project on sbi bank

8/3/2019 Project on SBI Bank

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INDUSTRY OVERVIEW

History:

Banking in India has its origin as carry as the Vedic period. It is believed that the transition from

money lending to banking must have occurred even before Manu, the great Hindu jurist, who has

devoted a section of his work to deposits and advances and laid down rules relating to the

interest. During the mogal period, the indigenous bankers played a very important role in lending

money and financing foreign trade and commerce. During the days of East India Company, it

was to turn of the agency houses top carry on the banking business. The general bank of India

was the first joint stock bank to be established in the year 1786.The others which followed were

the Bank of Hindustan and the Bengal Bank. The Bank of Hindustan is reported to have

continued till 1906, while the other two failed in the meantime. In the first half of the 19th

Century the East India Company established three banks; The Bank of Bengal in 1809, The Bank

of Bombay in 1840 and The Bank of Madras in 1843.These three banks also known as

presidency banks and were independent units and functioned well. These three banks were

amalgamated in 1920 and The Imperial Bank of India was established on the 27th Jan 1921, with

the passing of the SBI Act in 1955, the undertaking of The Imperial Bank of India was taken

over by the newly constituted SBI. The Reserve Bank which is the Central Bank was created in

1935 by passing of RBI Act 1934, in the wake of swadeshi movement, a number of banks withIndian Management were established in the country namely Punjab National Bank Ltd, Bank of

India Ltd, Canara Bank Ltd, Indian Bank Ltd, The Bank of Baroda Ltd, The Central Bank of

India Ltd .On July 19th 1969, 14 Major Banks of the country were nationalized and in 15 th April

1980 six more commercial private sector banks were also taken over by the government. The

Indian Banking industry, which is governed by the Banking Regulation Act of India 1949, can be

broadly classified into two major categories, non-scheduled banks and scheduled banks.

Scheduled Banks comprise commercial banks and the co-operative banks.

The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and

resulted in a shift from class banking to mass banking. This in turn resulted in the significant


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growth in the geographical coverage of banks. Every bank had to earmark a min percentage of

their loan portfolio to sectors identified as priority sectors the manufacturing sector also grew

during the 1970s in protected environments and the banking sector was a critical source. The

next wave of reforms saw the nationalization of 6 more commercial banks in 1980 since then the

number of scheduled commercial banks increased four- fold and the number of bank branches

increased to eight fold.

After the second phase of financial sector reforms and liberalization of the sector in the early

nineties. The PSBs found it extremely difficult to complete with the new private sector banks

and the foreign banks. The new private sector first made their appearance after the guidelines

permitting them were issued in January 1993.

The Indian Banking System:

Banking in our country is already witnessing the sea changes as the banking sector seeks new

technology and its applications. The best port is that the benefits are beginning to reach the

masses. Earlier this domain was the preserve of very few organizations. Foreign banks with

heavy investments in technology started giving some Out of the world customer services. But,such services were available only to selected few- the very large account holders. Then came the

liberalization and with it a multitude of private banks, a large segment of the urban population

now requires minimal time and space for its banking needs.

Automated teller machines or popularly known as ATM are the three alphabets that have

changed the concept of banking like nothing before. Instead of tellers handling your own cash,

today there are efficient machines that dont talk but just dispense cash. Under the

Reserve Bank of India Act 1934, banks are classified as scheduled banks and non-scheduled


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banks. The scheduled banks are those, which are entered in the Second Schedule of RBI Act,

1934. Such banks are those, which have paid- up capital and reserves of an aggregate value of

not less then Rs.5 lacs and which satisfy RBI that their affairs are carried out in the interest of

their depositors. All commercial banks Indian and Foreign, regional rural banks and state co-

operative banks are Scheduled banks. Non Scheduled banks are those, which have not been

included in the Second Schedule of the RBI Act, 1934.

The organized banking system in India can be broadly classified into three categories: (i)

Commercial Banks (ii) Regional Rural Banks and (iii) Co-operative banks. The Reserve Bank of

India is the supreme monetary and banking authority in the country and has the responsibility to

control the banking system in the country. It keeps the reserves of all commercial banks and

hence is known as the Reserve Bank .

Current scenario:-

Currently (2007), the overall banking in India is considered as fairly mature in terms of supply,

product range and reach - even though reach in rural India still remains a challenge for the

private sector and foreign banks. Even in terms of quality of assets and

Capital adequacy, Indian banks are considered to have clean, strong and transparent balance

sheets - as compared to other banks in comparable economies in its region. The Reserve Bank of

India is an autonomous body, with minimal pressure from the Government

With the growth in the Indian economy expected to be strong for quite some time especially in

its services sector, the demand for banking services especially retail banking, mortgages and

investment services are expected to be strong. Mergers & Acquisitions., takeovers, are much

more in action in India.

One of the classical economic functions of the banking industry that has remained virtually

unchanged over the centuries is lending. On the one hand, competition has had considerable


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adverse impact on the margins, which lenders have enjoyed, but on the other hand technology

has to some extent reduced the cost of delivery of various products and services.

Bank is a financial institution that borrows money from the public and lends money to the public

for productive purposes. The Indian Banking Regulation Act of 1949 defines the term Banking

Company as "Any company which transacts banking business in India" and the term banking as

"Accepting for the purpose of lending all investment of deposits, of money from the public,

repayable on demand or otherwise and withdrawal by cheque, draft or otherwise".

Banks play important role in economic development of a country, like:

y Banks mobilise the small savings of the people and make them available for productive

purposes.

y Promotes the habit of savings among the people thereby offering attractive rates of interestson their deposits.

y Provides safety and security to the surplus money of the depositors and as well provides aconvenient and economical method of payment.

y Banks provide convenient means of transfer of fund from one place to another.

y Helps the movement of capital from regions where it is not very useful to regions where itcan be more useful.

y Banks advances exposure in trade and commerce, industry and agriculture by knowing theirfinancial requirements and prospects.

y Bank acts as an intermediary between the depositors and the investors. Bank also acts asmediator between exporter and importer who does foreign trades.

Thus Indian banking has come from a long way from being a sleepy business institution to a

highly pro-active and dynamic entity. This transformation has been largely brought about by the

large dose of liberalization and economic reforms that allowed banks to explore new business

opportunities rather than generating revenues from conventional streams (i.e. borrowing and


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lending). The banking in India is highly fragmented with 30 banking units contributing to almost

50% of deposits and 60% of advances.

