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History of State Bank of India

History of State Bank of India

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Published by: Aamin Khan on Aug 03, 2011
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HISTORY OF STATE BANK OF INDIA The roots of the State Bank of India rest in the first decade of 19th

century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay (incorporatedon 15 April 1840) and the Bank of Madras (incorporated on 1 July1843). All three Presidency banks were incorporated as joint stock companies, and were the result of the royal charters. These three banks received the exclusive right to issue paper currency in 1861with the Paper Currency Act, a right they retained until the formationof the Reserve Bank of India. The Presidency banks amalgamated on27 January 1921, and the reorganized banking entity took as its name Imperial Bank of India. The Imperial Bank of India continued to remain a joint stock company. Pursuant to the provisions of the State Bank of India Act (1955), the Reserve Bank of India, which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 30 April 1955 the Imperial Bank of India became the State Bank of India. TheGovt. of India recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest because the RBI is the country's banking regulatory authority Offices of the Bank of Bengal In 1959 the Government passed the State Bank of India (SubsidiaryBanks) Act, enabling the State Bank of India to take over eight formerStateassociated banks as its subsidiaries. On Sept 13, 2008,State Bank of Saurashtra, one of its Associate Banks, merged with State Bank of India. SBI has acquired local banks in rescues. For instance, in 1985, itacquired Bank of Cochin inKerala, which had 120 branches. SBI wasthe acquirer as its affiliate, State Bank of Travancore, already had anextensive network in Kerala ASSOCIATE BANKS OF STATE BANK OF INDIA There are six associate banks that fall under SBI, and together thesesix banks constitute the State Bank Group. All use the same logo of ablue keyhole and all the associates use the "State Bank of" namefollowed by the regional headquarters' name. Originally, the thenseven banks that became the associate banks belonged toprincely

1960. More than 8500 ATMs across India. though it was marred by the Harshad Mehta scam in 1992. The first step along these linesoccurred on 13 August 2008 when State Bank of Saurashtra mergedwith State Bank of India. The bank has one of the largestATM networks in theregion.Bahrain.448. most notably during Chandra Shekhar's tenure as Prime Minister of India. and .77% is ownedby individuals. the bank has sought to expand its overseas operations by buying foreign banks. Furthermore on 19th June 2009 the SBI boardapproved the merger of its subsidiary. GROWTH OF STATE BANK OF INDIA State Bank of India has often acted as guarantor to theIndian Government. Hong Kong. SBI¶s total assets will inch very close to the Rs 10-lakhcrore mark. The acquisition of State Bank of Indore will help SBI add 470branches to its existing network of 11. and Tokyo. Los Angeles.3% in the bank. following theacquisition. With 11. In tune with the first Five Year Plan. There has been a proposal to merge all the associate banks into SBI to create a "megabank" and streamline operations. agencies or offices in 32 countries. Sydney.Dhaka. It has offshore banking units in theBahamas.448 branches and a further 6500+ associate bank branches. Also. who held the shares prior to its takeover by thegovernment. Johannesburg. In recent years.states until the government nationalized them between October. the government integrated these banksinto State Bank of India to expand its rural outreach. State Bank of Indiahas electronically networked all of its branches under Core BankingSystem (CBS). andSingapore. the SBI has extensive coverage. Total assets of SBI and the State Bank of Indore stood atRs 998. which reduced the number of state banksfrom seven to six. emphasizing thedevelopment of rural India. withitself. It is the only Indian bank to feature in the top 100 world banks in theFortune Global 500 rating and various other rankings NTERNATIONAL PRESANCE OF SBI The bank has 92 branches. SBI holds 98.Frankfurt. 1959 and May. New York. and the balance 1.119 crore as on March 2009. It has branches of the parent inColombo. Muscat. London and environs. Male in the Maldives. Osaka. The State Bank of Indiahas had steady growth over its history. State Bank of Indore.

