Devesh Mittal

PGDM-FS
Roll No 34
State Bank of India
About SBI:
Founded in 1806, Bank of Calcutta was the first bank established in India and over
a period of time evolved into State Bank of India (SBI). SBI represents a sterling
legacy of over 200 years. It is the oldest commercial bank in the Indian
subcontinent, strengthening the nation’s trillion-dollar economy and serving the
aspirations of its vast population. The Bank is India’s largest commercial Bank in
terms of assets, deposits, branches, number of customers and employees,
enjoying the continuing faith of millions of customers across the social spectrum.
Headquartered at Mumbai, SBI provides a wide range of products and services to
personal, commercial enterprises, large corporates, public bodies and
institutional customers through its various branches and outlets joint ventures,
subsidiaries and associate companies.

Vision:
1. MY SBI.
2. MY CUSTOMER FIRST
3. MY SBI: FIRST IN CUSTOMER SATISFACTION

Mission:
1. We will be prompt, polite and proactive with our customers.
2. We will speak the language of young India.
3. We will create products and services that help our customers achieve their
goals.
4. We will go beyond the call of duty to make our customers feel valued.
5. We will be of service even in the remotest part of our country.
 6. We will offer excellence in services to those abroad as much as we do to
those in India.
7. We will imbibe state-of-the-art technology to drive excellence.

Values:
1. We will always be honest, transparent and ethical.
2. We will respect our customers and fellow associates.
3. We will be knowledge driven.
4. We will learn and we will share our learning.
5. We will never take the easy way out.
6. We will do everything we can to contribute to the community we work in.
7. We will nurture pride in India.

Policies at SBI:

Policy on Depositors Rights:

RBI has advised banks to formulate a transparent and comprehensive policy
setting out the rights of the depositors in general and small depositors in
particular. The policy should cover all aspects of operations of deposit accounts,
charges leviable and other related issues to facilitate interaction of depositors at
branch levels. The policy should also be explicit in regard to secrecy and
confidentiality of the customers. Accordingly, this policy document on deposits
outlines the guiding principles in respect of formulation of various deposit
products offered by the Bank and terms and conditions governing the conduct of
the account. The document recognizes the rights of depositors and aims at
dissemination of information with regard to various aspects of acceptance of
deposits from the members of the public, conduct and operations of various
deposits accounts, payment of interest on various deposit accounts, closure of
deposit accounts, method of disposal of deposits of deceased depositors, etc., for
the benefit of customers. It is expected that this document will impart greater
transparency in dealing with the individual customers and create awareness
among customers of their rights. The ultimate objective is that the customer will
get services they are rightfully entitled to receive without demand.

Compensation Policy:
IT-CBS Development department has developed the necessary functionality
related to automation of payment of compensation for the following deficiencies
in CBS and rolled out the same since November, 2013. Detailed operational
guidelines in regard to payment of compensation to the customers on account of
deficiencies in the services have been circulated by way of e-Circular No. :
NBG/BOD-GB/70/2014 – 15 dated 05th November, 2014.

 Unauthorised / erroneous debit.

 ECS direct debits / other debits to accounts
 Issue of ATM / Debit cards without written consent of customers.
 Payment of cheques after acknowledgement of stop payment instruction at
Home Branch.
 Compensation for delayed collection of export bills / payment of foreign
inward remittances etc., adverse movement of forex rates and also
payment of interest for delay in payment to the exporters on export bill
sent for collection and realized by authorized dealers.
 Delay in credit / return of NEFT/NECS/ECS transactions
 Collection of cheque drawn on foreign countries
 Cheque, lost in Bank's custody, payable in India
 Cheque, lost in Bank's custody, payable in foreign countries
 Disputed ATM transactions
 Delay in credit of pension
 Delay in issuance of duplicate IOI.
 Lenders' liability, delay in return of securities documents

Customer Rights Policy:

1. Right to Fair Treatment
Both the customer and the financial services provider have a right to be
treated with courtesy. The customer should not be unfairly discriminated
against on grounds such as gender, age, religion, caste and physical ability
when offering and delivering financial products.

