limitada, Sau Paulo
PROFILE
State Bank of India was constituted through an Act of Parliament on 8 May 1955 to carry on the
business of banking and other business in accordance with provisions of the State Bank India
Act and for the purpose of taking over the undertaking of the Imperial Bank with effect from 1st
July 1955. The origin of State Bank date back to 1806 when the Bank of Calcutta (later Bank of
Bengal) was established. This was the first of the Presidency banks to be set up in British India
to meet the needs of the mercantile community. The Bank of Bombay and Bank of Madras
followed this in 1840. These three banks pioneered the spread of banking in the country and in
1921 the three banks were amalgamated to form Imperial Bank of India. In 1955 the controlling
interests in the Imperial Bank were acquired by Reserve Bank of India and the bank became
State Bank of India under the State Bank of India Act. During the process of nationalization, the
private ownership was retained, though on a minority basis.
SBI group consisting of State Bank of India and its seven associates handles a significant part of
the day-to-day banking business of both Central and State governments and is the main banker
to most of the public sector corporations set up after independence. It plays a major role in
financing procurement of grains and other commodities like cotton, jute and tobacco. It also
handles special schemes such as gold bonds, gold replenishment schemes (against export of
jewellary), the national deposit scheme, etc. Its activities cover industrial finance, international
banking, agricultural finance, etc. SBI Capital Markets Ltd., the merchant banking and leasing
subsidiary of SBI, co-promoted SBI Home Finance Ltd. A new company SBI Funds
Management Ltd. was incorporated to take over the management of mutual fund activities from
SBICAP. SBI Factors and Commercial Services Pvt. Ltd. (SBI Factors) were established to
provide factoring services in the western region.
India’s largest public sector bank, State Bank of India (SBI) has been a brilliant performer this
year. Post September 11, while the BSE Sensex has remained flat, SBI’s stock has soared by
29%. Also, since the beginning of the current fiscal, the stock has gained 19%, as against a 14%
fall in the Sensex. The State Bank of India is the largest commercial bank in India in terms of
profits, assets, deposits, branches and employees. At the end of the financial year 2000-01
(April-March), the Bank had total assets of Rs.3,156.44 billion (US$67.71 billion), total deposits
of Rs.2,428.28 billion (US$52.09 billion), and made a net profit of Rs.16.05 billion (US$344
million) during the year. The Bank has a vast domestic network of 9,019 branches and staff
strength of 214,845. It commanded one-fifth of deposits and loans of all scheduled commercial
banks in the country.
The performance has not been driven by a general positive sentiment towards banking sector.
Rather, SBI’s ongoing restructuring initiatives and business aggressiveness have percolated into
its financial performance and consequently its stock price. The sleeping banking giant has
awakened and is likely to pose challenges for the private sector stalwarts. Starting from
realigning the organization structure through VRS, the bank has taken quick steps in
implementation of technology and diversifying its foray into retail finance and other related
businesses including insurance. The bank with 9,085 of its own branches and 4,500 branches of
its subsidiaries is catching up with its private sector peers to provide one-stop financial solutions.
With the slowdown in the corporate loan demand and deteriorating asset quality, the bank eyed
the retail finance market, which offered immense growth opportunities. It has made a vengeful
entry into housing finance market becoming the third largest player within a short time. Its
housing loan portfolio nearly doubled in FY02, forming 33% of total retail loans. SBI aims to
grow its housing loan disbursements by over 75% in the current fiscal. With bias towards softer
interest rates and tax benefits for investments in housing loans, the bank is likely to achieve its
target. In the overall personal finance segment, SBI has targeted to achieve 40% growth. With
growing retail assets, the contribution of retail banking to total loan assets is expected to go up
from 15% in FY02 to 20% in the next three years. Since default rate in retail finance is relatively
low, the bank’s asset quality is likely to improve. SBI has targeted to bring down its net NPAs to
advances ratio to 5% in the second half of 2002-03 from 5.6% in FY02.
From the Chairman's Desk
Dear Shareholders,
I am pleased to place before you the Report of the Board of Directors of your Bank for the year
2001-02. You will be happy to see your Bank's excellent performance, details of which are
presented in the Report.
The year 2001-02 witnessed mixed trends with GDP growth largely driven by good agricultural
performance. Low inflation, robust growth in foreign exchange reserves and large stocks of food
grains added to the strength of the economy.
A decade of economic reforms has strengthened the fundamentals of the Indian economy and
the second generation reforms will serve to put the country on to a higher growth trajectory.
There is no doubt that banking sector reforms have increased the profitability, productivity and
efficiency of banks, but in the days ahead banks will have to prepare themselves to face new
challenges including growing competition in the face of falling spreads and squeeze on
profitability. In order to leverage technology for growth, banks need to develop a greater
understanding of the impact of technology and a sense of urgency for implementing the changes
along with putting in place new strategies to manage risks in the changing environment.
Ultimately, there is need for greater customer orientation and future business models of banks
will not be based on interest margins but rather on value added services to the customer. Other
issues that compel attention in the changing environment are corporate governance and
adoption of international standards and best practices.
You will be happy to see that your Bank is addressing these issues and has taken path-breaking
initiatives in introducing IT driven products and services. Your Bank is fast growing into a
technology-driven bank, with a range of products for customers, multiple delivery channels for
business growth and a strategy to reduce costs, improve profitability and stay ahead of the
competition. A state-of-the-art core banking solution has been identified which provides
anywhere banking for our customers. The task of implementing the solutions has been entrusted
to Tata Consultancy Services (TCS). Implementation has already commenced and we expect to
see tangible results in a year's time. Networking project will lead the way with 20 cities
connected by October 2002 and 49 cities by December 2002.
Internet banking services have been further expanded to reach out to 154 branches and an
exclusive Internet banking product for corporates was launched in March 2002. Other
technology solutions identified to leapfrog into IT-enabled operations relate to Asset Liability
Management and Treasury Management. More than 3000 branches (80.28% of the business)
are driven by computerized systems. One of the landmark achievements was the deployment of
1070 ATMs across the country catering to more than 1.8 million ATM cardholders. Of these
ATMs, 568 were networked across 102 centers. Your Bank vigorously marched ahead taking
giant strides in traditional IT initiatives like full branch computerization, remote login for corporate
customers, tele-banking, electronic payment system, expanding web presence, SWIFT based
services and cheque processing systems. Your Bank launched its country-wide Video
Conferencing network spanning 24 locations- the largest such network in the country.
In line with customer expectations, your Bank launched several new products during the year.
Housing emerged as a major thrust area and loans were offered at very competitive rates. A
flexible tailor-made housing loan scheme was launched wherein the customer could fix his
installments for various years of repayment aligning these with his repayment capacity keeping
in view other financial obligations. The Bank also introduced a short-term housing loan scheme
offering the benefit of lower rate of interest to customers having the capacity to repay their loans
in a shorter period up to a maximum of five years. New products proposed to be offered during
the current year include up gradation of ATM cards to Debit cards, upgraded version of tele-
banking, smart cards, co-branded credit cards, railway reservation through ATM and Internet,
etc.
Maintaining the thrust on development banking, your Bank's advances to the priority sector as a
proportion of net bank credit stood at 41.53% at the end of March 2002 against the benchmark
of 40%. During the year, the Bank launched new schemes to increase the flow of credit to the
agricultural sector viz., Kisan Gold Card, Land Purchase Scheme for small and marginal farmers
and scheme for financing purchase of Combine Harvesters. So far your Bank has issued 14.04
lakh Kisan Credit Cards covering aggregate credit limits of Rs 2873 crore and has a target of
issuing more than 8.20 lakh Kisan Credit Cards and 1.15 lakh Kisan Gold Cards during 2002-03.
Your Bank has also launched three new products for the benefit of SSI units viz., SME Credit
Plus, General Purpose Term Loan and Small Business Credit Card. Your Bank has stepped up
its activities under Project Uptech to make SMEs more quality and cost competitive. So far 22
clusters covering various industry groups have been taken up under Project Uptech. Under its
initiatives for Micro Credit, your Bank has so far linked itself with 127,820 Self Help Groups
(SHGs) covering more than 23 lakh members and has plans to link itself with 27,560 new SHGs
during the year.
Your Bank has a well documented NPA Management Policy, which emphasizes, inter alia, early
identification of problem loans, effective response to early warning signals and vigorous
approach to recovery including one time settlement (OTS). The Bank widely publicized various
OTS schemes formulated by RBI. Due to efforts at the grass roots in motivating the staff and the
borrowers, the schemes yielded good results. The gross and net NPA levels of your Bank have
come down from 12.93% and 6.03% respectively in March 2001 to 11.95% and 5.63%
respectively in March 2002.
In a deregulated environment risk management holds the key to success; opportunities do not
come alone but bring in their wake risks in new forms and of varying magnitudes. Banks need to
usher in a risk management culture and develop review and control systems encompassing
credit, market and other forms of risk. This calls for tremendous amount of reskilling of staff,
developing a cadre of specialists and introduction of technology driven management information
systems. Our Business Development and HR systems will have to rise to meet the various
challenges and exploit opportunities thrown up by the paradigm shift in banking. Efforts are
already on in that direction.
With all these initiatives, your Bank is well poised to move ahead rapidly in the current year and
achieve the financial goals and strategies we have set for ourselves.
With warm regards,
Yours sincerely
(Janki Ballabh)
BALANCE SHEET OF THE STATE BANK OF INDIA AS ON
31ST MARCH 2002
[000s omitted]
As on 31.03.2002 As on 31.03.2001
CAPITAL AND LIABILITIES SCHEDULE (Current Year) (Previous year)
Rs. Rs.
Capital 1 5262989 5262989
Reserves & Surplus 2 146980804 129352414
Deposits 3 2705601437 2428283800
Borrowings 4 93239446 107010418
Other Liabilities and
5 531197807 486532484
Provisions
TOTAL 3482282483 3156442105
As on 31.03.2002 As on 31.03.2001
ASSETS SCHEDULE (Current Year) (Previous year)
Rs. Rs.
Cash and balances with
6 218725347 184958687
Reserve Bank of India
Balances with banks and
7 430576316 422133168
money at call & short notice
Investments 8 1451420317 1228764928
Advances 9 1208064653 1135902708
Fixed Assets 10 24152273 25933018
Other Assets 11 149343577 158749596
TOTAL 3482282483 3156442105
Contingent Liabilities 12 1022129848 836689825

Bills for Collection -- 101766049 80803219
ASSETS ANALYSIS
ASSETS
Rs. Crore
Non-Annualized Mar-98 Mar-99 Mar-00 Mar-01 Mar-02
Cash and bank balance 32645.82 53212.6 47136.44 60709.18 64930.16

Cash in hand 508.15 497.97 558.27 867.86 1052.58
Deposit account 1010.57 1680.8 2675.95 3139.35 3296.56
Money at call 821 11038.61 9540.16 21185.87 23085.95

Balance outside India 17305.82 23002.07 15924 17771.83 16546.53
Current account 460.31 3528.66 3931.51 9016.52 6529.48
Deposit account 1215.57 983.86 974.73 1306.01 2242.33

Money at call 15629.94 18489.55 11017.76 7449.3 7774.72
Balance with RBI 12906.42 16894.32 18344.78 17628.01 20819.95
Investments 54982.24 71286.52 91878.68 122876.5 145142

Government securities 39177.27 51752.76 68068.27 96416.82 117323
Approved securities 7157.97 6464.39 5913.72 5704.99 5220.32

Assisted companies 0 0 0 0 0
Subsidiaries/associates 1424.41 1540.13 1619.83 1338.62 1344.82
Mutual funds 0 0 2932.06 0 0
Others 7222.59 11529.24 13344.8 19416.05 21253.85
Investments outside India 2221.46 2690.45 3199.94 3976.49 4741.86
Quoted investment 0 0 0 0 0
Market value of quoted
investment 0 0 0 0 0
Advances & loans 74237.33 82359.84 98101.97 113590.3 120806.5

Bills receivables 7933.47 7741.25 9235.12 12840.01 11555.36
Short term/demand advances 43553.46 45991.24 54979.16 61197.15 64178.41
Term advances 22750.4 28627.35 33887.69 39553.11 45072.7