The Structure of Indian Banking:

The Indian banking industry has Reserve Bank of India as its Regulatory Authority. This is a mix

of the Public sector, Private sector, Co-operative banks and foreign banks. The private sector

banks are again split into old banks and new banks.


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Chart Showing Three Different Sectors of Banks

i) Public Sector Banks

ii) Private Sector Banks

Reserve Bank of India

[Central Bank]

Scheduled Banks

Scheduled Co-operative BanksScheduledCommercial Banks

Public SectorBanks

onalizedBanks

SBI & itsAssociates

Private SectorBanks

Old PrivateSectorBanks

Foreign

Banks

Regional

Rural Banks

Scheduled UrbanCo-Operative

Banks

Scheduled StateCo-OperativeBanks

New Private

Sector Banks


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Public Sector Banks

SBI and Nationalized Regional Rural

SUBSIDIARIES Banks Banks

SBI and subsidiaries

This group comprises of the State Bank of India and its seven subsidiaries viz., State

Bank of Patiala, State Bank of Hyderabad, State Bank of Travancore, State Bank of Bikaner and

Jaipur, State Bank of Mysore, State Bank of Saurashtra, State Bank of India

State Bank of India (SBI) is the largest bank in India. If one measures by the number ofbranch offices and employees, SBI is the largest bank in the world. Established in 1806as Bank

of Bengal it is the oldest commercial bank in the Indian subcontinent. SBI provides various

domestic, international and NRI products and services, through its vast network in India and

overseas. With an asset base of $126 billion and its reach, it is a regional banking behemoth. The

government nationalized the bank in1955, with the Reserve bank of India taking a 60%

ownership stake. In recent years the bank has focused on two priorities, 1), reducing its huge

staff through Golden handshakeschemes known as the Voluntary Retirement Scheme, which saw

many of its best and brightest defect to the private sector, and 2), computerizing its operations.

The State Bank of India traces its roots to the first decade of19th century, when the Bankof

culcutta, later renamed theBank of bengal, was established on 2 jun 1806. The government

amalgamatted Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay

and the bank of Madras, and named the reorganized banking entity the Imperial Bank of India.

All these Presidency banks were incorporated ascompanies, and were the result of theroyal

charters. The Imperial Bank of India continued to remain a joint stock company. Until the


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establishment of a central bank in India the Imperial Bank and its early predecessors served as

the nation's central bank printing currency.

The State Bank of India Act 1955, enacted by the parliament of India, authorized the Reserve

Bank of India, which is the central Banking Organisationof India, to acquire a controlling interest

in the Imperial Bank of India, which was renamed the State Bank of India on30th April 1955.

In recent years, the bank has sought to expand its overseas operations by buying foreign banks. It

is the only Indian bank to feature in the top 100 world banks in the Fortune Global 500 rating

and various other rankings. According to the Forbes 2000 listing it tops all Indian companies.

Nationalized banks

This group consists of private sector banks that were nationalized. The Government of India

nationalized 14 private banks in 1969 and another 6 in the year 1980. In early 1993, there were

28 nationalized banks i.e., SBI and its 7 subsidiaries plus 20 nationalized banks. In 1993, the loss

making new bank of India was merged with profit making Punjab National Bank. Hence, now

only 27 nationalized banks exist in India.

Regional Rural banks

These were established by the RBI in the year 1975 of banking commission. It was established to

operate exclusively in rural areas to provide credit and other facilities to small and marginal

farmers, agricultural laborers, artisans and small entrepreneurs.

Private Sector Banks

Private Sector Banks

Old private new privateSector Banks Sector Banks


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Old Private Sector Banks

This group consists of the banks that were establishes by the privy sectors, committee

organizations or by group of professionals for the cause of economic betterment in their

operations. Initially, their operations were concentrated in a few regional areas. However, their

branches slowly spread throughout the nation as they grow.

New private Sector Banks

These banks were started as profit orient companies after the RBI opened the banking sector to

the private sector. These banks are mostly technology driven and better managed than other

banks.

Foreign banks

These are the banks that were registered outside India and had originated in a foreign country.

The major participants of the Indian financial system are the commercial banks, the financial

institutions (FIs), encompassing term-lending institutions, investment

institutions, specialized financial institutions and the state-level development banks, Non-Bank

Financial Companies (NBFCs) and other market intermediaries such as the stock brokers and

money-lenders. The commercial banks and certain variants of NBFCs are among the oldest of

the market participants. The FIs, on the other hand, are relatively new entities in the financial

market place.

IMPORTANCE OF BANKING SECTOR IN AGROWING ECONOMY

In the recent times when the service industry is attaining greater importance compared to

manufacturing industry, banking has evolved as a prime sector providing financial services to

growing needs of the economy.


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Banking industry has undergone a paradigm shift from providing ordinary banking services in

the past to providing such complicated and crucial services like, merchant banking, housing

finance, bill discounting etc. This sector has become more active with the entry of new players

like private and foreign banks. It has also evolved as a prime builder of the economy by

understanding the needs of the same and encouraging the development by way of giving loans,

providing infrastructure facilities and financing activities for the promotion of entrepreneurs and

other business establishments.

For a fast developing economy like ours, presence of a sound financial system to mobilize and

allocate savings of the public towards productive activities is necessary. Commercial banks play

a crucial role in this regard.

The Banking sector in recent years has incorporated new products in their businesses, which are

helpful for growth. The banks have started to provide fee-based services like, treasury

operations, managing derivatives, options and futures, acting as bankers to the industry during

the public offering, providing consultancy services, acting as an intermediary between two-

business entities etc.At the same time, the banks are reaching

out to other end of customer requirements like, insurance premium payment, tax payment etc. It

has changed itself from transaction type of banking into relationship banking, where you find

friendly and quick service suited to your needs. This is possible with understanding the customer

needs their value to the bank, etc. This is possible with the help of well organized staff, computer

based network for speedy transactions, products like credit card, debit card, health card, ATM

etc. These are the present trend of services. The customers at present ask for convenience of

banking transactions, like 24 hours banking, where they want to utilize the services whenever

there is a need. The relationship banking plays a major and important role in growth, because the

customers now have enough number of opportunities, and they choose according to their

satisfaction of responses and recognition they get. So the banks have to play cautiously, else they

may lose out the place in the market due to competition, where slightest of opportunities are

captured fast.


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Another major role played by banks is in transnational business, transactions and networking.

Many leading Indian banks have spread out their network to other countries, which help in

currency transfer and earn exchange over it.