2. Right to Transparency, Fair and Honest Dealing

The financial services provider should make every effort to ensure that the
contracts or agreements it frames are transparent, easily understood by,
and well communicated to the common person. The product’s price, the
associated risks, the terms and conditions that govern use over the
product’s life cycle and the responsibilities of the customer and financial
service provider, should be clearly disclosed. The customer should not be
subject to unfair business or marketing practices, coercive contractual
terms or misleading representations. Over the course of their relationship,
the financial services provider cannot threaten the customer with physical
harm, exert undue influence, or engage in blatant harassment.

3. Right to Suitability
The products offered should be appropriate to the needs of the customer
and based on an assessment of the customer’s financial circumstances and
understanding.

4. Right to Privacy
Customers’ personal information should be kept confidential unless they
have offered specific consent to the financial services provider or such
information is required to be provided under the law or it is provided for a
mandated business purpose (for example, to credit information
companies). The customer should be informed upfront about likely
mandated business purposes. Customers have the right to protection from
all kinds of communications, electronic or otherwise, which infringe upon
their privacy.
 5. Right to Grievance Redressal and Compensation
The customer has a right to hold the financial services provider accountable
for the products offered and to have a clear and easy way to have any valid
Customer Rights Policy – 2018 grievance redressed. The provider should
also facilitate redressal of grievances stemming from its sale of third party
products. The financial services provider must communicate its policy for
compensating mistakes, lapses in conduct, as well as non-performance or
delays in performance, whether caused by the provider or otherwise. The
policy must lay out the rights and duties of the customer when such events
occur.

Long Term Objectives:

1. To have a strong commercial bank under the control and supervision of the
Government.
2. To spread banking facilities in rural, semi-urban and metropolitan areas by
opening 400 branches within five years of its establishment. This policy of
branch expansion has since been continued.
3. To help spread banking in rural areas for the purpose of encouraging and
mobilising savings among the ruralists and to provide credit to them.
4. To subscribe to the debentures of State Land Development Banks and to
advance loans on their security.
5. To strengthen co-operative societies, help in the establishment of licensed
warehouses arid co-operative marketing societies.
6. To provide financial assistance to small, cottage and village industries.
7. To help other banks and strengthen the banking system.
8. To help the RBI in implementing its monetary and credit policies

Historical Events
A major change in the conditions of operation of the Banks of Bengal, Bombay
and Madras occurred after 1860. With the passing of the Paper Currency Act of
1861, the right of note issue of the presidency banks was abolished and the
Government of India assumed from 1 March 1862 the sole power of issuing paper
currency within British India. The task of management and circulation of the new
currency notes was conferred on the presidency banks and the Government
undertook to transfer the Treasury balances to the banks at places where the
banks would open branches. None of the three banks had till then any branches
(except the sole attempt and that too a short-lived one by the Bank of Bengal at
Mirzapore in 1839) although the charters had given them such authority. But as
soon as the three presidency bands were assured of the free use of government
Treasury balances at places where they would open branches, they embarked on
branch expansion at a rapid pace. By 1876, the branches, agencies and sub
agencies of the three presidency banks covered most of the major parts and many
of the inland trade centres in India. While the Bank of Bengal had eighteen
branches including its head office, seasonal branches and sub agencies, the Banks
of Bombay and Madras had fifteen each.

Presidency Banks Act

The presidency Banks Act, which came into operation on 1 May 1876, brought the
three presidency banks under a common statute with similar restrictions on
business. The proprietary connection of the Government was, however,
terminated, though the banks continued to hold charge of the public debt offices
in the three presidency towns, and the custody of a part of the government
balances. The Act also stipulated the creation of Reserve Treasuries at Calcutta,
Bombay and Madras into which sums above the specified minimum balances
promised to the presidency banks at only their head offices were to be lodged.
The Government could lend to the presidency banks from such Reserve Treasuries
but the latter could look upon them more as a favour than as a right.

Presidency Banks of Bengal

The presidency Banks of Bengal, Bombay and Madras with their 70 branches were
merged in 1921 to form the Imperial Bank of India. The triad had been
transformed into a monolith and a giant among Indian commercial banks had
emerged. The new bank took on the triple role of a commercial bank, a banker's
bank and a banker to the government.
But this creation was preceded by years of deliberations on the need for a 'State
Bank of India'. What eventually emerged was a 'half-way house' combining the
functions of a commercial bank and a quasi-central bank.
The establishment of the Reserve Bank of India as the central bank of the country
in 1935 ended the quasi-central banking role of the Imperial Bank. The latter
ceased to be bankers to the Government of India and instead became agent of
the Reserve Bank for the transaction of government business at centres at which
the central bank was not established. But it continued to maintain currency chests
and small coin depots and operate the remittance facilities scheme for other
banks and the public on terms stipulated by the Reserve Bank. It also acted as a
bankers' bank by holding their surplus cash and granting them advances against
authorised securities. The management of the bank clearing houses also
continued with it at many places where the Reserve Bank did not have offices.
The bank was also the biggest tenderer at the Treasury bill auctions conducted by
the Reserve Bank on behalf of the Government.