Institutions & banks 0 0 0 0 0
Other advances 0 0 0 0 0
Foreign currency advances 0 0 0 0 0

Secured advances 71884.05 77291.42 92161.81 90357.88 98526.09
Unsecured advances 2353.28 5068.42 5940.16 23232.39 22280.38
Advances to priority sector 19522.82 23090.38 25877.55 30153.35 31591.48
Advances to public sector 12088.19 13465.12 9490.49 20271.27 21990.35
Deferred tax 0 0 0 0 312.9
Other assets
Stock in trade 72.54 69.67 67.97 74.18 76.44
Stock hired 0 0 0 0 0
Stock of securities 0 0 0 0 0
Stock others 72.54 69.67 67.97 74.18 76.44
Receivables 16228.42 13386.74 21842.28 13529.53 13794.38

Accrued income 3005.48 3348.96 4278.57 5133.28 5737.66
Lease receivables 0 0 0 0 0
Non-banking assets 0.22 0.24 0.25 1.26 0.27

Inter office adjustments 2924.35 0 8760.74 58.89 0
Exchange fluctuation
receivables 0 0 0 0 0
Advance payment of tax 1647.34 2403.95 1957.55 2007.06 1861.14

Other receivables 8651.03 7633.59 6845.17 6329.04 6195.31
Future lease rent receivable 0 0 0 0 102.66
Gross fixed assets 2347.61 3338.31 3976.97 4458.99 4678.09

Less: cumulative
depreciation 841.3 1144.65 1499.36 1865.68 2262.86
Net fixed assets 1506.31 2193.66 2477.61 2593.31 2415.23
Land & building 653.62 687.74 749.86 855.88 920.32

Revalued assets 0 0 0 0 0
Leased assets 289.33 1002.51 1386.51 1258.05 1434.53
Intangible assets/expenses
n.w.o 0 0 0 2271.24 1063.54
TOTAL ASSETS 179672.7 222509 261505 315644.2 348541.2

DETAILED ANALYSIS OF ASSETS
1997-98
The cash and bank balances amounted to Rs. 32 645.82 crores. The money at call was low at
821 crores. The bank was maintaining a balance of 12906.42 crores with RBI. The investments
in India were worth 54982.24 crores. However there was no investment in mutual funds. The
investments outside India stood at 2221.46 crores. The figures were low, as the impact of
globalization was not yet felt. The advances and loans amounted to 74237 crores which was
41.32% of the total assets. Of this short-term loans amounted to 69.35% of the total loans. The
ratio of loans to priority and public sector stood at 1.6. The percentage of secured loans was
96.83%. Inter-office adjustments amounted to 2924 crores. This was attributed to the fact that
reconciliation of inter-office accounts continues for some time after the accounts are closed.
Gross Assets were valued at 2347 crores. The depreciation amount was 841.3 crores and the
method used was written down value method prescribed under the Income Tax Act.
Depreciation of leased assets was provided for on capital recovery method. Leased Assets
valued at 289.33 crores.
1998-99
Cash and Bank Balance increased to 53212.6 (increase of 61% over the previous year) while
Cash in Hand reduced to 497.97 crores. Money at call increased drastically this year. Due to this
fact the current account assets surged. The interest expenses on deposits (excluding RIBs) in
India during 1998-99 recorded an increase of 17.5% as compared to the previous year, primarily
due to the increase in average level of deposits by 16.9% (excluding RIB deposits) during the
year. While the maximum interest rate on domestic deposits came down from 12% at the
beginning of the fiscal to 10.5% at the end, the average cost of deposits registered a marginal
increase from 8.01% in 1997-98 to 8.05% in 1998-99. Introduction in May 1998 of term deposits
for a minimum period of 15 days (earlier, the minimum period for which a term deposit could be
taken was 30 days) as well as the differential (higher) rates for single deposits of Rs.15 lakh and
above, contributed to the additional cost under this head. Investments increased by 40%.
Investment in government securities contributed a lot. Investments in approved securities
decreased from the previous year. Advances and loans increased marginally. Stocks in trade
decreased to 69.67. Inter-office adjustments had been completed by the end of the accounting
year. Hence the receivables decreased. There was a drastic increase in amount of leased
assets.
1999-00
Cash and Bank Balance decreased but the cash in hand increased marginally. Money at call
followed the previous trend and decreased. Money at call with RBI decreased by around 6000
crores. Investments increased continuously. This year the bank invested in mutual funds, which
thereby increased investments. Advances and loans continued to increase. But the ratio of
advances to priority sector versus the public sector changed radically. It increased from 1.6 to 3
in two years. The receivables increases this year because of inter office adjustments of 8760
crores.
2000-01
On 30 March 2001, IRDA had granted license to the joint venture for carrying out the life
insurance business in the country. In June 2001, life insurance company has launched its first
product-Sanjeevan. It is a single-premium money-back product providing life cover up to a
maximum of 75 years of age. The company is also looking at launching pension products in few
days. During the year, the Bank, pursuant to the Voluntary Retirement Scheme for eligible
employees made a payment in respect of encashment of leave salary amounting to Rs.203.63
crore. In terms of the accounting policy consistently followed by the Bank, the entire amount has
been charged to the Profit and Loss Account of the current year (accounting on payment basis)
including an amount of Rs.123.19 crore being encashment of leave salary related to prior
periods, as determined by an actuarial valuation. The amount of unsecured surged to 23232.39
crores. Advances to public sector which had gone down last year increased again. Receivables
again went down due to less money kept for inter office adjustments. Intangible assets showed
at 2271.24 crore
2001-02
The Bank implemented a Voluntary Retirement Scheme (VRS) for eligible employees during FY
2000-01. Expenditure thereof aggregated to Rs. 2271.24 crore, of which Rs. 853.19 crore was
charged to the Profit and Loss Account of FY 2000-01. Of the balance, an amount of Rs. 354.51
crore has been charged to the Profit and Loss Account of FY 2001-02. The remaining amount of
Rs. 1083.54 crore is being treated as deferred revenue expenditure included under Schedule 11
"Other Assets", to be amortized equally over a further period of 3 years in accordance with RBI
guidelines. All the statistics increased as per the continuing trends.
CAPITAL AND LIABILITIES: BANKING COS.
State Bank Of India Mar-98 Mar-99 Mar-00 Mar-01 Mar-02

Rs. Crore Non-
Annualized
Capital 526.3 526.3 526.3 526.3 526.3
Equity capital 526.3 526.3 526.3 526.3 526.3

Preference capital 0 0 0 0 0
Bonus equity capital 0 0 0 0 0
Reserve funds & surplus 9081.88 9876.01 11620.98 12935.24 14698.08
Share premium reserves 3510.57 3510.57 3510.57 3510.57 3510.57

Statutory reserves 4321.46 5108.77 6595.83 7789.55 9686.6
Other specific reserves 172.17 53.1 58.09 557.43 781.22
Revaluation reserves 0 0 0 0 0
Revenue reserves 1077.68 1203.57 1456.49 1077.69 719.69
Deposits 131091.32 169041.93 196821.07 242828.37 270560.14

Demand deposits 27813.65 30692.03 36182.05 40328.08 42312.79
Saving deposits 29207.85 34321.25 41506.53 47893.42 56396.36
Term deposits 74069.82 104028.65 119132.49 154606.87 171850.99
Deposits by financial
institutions 0 0 0 0 0
Demand deposits from

banks 4400.39 4520.9 5206.04 5641.56 6913.88
Term deposits from banks 3470.18 5793.73 5500.66 6499.52 6746.43

Deposits outside India 7542.58 8787.09 9182.34 7932.42 8011.33
Borrowings 9080.79 10063.13 11193.41 15133.62 12781.6

RBI 0 0 670.29 0 0
Banks 0.8 0 0 0.01 1.21
Financial institutions 836.77 1076.39 1669.6 2537.4 2152.61

Government 0 0 0 0 0
Foreign institutions 7255.87 8002.67 6938.18 8163.63 7170.12
Debentures & bonds 987.35 984.07 1915.34 4432.58 3457.66

Others 0 0 0 0 0
Secured loans 912.13 1413.11 2596.11 3067.01 2634.77
Deferred tax 0 0 0 0 330.85
Other liabilities &

provisions 29892.37 33001.66 41343.19 44220.66 49644.18
Bills payable 8754.94 10796.43 10562.53 13598.42 13875.17
Inter office adjustment 0 555.41 0 0 4722.18
Interest accrued and due 7619.88 10100.69 13080.79 16966.05 19285.58

Earmarked funds 0 0 0 0 0
Others (incl. provisions) 13517.55 11549.13 17699.87 13656.19 11761.25
TOTAL LIABILITIES 179672.66 222509.03 261504.95 315644.19 348541.15
Contingent liabilities
Bills for collection 0 9265.1 2309.78 8080.32 10176.6
Bills discounted 8646.15 0 0 0 0
Endorsement obligation 10830.12 9785.72 12941.7 12894.58 12591.26

Disputed taxes 0 0 0 0 0
Letters of credit 0 0 0 0 0
Future lease rent payable 0 0 0 0 0

DETAILED ANALYSIS OF CAPITAL AND LIABILITIES
Equity Capital remained constant at 526.3 crore. No preference capital was issued. Neither any
bonus was issued to shareholders. Reserves and surplus increased every year from 9081 to
1498 crores. Revenue reserves increased till 2000 and then began to decrease as the bank
began to diversify and invest more money in restructuring. On the monetary front, liquidity
conditions remained easy. During 2001-02, the year-on-year growth in money supply (M3) at
14.0% was in line with the growth projected by RBI, as against 16.8% in 2000-01, when growth
was boosted by India Millennium Deposit inflows. For the same reason, growth in aggregate
deposits of all scheduled commercial banks at 14.3% was lower than 18.4% during 2000-01.
Reflecting the deceleration in industrial production, growth in non-food credit was lower at 12.8%
during 2001-02 than the growth of 14.9% in the previous year. During the same period, the
increase in total flow of funds from banks including banks' investments in bonds, debentures,
shares, CPs, at 11.8% was also lower than the increase of 15.7% during 2000-01. Deposits
doubled their amounts in the last 5 years. Borrowings increased till 2001 and then decreased in
2002. Issue of debentures and bonds also decreased in 2002. This can be attributed to the fact
that the borrowings from FII decreased considerably due to Sept. 11 crisis. Also these figures
decreased in 2000 due to economic crisis of 2000. Inter-office adjustments were added in
liabilities in 1999 and 2002.
CASH FLOW ANALYSIS
Cash Flow
Mar Mar Mar Mar Mar

State Bank Of India 1998 1999 2000 2001 2002
Rs.Crore
SOURCES OF CASH
Opening Balance 27752.75 32645.82 53212.59 47136.44 60709.19
Revenue Inflow 1985.92 3488.81 4639.5 5241.89 7082.06
Non operating income 50.11 62.44 64.84 77.05 102.67

Sale of fixed assets 0 0 0 0 0
Sale of investments 0 0 0 166.78 0
Capital proceeds 0 0 0 0 0
Loan proceeds 0 0 1134.88 2520.98 0
Decrease in operating assets 23889.98 42835.64 27779.14 46007.31 27731.76

Deposits 20390.15 37950.61 27779.14 46007.31 27731.76
Advances 0 0 0 0 0
Others 3499.83 4885.03 0 0 0
Total cash inflow 53678.76 79032.71 86830.95 101150.5 95625.68
APPLICATION OF CASH
Disbursements 0 0 0 0 0
Purchase of fixed assets 498.4 999.09 649.6 517.61 246.88

Purchase of investments 8177.6 16320.63 20075.65 0 0.09
Repayment of loans 4.71 3.28 4.6 3.74 974.93
Loans to group companies 0 0 0 0 0

Loans to other companies 0 0 0 0 0
Tax paid 0 0 803.89 1017.59 1459.43
Dividend paid 199.46 231.57 233.68 306.57 290.13

Other cash expense 0 0 0 0 0
Increase in operating assets 12004.13 8122.51 17790.89 38277.29 27296.65

