Transforming Public Sector Banks

State Bank Of India

A Success Story
Presented By: Ajeet, Maisura, Chintan, Satish , Ram, Bhavin, Dipal, Dhiren , Abhishek

HISTORICAL PERSPECTIVE

Banks nationalised in 1969 By early 1990s accounted for 90% of countrys banking business By 1992 had over 60,000 branch offices Highly regulated and protected environment Failed to measure up to international benchmarks of strength and efficiency

HISTORICAL PERSPECTIVE

Financial sector reforms initiated in 1991 Public Sector Banks (PSBs) post losses for the first time as a group in the first year of reforms State Bank of India (SBI) and its 7 subsidiaries continued to post profits By 1995-96 several other PSBs also improved their profitability Wide variations in competitive efficiency of PSBs persists even today
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SBI vs. SBI

New Parivartan Scheme - Launching a performance overhauling scheme for the banks employees. Perception as Government Bank only Service oriented Bank Largest advertising Bank

STATE BANK GROUP

State Bank Group a financial conglomerate of:  SBI Over 9,000 Branches
 One

of the worlds largest branch networks

 7 Associate Banks Over 4,000 Branches  Banking Subsidiaries

1

in India  2 wholly-owned (outside India)  2 joint ventures (outside India)

 7 Non-Banking Subsidiaries

WHAT DIFFERENTIATES SBI? WHAT DIFFERENTIATES SBI? WHAT DIFFERENTIATES SBI? WHAT DIFFERENTIATES SBI?
State Bank of India Corporate Governance Organisation structure Corporate Leadership

Product Innovation Internal Controls

Human Resources

State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

ORGANISATION STRUCTURE

Adapting with time  First Restructuring (1971)

 market

segmentation  Annual performance budgeting

 Second Restructuring (1980)

 modular

structure  controlling offices nearer to operating units for better control

 Comprehensive Review of Structure Processes & Roles (1994 95)

 strategic

business units  business groups

State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

ORGANISATION STRUCTURE
Business Group Strategic Business Units 1 2
Corporate Banking Group National Banking Group Corporate Accounts Group Project Finance Group & Leasing Group Each of the Local Head Offices constitutes a separate SBU. Branches in LHO grouped under two networks:a. Development & Personal Banking (Retail Banking) b. Commercial Banking (Corporate Banking)

3 4

International Banking Foreign Offices(an SBU) , Global Merchant Banking, Global Link Office Associates & Subsidiaries Associate Banks, Subsidiaries of SBI
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

ORGANISATION STRUCTURE
Customer Focused Organisation Structure
State Bank of India
Corporate Centre

Corporate Banking Group

International Banking Group

National Banking Group

Associates & Subsidiaries

Project Finance SBU

Corporate Accounts Group

Leasing SBU

Local Head Offices

7 Associate Banks

100% owned banking subsidiary

Non-Banking Subsidiaries & Affiliates

Focus on Infrastructre, Telecom, Transport & Hydrocarbon financing

Dedicated focus on Top Corporates

Focus on Infrastructre & Capital intensive projects

Commercial Network

Development & Personal Banking Network

Mid-sized corporates, large SSIs & Agri.

SSIs/ Agriculture /Small business

Government Business

Personal customers

Investment Banking Funds Management Primary Dealership Factoring Credit Cards Insurance Credit Bureau 9

High networth Individuals

State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

CORPORATE GOVERNANCE

SBI practiced corporate governance even before it became the buzz word SBI is unique in that it has both  Central Board  Local Board for each Circle Independent directors from different walks of life industrialists, academicians, professionals The Board is the highest policy making body in the bank
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

CORPORATE GOVERNANCE

Contributions from these directors have been manifold:  Executive Committee of the Central Board weekly meetings  Audit Committee supervision of total audit function of the bank external & internal  Asset-liability management Committee  Shareholders/investors grievance Committee redressal of complaints
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

CORPORATE GOVERNANCE

Specific tenure for independent directors Information flow to the directors  Periodic reviews on micro & macro functioning of the bank benchmarked against the entire banking sector  Open discussions with the top management Bring in the outside-in perspective  Guiding the management in identifying opportunities for the bank
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

CORPORATE LEADERSHIP

Planning for the future  Clearly documented and transparent management process  Process for early identification of leaders and succession planning is followed at top-management levels Selection system involves outside specialists thereby reducing any influences/ biases Constant monitoring of performance at all levels for improving effectiveness
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

CORPORATE LEADERSHIP

Decisions evaluated through committee process Clear division in functions  Chairman as the Chairman of the Board of Directors spearheads policy-making  Group Executives entrusted with operational responsibility for the SBUs attached to them  Policy planning functions with Staff functionaries at the Apex level  Similar structure in Circles
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

INTERNAL CONTROLS

Time tested systems and procedures SBI does not compromise with the procedures as laid down by regulators and its own internal systems  Indeed, SBI has been seen by the market as the face of the regulator Comprehensive Management Information and Decision Support Systems Constant reviews of these systems to keep pace with the dynamics of the market
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

INTERNAL CONTROLS

New systems evolved on an-on-going basis to suit changing environment  Credit process streamlining of the sanction process through greater delegation of sanctioning powers, delayering of the credit assessment process  Committee form of decision making Systems Audit periodically undertaken to assess deficiency
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

PRODUCT INNOVATION

Leveraging customer base to focus on Cross Selling Segmental focus  Focus on mid-corporate, trade, housing, consumer finance, agriculture Innovative forms of credit Self-Help Group, Kissan (Farmers) Credit Card Project Uptech - providing expertise and technical support to the borrowing customers in their activities
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

HUMAN RESOURCES

Committed professional cadre Best pool of human resources  SBI has been the source for talent for many of the foreign and private sector Banks Employee productivity - Performance Management System Transparency in personnel matter  Appellate / review authority
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State Bank of India

Corporate Governance

Organisation structure

Corporate Leadership

Product Innovation

Human Resources

Internal Controls

HUMAN RESOURCES

Excellent in-house training infrastructure reputed to be the best in India and one of the best in Asia  Training system synchronised with the corporate objectives  Training delivery practical oriented programmes, on-the-job trainings, job related  Proper selection of trainers / trainees  Hands-on training by deputing to the Branches  Training colleges/centres in each Circle  Training from the time of entry till the time for retirement for all staff  Research wing 19  Systematic evaluation of the impact of training

TECHNICAL ASPECT

Online Trading Net Banking Mobile Banking Debit Card and Credit Card Cross Selling with Indian Railway Working in 13 countries

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AREAS OF CONCERN

Government ownership acts as a constraint in raising fresh capital Perception as one of the brightest family silvers often results in political intervention delaying decisions relating to critical strategic and policy changes Absence of market related compensation structure for employees Inability to offer performance based compensation and rewards Inability to attract and retain best-in-class talent
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CONCLUSION

Notwithstanding its public sector nature SBI has shown consistently strong performance, demonstrating:
 Being in the public sector in itself need not really be a handicap to success  It is not only possible but essential to retain a commercial culture and competitive efficiency while attending to social and developmental objectives  Quality of governance is independent of ownership  Ownership, and management roles and concerns can be kept separate and as long as they are kept so, performance is better  Long term strategy and a clear vision about market positioning is essential  Ability to provide leadership from within is important 22  Development of human resource is critical

RECOMANDATION

Bank at home Facility Proper Maintenance of ATMs Make work environment professionally Easy Documentation 8 to 8 Facility

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Thank You
Reference www.statebankofindia.com www.reservebankofindia.com