First Five Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural
India was given the highest priority. The commercial banks of the country
including the Imperial Bank of India had till then confined their operations to the
urban sector and were not equipped to respond to the emergent needs of
economic regeneration of the rural areas. In order, therefore, to serve the
economy in general and the rural sector in particular, the All India Rural Credit
Survey Committee recommended the creation of a state-partnered and state-
sponsored bank by taking over the Imperial Bank of India, and integrating with it,
the former state-owned or state-associate banks. An act was accordingly passed
in Parliament in May 1955 and the State Bank of India was constituted on 1 July
1955. More than a quarter of the resources of the Indian banking system thus
passed under the direct control of the State. Later, the State Bank of India
(Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to
take over eight former State-associated banks as its subsidiaries (later named
Associates).

The State Bank of India was thus born with a new sense of social purpose aided by
the 480 offices comprising branches, sub offices and three Local Head Offices
inherited from the Imperial Bank. The concept of banking as mere repositories of
the community's savings and lenders to creditworthy parties was soon to give way
to the concept of purposeful banking subserving the growing and diversified
financial needs of planned economic development. The State Bank of India was
destined to act as the pacesetter in this respect and lead the Indian banking
system into the exciting field of national development.

Financial Statement

Q2FY19 OVER Q2FY18

1. The Bank registered a Net Profit of Rs.945 Cr which is largely attributable
to:
 Domestic Credit Growth of 11.11% YoY
 Decline in Slippage ratio by 159 bps YoY.
 Decline in Credit Cost by 68 bps YoY
2. Overhead Expenses having declined by 3.19% YoY
3. Operating Profit declined by 30.47% from Rs. 19,999 Cr in Q2FY18 to Rs.
13,905
4. Cr in Q2FY19, mainly due to lower trading income in Q2FY19 and one-time
income of Rs. 5,436 Cr on part stake sale in SBI Life during Q2FY18.
5. Net Interest Income increased by 12.48% from Rs.18,586 Cr in Q2FY18 to
Rs. 20,906 Cr in Q2FY19.
6. Interest Income on Loans increased by 7.05% YoY from Rs. 35,801 Cr in
Q2FY18 to Rs. 38,326 Cr in Q2FY19.
7. Growth in Interest Expenses on Deposits contained at 2.81% YoY from Rs.
33,980 Cr in Q2FY18 to Rs. 34,934 Cr in Q2FY19 despite a growth in
Deposits of 7.02% YoY.
8. Non-Interest Income decreased by 41.46% from Rs. 16,017 Cr in Q2FY18 to
Rs. 9,375 Cr in Q2FY19 mainly on account of YoY decline of 72.69% in
trading income. Q2FY18 also included Rs. 5,436 Cr on account of part stake
sale in SBI Life.
9. Recovery in Written-Off Accounts registered a robust growth of 14.59%
from Rs.1,158 Cr in Q2FY18 to Rs. 1,327 Cr in Q2FY19.
Strategic Differentiators
Strategic Differentiators of SBI have helped in ensuring the success of SBI. Some
of the major ones are discussed in the following sections.

Performing different activities than rivals:

The SBI Brand:

Contemporary Positioning at all Times SBI used the tagline 'The banker to every
Indian' to create a dominant position in the Indian banking industry. This has
helped the bank withstand the onslaught of private and foreign banks in the
Indian banking industry with relative ease. Keeping up with modern trends, SBI
has now re-positioned its brand as: 'A "Smart" Bank for the New Generation'. To
do justice to this positioning, hundreds of SBI branches are converting to the
'sbiINTOUCH' branches that leverage digital technology and make good use of the
digital platforms. These outlets are equipped with state-of-the-art gadgets and
machines, which allow customers to transact in a self-serving mode and with both
onsite and remote expert assistance. In fact, SBI is currently the market leader for
mobile banking services in India with 1.77 crore users and a market share of
35.97% in terms of value of transactions. The SBI brand lives up to the promise it
makes to customers by putting customers first.