Deposits 0 0 0 0 0
Advances 12004.13 8122.51 17006.36 16921.22 9368.49
Others 0 0 784.53 21356.07 17928.16
Closing balance 32645.82 53212.59 47136.44 60709.19 64930.17
Total cash outflow 53530.12 78889.67 86694.75 100832 95198.28
Increase/Decrease in cash
balance 4893.07 20566.77 -6076.15 13572.75 4220.98
Cash flow before operating

assets charges 1985.92 3488.81 4639.5 5241.89 7082.06
Cash flow from operations 13871.77 38201.94 14627.75 12971.91 7517.17
Cash used in investing activity 8676 17319.72 20725.25 350.83 246.97

Cash from financing activity -4.71 -3.28 1130.28 2517.24 -974.93
DETAILED CASH FLOW ANALYSIS
The basic purpose of cash flow statements is to provide information about cash receipts and
cash payments. The basic classifications of cash flow are
- Operating (primary business activities, bank must generate a positive net cash flow if it to
survive. It is a key measure of liquidity)
- Investing (cash flows from purchases and disposal of plant assets, Not necessarily positive.
Growing businesses may have negative investing cash flow)
- Financing (cash flow of the bank with its owners and creditors. For e.g. Issuance of stock,
Growing businesses may have negative financing cash flow)
Cash flow from operations has decreased with the exception of 1998-99. This implies that the
liquidity has been decreasing. The investing cash flow increased radically from 8676 to 17319
crores and then increased marginally to 20725 crores. However it fell sharply from 1999-00 to
2000-01 because the bank did not invest. Financing cash flow has been negative in 1997-99 as
the loan repayments have been exceeding loan proceeds. In 1999-01 the loan proceeds
increased to a large amount and thereby exceeding the repayments. In 2002 again the proceeds
reduced to zero.
INCOME & EXPENDITURE
Mar
State Bank Of India 1998 Mar-99 Mar-00 Mar-01 Mar-02
Rs. Crore Non-Annualized
REVENUE
Income 18634.85 22311.16 25649.31 29755.66 33781.48
Interest received 9487.24 11522.23 12694.76 14957.45 15538.21

On advances 7829.12 8581.38 9553.95 11143.25 11063.4
On deposits with RBI 631.55 1100.81 1573.35 1887.05 3054.88
On others 1026.57 1840.04 1567.46 1927.15 1419.93

Dividend earned 6441.73 7647.75 9571 11258.18 14374.54
Security transactions 115.57 72.66 268.88 341.86 351.64
Leasing & hire services 47.04 120.64 218.25 262.18 292.94

Bill discounting 0 0 0 0 0
Exchange transactions 505.5 569.19 328.97 303.55 407.64
Commission & brokerage 2037.77 2378.69 2567.45 2632.44 2816.51

Others - 0 0 0 0 0
Other income 63.11 82.25 111.33 270.89 233.61
Non-recurring income 965.2 13.1 539.19 140.22 407.8

Gain on reval. of investments 0 0 0 0 0
Others 965.2 13.1 539.19 140.22 407.8
EXPENDITURE
Interest expended 10473.2 13044.44 15272.58 17756.02 20728.84

On deposits 9586.24 12196.58 14396.64 16643.22 19554.27
On RBI loans 481.24 474.43 557.04 521.8 364.07

Others 405.72 373.43 318.9 591 810.5
Lease rent 0 0 0 0 0
Other rent 344.82 379.9 425.55 471.31 524.44

Interest Tax 0 0 0 0 0
Loss on security transactions 0 0 0 0 0
Loss on exchange transactions 0 0 0 0 0

Prov. for diminution in
investments 13.55 28.37 0 24 198.49
Personnel cost 3557.75 4147.4 4477.87 5158.46 4798.27
Prov. for contingencies, NPA,
etc. 1366.49 1570.02 1319.53 1470.48 2204.73
Other operating expenses 60.15 74.32 98.3 107.94 142.5
Other expenses 594.08 678.58 1157.62 2196.09 1320.74
Non-recurring expenses 100 622.36 0 0 19.2

Loss on reval. of investments 0 0 0 0 19.2
Others 100 622.36 0 0 0
Less: Expenses capitalised 0 0 0 0 0
Interest capitalised 0 0 0 0 0
PBDT 3153.12 1861.12 3548.38 2982.47 4485.68
Depreciation 164.07 310.57 356.85 406.86 451.04

Leased depreciation 17.91 53.92 108.93 143.93 175.37
PBT 2989.05 1550.55 3191.53 2575.61 4034.64
Tax provision 1127.85 522.75 1139.98 971.36 1603.02

Corporate tax 1001 383 978.5 971 1602.57
Other direct taxes 126.85 139.75 161.48 0.36 0.45
PAT 1861.2 1027.8 2051.55 1604.25 2431.62
Appropriation of profit
Dividends 210.52 210.52 263.15 263.15 315.78

Dividend Tax 21.05 23.16 43.42 26.84 0
Retained earnings 1629.63 794.12 1744.98 1314.26 2115.84
PROFITABILITY RATIOS
1998 1999 2000 2001 2002

Break-Even Yield Ratio 17.15 15.63 15.56 15.83 14.10
Cost of Funds Ratio 7.40 7.00 7.41 7.32 7.52
Net Profit Margin 7.15 5.34 7.96 4.58 10.50
Adjusted Return On Net Worth 15.87 11.91 16.88 9.89 19.35
Reported Return On Net Worth 15.97 11.91 16.88 9.88 19.37
Liberalization and deregulation have heightened competition among banks, which will only
intensify with financial liberalization under the WTO regime, and banks in India will have to
benchmark themselves against world class banks. In this context, the way to boost profitability
and stay ahead is by developing sophisticated and customized products, increasing volumes,
monitoring risks and reaching out to customers in diversified and distant markets by leveraging
technology. In line with this, the Bank is also making all out efforts to adopt state-of-the-art
technology with far reaching consequences for efficiency and profitability.
2002
• The Operating Profit of the Bank for 2001-02 stood at Rs.6,044.83 crore as compared to
Rs.3,966.78 crore. in 2000-01, recording a growth of 52.39%. The Bank has posted a Net
Profit of Rs.2,431.62 crore for 2001- 02 as compared to Rs.1,604.25 crore in 2000-01,
registering a growth of 51.57%.
• It will be recalled that the Net Profit of 2000-01 was depressed by the IMD issue expenses
and VRS related expenses but was favorably impacted by write back of excess provision for
investment depreciation (net of tax).
• Similarly, in 2001-02, the Net Profit has been depressed by provision for investment
depreciation (including amortization of premium on `Held to Maturity' category), as well as by
pro-rata write off of deferred revenue expenditure relating to VRS.
• On a fully comparable basis, the adjusted Net Profit of 2001-02 (Rs.2,841.76 crore) has
recorded a growth of 31.53% over the adjusted Net Profit of 2000-01 (Rs.2,160.48 crore).
• The growth in profit in 2001-02 has been achieved through increases, both in Net Interest
Income and Fee Income. Profit on sale of investments in 2001-02 was Rs.351.64 crore as
against Rs.341.85 crore in 2000-01, and thus the increase under this head contributed to the
growth in profit of 2001-02 to the extent of only Rs. 9.79 crore.
2001
• The Operating Profit of the Bank for 2000-01 before reckoning the one-time issue expenses
of India Millennium Deposits and the VRS related expenses charged off during the year,
stood at Rs.5263.16 cr. as compared to Rs.4202.50 cr. in 1999-2000, recording an increase
of 25.24%.
• After accounting for the above expenditure, the Operating Profit for 2000-01 was Rs.3966.78
cr.
• The Published Net Profit of the Bank for 2000-01 is Rs.1604.25 cr. as compared to
Rs.2051.55 cr in 1999-2000. The reduction was due to the IMD issue expenses and VRS
related expenses charged off during 2000-01, as afore said, which depressed the profit by
Rs.640.98 cr. (net of tax).
• Further, write back of excess provision for investment depreciation (net of tax) contributed
onlyto the extent of Rs.84.75 cr to the Net Profit of 2000-01, as against Rs.322.40 cr in 1999-
00.
• The Net Profit, after adjusting for the above factors as applicable in both the years, would be
Rs.2160.48 cr in 2000-01as against Rs.1729.15 cr in 1999-00, i.e., a growth of 24.94%.
2000
• The Bank posted a Net Profit of Rs.2,051.55 crore for the year 1999-2000 as against
Rs.1,027.80 crore in 1998-99. The write-back of excess provision for investment
depreciation (net of tax) contributed to the extent of Rs.322.40 crore to the growth in the Net
Profit of 1999-2000, as against Rs.8.51 crore in 1998-99.
• It may also be recalled that the Net Profit of 1998-99 was affected to the extent of
Rs.207.47 crore (net of tax) by the charging off of the entire RIB issue expenses during that
year. Even after adjusting for both the above items of non-recurring nature, the Net Profit for
the year 1999-2000 from pure operations recorded a strong growth of 40.95% over 1998-
99.
• The Operating Profit also recorded an increase of 21.77% from Rs.3,451.16 crore to
Rs.4,202.50 crore.
• Income tax provision at Rs.978.5 crore was higher than the provision of Rs.383 crore made
in 1998-99 on account of higher operating profit for the year, tax on the amount of excess
investment depreciation written back and levy of 10% surcharge on income tax. Arrears of
salary for the year 1999-2000 consequent upon the salary revision of supervising staff had
already been charged to the operating profit (Rs.153 crore). For salary revision arrears of
award staff, provision was made in the accounts of 1999-2000 to the extent of Rs.121 crore.
• The Asset Liability Management Committee (ALCO) at the Corporate Centre is engaged in
evolving optimal asset/liability structure for the Bank on an on-going basis with a view to
containing mis-matches, optimising profits and ensuring the requirement of capital
adequacy. The mechanisms provide for detailed policy formulation within the broad
parameters laid down by the Bank and reviewing policy implementation as also facilitating
decision making in certain critical areas. The ALCO lays down parameters for efficient
management of the risks and oversees the process of product development and pricing.
• In January 2000, a new product, ‘Personal Loan against Mortgage of Immovable Property’,
an omnibus scheme enabling individuals to take loans against their immovable assets to
meet any financial requirement, was launched. It has become popular owing to its flexibility
in terms of eligibility, purpose and mode of financing (term loan or overdraft). Another new
product launched during the year was ‘Corporate Liquid Term Deposit Scheme’, which
permits unitized break-up and enables corporates and business organizations to deploy
their short-term funds profitably. With the launch of this scheme, the Bank has made
unitized term deposits available for every segment of customers.
• The Bank’s foreign offices play an important role in handling the country’s foreign trade
related business and providing foreign currency resources to the Indian corporates and
business houses. During the year, the Bank arranged foreign currency loans of US$ 600
million for 14 corporates. To mitigate forex and interest rate risks of the Indian corporates,
the Bank has structured a product ‘Long Term Rupee-Foreign Currency Swap’. During
1999-2000, such swaps worth US$ 65 million were put through.
• During the year, foreign offices of the Bank achieved substantial success in improving core
assets, viz., loans and investments to corporates domiciled at foreign centres, thereby
reducing dependence on India related assets. The foreign branches contributed Rs.185
crore to the net profit of the Bank.
• Non-resident Indians are important customers of the Bank. During the year, the Bank
mobilized NRI deposits of Rs.2,726 crore, recording a growth of 77% over the previous
year.
ANALYSIS OF SOURCES & USES OF FUNDS
SOURCES & USES OF

FUNDS

Rs.Crore Non-Annualized
Sources of funds
Deposits from public 20390.15 37950.61 27779.14 46007.3 27731.77

Term deposits 13043.24 29958.83 15103.84 35474.38 17244.12
Saving bank deposits 5179.72 5113.4 7185.28 6386.89 8502.94
Demand deposits 2167.19 2878.38 5490.02 4146.03 1984.71

Misc.deposits 0 0 0 0 0
Deposits outside India 608.75 1244.51 395.25 -1249.92 78.91
Borrowings 1128.21 982.34 1130.28 3940.21 -2352.02
Inter-bank borrowings 0.79 -0.8 0 0.01 1.2