the country¶s oldest Bank and a premier interms of balance sheet size. with Canara Bank owning the rest. named State Bank of India (California). to expand its Rural Banking base. In Nepal SBI owns 50% of Nepal SBI Bank. SanDiego and Bakersfield. The Bank is forging ahead with cutting edge technology andinnovative new banking models. San Jose. SBI operates several foreign subsidiaries or affiliates.Mobile Banking. Custodial Services. which has branches throughout the country. market capitalizationand profits is today going through a momentous phase of Change andTransformation ± the two hundred year old Public sector behemoth istoday stirring out of its Public Sector legacy and moving with anagility to give the Private and Foreign Banks a run for their money. four in the greaterToronto area. and three in British Columbia. number of branches. Private Equity. Canoga Park. In Moscow SBI owns 60% ofCommercial Bank of India. State Bank of India (California). whichnow has eight branches . InIndonesia it owns 76% of PT Bank Indo Monex. structured products etc ± each one of these initiatives havinga huge potential for growth. AdvisoryServices.and State Bank of India (Canada). 2009.looking at the vast . Artesia. The bank is entering into many new businesses with strategic tie ups ± Pension Funds. This bank began in 1981 asthe Indo-Nigerian Merchant Bank and received permission in 2002 tocommence retail banking.seven branches in the state of California andone in Washington DC which was recently opened on 23rdNovember. General Insurance. The seven branches in the state of California arelocated in Los Angeles. Fresno. The Canadian subsidiary too dates to 1982and has seven branches.representative offices inBhutan and Cape Town. It hastwo subsidiaries in North America. Point of Sale Merchant Acquisition. State Bank of India already has a branch inShanghai and plans to open one up inTianjin JOURNEY AND VISION OF SBI The State Bank of India. In 1982. SBI operates as INMB Bank. the bank established itsCalifornia subsidiary. It now has five branches in Nigeria. In 1990 itestablished an offshore bank. State Bank of India (Mauritius). InNigeria.

SBILife and SBI Cards . debit cards. Throughout all this change. It is the only Indian bank to feature in theFortune 500 list. etc. It is also focusing at the top end of the market. andhas awarded the . In a recently concluded mass internalcommunication programme termed µParivartan¶ the Bank rolled outover 3300 two day workshops across the country and covered over130. attitudes and take all employees together on this excitingroad to Transformation. The Bank is changing outdated front and back end processes tomodern customer friendly processes to help improve the totalcustomer experience. The CNN IBN. It is in the process of raising capital for its growthand also consolidating its various holdings. and other electronicchannels such as Internet banking. It is consolidating its globaltreasury operations and entering into structured products andderivative instruments. SBI Factors.The Bank is also in the process of providing complete paymentsolution to its clientele with its over 8500 ATMs. the State Bank of India is undertaking.000 villages in the next two years.untapped potential in the hinterland and proposesto cover 100. SBI DFHI. the Bank is the largest provider ofinfrastructure debt and the largest arranger of external commercial borrowings in the country. Theworkshops fired the imagination of the employees with some otherbanks in India as well as other Public Sector Organizations seeking toemulate the programme. the Bank is also attempting to change oldmindsets. The bank is also looking at opportunities to grow in size in India aswell as Internationally.to drive home the message of Change and inclusiveness. With four national level Apex Training Colleges and 54 learningCentres spread all over the country the Bank is continuously engagedin skill enhancement of its employees.today it offers the largest banking network to the Indian customer.000 employees in a period of 100 days using about 400 Trainers. Network 18 recognized this momentoustransformation journey. on whole sale bankingcapabilities to provide India¶s growing mid / large Corporate with acomplete array of products and services. With about 8500 of its own 10000 branches andanother 5100 branches of its Associate Banks already networked. It presently has 82 foreign offices in 32countries across the globe. It has also 7 Subsidiaries in India ± SBICapital Markets. Some of the trainingprogrammes are attended by bankers from banks in other countries. SBICAP Securities.forming a formidable group in the IndianBanking scenario. Today. mobile banking.

Bhatt in January 2008 EVOLUTION OF SBI The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank ofCalcutta in Calcutta on 2 June 1806. the decision to allow the Bank of Bengalto issue notes. to itsChairman. joint-stock banking in India. even investment onbehalf of the clients) by the indigenous bankers had not spread as . shaped by ideasculled from similar developments in Europe and England. O. viz. it was the first joint-stock bankof British India sponsored by the Government of Bengal. which would be accepted for payment of publicrevenues within a restricted geographical area. Three years later the bankreceived its charter and was re-designed as the Bank of Bengal (2January 1809).prestigious Indian of the Year ± Business. the three presidency banks cameinto existence either as a result of the compulsions of imperialfinance or by the felt needs of local European commerce and werenot imposed from outside in an arbitrary manner to moderniseIndia's economy. This right of noteissue was very valuable not only for the Bank of Bengal but also itstwo siblings. It meant anaccretion to the capital of the banks. however. Mr. So was the associatedinnovation in banking. The concept of depositbanking was also an innovation because the practice of acceptingmoney for safekeeping (and in some cases. ESTABLISHMENT The establishment of the Bank of Bengal marked the advent of limited liability. A unique institution. Primarily Anglo-Indian creations. These three banks remained at theapex of modern banking in India till their amalgamation as theImperial Bank of India on 27 January 1921. Their evolution was. P. and wasinfluenced by changes occurring in the structure of both the localtrading environment and those in the relations of the Indianeconomy to the economy of Europe and the global economicframework. The Bankof Bombay (15 April 1840) and the Bank of Madras (1 July 1843)followed the Bank of Bengal. the Banks of Bombay and Madras. a capital on which theproprietors did not have to pay any interest.