These banks play a major role in commercial import and export business, between parties of two

countries. This foreign presence also helps in bringing in the international standards of

operations and ideas. The liberalization policy of 1991 has allowed many foreign banks to enter

the Indian market and establish their business. This has helped large amount of foreign capital

inflow & increase our Foreign exchange reserve.

Another emerging change happening all over the banking industry is consolidation through

mergers and acquisitions. This helps the banks in strengthening their empire and expanding their

network of business in terms of volume and effectiveness.

EMERGING SCENARIO IN THE BANKING SECTOR

The Indian banking system has passed through three distinct phases from the time of inception.

The first was being the era of character banking, where you were recognized as a credible

depositor or borrower of the system. This era come to an end in the sixties. The

second phase was the social banking. Nowhere in the democratic developed world, was banking

or the service industry nationalized. But this was practiced in India. Those were the days when

bankers has no clue whatsoever as to how to determine the scale of finance to industry. The third

era of banking which is in existence today is called the era of Prudential Banking. The main

focus of this phase is on prudential norms accepted internationally.

SBI Group-


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The Bank of Bengal, which later became the State Bank of India. State Bank of India with its

seven associate banks commands the largest banking resources in India.

Nationalisation-

The next significant milestone in Indian Banking happened in late 1960s when the then Indira

Gandhi government nationalized on 19th July 1949, 14 major commercial Indian banks followed

by nationalisation of 6 more commercial Indian banks in 1980.

The stated reason for the nationalisation was more control of credit delivery. After this, until

1990s, the nationalised banks grew at a leisurely pace of around 4% also called as the Hindu

growth of the Indian economy.After the amalgamation of New Bank of India with Punjab

National Bank, currently there are 19 nationalised banks in India.

Liberalization-

In the early 1990s the then Narasimha rao government embarked a policy of

liberalization and gave licences to a small number of private banks, which came to be known as

New generation tech-savvy banks, which included banks like ICICI and HDFC. This move along

with the rapid growth of the economy of India, kick started the banking sector in India, which

has seen rapid growth with strong contribution from all the sectors of banks, namely Government

banks, Private Banks and Foreign banks. However there had been a few hiccups for these new

banks with many either being taken over like Global Trust Bank while others like Centurion

Bank have found the going tough.

The next stage for the Indian Banking has been set up with the proposed relaxation in the norms

for Foreign Direct Investment, where all Foreign Investors in Banks may be given voting rights

which could exceed the present cap of 10%, at pesent it has gone up to 49% with some

restrictions.


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The new policy shook the Banking sector in India completely. Bankers, till this time, were used

to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave

ushered in a modern outlook and tech-savvy methods of working for traditional banks.All this

led to the retail boom in India. People not just demanded more from their banks but also received

more.

CURRENT SCENARIO-

Currently (2007), overall, banking in India is considered as fairly mature in terms of supply,

product range and reach-even though reach in rural India still remains a challenge for the private

sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks

are considered to have clean, strong and transparent balance sheets-as compared to other banks

in comparable economies in its region. The Reserve Bank of India is an autonomous body, with

minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to

manage volatility-without any stated exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in

its services sector, the demand for banking services-especially retail banking, mortgages and

investment services are expected to be strong. M&As, takeovers, asset sales and much more

action (as it is unravelling in China) will happen on this front in India.


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In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak

Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed

to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any

stake exceeding 5% in the private sector banks would need to be vetted by them. Currently, India

has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the

Government of India holding a stake), 29 private banks (these do not have government stake;

they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a

combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA

Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the

banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

Banking in India

1 Central Bank Reserve Bank of India

2 Nationalised Banks

State Bank of India, Allahabad Bank, Andhra Bank,

Bank of Baroda, Bank of India, Bank of

Maharastra,Canara Bank, Central Bank of India,

Corporation Bank, Dena Bank, Indian Bank, Indian

overseas Bank,Oriental Bank of Commerce, Punjab and

Sind Bank, Punjab National Bank, Syndicate Bank,

Union Bank of India, United Bank of India, UCO

Bank,and Vijaya Bank.

3 Private Banks

Bank of Rajastan, Bharath overseas Bank, Catholic

Syrian Bank, Centurion Bank of Punjab, City Union

Bank, Development Credit Bank, Dhanalaxmi Bank,

Federal Bank, Ganesh Bank of Kurundwad, HDFC

Bank, ICICI Bank, IDBI, IndusInd Bank, ING Vysya

Bank, Jammu and Kashmir Bank, Karnataka Bank

Limited, Karur Vysya Bank, Kotek Mahindra Bank,

Lakshmivilas Bank, Lord Krishna Bank, Nainitak Bank,

Ratnakar Bank,Sangli Bank, SBI Commercial and


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International Bank, South Indian Bank, Tamil Nadu

Merchantile Bank Ltd., United Western Bank, UTI

Bank, YES Bank.

COMPANY PROFILE


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STATE BANK OF INDIA

Not only many financial institution in the world today can claim the antiquity and majesty of the

State Bank Of India founded nearly two centuries ago with primarily intent of imparting stability

to the money market, the bank from its inception mobilized funds for supporting both the public

credit of the companies governments in the three presidencies of British India and the privatecredit of the European and India merchants from about 1860s when the Indian economy book a

significant leap forward under the impulse of quickened world communications and ingenious

method of industrial and agricultural production the Bank became intimately in valued in the

financing of practically and mining activity of the Sub- Continent Although large European and

Indian merchants and manufacturers were undoubtedly thee principal beneficiaries, the small

man never ignored loans as low as Rs.100 were disbursed in agricultural districts against glad

ornaments. Added to these the bank till the creation of the Reserve Bank in 1935 carried out

numerous Central Banking functions.

Adaptation world and the needs of the hour has been one of the strengths of the Bank, In the post

depression exe. For instance when business opportunities become extremely restricted, rules

laid down in the book of instructions were relined to ensure that good business did not go post.


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Yet seldom did the bank contravenes its value as depart from sound banking principles to retain

as expand its business. An innovative array of office, unknown to the world then, was devised in

the form of branches, sub branches, treasury pay office, pay office, sub pay office and out

students to exploit the opportunities of an expanding economy. New business strategy was also

evaded way back in 1937 to render the best banking service through prompt and courteous

attention to customers.