Financial institutions -46.6 239.62 593.21 867.8 -384.79
Government 0 0 0 0 0
RBI -0.06 0 670.29 -670.29 0

Foreign borrowing 1178.79 746.8 -1064.49 1225.45 -993.51
Debentures -4.71 -3.28 931.27 2517.24 -974.92
Other borrowings 0 0 0 0 0
Current liabilities &

provisions 50.12 3109.29 8341.53 2877.47 5423.52
Capital Issues 0 0 0 0 0
Fresh capital (excl. Bonus
issue) 0 0 0 0 0
Share premium 0 0 0 0 0
Reserves & surplus 1786.42 1097.48 2099.68 -590.66 3367.72
USES OF FUNDS
Cash and bank 4893.07 20566.78 -6076.16 13572.74 4220.98

Other receivables -2187.79 -2844.55 8453.84 -8306.54 267.11
Advances 12004.13 8122.51 15742.13 15488.3 7216.2
Bills receivable 1277.06 -192.22 1493.87 3604.89 -1284.65
Short term advances 5081.35 2437.78 8987.92 6217.99 2981.26

Long term advances 5645.72 5876.95 5260.34 5665.42 5519.59
Advances to assisted
companies 0 0 0 0 0
Advances to
banks/institutions 0 0 0 0 0
Advances/loans from other

cos 0 0 0 0 0
Advances in foreign
currency 0 0 0 0 0
Advances priority sector 2577.06 3567.56 2787.17 4275.8 1438.13

Advances public sector 2024.12 1376.93 -3974.63 10780.78 1719.08
Investments 8154.68 16304.28 20592.16 30997.8 22265.55

Government securities 5117.52 12575.49 16315.51 28348.55 20906.22
Approved securities -313.64 -693.58 -550.67 -208.73 -484.67
Investment outside India 1106.33 468.99 509.49 776.55 765.37
Associate banks/cos. 225.57 115.72 79.7 -281.21 6.2
Mutual funds 0 0 2932.06 -2932.06 0
Gross fixed assets 490.81 990.7 638.66 482.02 219.1
Total sources/uses of funds 23354.9 43139.72 39350.63 52234.32 34170.99
Deposits from public 20390.15 37950.61 27779.14 46007.3 27731.77

Borrowings 1128.21 982.34 1130.28 3940.21 -2352.02
Current liabilities &
provisions 50.12 3109.29 8341.53 2877.47 5423.52
Reserves & surplus 1786.42 1097.48 2099.68 -590.66 3367.72
Cash and bank 4893.07 20566.78 -6076.16 13572.74 4220.98
Advances 12004.13 8122.51 15742.13 15488.3 7216.2
Investments 8154.68 16304.28 20592.16 30997.8 22265.55
Total sources/uses of funds 23354.9 43139.72 39350.63 52234.32 34170.99
DETAILED ANALYSIS OF FUNDS STATEMENT
• The funds flow statement has become an important statement these days. It is a mandatory
attachment to the annual report.
• Deposits from public have seen a zig zag trend over the past few years.
• The trend has been largely due to increase and decrease in term deposits.
• Deposits outside India have also seen the same trend. In 2000-01 the deposits have been
negative.
• Similarly the borrowings have been have reduced when the deposits have increased.
• This has also been largely due to changes in foreign lendings.
• Borrowings from debentures have also increased and touched the maximum in 2000-01.
Reserves and Surplus have also followed the same trend as borrowings.
Growth Indicators: Banking Cos.
Mar- Mar- Mar- Mar- Mar-

State Bank Of India 98 99 00 01 02
(In Percentage) Non-Annualized
Deposits 18.42 28.95 16.43 23.38 11.42
Term deposits 21.37 40.45 14.52 29.78 11.15

Saving deposits 21.56 17.51 20.94 15.39 17.75
Demand deposits 8.45 10.35 17.89 11.46 4.92
-
Deposits outside India 8.78 16.5 4.51 13.61 0.99
Borrowings 14.19 10.82 11.23 35.2 -15.54
From RBI -100 -100
Advances 19.29 10.94 19.11 15.79 6.35

Short term 14.09 4.36 19.51 15.3 2.29
Long term 33.01 25.83 18.38 16.72 13.95
Assisted companies
Priority sector 15.21 18.27 12.07 16.52 4.77

Public sector 20.11 11.39 -29.52 113.6 8.48
Total income 6.24 19.73 14.96 16.01 13.53
Interest income 0.62 21.45 10.18 17.82 3.88

Profit on exchange transactions -27.69 12.6 -42.2 -7.73 34.29
Commission & brokerage 12.91 16.73 7.94 2.53 6.99
Fund based income 5.48 20.1 15.8 17.51 14.16

Fee based income 12.91 16.73 7.94 2.53 6.99
Total cost 10.45 17.84 8.99 25.52 -1.98

Personnel cost 7.07 16.57 7.97 15.2 -6.98

Provisions 49.36 14.89 -15.95 11.44 49.93
Deposits 18.42 28.95 16.43 23.38 11.42

Borrowings 14.19 10.82 11.23 35.2 -15.54
Advances 19.29 10.94 19.11 15.79 6.35
Total income 6.24 19.73 14.96 16.01 13.53
Interest income 0.62 21.45 10.18 17.82 3.88
Total cost 10.45 17.84 8.99 25.52 -1.98
DEPOSIT RATIOS
1998 1999 2000 2001 2002
Demand Deposit of Total Deposits 15.63 16.60 18.38 18.15 21.21

Saving Deposit of Total Deposits 20.84 19.72 21.08 20.30 22.28
Time Deposit of Total Deposits 63.51 63.66 60.52 61.54 56.50
Deposits within India as % to Total Deposits 97.03 96.73 95.33 94.80 94.24
Deposits Outside India as % to Total Deposits 02.96 03.26 04.66 05.19 05.75
2002:
• On the monetary front, liquidity conditions remained easy.

• During 2001-02, the year-on-year growth in money supply (M3) at 14.0% was in line with the
growth projected by RBI, as against 16.8% in 2000-01, when growth was boosted by India
Millennium Deposit inflows.
• For the same reason, growth in aggregate deposits of all scheduled commercial banks at
14.3% was lower than 18.4% during 2000-01.
• Reflecting the deceleration in industrial production, growth in non-food credit was lower at
12.8% during 2001-02 than the growth of 14.9% in the previous year.
• During the same period, the increase in total flow of funds from banks including banks’
investments in bonds, debentures, shares, CPs, at 11.8% was also lower than the increase
of 15.7% during 2000-01.
• In this scenario, the overall stance of RBI’s monetary policy during 2001-02 was provision of
adequate liquidity to support credit growth with a bias towards soft interest rate regime.
Reduction in the Bank Rate and Cash Reserve Ratio was announced in October 2001 and
measures to increase flexibility in deposit and lending rates were also introduced. During the
year, banking sector reforms continued to emphasize steps to secure the soundness and
stability of banks including improving asset quality, strengthening prudential norms,
streamlining credit delivery and, in general, making the Indian banking system comparable to
international standards.
• The Bank has sponsored 30 RRBs spread over 85 districts in 16 States with a network of
2,342 branches. The aggregate deposits and advances of the sponsored RRBs stood at
Rs.6,042.89 crore and Rs.2,559.32 crore respectively. During the year ended 31st March
2001, 24 of the Bank’s RRBs made profit, as against 26 in the year ended 31st March 2000.
The Bank has, up to March 2002, contributed Rs.134.97 crore for re-capitalization of the 29
RRBs taken up for financial restructuring.
2001:
• Cost of deposits (excluding Resurgent India Bonds/ India Millennium Deposits) witnessed a
reduction from 7.86% in 1999-2000 to 7.62% in 2000-01.
• In a major initiative this year, the Bank collected USD 5,497 million from the non-residents
through the India Millenium Deposits (IMD) Programme (a five year deposit scheme),
launched in October 2000. The IMD Programme was aimed at raising long-term resources
for augmenting the country's forex reserves and for meeting the financial needs of
infrastructure projects.
• The domestic deposits of the Bank (excluding RIBs / IMDs) grew by Rs.19,300 crore (13.1%)
during the year. Reflecting the thrust on Personal segment, these deposits grew by Rs.
15,901 crore (17.28%) and formed 57.95% of the total deposits of the Bank as against
56.5% at the end of March 2000.
2000:
• The Bank’s aggregate liabilities (excluding capital and reserves) rose by 17.6% from
Rs.2,12,107 crore as on the 31st March 1999 to Rs.2,49,358 crore as on the 31st March
2000.
• The increase in liabilities was mainly contributed by increase in deposits. Global deposits,
including RIB deposits, stood at Rs.1,96,821 crore as on the 31st March 2000, representing
an increase of 16.4% over the level as on the 31st March 1999. Global deposits, excluding
RIB deposits, grew by 18.4% from Rs.1,51,007 crore to Rs.1,78,802 crore.
• In January 2000, a new product, ‘Personal Loan against Mortgage of Immovable Property’,
an omnibus scheme enabling individuals to take loans against their immovable assets to
meet any financial requirement, was launched. It has become popular owing to its flexibility
in terms of eligibility, purpose and mode of financing (term loan or overdraft).
• Another new product launched during the year was ‘Corporate Liquid Term Deposit
Scheme’, which permits unitized break-up and enables corporates and business
organizations to deploy their short-term funds profitably. With the launch of this scheme, the
Bank has made unitized term deposits available for every segment of customers. With the
liberalization of the gold import policy, the Bank started sales of imported Non-resident
Indians are important customers of the Bank.
• During the year, the Bank mobilized NRI deposits of Rs.2,726 crore, recording a growth of
77% over the previous year.
1999:
• The interest expenses on deposits (excluding RIBs) in India during 1998-99 recorded an
increase of 17.5% as compared to the previous year, primarily due to the increase in
average level of deposits by 16.9% (excluding RIB deposits) during the year.
• While the maximum interest rate on domestic deposits came down from 12% at the
beginning of the fiscal to 10.5% at the end, the average cost of deposits registered a
marginal increase from 8.01% in 1997-98 to 8.05% in 1998-99.
• Introduction in May 1998 of term deposits for a minimum period of 15 days (earlier, the
minimum period for which a term deposit could be taken was 30 days) as well as the
differential (higher) rates for single deposits of Rs.15 lakh and above, contributed to the
additional cost under this head.
INVESTMENTS PROJECTS
Project : Life Insurance Services Project

Location : Multi States, Multi States (MS)
Project Type : New Unit
Product : Life insurance services
Cost : Rs 175.00 Crores
Status : Under Implementation
Co-Promoter : B N P PARIBAS, France
Promoter : STATE BANK OF INDIA, India
Implementer : S B I LIFE INSURANCE CO. LTD.
• SBI Life Insurance Company is a joint venture between State Bank of India (SBI) and
France-based BNP Paribas. In the joint venture, SBI will hold 74 per cent stake and the
remaining 26 per cent will be held by BNP.
• On 30 March 2001, IRDA had granted license to the joint venture for carrying out the life
insurance business in the country.
• In June 2001, life insurance company has launched its first product-Sanjeevan. It is a
single-premium money-back product providing life cover up to a maximum of 75 years of
age. The company is also looking at launching pension products in few days.
• In September 2001, the insurance company has launched two new products, "Sukhjeevan"
and "Young Sanjeevan".
PROFITABILITY RATIOS

In percentage Non-Annualized
As % of operating income
PBDT 16.92 8.34 13.83 10.02 13.28
PAT 9.99 4.61 8 5.39 7.2
PBDT (before contingency,
NPA provision) 24.25 15.38 18.98 14.97 19.8

PAT(before contingency,
NPA provision) 17.32 11.64 13.14 10.33 13.72
Corporate tax as % of PBT 33.49 24.7 30.66 37.7 39.72
As % of Total assets
PBDT 1.9 0.93 1.48 1.04 1.37
PAT 1.12 0.52 0.86 0.56 0.74
Operating cash flow 8.35 19.19 6.1 4.54 2.29
As % of Net worth
PBDT 35.86 18.6 31.47 25.56 35.39
PAT 21.17 10.27 18.2 13.75 19.18