as far as the government was concerned. one lakh and the period ofaccommodation confined to three months only. keeping cashaccounts and receiving deposits and issuing and circulating cashnotes. Lending against shares of the banks oron the mortgage of houses. which wasin turn endorsed to the bank. which began to be financed later.forbidden. The three banks were governed by royal charters. one of whom was elected as the president of the board. The security for suchloans was public securities. treasure.bullion. jewels.which managed the affairs of each bank. The members of the board of directors.four-fifth of which were privately subscribed and the rest owned bythe provincial government. however. The rest were government nominees. were eitherpledged or hypothecated to the bank. But. ASSOCIATE BANKSOF SBI AND IT. andespecially upto the time that the three presidency banks had a rightof note issue. Demand promissory noteswere signed by the borrower in favour of the guarantor. . were mostly proprietarydirectors representing the large European managing agency housesin India. mule twist and silk goods were also granted but suchfinance by way of cash credits gained momentum only from thethird decade of the nineteenth century. cotton. Loans were restricted to Rs. bank notes and government balances made up the bulkof the investible resources of the banks. invariably civilservants. includingtea.ageneral habit in most parts of India. cottonpiece goods. which wererevised from time to time. land or other real property was. salt woollens. sugar and jute. for a long time. But the main function of the three banks.Loans against goods like opium. plate.S BUSINESS State Bank of India has the following six Associate Banks (ABs) with controlling interest ranging from 75% to 100%. BUSINESS The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities. or goods 'not of a perishable nature'and no interest could be charged beyond a rate of twelve per cent. was to help the latter raiseloans from time to time and also provide a degree of stability to theprices of government securities. Indians were the principal borrowers against deposit of Company'spaper. All commodities. indigo. Each charter provided for a share capital. commonly called Company's Paper. while the business of discounts on private as well as salarybills was almost the exclusive monopoly of individuals Europeansand their partnership firms.

1.State Bank of Bikaner and Jaipur (SBBJ) . providing value added services to clientele. Deposits and advancesgrew by 19% and 22%. Products Personal Banking SBI Term Deposits SBI Loan For Pensioners SBI Recurring Deposits Loan Against Mortgage Of Property SBI Housing Loan Loan Against Shares & Debentures SBI Car Loan Rent Plus Scheme SBI Educational Loan Medi-Plus Scheme And Services y y y y y Other Services Agriculture/Rural Banking NRI Services ATM Services Demat Services Corporate Banking Internet Banking Mobile Banking International Banking y y y y y y y y . State Bank of Patiala (SBP) 6.61% as on 31st March 2008. respectively.State Bank of Travancore (SBT) The six ABs have a combined network of 4502 branches in Indiawhich are fully computerized and 2410 ATMs networked with SBIATMs.69 crores. State Bank of Indore (SBIr) 4.State Bank of Hyderabad (SBH) 3. 2.2277. State Bank of Mysore (SBM) 5. The combined net profit of these banks increased by 12% over theprevious year to reach Rs. The combinedNet NPA ratio of all ABs was at 0. during the year.

The Bank also facilitates the free transaction of money at the ATMs of State Bank Group. primary dealership in government securities. factoring services. fund management. Subsidiaries The State Bank Group includes a network of eight banking subsidiaries and several non-banking subsidiaries. Through the establishments. State Bank of Hyderabad. State Bank of Indore. it offers various services including merchant banking services. The eight banking subsidiaries are: State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of India (SBI) State Bank of Indore (SBIR) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT) y y y y y y y y . which includes the ATMs of State Bank of India as well as the Associate Banks ± State Bank of Bikaner & Jaipur. etc. You may also transact money through SBI Commercial and International Bank Ltd by using the State Bank ATMcum-Debit (Cash Plus) card. credit cards and insurance.y y y y y y y Safe Deposit Locker RBIEFT E-Pay E-Rail SBI Vishwa Yatra Foreign Travel Card Broking Services Gift Cheques ATM Services SBI provides easy access to money to its customers through more than 8500 ATMs in India.

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