Specialized Products

In order to target new customer segments in an effective manner, SBI develops

specialized products to cater to the needs of these new segments. A pioneering
innovative product 'e-Smart SME' for financing merchants selling through
ecommerce platforms has been designed. Tie-ups with leading e-commerce
companies like Snapdeal and Flipkart have been established this year.This
innovative product moves away from the traditional balance-sheet-based lending
to a cash flow-based lending programme. It uses an in-house developed
proprietary credit model based on platform and surrogate data to assess
eligibility. The entire process has been automated – 'at the click of a button' –
from online application, uploading of documents, processing and sanction, all in
less than a minute – first time ever in the history of banks in India. The seller no
longer needs to submit traditional financial statements like balance-sheet, profit
and loss account or income tax returns to avail this financing facility.

Customer Comes First:

SBI is able to target the youth of today through modern, technology-enabled

initiatives. State Bank Buddy is the mobile wallet designed for the tech-savvy
generation, the youth of the country. With this buddy app, the user can do a
number of online transactions like mobile recharge, pay utility bills, online
shopping and ticketing, etc. Within seven months of its launch, Buddy user
registration has crossed 26.60 lakh. The wallet has seen more than 48 lakh
transactions to the tune of Rs 230.71 crore. SBI has also launched the mobile app
'State Bank Samadhaan' on Google Play Store. This is a self-service app enabling
SBI customers to avail of a range of services and obtain commonly sought
information, without visiting the branch. The app will provide information about
deposits, advances, internet banking, mobile banking, EMI calculation, SBI
branches, ATM locations, SBI holidays and give direct access to various mobile
apps viz., SBI Freedom, SBI Anywhere, SBI Buddy, SBI Quick, etc. A unique feature
of the app is that it will enable any SBI customer to get on-demand his statement
of account and interest certificate on housing loan and education loan securely on
his or her registered email address 24x7. Another mobile app, 'State Bank No
Queue' has been launched; this enables customers to self-generate e-tokens for
availing select banking services at select branches. This reduces the waiting time
of customers and reduces crowds as the token is generated before the customer
reaches the branch. SBI has also launched mobile banking applications for SME
and corporate customers viz. "State Bank Anywhere Saral' and 'State Bank
Anywhere Corporate'. These applications allow customers to do all their banking
transactions such as account enquiry, mini statement, utility bills payment, EPF
payment, creation of fixed deposits, and a lot more. The corporate customers get
additional features which allow them to initiate payment to suppliers, authorize
e-cheques and enquiry of account transactions. On the SME business front,
Project Shikhar was rolled out to gain 'first mover' advantage in the e-commerce
space. Under this project, the bank is working on various initiatives to pioneer
ecosystem lending through partnerships with new business models. A pioneering
innovative product called 'e-Smart.

Performing similar activities in different ways:

Managing Risk in a Proactive Manner

SBI believes in spreading its risk by offering advances to a wide variety of

customers rather than focusing on a few segments. This is evident from the mix of
the advances as shown in Annexure 3. In order to focus on capital conservation
and maximisation of return on capital, SBI has introduced risk-based budgeting
(RBB). SBI has implemented the risk-adjusted return on capital (RAROC)
framework both at customer and portfolio level. For resolution/recoveries of
NPAs, SBI has introduced certain innovative methods which have given the first
mover advantage to the bank in areas like early warning system, arranging mega
e-auction of large number of properties on a pan-India basis, initiation of criminal
actions, identification of unencumbered properties of the borrowers/guarantors
and arranging for attachment of properties before the court.

Engaging Employees to Bolster SBI's Performance

SBI has introduced flexi-timing/flexi-hour scheme in a limited scale where the

employee is free to select own work hours within limits laid by the management,
on the grounds of looking after family and health. Additionally, SBI has
implemented a new system of performance appraisal (Career Development
System CDS) of employees in an objective and transparent manner. The entire
system is IT-driven and all the employees of the bank have been assigned KRAs
and almost 90% of the positions have been made budgetary or measurable.

References:
 http://www.nibmindia.org/admin/fckImages/A1-
Vinimaya%20XXXVII%20No%203.pdf
 https://www.sbi.co.in/AR1516/download_pdf.html
 https://www.onlinesbi.com/