PAT(NNRT) 11.33 16.36 13.41 12.55 16.12
Operating cash flow 157.77 381.82 129.74 111.17 59.3
Operational Efficiency
Avg. cost of deposits 7.93 8.13 7.87 7.57 7.62

Avg. return on advances 12.85 12.18 11.69 11.75 10.54
Interest spread 4.92 4.05 3.82 4.18 2.92

Interest spread / Deposits 0 0 0 0 0
Interest income / Assets 5.71 5.79 5.29 5.24 4.73
Interest expended /
Borrowing/deposits 8.09 8.17 7.89 7.62 7.66
As % of Total income
Fund based income 89.06 89.34 89.99 91.15 91.66
Fee based income 10.94 10.66 10.01 8.85 8.34
Personnel cost 19.09 18.59 17.46 17.34 14.2
Non-interest income 49.09 48.36 50.51 49.73 54
Fee based income / Personnel cost 57.28 57.35 57.34 51.03 58.7
Provisions, bad debts /Advances 2.24 2.23 1.61 1.55 2.1

Total income /Total assets 11.22 11.21 10.69 10.42 10.28
Non-interest income /Total funds 6.62 6.36 6.32 6.05 6.44
Credit/deposit ratio 50.58 44.14 45.15 41.49 40.38

Incremental credit/deposit ratio 52.61 21.91 51.29 25.83 30.65
Growth
Total income 6.24 19.73 14.96 16.01 13.53
Interest 0.62 21.45 10.18 17.82 3.88

Deposits 18.42 28.95 16.43 23.38 11.42
Advances 19.3 12.54 19.09 13.37 8.44
Total Income (Rs. crore) 18634.85 22311.16 25649.31 29755.66 33781.48

Deposits (Rs. crore) 131091.3 169041.9 196821.1 242828.4 270560.14
Advances (Rs. crore) 66303.86 74618.59 88866.85 100750.3 109251.11

DETAILED ANALYSIS OF PROFITABILITY RATIOS
• The growth in non-interest income (other income) was 16.5% in 1998-99 as compared to
6.7% recorded in 1997-98. The non-interest income was Rs.3,284.69 crores compared to
Rs. 2,820.17 crores in 1997-98. This growth was contributed mainly by commission on
government business, exchange on remittances and other miscellaneous income. Leasing
income, which forms part of non-interest income, recorded a substantial increase of
Rs.73.60 crores over last year.
• The gross interest income of the global operations of the Bank grew from Rs.15,878.89
crores in 1997-98 to Rs.19,107.54 crores in 1998-99, which was due to increases in the
average level of advances as well as the average level of resources deployed in treasury
operations, over the average levels of 1997-98. Lower levels of Prime Lending Rate (PLR)
during the year were reflected in a lower average yield on advances in India at 11.3% in
1998-99 compared to 11.9% in 1997-98. State Bank Advance Rate (the Prime Lending Rate
of the Bank), which was 14% at the beginning of the fiscal, stood at 12% at the end; for the
major part of the year, it was 13%. While this factor resulted in the reduced yield on
advances, the volume growth of Rs.9,072 crores in the average level of domestic advances
during the year as compared to the average level of 1997-98, resulted in a higher growth in
interest income on domestic advances at 9.2% compared to a decline of 4.6% recorded in
1997-98. Income from resources operations in India registered a higher growth of 23.3%
compared to 14.3% in 1997-98. This growth was driven by higher volume of resources
deployed which went up by Rs.14,929 crores as compared to 1997-98, as well as by
increase in the yield on resources operations, which went up from 9.7% in 1997-98 to 9.9%
in 1998-99.
• The Net Interest Income of the Bank registered a growth of 8.33%, from Rs.8,382.58 crore in
2000-01 to Rs.9,081.24 crore in 2001-02. This was driven by volume growth. The Net
Interest Margin went down from 3.23% in 2000-01 to 2.91 % in 2001-02.
• The gross interest income from the global operations grew from Rs.26,138.60 crore in 2000-
01 to Rs.29,810.09 crore in 2001-02. The substantial growth was contributed by increase in
the interest on resources deployed in treasury operations.
• Interest income on advances showed a marginal decline, owing to decline in the interest on
advances at our Foreign Offices, primarily due to declining interest rates abroad. The interest
income on advances in India, however, registered an increase from Rs.10,113.68 crore in
2000-01 to Rs.10,410.51 crore in 2001-02.
• Prime Lending Rate was stable throughout the year. State Bank Advance Rate (the Prime
Lending Rate of the Bank), which was reduced from 12.00% to 11.50% in February 2001,
remained at that level during the entire 2001-02. The Medium Term Lending Rate (SBMTLR)
remained at the level of 12.00% during the entire 2001-02. Lower rates (Short Term PLR) for
shorter maturity loans, which were introduced in March 2001, were in operation throughout
2001-02. Average yield on advances in India, as a result, came down from 10.17% in 2000-
01 to 9.66% in 2001-02. However, volume increase of Rs.8288 crore (i.e., by 8.33%) in the
average level of advances in India contributed to the increase in interest income from
advances.
• Non-interest income grew by 7.51%, from Rs.3,883.04 crore in 2000-01 to Rs.4,174.48 crore
in 2001-02. The growth was contributed mainly by growth in forex income and
commission/exchange income.
• During the year, the Bank earned an income of Rs.102.67 crore (Rs.77.05 crore in the
previous year), by way of dividends from Associate Banks/Subsidiaries and Joint Ventures in
India and abroad.
• There was a decline of 14.29% in the staff cost from Rs.6,011.65 crore in 2000-01 to
Rs.5,152.78 crore in 2001-02. The staff cost of 2000-01 and 2001-02 included VRS
expenses amounting to Rs.853.19 crore and Rs.354.51 crore, respectively. After factoring
out the VRS related expenses in both the years, the staff cost of 2001-02 has still recorded a
decline of 6.98% from that of 2000-01.
• Other Operating Expenses have also registered a decline of 10.01%. The one-time item of
IMD issue expenses was charged off in 2000-01. After factoring out this item, the Other
Operating Expenses of 2001-02 have registered an increase of 11.61% compared to 2000-
01.
• Operating Expenses, comprising both staff cost and other operating expenses, have
registered a decline of 13.11%. After adjusting for VRS related expenses in both the years
and for IMD issue expenses in 2000-01, the Operating Expenses of 2001-02 have recorded
a decline of 2.09% compared to 2000-01.
What is credit-deposit ratio?
It is the proportion of loan-assets created by banks from the deposits received. The higher the
ratio, the higher the loan-assets created from deposits.
What is the implication?

Some experts contend that a high credit-deposit ratio could lead to a rise in interest rates.
How?
Consider Bank X which has deposits worth Rs. 100 crores and a credit-deposit ratio of 60 per
cent. That means Bank X has used deposits worth Rs. 60 crores to create loan-assets. Only Rs.
40 crores is available for other investments.
Now, the Indian government is the largest borrower in the domestic credit market. The
government borrows by issuing securities (G-secs) through auctions held by the RBI. Banks,
thus, lend to the government by investing in these G-secs. And Bank X has only Rs. 40 crores to
invest in G-secs. If more banks like X have lesser money to invest in G-secs, what will the
government do? After all, it needs to raise money to meet its expenditure. The government has
two options. One, it can raise yields to make investment by banks in G-secs attractive. Or two,
force the RBI to take the securities into its books. Both the options have a tendency to push up
interest rates in the economy.
Deposits: The deposits grew from Rs.1820.47bn to Rs.9003.06bn at a CAGR of 16.69 %.

There was a spurt in the last 3-4 years of the decade indicating improving trend. In this decade
however, the savings accounts were the laggards in terms of growth at 13.34 % CAGR. The
term deposits grew at 18.38 % and current deposits grew at 15.23 %. This reversal of trend in
growth rates shows that the people are increasingly using banks to deposit money to be used for
transaction motive.
Advances: The advances increased from Rs.1287.85bn to Rs.4434.69bn at a CAGR of 12.46

%. The lower growth in advances is due to the decline in credit-deposit ratio from 70.74 % in
1990 to 49.26 %. This shows there was a marked decline in investment in this decade with
savings exceeding investment.
IT INITIATIVES: Introduction of electronic nostro account reconciliation (ELENOR) IN DEC 2000
has helped in fast and fully integrated reporting of forex transactions. It has enabled online
reporting of forex transactions from 444 forex intensive branches. State bank electronic payment
systems (STEPS) became operational in 2001. No. of computerized branches went upto 3,035
covering 80% of the bank's business. Faster, reliable, error-free transmission of Fund Transfer
messages / data and automatic bilateral key exchange. SWIFT guarantees 100% security on
transmission of message on the network. SWIFT Operating Centre at Mumbai upgraded to the
latest version of SWIFT software - Swift Alliance. SWIFT connectivity provided at 302 Forex
Intensive branches.
PBDT/PAT as a % of Total Assets
1998-1999 Decrease
• The net interest margin as a percentage of the Average Total Assets (ATA) for the bank
declined from 3.02% in 1998-99 to 2.86% in 1999-00.
• Drop in yield on advances and investments and a reduction in the non interest income/ ATA
during the year
1999-2000 Increase
• The Operating Profits as a percentage of ATA increased marginally from 1.72% in 1998-99
to 1.74% in 1999-00. This was due to a decrease in the operating expenses /ATA from
2.93% in 1998-99 to 2.6 % in 1999-2000.
• PAT as a percentage to ATA increased from 0.51% to 0.85% during the same period. This
was also due to lower provisioning on NPAs and write back of provision on depreciation of
investments.
• The bank has also taken fresh exposures in infrastructure related projects mainly in the
power, ports, roads and oil and gas sectors during 1999-2000.
• Deposits of SBI grew from Rs. 169042 crore in 1998-99 to Rs. 196821 crore in 1999-00
registering a growth of 16.50%.
• SBI also mobilised around U.S.$ 5.5 billion (approximately Rs. 25000 crore) by way of India
Millenium Deposits (IMD) in October/November 2000.
• reduced its Net NPA level from 7.18% as on 31st March 1999 to 6.41% as on 31st March
2000. This was on account of substantial provisions and write-offs that the bank has made
over the years.
• The write back of excess provision for investment depreciation (net of tax) contributed to the
extent of Rs.322.40 cr to the growth in the Net Profit of 1999-2000, as against Rs.8.51 cr in
1998-99.
2000-01
Net Profit of 2000-01 was depressed by the IMD issue expenses and VRS related expenses but
was favourably impacted by write back of excess provision for investment depreciation (net of
tax).
2001-02
The growth in profit in 2001-02 has been achieved through increases, both in Net Interest
Income and Fee Income. Profit on sale of investments in 2001-02 was Rs.351.64 crore as
against Rs.341.85 crore in 2000-01, and thus the increase under this head contributed to the
growth in profit of 2001-02 to the extent of only Rs. 9.79 crore.
Similarly, in 2001-02, the Net Profit has been depressed by provision for investment depreciation
(including amortization of premium on `Held to Maturity' category), as well as by pro-rata write
off of deferred revenue expenditure relating to VRS. Further, the appreciation in the Held for
Trading category of investments has not been recognized due to a revision in RBI guidelines in
2001-02. On a fully comparable basis, the adjusted Net Profit of 2001-02 (Rs.2,841.76 crore)
has recorded a growth of 31.53% over the adjusted Net Profit of 2000-01 (Rs.2,160.48 crore).
The gross interest income from the global operations grew from Rs.26,138.60 crore in 2000-01
to Rs.29,810.09 crore in 2001-02. The substantial growth was contributed by increase in the
interest on resources deployed in treasury operations.
Interest expenses on deposits (excluding Resurgent India Bonds/ India Millennium Deposits) in
India during 2001-02 recorded an increase of 7.55% compared to the previous year, whereas
the average level of deposits grew by 15.87%. This resulted in a reduction in the cost of deposits
from 7.62% in 2000-01 to 7.07% in 2001-02.
The expenditure/income on Repo transactions during 2001-02 has been treated as interest
expenditure/ interest income, instead of being treated as loss/profit on sale of investments, as
was hitherto being done. Consequently, the corresponding figures of the previous year have
also been regrouped.
Operating Cash Flows
Reasons for the recent decline:
Overall a decline in operating cash flows has resulted from the economic slag that existed since
the IT boom subsided. September 11 Attacks added water the already extinguishing fire.
Lowering of interest rate by RBI also acted as an impediment the coming deposits and
advances.
Also there was low industry growth due to decline the operating expenses
Operating Expenses, comprising both staff cost and other operating expenses, have registered
a decline of 13.11%. After adjusting for VRS related expenses in both the years and for IMD
issue expenses in 2000-01, the Operating Expenses of 2001-02 have recorded a decline of
2.09% compared to 2000-01. Other Operating Expenses have also registered a decline of
10.01%. The one-time item of IMD issue expenses was charged off in 2000-01.
There was a decline of 14.29% in the staff cost from Rs.6,011.65 crore in 2000-01 to
Rs.5,152.78 crore in 2001-02. The staff cost of 2000-01 and 2001-02 included VRS expenses
amounting to Rs.853.19 crore and Rs.354.51 crore, respectively.
NON PERFORMING ASSETS ANALYSIS
2000
• Provision towards NPAs (including Rs.22.72 crore for the Bank’s foreign offices) was lower
at Rs.1,286.95 crore in 1999-2000 compared to Rs.1,422.67 crore in 1998-99, mainly due to
lower accretion of NPAs.
• An additional provision of Rs.32.59 crore (including Rs.3.19 crore at the foreign offices) on
the standard assets in the global loan portfolio was made in terms of the RBI guidelines,
taking the total provision on standard assets including such provision held at the foreign
offices to Rs.229.32 crore.
• The seven Associate Banks recorded remarkable performance during 1999-2000, as
compared to the previous year. The net profit of these banks together increased by 43%.
Deposits and advances of these banks grew by over 18% and investments by over 22%.
Almost all the Associate Banks were able to reduce their levels of NPAs.
• Credit Policy: The highlights of the policy initiatives pertaining to the Bank’s loans to the
Commercial and Institutional, Small Scale Industries and Agriculture segments in 1999-2000
are presented below:
o The scheme for financing IT-related activities revised.
o Guidelines formulated for one-time review of chronic NPAs and their settlement
through the process of compromise.
o A scheme for financing VRS in Central PSUs designed.
• NPA Management: The Bank’s NPA management policy lays stress, inter alia, on early
identification of problem loans, effective response to early warning signals, adherence to the
time norms for corrective action and recovery including one-time settlements. Mechanism for
follow-up of legal cases, specially those filed with Debt Recovery Tribunals, has been
streamlined. In addition to six specialized Rehabilitation and Recovery Branches at Mumbai,
New Delhi, Calcutta, Chennai, Ahmedabad and Hyderabad, two more such branches were
opened at Chandigarh and Bangalore during the year. Compromise settlements were
encouraged, especially through Settlement Advisory Committees and Lok Adalats.
2001
• Net NPAs to Net Advances stood at 6.03%