A highly efficient and experienced management functioning in a well defined organizational

structure did not take long to place the bank an executed pedestal in the areas of business,

profitability, internal discipline and above all credibility A impeccable

financial status consistent maintenance of the lofty traditions if banking an observation of a high

standard of integrity in its operations helped the bank gain a pre- eminent status. No wonders the

administration for the bank was universal as key functionaries of India successive finance

minister of independent India Resource Bank of governors and representatives of chamber of

commercial showered economics on it.

Modern day management techniques were also very much evident in the good old days years

before corporate governance had become a puzzled the banks bound functioned with a high

degree of responsibility and concerns for the shareholders. An unbroken records of profits and a

fairly high rate of profit and fairly high rate of dividend all through ensured satisfaction,

prudential management and asset liability management not only protected the interests of the

Bank but also ensured that the obligations to customers were not met. The traditions of the past

continued to be upheld even to this day as the State Bank years itself to meet the emerging

challenges of the millennium.

PRODUCTS:

State Bank Of India renders varieties of services to customers through the following

products:


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Personal Loan Product:

y SBI Term Deposits

y SBI Recurring Deposits

y SBI Housing Loan

y SBI Car Loan

y SBI Educational Loan

y SBI Personal Loan

y SBI Loan For Pensioners

y Loan Against Mortgage Of Property

y Loan Against Shares & Debentures

y Rent Plus Scheme

y Medi-Plus Scheme

y Rates Of Interest

SBI Housing loan

SBI Housing loan or Mortgage Loan schemes are designed to make it simple for you to make a

choice at least as far as financing goes!

'SBI-Home Loans'

features:

y No cap on maximum loan amount for purchase/ construction of house/ flat


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y Option to club income of your spouse and children to compute eligible loan amount

y Provision to club expected rent accruals from property proposed to compute eligible loan

amount

Provision to finance cost of furnishing and consumer durables as part of project cost

y Repayment permitted upto 70 years of age

y Free personal accident insurance cover

y Optional Group Insurance from SBI Life at concessional premium (Upfront premium

financed as part of project cost)

y Interest applied on daily diminishing balance basis

y 'Plus' schemes which offer attractive packages with concessional interest rates to Govt.

Employees, Teachers, Employees in Public Sector Oil Companies.

y Special scheme to grant loans to finance Earnest Money Deposits to be paid to Urban

Development Authority/ Housing Board, etc. in respect of allotment of sites/ house/ flat

y No Administrative Charges or application fee

y Prepayment penalty is recovered only if the loan is pre-closed before half of the original

tenure (not recovered for bulk payments provided the loan is not closed)

y Provision for downward refixation of EMI in respect of floating rate borrowers who avail

Housing Loans of Rs.5 lacs and above, to avail the benefit of downward revision of

interest rate by 1% or more

y In-principle approval issued to give you flexibility while negotiating purchase of a

property

y Option to avail loan at the place of employment or at the place of construction

y Attractive packages in respect of loans granted under tie-up with Central/ State

Governments/ PSUs/ reputed corporates and tie-up with reputed builders (Please contact

your nearest branch for details)

SERVICES:

DOMESTIC TREASURY

SBI VISHWA YATRA FOREIGN TRAVEL CARD


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BROKING SERVICES

REVISED SERVICE CHARGES

ATM SERVICES

INTERNET BANKING

E-PAY

E-RAIL

RBIEFT

SAFE DEPOSIT LOCKER

GIFT CHEQUES

MICR CODES

FOREIGN INWARD REMITTANCES

ATM SERVICES

STATE BANK NETWORKED ATM SERVICES

State Bank offers you the convenience of over 8000 ATMs in India, the largest network in the

country and continuing to expand fast! This means that you can transact free of cost at the ATMs

of State Bank Group (This includes the ATMs of State Bank of India as well as the Associate

Banks namely, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of

Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, and State Bank of


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Travancore) and wholly owned subsidiary viz. SBI Commercial and International Bank Ltd.,

using the State Bank ATM-cum-Debit (Cash Plus) card.

KINDS OF CARDSACCEPTED AT STATE BANKATMs

Besides State Bank ATM-Cum-Debit Card and State Bank International ATM-Cum-Debit Cards

following cards are also accepted at State Bank ATMs: -

1) State Bank Credit Card

2) ATM Cards issued by Banks under bilateral sharing viz. Andhra Bank,Axis Bank, Bank of

India, The Bank of Rajasthan Ltd., Canara Bank, Corporation Bank, Dena Bank, HDFC Bank,

Indian Bank, Indus Ind Bank, Punjab National Bank, UCO Bank and Union Bank of India.

3) Cards issued by banks (other than banks under bilateral sharing) displaying Maestro, Master

Card, Cirrus, VISA and VISA Electron logos

4) All Debit/ Credit Cards issued by any bank outside India displaying Maestro, Master Card,

Cirrus, VISA and VISA Electron logos

Note: If you are a cardholder of bank other than State Bank Group, kindly contact your Bank for

the charges recoverable for usage of State Bank ATMs.

STA

TE BA

NK INTERNA

TIONA

LA

TM-CUM-DEBIT CA

RD


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Eligibility:

All Saving Bank and Current Account holders having accounts with networked branches and are:

y 18 years of age & above

y Account type: Sole or Joint with Either or Survivor / Anyone or Survivor

y NRE account holders are also eligible but NRO account holders are not.

Benefits:

y Convenience to the customers traveling overseas

y Can be used as Domestic ATM-cum-Debit Card

y Available at a nominal joining fee of Rs. 200/-

y Daily limit of US $ 1000 or equivalent at the ATM and US $ 1000 or equivalent at Point

of Sale (POS) terminal for debit transaction

y Purchase Protection*up to Rs. 5000/- and Personal Accident cover*up to Rs. 2,00,000/-

y Charges for usage abroad: Rs. 150+ Service Tax per cash withdrawal Rs. 15 + Service

Tax per enquiry.

State BankATM-cum-Debit (State Bank Cash plus) Card:

Indias largest bank is proud to offer you unparalleled convenience viz. State Bank ATM-cum-

Debit(Cash Plus) card. With this card, there is no need to carry cash in your wallet. You can nowwithdraw cash and make purchases anytime you wish to with your ATM-cum-Debit Card.

Get an ATM-cum-Debit card with which you can transact for FREE at any of over 8000 ATMs

of State Bank Group within our country.


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SBI GOLD INTERNATIONAL DEBIT CARDS

E-PAY

Bill Payment at Online SBI (e-Pay) will let you to pay your Telephone, Mobile, Electricity,

Insurance and Credit Card bills electronically over our Online SBI website

E-RAIL

Book your Railways Ticket Online.