2002
• Net NPAs to Net Advances stood at 5.63%

• Associate Banks: The seven Associate Banks reported satisfactory growth in business
during the year. Total deposits and advances of the Associate Banks grew by 16.2% and
18.98%, respectively.
• These banks together reported net profit of Rs.1,018 crore in 2001-02, which was higher
than the net profit in the previous year by 64.73%.
• These banks were able to bring down their NPAs during the year. The gross NPAs as a
percentage to gross advances came down from 12.12% in 2000-01 to 9.27% in 2001-02 and
the net NPAs as a percentage to net advances declined from 7.04% in 2000-01to 4.93% in
2001-02. All Associate Banks improved their Capital Adequacy Ratios.
• The average Capital Adequacy Ratio for all Associate Banks improved from 12.30% in 2000-
01 to 12.97% in 2001-02.
• The Bank's NPA management has assumed critical importance and is receiving focussed
attention at all levels. At the corporate level, a Task Force comprising top executives
monitors all NPAs above Rs.5 crore. At Local Head Office level, the Circle Management
Committee monitors all NPAs above Rs.1 crore. The NPA management policy lays stress,
inter alia, on early identification of problem loans, effective response to early warning signals,
appropriate recovery strategy including one-time settlement. Other measures taken by the
Bank include upgradation of appraisal skills of the officers dealing in credit through special
training programmes and an effective credit audit mechanism, which throws warning signals
for taking action to prevent performing assets turning into non-performing ones. For close
monitoring of cases with Debt Recovery Tribunals (DRT), the Bank has nominated nodal
officers in the DRT cells in the LHOs. The Bank has nine specialized Rehabilitation and
Recovery branches to focus on BIFR cases and large value accounts especially in doubtful
and loss categories. As a part of cleansing its balance sheet, the Bank has written off NPA
accounts with high level of provision and the outstandings are held in Advances under
Collection Account for further follow up.
• The technology initiatives would result in a) improved productivity, b) greatly reduced time-to-
management in MIS, c) better risk management, d) efficient tracking of NPAs, e) better
regulatory compliance, f) swifter reaction to market changes and customer needs and g)
reduction in transaction costs The initiative would make the Bank more customer-centric and
provide it the ability to extend services like a) any-where, any-time and any-channel banking,
b) single view across channels, c) customer relationship management and d) flexibility and
swiftness in product design and delivery apart from improving efficiency in customer service.
NEWS
SBI projects Rs 20,000 crore credit expansion

Triggered by the sudden upsurge in credit offtake to the tune of over Rs 12,000 crore in the H1
of 2002-03, State Bank of India's (SBI) has projected a Rs 20,000 crore credit expansion for the
bank in the 2002-03. The last 2 months of the H1 have made all the difference as there has
been an improved sentiment in all the sectors, while addressing an analysts' meet immediately
after the finalisation of the half yearly results.
SBI slashes PLR, MTLR, STAR by 25 bps

The State Bank of India (SBI) on 31 October 2002 took the lead to offer cheaper credit to
industry. It decided to slash its prime lending rate (PLR), medium-term lending rate (MTLR) and
short-term advance rate (STAR), each by 25 basis points (bps) across the board. Other banks
are expected to join the bandwagon soon. SBI has reduced its PLR to 10.75%, from the current
level of 11%. The MTLR has been reduced to 11.25%, while the STAR was reduced to 10.25%.
The new rates will be effective from 1 November 2002. SBI has also reduced the maximum
spread on its advances to 2.50% from 3.50% over PLR. The decision to slash lending rates was
very much on the expected lines after the reductions of key rates by the Reserve Bank of India
(RBI) in its review of the monetary and credit policy for the H2 of 2002-03. The RBI reduced the
Bank Rate, cash reserve ratio (CRR) and the repos-rate by 25 bps each. RBI governor, Bimal
Jalan, had urged banks to review their lending rates as the reductions in the Bank Rate
seemingly did not have any impact on credit flow. There is a sizeable gap between the present
level of the Bank Rate and the average lending rates of banks. Adding that no useful purpose is
likely to be served by a further reduction in the Bank Rate in the near future. Taking a cue from
the policy announcement, most banks have already cut their deposit rates. Banks have also
announced a likely review of their lending rates. The reduction of deposits rate paved the way
for a reduction in lending rates.
SBI reports 34% increase in net profit

Increase in interest and non-interest income helped State Bank of India (SBI) report a 34%
increase in net profit to Rs 835.20 crore for the quarter ended 30 September, 2002. Net interest
income rose to Rs 2,409.99 crore from Rs 2,297.04 crore. Janki Ballabh, Chairman, SBI, said
that the bank's performance was in line with its business plan. The bank would be able to better
the performance in the next quarter as some of the other income would get reflected in the
results by then. It is expected to get Rs 350 crore from the National Housing Bank and Rs 120
crore from the Syndicate Bank. Total income was at Rs 8,992.39 crore (Rs 8,445.08 crore), this
is inclusive of other income which increased to Rs 1,132.83 crore ( Rs 884.30 crore) and interest
earned which rose to Rs 7,859.56 crore (Rs 7,560.78 crore). According to Ballabh, the bank
would be able to achieve the 16% growth in advances. The housing segment is expected to
surpass the Rs 4500 crore target. Interest expended was at Rs 5,449.57 crore (Rs 5,263.74
crore). Total expenditure was at Rs 7,263.83 crore (Rs 7,023.98 crore) For the half-year ended
September 2002, the net profit stood at Rs 1,598.40 crore as compared to Rs 1,202.04 crore in
the corresponding period in the previous year.
SBI, BoB reduced their deposit rates

The State Bank of India (SBI) and Bank of Baroda (BoB) have been the first to respond to the
central bank's rate cut. SBI and BoB have reduced their deposit rates by 50 basis points and 25
basis points respectively. The cuts will be effective from 1 November.
SBI, ICICI Bank among top 100 Asian banks: Study

The State Bank of India (SBI) and ICICI Bank are the only 2 banks from India that figure among
the top 100 banks in Asia in 2001, according to a study. While SBI with assets estimated at $
68.9 billion is rated 26th among such banks, ICICI Bank is ranked 90th with $ 21.54 billion in
assets during the period, says the Asian Banker Journal. However, 27 other Indian banks
figured in the list of top 300 banks in Asia in 2001, though many of them are ranked over 200 in
the group.
Notes to Accounts & Auditor's Qualifications
Mar 1998
NOTES ON ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 1998.
1. In respect of foreign transactions and their year end translation, the Bank is consistently
following FEDAI/RBI guidelines, which are mandatory, instead of the Accounting Standard 11 of
the Institute of Chartered Accountants of India.
2. Since employees of the Bank can encash unavailed leave during the period of service, the
Accounting Standard 15 issued by the Institute of Chartered Accountants of India does not apply
to that extent, and the expenses on employees likely to avail encashment of accumulated leave,
if any, at the time of retirement are accounted for on payment basis.
3. The Capital Adequacy Ratio of Bank is 14.58% as at 31st March, 1998 (12.17% for 31st
March, 1997). The ratio has been arrived at on the basis of guidelines/directives issued by the
RBI.
4. Net NPAs to Net Advances as at 31st March, 1998 is 6.07%. (7.30% for 31st March, 1997).
5. During 1993-94, the Bank issued to the public unsecured, redeemable, subordinated floating
interest rate bonds (SBI Bonds) of the face value of Rs.1,000/- each for cash at par for an
aggregate amount of Rs.1000,00,00 thousand to augment its Tier II capital. The face value of
Bonds outstanding as at 31st March, 1998 is Rs.987,35,02 thousand (Rs.992,06,12 thousand
for 31st March, 1997).
6. (a) The Bank has marked to market 100% of its investments in approved securities as at 31st
March, 1998 (70.9% as at 31st March, 1997), as against minimum of 60% prescribed by RBI.
Consequential depreciation has been absorbed in the year-end excess provisions for
depreciation in investments. (b) The excess provision for depreciation in investment held by the
Bank as at the end of the financial year 1996-97 over the requirement for the same as at 31st
March, 1998 amounting to Rs.964,12,71 thousand has been taken to the profit & Loss Account
as a credit item under the head "Expenditure-Provisions & Contingencies" and appropriated to
Capital Reserve Account to the extent of Rs.119,06,96 thousand net of taxes (Rs.337,44,45
thousand) and statutory reserves (Rs.507,61,30 thousand).
7. Reconciliation/adjustment of various Inter-Office Accounts is at different stages. The impact
of reconciliation on the accounts, if any, is not ascertainable at this stage.
Signed on : 18th June, 1998.

State Bank of India Mar 1999
NOTES TO ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 1999.
1. In respect of Foreign Exchange transactions and their year end translation, the Bank is
consistently following FEDAI/RBI guidelines, which are mandatory, instead of the Accounting
Standard 11 of the Institute of Chartered Accountants of India.
to that extent, and the expenses on employees likely to avail encashment of accumulated leave,
if any, at the time of retirement are accounted for on payment basis.
3. The Capital Adequacy Ratio of the Bank is 12.51% as at 31st March, 1999 (14.58% for 31st
March 1998). The ratio, arrived at on the basis of guidelines/directives issued by the RBI,
comprises :
31st March 1999 31st March 1998
Tier I Capital 9.36% 10.69%
Tire II Capital 3.15% 3.89%
4. Net NPAs to Net Advances as at 31st March 1999 is 7.18% (6.07% for 31st March 1998).
5. Break-up of the item "Provisions and Contingencies" included under the head "Expenditure "
of Profit and Loss Account :
(Rs.in Thousand) (Rs.in Thousand)
1998-99 1997-98
a) Provision towards Income Tax 383,00,00 1001,00,00
b) Provision towards other taxes 139,75,00 126,85,00
c) Amount of provision made towards NPAs 1422,67,63 1151,42,38
d) Prudential Provisions against total
Standard Assets (Loans and Advances)
In India, over and above the
RBI guidelines 14,00,00 149,00,00
e) Provision for salary revision 315,31,00 100,00,00
f) Depreciation in the value of 13,09,46 964,12,71
Investment in India (Credit) (Credit)
g) Depreciation in the value of
Investment in Foreign Office 28,37,07 13,55,00
h) Others 133,34,37 66,06,73
Total 2423,35,61 1643,76,40
6. During 1993-94, the Bank issued to the public unsecured, redeemable, subordinated floating
interest rate bonds (SBI Bonds) of the face value of Rs.1000/- each for cash at par for an
aggregate amount of Rs.1000,00,00 thousand to augment its Tier II capital. The face value of
Bonds outstanding as at 31st March 1999 is Rs.984,07,17 thousand (Rs.987,35,02 thousand for
31st March 1998).
7. ADDITIONAL DISCLOSURES IN TERMS OF RBI GUIDELINES :

1998-99 1997-98
Interest Income as a percentage to Working Funds 8.60% 8.86%
Non-Interest Income as a percentage to Working Funds 1.48% 1.57%
Operating Profit as a percentage to Working Funds 1.55% 1.96%
Return on Assets 0.46% 1.04%
Business (Deposits and Advances) per employee
(Rs.in Thousand) 9364 7544
Profit per employee (Rs.in Thousand) 43 77
8. (a) The Bank has marked to market to market 100% of its investments in approved securities
as at 31st March, 1999 (100% as at 31st March 1998), as against a minimum of 70% prescribed
by RBI.
(b) As per the guidelines of RBI :
(i) The Balance of Rs.119,06,96 thousand held in Capital Reserve Account, representing
the net excess provision towards depreciation on investments for the year ended 31st
March 1998 stands transferred to "Investment Fluctuation Reserve Account".
(ii) The excess provision for depreciation in investments held by the Bank as at the end
of the financial year 1997-98 over the requirement for the same as at 31st march 1999
amounting to Rs.13,09,46 thousand has been taken to the Profit & Loss Account as a
credit item under the head "Expenditure Provisions & Contingencies" and appropriated to
Investment Fluctuation Reserve Account to the extent of Rs.6,80,92 thousand net of
taxes (Rs.4,58,31 thousand) and Statutory Reserves (Rs.1,70,23, thousand).
9. Reconciliation/adjustment of various Inter-Office Accounts is at different stages. The Bank is

taking effective steps in reconciling the outstanding entries. The impact of reconciliation though
not quantifiable, in the opinion of the management, may not be material.
10. Previous year's figures have been regrouped, wherever necessary, to conform to current
year's classification.
NOTE TO ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2001.
1. In respect of Foreign Exchange transactions and their year-end translation, the Bank is
consistent following FEDAI/RBI guidelines, which are mandatory, instead of the Accounting
to that extent, and the expenses on encashment of accumulated leave by employees at the time
of retirement are accounted for on payment basis. During the year, the Bank, pursuant to the
Voluntary Retirement Scheme for eligible employees made a payment in respect of encashment
of leave salary amounting to Rs.203.63 crore. In terms of the accounting policy consistently
followed by the Bank, the entire amount has been charged to the Profit and Loss Account of the
current year (accounting on payment basis) including an amount of Rs.123.19 crore being
encashment of leave salary related to prior periods, as determined by an actuarial valuation.
3. The Capital Adequacy Ratio of the Bank is 12.79% as at 31st March 2001 (11.49% as at 31st
March 2000).
4. Net NPAs to Net Advances as at 31st March 2001 is 6.03% (6.41% as at 31st March 2000).
5. Break up of the item "Provisions and Contingencies" included under the head "Expenditure" in
the Profit and Loss Account :
(Rs. in Crore)
2000-2001 1999-2000
a) Provision for Income Tax 971.00 978.50

b) Provision for other Taxes 0.36 161.48
c) Amount of provision made against NPAs 1,432.53 1,286.95
d) General provision on Standard Assets in
the global loan portfolio 37.95 32.58
e) Provision for salary revision -- 121.00
f) Depreciation in the value of 140.19 524.22
Investments in India (Credit) (Credit)
g) Depreciation in the value of 24.00 14.15
Investments in Foreign Offices (Credit)
h) Others 36.88 108.81
Total 2,362.53 2,150.95
6. (a) During 1993-94, the Bank issued to the public unsecured, redeemable, subordinated
floating interest rate bonds (SBI Bonds) of the face value of Rs.1,000/- each for cash at par for
an aggregate amount of Rs.1000.00 crore to augment its Tier II capital. The face value of Bonds
outstanding as at 31st March 2001 is Rs.975.73 crore (Rs.979.47 crore as at 31st March 2000).
The Bank has exercised the call option on these Bonds and the same will be redeemed as on
30th June 2001. As per RBI gm deletes, the amount of these Bonds has not been reckoned for
calculating the Bank's Capital Adequacy Ratio as on 31st March 2001.
(b) During 1999-2000, the Bank issued by way of private placement, unsecured, subordinated
bonds of the face value of Rs.1,00,000 each for cash at par at a fixed rate of 10.80% p.a.,
payable semi-annually, for an aggregate amount of Rs.935.87 crore to augment its Tier II
capital. The Bonds ere redeemable at par at the end of 63 months from the date of allotment.
The face value of Bonds outstanding as at 31st March 2001 is Rs.935.87 crore (Rs.935.87 crore
as at 31st March 2000).
(c) During 2000-2001, the Bank issued by way of structured private placement, unsecured,
subordinated bonds of the face value of Rs.10,00,000/- each for cash at par for an aggregate
amount of Rs.2500.00 crore as under:
(i) Rs.824.80 crore at a fixed rate of 11.55% pa. payable annually, and redeemable at
par at the end of 63 months from the date of allotment,
(ii) Rs.1675.20 crore at a fixed rate of 11.90% p.a. payable annually, and redeemable at
par at the end of 87 months from the date of allotment. The face value of the above
Bonds outstanding as at 31st March 2001 is Rs.2500.00 crore.
7. Additional disclosures as per RBI guidelines with effect from the year ended 31st March 2001:
(a) Investments in Shares, etc. (Rs. in Crore) (f) Investments in shares 988.75 (ii) Investments
in convertible debentures 32.72 (iii) Units of equity oriented mutual funds 738.83 (b) Loan
Assets subjected to restructuring during 2000-2001 (Rs. in Crore) (i) Total amount of loan assets
subjected to restructuring 563.64 (ii) Amount of standard assets subjected to restructuring
352.42 (included in (i) above) (iii) Amount of sub-standard assets subjected to 179.75
restructuring [included in (i) above)
8. The Bank has implemented a Voluntary Retirement Scheme (VRS) for eligible employees
during the year. Expenditure thereof aggregated to Rs.2271.24 crore. Gross amount charged to
the Profit and Loss Account of FY 2000-01 is Rs.853.19 crore (including leave encashment
amounting to Rs.203.63 crore). Balance of Rs.1418.05 crore has been treated as deferred
revenue expenditure and included under Schedule 11-Other Assets, to be amortized equally
over a further period of 4 years in accordance with RBI guidelines. Charge net of tax is
Rs.373.07 crore.
9. The changes in classification of investments and income recognition/valuation norms as per

RBI guidelines had a favorable net impact on post tax profit of the year by Rs.106.96 crore.
Signed on : 21st June, 2001.

State Bank Of India Mar 2002
NOTES TO ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2002.
1. CONTINGENT LIABILITIES :
(Rs. in `000')
31.3.2002 31.3.2001
I. Claims against the bank not acknowledged as debts 390,56,00 244,94,60
II. Liability for partly paid investments 9,30,00 68,97,30
III.Liability on account of outstanding forward
exchange contracts 53447,42,33 48157,32,20
IV. Guarantees given on behalf of constituents
(a) In India 11725,92,83 8706,17,54
(b) Outside India 3369,11,59 6175,15,54
V. Acceptances, endorsements & other obligations 12591,25,86 12894,57,61
V1.Other items for which the bank is
contingently liable 20679,39,87 7421,83,46
TOTAL 102212,98,48 83668,98,25
2. In respect of Foreign Exchange transactions and their year-end translation, the Bank is
consistently following FEDAI/RBI guidelines, which are mandatory, instead of the Accounting
to that extent, and the expenses on encashment of accumulated leave by employees at the time
of retirement are accounted for on payment basis. However, the matter is under consideration of
Reserve Bank of India and Institute of Chartered Accountants of India.
4. Net NPAs to Net Advances as at 31st March 2002 is 5.63% (6.03% as at 31st March 2001).
5. (a) During 1999-2000, the Bank issued by way of private placement, unsecured, subordinated
bonds of the face value of Rs. 1,00,000/- each for cash at par at a fixed rate of 10.80% p.a.,
payable semi annually, for an aggregate amount of Rs. 935.87 crore to augment its Tier II
capital. The Bonds are redeemable at par at the end of 63 months from the date of allotment.
The face value of Bonds outstanding as at 31st March 2002 is Rs. 935.87 crore (Rs. 935.87
crore as at 31st March 2001).
(b) During 2000-2001, the Bank issued by way of structured private place, unsecured,
subordinated bonds of the face value of Rs.10,00,000/ - each for cash at par for an aggregate
amount of Rs. 2500.00 crore, as under:
(i) Rs. 824.80 crore at a fixed rate of 11.55% p.a. payable annually, and redeemable at
par at the end of 63 months from the date of allotment,
(ii) Rs. 1675.20 crore at a fixed rate of 11.90% p.a. payable annually, and redeemable at
par at the end of 87 months from the date of allotment. The face value of the above
Bonds outstanding as at 31st March 2002 is Rs. 2,500.00 crore (Rs. 2500.00 crore as at
31st March 2001).
(c) During 2000-2001, the Bank raised unsecured, subordinated loan amounting to Euro 5.113
million, at a fixed rate of 6.5% p.a. redeemable at par at the end of 108 months. The loan
amount outstanding as at 31st March 2002 is Euro 5.113 million (Rupee equivalent 21.79 crore)
(Euro 5.113 million as at 31st March 2001, Rupee equivalent 20.98 crore).
6. The Bank implemented a Voluntary Retirement Scheme (VRS) for eligible employees during
FY 2000-01. Expenditure thereof aggregated to Rs. 2271.24 crore, of which Rs. 853.19 crore
was charged to the Profit and Loss Account of FY 2000-01. Of the balance, an amount of Rs.
354.51 crore has been charged to the Profit and Loss Account of FY 2001-02. The remaining
amount of Rs. 1083.54 crore is being treated as deferred revenue expenditure included under
Schedule 11 "Other Assets", to be amortized equally over a further period of 3 years in
accordance with RBI guidelines.
7. Segmental reporting as per Accounting Standard 17
The following Segments have been identified as Primary Segments :

a) National Banking Group (NBG) comprising branches/offices in India except branches under
Corporate Banking Group (CBG).
b) CBG comprising Corporate Banking Group accounts including Leasing and Project Finance
c) Treasury Operations (Domestic)
d) International Banking Group (IBG) comprising the operations of Foreign Offices and forex
operations of Foreign Department.
The following segments have been identified as Secondary Segments :
a) Indian Operations (consisting of Domestic Offices)
b) Foreign Operations (consisting of Foreign Offices)
7.1 Pricing of inter segmental transfers :

The NBG is the primary resource mobilizing unit, the other segments (CBG/Domestic Treasury)
compensate the NBG for funds lent by the NBG to them taking into consideration, the average
cost of funds incurred by the NBG. The cost of funds incurred by NBG includes both direct
interest cost and other indirect cost.
7.2 Allocation of Expenses :

a) Expenses incurred at branches are taken to the respective segment to which the branch
belongs.
b) Expenses incurred at Corporate Centre establishments directly attributable to a particular
segment are allocated to relevant segment.
c) Expenses not directly attributable to specific segments are allocated on the basis of number
of employees/ratio of directly attributable expenses.
9. Earnings Per Share as per Accounting Standard 20 Basic Rs. 46.20 (Net Profit Rs. 2431.62
Crore / weighted average number of equity shares
Diluted Rs. 46.20 (There are no dilutive potential equity shares)
10. 'Repo' transactions :

Hitherto income/expenditure on Repo transactions was shown as profit/ loss on sale of
investments. In the current year, such income/expenditure has been treated as Interest income
or expenditure, as the case may be, considering the nature of transaction.
11. Investment in 'Held for Trading' :

In accordance with RBI guidelines there has been a change in accounting policy on valuation of
investments in the 'Held for Trading' category from market value to book value or market value,
whichever is lower. Consequent to such change, the Profit for the year is lower by Rs. 106.46
crore with corresponding decrease in the book value of investment.