The facility has been launched wef Ist September 2003 in association with IRCTC. The

scheme facilitates Booking of Railways Ticket Online.

The salient features of the scheme are as under:

y All Internet banking customers can use the facility.


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y On giving payment option as SBI, the user will be redirected to onlinesbi.com. After

logging on to the site you will be displayed payment amount, TID No. and Railway

reference no.

y . The ticket can be delivered or collected by the customer.

y The user can collect the ticket personally at New Delhi reservation counter .

y The Payment amount will include ticket fare including reservation charges,

courier charges and Bank Service fee of Rs 10/. The Bank service fee has been waived

unto 31st July 2006.

SAFE DEPOSIT LOCKER

For the safety of your valuables we offer our customers safe deposit vault or locker facilities at a

large number of our branches. There is a nominal annual charge, which depends on the size of

the locker and the centre in which the branch is located.

NRI HOME LOAN

SALIENT FEATURES

Purpose of Loan

Loans to NRIs & PIOs can be extended for the following purposes.

y To purchase/construct a new house / flat

y To repair, renovate or extend an existing house/flat


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y To purchase an existing house/flat

y To purchase a plot for construction of a dwelling unit.

y To purchase furnishings and consumer durables, as a part of the project cost

AGRICULTURE / RURAL

State Bank of India Caters to the needs of agriculturists and landless agricultural labourers

through a network of 6600 rural and semi-urban branches. here are 972 specialized branches

which have been set up in different parts of the country exclusively for the development of

agriculture through credit deployment. These branches include 427 Agricultural Development

Branches (ADBs) and 547 branches with Development Banking Department (DBDs) which cater

to agriculturists and 2 Agricultural Business Branches at Chennai and Hyderabad catering to the

needs of hitech commercial agricultural projects.

COMPARISON OF LOANS & ADVANCES OF STATE BANK OF INDIA WITH

OTHER PUBLIC AND PRIVATE SECTOR BANKS

For the year 2003:

Name Of the Banks Amt of advances

State Bank Of India 137758.46

Syndicate Bank 16305.35

Canara Bank 40471.60

Corporation Bank 12029.17

HDFC Bank 11754.86

ICICI Bank 52474.48

UTI Bank 7179.92


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For the year 2004:


State Bank Of India 157933.54Syndicate Bank 20646.93



HDFC Bank 17744.51

ICICI Bank 60757.36

UTI Bank 9362.95

0

20000

40000

60000

80000100000

120000

140000

Amount

1 2 3 4 5 6 7 8

Banks

loans And Advances for the year 2003

Series1

Series2


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For the year 2005:






HDFC Bank 25566.30

ICICI Bank 88991.75

UTI Bank 15602.92

0

20000

40000

60000

80000

100000

120000

140000

160000

Amount

1 2 3 4 5 6 7 8

Names of banks

loans and Advances for the year 2004

Series1

Series2


28/48

For the year 2006:






HDFC Bank 35061.26

ICICI Bank 143029.89

UTI Bank 22314.23

0

50000

100000

150000

200000

250000

Amount

1 2 3 4 5 6 7 8

Numbers of Banks

loans and Advances for the year 2005

Series1

Series2


29/48

For the year 2007:






HDFC Bank 46944.78

ICICI Bank 164484.38

UTI Bank 36876.48

0

50000

100000

150000

200000

250000

300000

Amount

1 2 3 4 5 6 7 8

Number of banks

loans and Advance for the year 2006

Series1

Series2


30/48

Interpretation:

Considering the above data we can say that year on year the amount of advances lent by

State Bank of India has increased which indicates that the banks business is really commendable

and the Credit Policy it has maintained is absolutely good. Whereas other banks do not have such

good business SBI is ahead in terms of its business when compared to both Public Sector and

Private Sector banks, this implies that SBI has incorporated sound business policies in its bank.

0

50000

100000

150000

200000

250000

300000

350000

Amount

1 2 3 4 5 6 7 8

Name of Banks

Loans & Advances for the year 2007

Banks

Amt


31/48

COMPARISON STUDY ON CREDIT RECOVERY MANAGEMENT

For the year 2004:

Name Of The Banks

Loans Issued Recovered Outstanding

State Bank Of India 157933.54 91601.4 66332.09

Syndicate Bank 20646.62 11562.11 9084.5

Canara Bank 47638.62 27058.74 20579.88

Corporation Bank 14889.72 7500 6389.72

HDFC Bank 17744.51 9670.75 8073.76


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ICICI Bank 60757,36 34631.70 26125.66

UTI Bank 9362.92 4615.55 4447.40

For the year 2005:

Name Of The Banks Loans Issued Recovered Outstanding


Syndicate Bank 26729.21 15422.75 11306.46

Canara Bank 60421.40 35044.42 25376.96

Corporation Bank 18546.36 10478.70 8067.67

HDFC Bank 25566.30 14291.56 11274.74

ICICI Bank 88991.75 52327.15 36664.60

UTI Bank 15602.92 8550.40 7052.52

0

20000

40000

60000

80000

100000

120000

140000

160000

Amount

Banks

Total loans for the year 2004

Name Of The Banks

State Bank Of India

Syndicate Bank

Canara Bank

Corporation Bank

HDFC Bank

ICICI Bank

UTI Bank


33/48

For the year 2006:



Syndicate Bank 36466.24 21879.74 14386.50

Canara Bank 79425.69 48446.67 30976.02


HDFC Bank 35061.26 20125.61 14936.10

ICICI Bank 143029.89 88392.47 54637.46

UTI Bank 22314.24 12429.03 9885.20

0

50000

100000

150000

200000

250000

Amount

Banks


Name Of The Banks

State Bank Of IndiaSyndicate Bank

Canara Bank

Corporation Bank

HDFC Bank

ICICI Bank

UTI Bank


34/48

For the year 2007:



Syndicate Bank 51670.44 31879.74 19790.7

Canara Bank 98505.69 68449.67 30056.02


HDFC Bank 46944.78 30125.16 16819.62

ICICI Bank 164484.38 98392.47 66091.91

UTI Bank 36876.48 22429.03 14447.45

0

50000

100000

150000

200000

250000

300000

amount

Banks

total loans for the year 2006

Name Of The Banks

State Bank Of India

Syndicate Bank

Canara Bank

Corporation Bank

HDFC Bank

ICICI Bank

UTI Bank


35/48

PRIORITY SECTORADVANCES OF BANKS

COMPARISON WITH OTHER PUBLIC SETOR BANKS

S.No Name of the Bank

Direct

Agriculture

Advances

Indirect

Agriculture

Advances

Total

Agriculture

Advances

Weaker

Section

Advances

Total

Priority

Sector

Advance

Amount Amount Amount Amount Amount

1 STATE BANK OF INDIA 23484 7032 30516 19883 82895

2 SYNDICATE BANK 4406.33 1464.64 5870.94 3267.71 14626.62

3 CANARA BANK 8348 3684 12032 4423 30937

4 CORPORATION BANK 963.58 971.22 1934.80 665.32 9043.74

0

50000

100000

150000

200000

250000

300000

350000

Amount

Banks


Name Of The Banks

State Bank Of India

Syndicate Bank

Canara Bank

Corporation Bank

HDFC Bank

ICICI Bank

UTI Bank


36/48

PRIORITY SECTORADVANCES OF PUBLIC SECTOR BANKS IN

PERCENTAGES ARE AS FOLLOWS:

S.No Name of the Bank

Direct

Agriculture

Advances

Indirect

Agriculture

Advances

Total

Agriculture

Advances

Weaker

Section

Advances

Total

Priority

Sector

Advances

% Net

Banks

Credit

% Net

Banks

Credit

% Net

Banks

Credit

% Net

Banks

Credit

% Net

Banks

Credit

1STATE BANK OF

INDIA10.5 3.1 13.6 8.9 37.0

2 SYNDICATE BANK 13.5 4.5 18.0 10.0 44.9

3 CANARA BANK 11.2 4.9 15.7 5.9 41.4

4 CORPORATION BANK 4.5 4.5 9.0 3.1 41.9

Priority sector Advance

0

10000

20000

30000

40000

50000

6000070000

80000

90000

1 2 3 4 5

Banks

Amount

sl.no

Name of the Bank

Direct Agri advance

Indirect Agri Advance

Total Agri Advance

Weakar section Advance

Total Priority sector

Advance


37/48

Interpretations:

y SBIs direct agriculture advances as compared to other banks is 10.5% of the Net BanksCredit, which shows that Bank has not lent enough credit to direct agriculture sector.

y In case of indirect agriculture advances, SBI is granting 3.1% of Net Banks Credit, which isless as compared to Canara Bank, Syndicate Bank and Corporation Bank. SBI has toentertain indirect sectors of agriculture so that it can have more number of borrowers for theBank.

y SBI has advanced 13.6% of Net Banks Credit to total agriculture and 8.9% to weaker sectionand 37% to priority sector, which is less as compared with other Bank.

Priority sector of Bank

0

5

10

15

20

25

30

35

40

45

50

1 2 3 4 5

Banks

Amount

Name of the Bank

Direct Agri advance

Indirect Agri Advance

Total Agri Advance

Weakar section Advance

Total Priority sector

Advance


38/48

Banking sectors in india

PUBLIC SECTOR BANKS-The public sector is the one whose working is in the hands ofthe government. the government holds a majority stake in public sector industries. Theiractivities are mostly influenced by the government. But due to privatization of publicsector industries, their nimbler has reduced to a significant extent. Indian railways,nuclear power industry, electricity board, etc.are still in cluded in the public sector. it maybe defined as "an enterprise where there is no private ownership but its activities are notmainly confined to the maximization of profits and private interests of the enterprise butit is influenced by social.

PRIVATE BANKS- are banks that are not incorporated. A private bank is owned byeither an individual or a general partner(s) with limited partner(s). In any such case, the

creditors can look to both the "entirety of the bank's assets" as well as the entirety of thesole-proprietor's/general-partners' assets.

FOREIGN SECTOR BANKS- Foreign sector banks are those banks which have theirhead office in other countries outside India and branch is working in India.

CO-OPERATIVE SECTOR

The co-operative sector is very much useful for rural people. The co-operative bankingsector is divided into the following categories.

a. State co-operative Banksb. Central co-operative banksc. Primary Agriculture Credit Societies

RRBsA rural bank is a financial institution that helps rationalize the developing regions ordeveloping country to finance their needs specially the projects regarding agriculturalprogress.


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Structure of Banking in India

Scheduled

BanksNon-Scheduled

Banks

Reserve Bank ofIndia

Scheduled

Commercial Banks

Scheduled

Cooperative Banks

Publicsectorbanks

PrivateSectorBanks

Foreign

Banks

RegionalRuralBanks

Scheduled UrbanCooperativeBanks

ScheduledStateCooperative

Banks

Old Private

Sector Banks

New Private

Sector Banks

Nationalized

Banks

SBI & its

Associates

Source-Banking &Finance Magazine


40/48

Indian banking system, over the years has gonethrough various phases after establishment of Reserve Bank of India in 1935 during theBritish rule, to function as Central Bank of the country. Earlier to creation of RBI, thecentral bank functions were being looked after by the Imperial Bank of India. With the 5-year plan having acquired an important place after the independence, the Govt. felt that

the private banks may not extend the kind of cooperation in providing credit support, theeconomy may need. In 1954 the All India Rural Credit Survey Committee submitted itsreport recommending creation of a strong, integrated, State-sponsored, State-partneredcommercial banking institution with an effective machinery of branches spread all overthe country. The recommendations of this committee led to establishment of first PublicSector Bank in the name of State Bank of India on July 01, 1955 by acquiring thesubstantial part of share capital by RBI, of the then Imperial Bank of India. Similarlyduring 1956-59, as a result of re-organisation of princely States, the associate banks camein to fold of public sector banking.

Another evaluation of the banking in India was undertaken during 1966 as theprivate banks were still not extending the required support in the form of credit disbursal,more particularly to the unorganised sector. Each leading industrial house in the countryat that time was closely associated with the promotion and control of one or morebanking companies. The bulk of the deposits collected, were being deployed in organisedsectors of industry and trade, while the farmers, small entrepreneurs, transporters , professionals and self-employed had to depend on money lenders who used to exploitthem by charging higher interest rates. In February 1966, a Scheme of Social Control wasset-up whose main function was to periodically assess the demand for bank credit fromvarious sectors of the economy to determine the priorities for grant of loans and advances

so as to ensure optimum and efficient utilisation of resources. The scheme however, didnot provide any remedy. Though a no. of branches were opened in rural area but thelending activities of the private banks were not oriented towards meeting the creditrequirements of the priority/weaker sectors.