ACCOUNTING POLICIES
1. General
The accompanying financial statements are prepared on the historical cost basis and conform to
the statutory provisions and practices prevailing in India in respect of Indian offices and in
various foreign countries in respect of foreign offices.
2. Transactions involving foreign exchange

2.1 Items of income and expenditure in respect of foreign offices and assets and liabilities in
foreign currencies are converted at the rate of exchange prevailing at the close of the year as
per Reserve Bank of India (RBI) guidelines.
2.2 Profit or loss on pending forward contracts are accounted for as per Foreign Exchange
Dealers Association of India (FEDAI) guidelines.
2.3 On interest arbitrage currency swaps, the accrued income and expenditure are accounted
for as interest income/expenditure.
3. Gold Banking
3.1 Closing stock of gold held under Gold Deposit Scheme is valued at market related rates, as
per RBI guidelines.
3.2 In case of gold received and silver sent by supplier, on consignment basis, income is
recognised at the time of sale.
4. Investments
4.1 Investments are classified under (i) `Held to Maturity' (ii) `Held for Trading' (iii) Àvailable for
Sale', as per RBI guidelines.
4.2 Investments under `Held to Maturity' category are carried at acquisition cost. Wherever the
book value is higher than the face value/redemption value, the excess amount is amortized
equally over the remaining period of maturity of the security.
4.3 a) Individual scrips classified under `Held for Trading' category where market quotations are
available are valued at the market price and appreciation/depreciation is recognised in the
revenue account. The book value of the individual scrip is changed with revaluation.
b) Investments classified under Àvailable for Sale' category where market quotations are
available are valued at cost or market price, whichever is lower.
4.4 Investments classified as Àvailable for Sale' where market quotations are not available are
valued at lower of cost or estimated realizable price computed as per Fixed Income Money
Market and Derivatives Association of India/Primary Dealers Association of India/RBI guidelines.
Depreciation scripwise is recognised, while appreciation is ignored. Treasury Bills and
Commercial Papers are valued at cost.
4.5 In respect of Debentures/Bonds where interest is not serviced, provision for depreciation is
made as per method applicable to Non-Performing Advances (Income Recognition and Asset
Classification norms).
4.6 Investments in Subsidiaries and Joint Ventures (both in India and abroad) are valued at
historical cost after netting off provisions, if any.
4.7 Investments in Regional Rural Banks (RRBs) are accounted for after netting off the
provisions held on account of losses incurred by RRBs up to the previous accounting period
restricted to amount of SBI's investment up to that period.
4.8 Brokerage/commission received on subscriptions are deducted from the cost of securities.
Brokerage, commission and stamp duty paid in connection with acquisition of securities are
treated as revenue expenses.
5. Advances
Provisions on advances are arrived at in accordance with RBI guidelines/directives as under:
5.1 Indian Offices
5.1.1 All advances are classified under four categories i.e. (a) Standard Assets, (b) Sub-
standard Assets, (c) Doubtful Assets and (d) Loss Assets.
5.1.2 Provisions are made on all outstanding net of interest not realized on Non-Performing
Assets (NPAs), as under
(a) Sub-standard Assets at 10% of outstanding.
(b) Doubtful Assets at 20%/30%/50% of the secured portion based on the number of years the
account remained as 'Doubtful Asset' (i.e. up to one year, one to three years and more than
three years respectively) and at 100% of the unsecured portion of the outstanding after netting
retainable or realizable amount of the guarantee cover under the schemes of Export Credit
Guarantee Corporation (ECGC), if any.
(c) In respect of advances guaranteed by the State Governments, where the guarantee had
been invoked and remained in default for more than two quarters as on 31st March 2000,
provision of 5% (i.e. 50% of the required provision) has been made.
(d) Loss Assets at 100% of the outstanding.
5.1.3 Unrealized Interest of the Previous Year on advances which became non-performing
during the year is provided for.
5.2 Foreign Offices
5.2.1 The advances are classified under four categories in line with Indian Offices for arriving at
the provisions.
5.2.2 Provisions are made as per the local requirements or as per Reserve Bank of India norms
fixed for Indian Offices, whichever is higher.
5.3 Provisions and interest not realized on NPAs are deducted from total advances.
5.4 General provision of 0.25% is made on Standard Assets in the global loan portfolio.
6. Fixed Assets
6.1 Premises and other fixed assets are accounted for on the historical cost basis.
6.2 Depreciation is provided for on written down value method at the rates prescribed under
Income Tax Rules, 1962. In respect of computers, depreciation is provided for on straight line
method @33.33% per annum, as per RBI guidelines. In respect of assets given on lease by the
Bank, depreciation is provided for on straight line method as per the Companies Act, 1956 and
the difference between the annual lease charge and the depreciation is taken to Lease
Equalization Account as per the guidelines issued by the Institute of Chartered Accountants of
India.
6.3 The value of the assets given on lease and the amounts paid as advance for assets to be
given on lease are disclosed as "Leased Assets" and "Capital Work-in-progress (Leased
Assets)" respectively under fixed assets. Provisions on non-performing leased assets are made
on the basis of IRAC norms applicable to advances, as per RBI guidelines.
6.4 In respect of leasehold premises, the lease amount paid is amortized over the period of
lease.
6.5 In respect of fixed assets held in foreign offices, depreciation is provided as per the local
laws of the countries.
7. Revenue Recognition
7.1 Indian Offices

Income and expenditure are accounted on accrual basis except in the following cases:
7.1.1 Interest and lease income on Non-Performing Assets are recognised on realisation basis,
as per RBI guidelines.
7.1.2 Interest which remains overdue for 2 quarters on securities and overdue interest on
investments is recognised on realisation basis.
7.1.3 Commission (other than on Deferred Payment Guarantees and Government
Transactions), exchange and brokerage are recognised on realisation basis.
7.1.4 Interest on overdue bills is recognised on realisation basis, as per RBI guidelines.
7.1.5 Dividends on investments are accounted for as and when received.
7.1.6 Encashment of leave is accounted for on payment basis.
7.2 Foreign Offices
Income is recognised as per the local laws of the countries.
B. Staff Benefits
Provisions are made for gratuity/pension benefits to staff on an actuarial valuation carried out at
the year end and for provident fund as per statutory requirements. Separate funds for
gratuity/pension/provident fund have been created.
9. Deferred Revenue Expenditure (related to Voluntary Retirement Scheme)

In accordance with the guidelines of RBI, ex gratia and incremental liability in respect of gratuity
and pension arising on implementation of Voluntary Retirement Scheme, is treated as Deferred
Revenue Expenditure to be amortized over a period of 5 years.
10. Net Profit

The net profit is arrived at after:
10.1 Provisions for income tax and wealth tax in accordance with the statutory requirements,
10.2 Provisions on advances,
10.3 Adjustments to the value of investments,
10.4 Transfers to contingency funds,
10.5 Other usual and necessary provisions.
11. Contingency funds are grouped in the Balance Sheet under the head "Other Liabilities and
Provisions".

Financial Analysis OF State Bank of India

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FINANCIAL ANALYSIS

Head /Corporate office: New Administrative Bldg.

Incorporation year: 1955

Listed on: Bombay Stock Exchange (BSE)

With warm regards,

TOTAL 3482282483 3156442105

TOTAL 3482282483 3156442105

Contingent Liabilities 12 1022129848 836689825

Cash and bank balance 32645.82 53212.6 47136.44 60709.18 64930.16

Money at call 821 11038.61 9540.16 21185.87 23085.95

Deposit account 1215.57 983.86 974.73 1306.01 2242.33

Investments 54982.24 71286.52 91878.68 122876.5 145142

Approved securities 7157.97 6464.39 5913.72 5704.99 5220.32

Others 7222.59 11529.24 13344.8 19416.05 21253.85

Investments outside India 2221.46 2690.45 3199.94 3976.49 4741.86

Advances & loans 74237.33 82359.84 98101.97 113590.3 120806.5

Term advances 22750.4 28627.35 33887.69 39553.11 45072.7

Foreign currency advances 0 0 0 0 0

Deferred tax 0 0 0 0 312.9

Receivables 16228.42 13386.74 21842.28 13529.53 13794.38

Non-banking assets 0.22 0.24 0.25 1.26 0.27

Advance payment of tax 1647.34 2403.95 1957.55 2007.06 1861.14

Gross fixed assets 2347.61 3338.31 3976.97 4458.99 4678.09

Land & building 653.62 687.74 749.86 855.88 920.32

Leased assets 289.33 1002.51 1386.51 1258.05 1434.53

TOTAL ASSETS 179672.7 222509 261505 315644.2 348541.2

State Bank Of India Mar-98 Mar-99 Mar-00 Mar-01 Mar-02

Capital 526.3 526.3 526.3 526.3 526.3

Equity capital 526.3 526.3 526.3 526.3 526.3

Bonus equity capital 0 0 0 0 0

Reserve funds & surplus 9081.88 9876.01 11620.98 12935.24 14698.08

Share premium reserves 3510.57 3510.57 3510.57 3510.57 3510.57

Deposits 131091.32 169041.93 196821.07 242828.37 270560.14

Demand deposits from

Term deposits from banks 3470.18 5793.73 5500.66 6499.52 6746.43

Borrowings 9080.79 10063.13 11193.41 15133.62 12781.6

Financial institutions 836.77 1076.39 1669.6 2537.4 2152.61

Debentures & bonds 987.35 984.07 1915.34 4432.58 3457.66

Deferred tax 0 0 0 0 330.85

Other liabilities &

Interest accrued and due 7619.88 10100.69 13080.79 16966.05 19285.58

TOTAL LIABILITIES 179672.66 222509.03 261504.95 315644.19 348541.15

Endorsement obligation 10830.12 9785.72 12941.7 12894.58 12591.26

Future lease rent payable 0 0 0 0 0

Mar Mar Mar Mar Mar

Opening Balance 27752.75 32645.82 53212.59 47136.44 60709.19

Revenue Inflow 1985.92 3488.81 4639.5 5241.89 7082.06

Non operating income 50.11 62.44 64.84 77.05 102.67

Decrease in operating assets 23889.98 42835.64 27779.14 46007.31 27731.76

Others 3499.83 4885.03 0 0 0

Total cash inflow 53678.76 79032.71 86830.95 101150.5 95625.68

Purchase of fixed assets 498.4 999.09 649.6 517.61 246.88

Loans to group companies 0 0 0 0 0

Dividend paid 199.46 231.57 233.68 306.57 290.13

Increase in operating assets 12004.13 8122.51 17790.89 38277.29 27296.65

Others 0 0 784.53 21356.07 17928.16

Closing balance 32645.82 53212.59 47136.44 60709.19 64930.17

Total cash outflow 53530.12 78889.67 86694.75 100832 95198.28

Cash flow before operating

Cash used in investing activity 8676 17319.72 20725.25 350.83 246.97

Income 18634.85 22311.16 25649.31 29755.66 33781.48

Interest received 9487.24 11522.23 12694.76 14957.45 15538.21