On July 19, 1969, the Govt. promulgated Banking Companies(Acquisition and Transfer of Undertakings) Ordinance 1969 to acquire 14 biggercommercial bank with paid up capital of Rs.28.50 cr, deposits of Rs.2629 cr, loans ofRs.1813 cr and with 4134 branches accounting for 80% of advances. Subsequently in1980, 6 more banks were nationalised which brought 91% of the deposits and 84% of theadvances in Public Sector Banking. During December 1969, RBI introduced the LeadBank Scheme on the recommendations of FK Nariman Committee.

In the post-nationalisation period, there was substantial increase in the no. of branchesopened in rural/semi-urban centres bringing down the population per bank branch to12000 appx. During 1976, RRBs were established (on the recommendations of M.Narasimham Committee report) under the sponsorship and support of public sector banks


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as the 3rd component of multi-agency credit system for agriculture and ruraldevelopment. While the 1970s and 1980s saw the high growth rate of branch bankingnet-work, the consolidation phase started in late 80s and more particularly during early90s, with the submission of report by the Narasimham Committee on Reforms inFinancial Services Sector during 1991.

In these five decades since independence, banking inIndia has evolved through four distinct phases:

Foundation phase can be considered to cover 1950s and 1960s till thenationalisation of banks in 1969. The focus during this period was to lay the foundationfor a sound banking system in the country. As a result the phase witnessed thedevelopment of necessary legislative framework for facilitating re-organisation andconsolidation of the banking system, for meeting the requirement of Indian economy. Amajor development was transformation of Imperial Bank of India into State Bank of Indiain 1955 and nationalisation of 14 major private banks during 1969.

Expansion phase had begun in mid-60s but gained momentum after nationalisation ofbanks and continued till 1984. A determined effort was made to make banking facilitiesavailable to the masses. Branch network of the banks was widened at a very fast pacecovering the rural and semi-urban population, which had no access to banking hitherto.Most importantly, credit flows were guided towards the priority sectors. However thisweakened the lines of supervision and affected the quality of assets of banks and pressurized their profitability and brought competitive efficiency of the system.

Consolidation phase: The phase started in 1985 when a series of policy

initiatives were taken by RBI which saw marked slowdown in the branch expansion.Attention was paid to improving house-keeping, customer service, credit management,staff productivity and profitability of banks. Measures were also taken to reduce thestructural constraints that obstructed the growth of money market.

Reforms phase The macro-economic crisis faced by the country in 1991 pavedthe way for extensive financial sector reforms which brought deregulation of interestrates, more competition, technological changes, prudential guidelines on assetclassification and income recognition, capital adequacy, autonomy packages etc.

BANK NATIONALISATION & PUBLIC SECTOR BANKING

Organized banking in India is more than two centuries old. Till 1935 all the banks were


42/48

in private sector and were set up by individuals and/or industrial houses which collecteddeposits from individuals and used them for their own purposes. In the absence of anyregulatory framework, these private owners of banks were at liberty to use the funds inany manner, they deemed appropriate and resultantly, the bank failures were frequent.

Statistics bear testimony to the fact that the genesis of the economiccrisis in India, which surfaced in 1991, lies in the large and persistent macroeconomicimbalances that developed over the 1980s. Move towards State ownership of banksstarted with the nationalisation of RBI and passing of Banking Companies Act 1949. Onthe recommendations of All India Rural Credit Survey Committee, SBI Act was enactedin 1955 and Imperial Bank of India was transferred to SBI. keeping in view the objectivesof nationalisation, PSBs undertook expansion of reach and services. Resultantly thenumber of branches increased 7 fold (from 8321 to more than 60000 out of which 58% inrural areas) and no. of people served per branch office came down from 65000 in 1969 to10000. Much of this expansion has taken place in rural and semi-urban areas. The

expansion is significant in terms of geographical distribution. States neglected by private banks before 1969 have a vast network of public sector banks. The PSBs includingRRBs, account for 93% of bank offices and 87% of banking system deposits.

The General Bank of India was set up in the year 1786. Next came Bank ofHindustan and Bengal Bank. The East India Company established Bank of Bengal(1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units andcalled it Presidency Banks. These three banks were amalgamated in 1920 and ImperialBank of India was established which started as private shareholders banks, mostlyEuropeans. In 1865 Allahabad Bank was established and first time exclusively by

Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore.Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, CanaraBank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in1935.

During the first phase the growth was very slow and banks also experiencedperiodic failures between 1913 and 1948. There were approximately 1100 banks, mostlysmall. Reserve Bank of India was vested with extensive powers for the supervision ofbanking in India as the Central Banking Authority. During those days public has lesserconfidence in the banks. As an aftermath deposit mobilisation was slow. Abreast of it thesavings bank facility provided by the Postal department was comparatively safer.Moreover, funds were largely given to traders.

The following steps are taken by the government of India to regulate banking institutionsin the country.

y 1949 : Enactment of Banking Regulation Act.


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y 1955 : Nationalisation of State Bank of India.

y 1959 : Nationalisation of SBI subsidiaries.

y 1961 : Insurance cover extended to deposits.

y 1969 : Nationalisation of 14 major banks.

y 1971 : Creation of credit guarantee corporation.

y 1975 : Creation of regional rural banks.

y 1980 : Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India roseto approximately 800% in deposits and advances took a hugejump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faithand immense confidence about the sustainability of these institutions.

Nationalised Banks in India

Banking System in India is dominated by nationalised banks. The nationalisationof banks in India took place in 1969 by Mrs. Indira Gandhi the then prime minister. Themajor objective behind nationalisation was to spread banking infrastructure in rural areasand make available cheap finance to Indian farmers. Fourteen banks were nationalised in1969. Before 1969, State Bank of India (SBI) was the only public sector bank in India.

SBI was nationalised in 1955 under the SBI Act of 1955.

The second phase of nationalisation of Indian banks took place in the year1980. Seven more banks were nationalised with deposits over 200 crores. Nationalisedbanks dominate the banking system in India. The history of nationalised banks in Indiadates back to mid-20th century, when Imperial Bank of India was nationalised (under theSBI Act of 1955) and re-christened as State Bank of India (SBI) in July 1955. Then on19th July 1960, its seven subsidiaries were also nationalised with deposits over 200crores.

However, the major nationalisation of banks happened in 1969 by the then-PrimeMinister Indira Gandhi. The major objective behind nationalisation was to spreadbanking infrastructure in rural areas and make cheap finance available to Indian farmers.In the year 1980, the second phase of nationalisation of Indian banks took place, in which


44/48

7 more banks were nationalised with deposits over 200 crores. With this, the Governmentof India held a control over 91% of the banking industry in India. After thenationalisation of banks there was a huge jump in the deposits and advances with thebanks. At present, the State Bank of India is the largest commercial bank of India and isranked one of the top five banks worldwide. It serves 90 million customers through a

network of 9,000 branches.

After the 1991 economic crisis, the central government launched economic liberalization.India has progressed towards a modern market-based system and has a growing middleclass.

SIGNIFICANCE OF BANKS

The importance of a bank to modern economy, so as to enable them to develop, can bestated as follow:

(i) The banks collect the savings of those people who can save and allocate them to thosewho need it. These savings would have remained idle due to ignorance of the people anddue to the fact that they were in scattered and oddly small quantities. But banks collectthem and divide them in the portions as required by the different investors.

(ii) Banks preserve the financial resources of the country and it is expected of them thatthey allocate them appropriately in the suitable and desirable manner.

(iii) They make available the means for sending funds from one place to another and dothis in cheap, safe and convenient manner.

(iv) Banks arrange for payments by changes, order or bearer, crossed and uncrossed,which is the easiest and most convenient, besides they also care for making suchpayments as safe as possible.

(v) Banks also help their customers, in the task of preserving their precious possess-ionsintact and safe.

(vi) To advance money, the basis of modern industry and economy and essential forfinancing the developmental process, is governed by banks.

(Vii) It makes the monetary system elastic. Such elasticity is greatly desired in thepresent economy, where the phase of economy goes on changing and with such changes,demand for money is required. It is quite proper and convenient for the government andR.B.I. to change its currency and credit policy frequently, this is done by RBI, by


45/48

changing the supply of money with the changing the supply of money with the changingneeds of the public.

Although traditionally, the main business of banks is acceptance of deposits and lending,the banks have now spread their wings far and wide into many allied and even unrelated

activities.

The following are the Scheduled Banks in India (Public Sector):

y State Bank of Indiay State Bank of Bikaner and Jaipury State Bank of Hyderabady State Bank of Indorey State Bank of Mysorey

Andhra Banky Allahabad Banky Bank of Baroday Bank of Indiay Bank of Maharashtray Canara Banky Central Bank of Indiay Corporation Banky Dena Banky Indian Overseas Banky Indian Banky Oriental Bank of Commercey Punjab National Banky Punjab and Sind Banky Syndicate Banky Union Bank of Indiay United Bank of Indiay Vijaya Bank

The following are the Scheduled Banks in India (Private Sector):

y ING Vysya Bank Ltdy Axis Bank Ltdy Indusind Bank Ltdy ICICI Bank Ltdy HDFC Bank Ltd


46/48

y IDBI Bank Ltd

The financial sector assessment report, prepared by the Reserve Bank of India (RBI) and

the Central Government, has favoured the merger of public sector banks (PSBs) having agovernment holding bordering on 51 per cent with those having a much higher state-holding to ensure that their business growth does not suffer due to capital constraints.

The report indicated that PSBs would need additional capital to meet Basel II norms andmaintain an asset growth for the overall projected growth of the economy at 8 per centand consequent growth of risk-weighted assets (RWAs).

This has the potential to further aggravate a growing apprehension that public sectorbanks growth could be constrained in relation to other players.

The extent of additional capital required from the government is expected to bemanageable, provided the RWAs grow by within 25 per cent annually and total cost ofrecapitalisation would be lower than in most other countries.

Public banks deposit growth rise, private, foreign banks seedrop

The public sector banks have shown growth in their credits in comparison to their privateand foreign competitors. According to latest data released by the Reserve Bank of India(RBI) in due course the depositors have withdrawn funds from private and foreign banks


47/48

and are investing their money with public sector banks which has resulted in a significantdecline in growth of deposits with private and foreign banks.

In recent months big companies such as Infosys moved their deposits from private andforeign banks to public sector banks, largely because the state-owned players were

offering higher interest rates. While in December, the public sector players had takendecision to reduce bulk deposit and focus more on current account and saving accountbalances.

Public sector banks score over private ones

Public sector banks have long been chastised as the black sheep of the financialsector. But while a lot of experts might deride these institutions for their non-performingassets and lower productivity, at the end of the day, public sector banks have far happier

customers compared to their counterparts in the private sector.According to Reserve Bank of Indias (RBI's) latest report, Trend and Progress of

Banking in India, public sector banks rule the roost in customer satisfaction.

The report should make those singing hosannas for private sector banks sit up. Itshows that the State Bank of India (SBI) recorded 0.1 complaints per branch while thecorresponding figure for icici was 1.39more than 10 times that of sbi.Citibank fared far worse: it recorded a whopping 8.59 complaints per branch. Thesecomplaints were made to RBI grievance cell.

One, however, needs to look at another aspect before delivering the final verdict:profits per branch. Here, private banks fare better. For example, on an average, a Citibankbranch earns a net profit of Rs 18 crore annually. An average icici bank branch earns Rs4.5 crore, while an average sbi branch earns just Rs 50 lakh, annually. The standardresponse to such figures is that private sector banks are more efficient than their publicsector counterparts with foreign banks taking efficiency to astronomical levels.

But their rich rake-offs notwithstanding, the profit-complaint ratio of private sector banksis much lower than their much maligned public sector counterparts sbis profit-complaintratio of 4.1 for example is much higher than cici and Citibank


48/48

Public sector banks score over private onesAccording to the rbi report, private and foreign banks

actually score pretty high on customer complaints of the nasty variety: namely,harassment in recovery of loans. Foreign banks record 0.134 such complaints perbranchmore than 30 times the overall average. The corresponding numbers for new

private Indian banks is 0.021 and 0.003 for public sector banks.

The Consumer Voice survey also has private sector banks faring poorly in this respect.Only one public sector bank figures amongst the top five in the list of banks with highestnumber of disgruntled customers. Not surprisingly, Citibank tops the list.

Citibank also tops another dubious list: that of people fed up with tele-marketingexecutives pestering them. The bank accounts for 40 per cent of all such complaints.

CHALLENGES FOR PUBLIC SECTOR BANKS IN INDIA

1. Implementation of Basel II2. Implementation of latest technology3. How to reduce NPA4. Corporate governance5. Man power planning6. Talent management7. Loan waiver: A new challenge8. Risk management9. Transparency and disclosures10.Challenges in banking security11.Competition with private sector banks12.Growth in business13.Enhancing customer service

project on sbi bank

Documents