Introduction

The Organizational structure of any bank depends upon its functions and objectives it desires to attain with the performance of such functions. The organizational structure of the bank was simple and centralized in the past. All the decisions and authority was in the hands of head office. The growing network of branches, change in technology, e-banking activities, issue of credit cards, debit cards, ATMs etc. led to many important organizational changes. The organizational setup of modern commercial banks is functional-cum-territorial.

Banking Commission Recommendation on Restructuring Organizational Setup of Nationalized Banks

The following important recommendations are given by the Banking Commission : 1. The Organizational structure of all the nationalized banks should be on the lines of that of the State Bank of India. 2. The Commission recommended the constitution of regional boards with statutory powers and responsibilities as in case of SBI. 3. The head office of nationalized banks should be main concerned with planning and budgeting of setting up of goals for zonal offices, check their performance and guiding and supporting them in performing their functions. 4. There should be functional departments at head office level of nationalized bank dealing with budgeting and profit planning, economic research management development, public relations, central accounts, investment etc.

Contd..
5. 6.

7.

8.

The main function of top executive must be relating to policy formulation. A zonal office should be there to control and guide the 200 to 300 branches. The zonal offices should engage in activities of economic analysis, data collection, branch expansion, overall policies related to deposit mobilization etc. The branch manager should be relieved from day-to-day activities to enable him to devote sufficient time to plan, coordination, control, training, public contacts and business development. There should be separate departments for deposits, collections, remittances, safe deposit vaults, cash, clearing, advances etc. Each department should be headed by office-in-charge with sufficient authority.

Important Areas for Business Development

The consultants while devising the strategies for the Bank, have kept in view the following important areas for business development : 1. To retain and nurture high value corporate customers who contribute to the income and profit of bank. 2. To avail of the new opportunities that have opened up for the bank for undertaking leasing and project finance. 3. To develop mid-market business by financing a large number of midsized corporates, financing such companies would be a good strategy. 4. To focus on opportunities for mortgage lending as well as consumer durable finance, offered by growing middle class in the country and other schemes also. 5. To fully utilize banks large network of branches especially in rural and semi-urban areas.

Contd..
6. To fully utilize manpower resources who are well-

trained, skilled and innovative, this strength cannot be matched by any of its competitors. 7. To fully use SBIs international network of branches which has created the base on which a sound strategy for international business could be developed.

Earlier Restructuring
The State Bank of India, which inherited a given organizational structure from Imperial Bank of India in 1955, did organizational restructuring in 1971 and then in 1979 on the recommendations of a consultancy team of Indian Institute of Management, Ahmedabad. The changes were made with a view to provide promotional opportunities to staff members. In the process of restructuring, compactness of the organization was lost.

Contd..
y Following are the reasons which force SBI to change its

structure : a) Customers would be looking for products and services available internationally. b) The competition will increase and c) Deposit taking will become expensive. d) Technology will be the greatest challenge before the Indian banking system as it enters the new millennium.

Organizing Principles of SBI

Following are the organizing principles of SBI : 1. Lean and Integrative Corporate Centre - It was decided to setup a lean and Integrative Corporate Centre. The Centre should focus on policy making and long term planning. It will have no active role in daily operations of the bank. The Centre will add value in areas requiring cross business unit perspective or expertise. 2. Targeted Business Units The bank has decided to create targeted business units to deal with specific customer groups/business activities requiring focused attention. These special customer groups or businesses are required to be handled in an integrative manner. These targeted business units have been named as Strategic Business Units (SBUs). The concept of SBU has been developed within the existing LHO structure. However, some SBUs have been created outside LHO structure to meet distinct requirements of certain businesses.

Contd..
3.

Senior Management Forums It was decided to form a senior management team. The team shall have common performance goals and aspirations. The team shall have a clear accountability system for staff and business units performance. The form shall be organized on the basis of a simple structure.

As a result of this principle, following picture has emerged upon adopting a new team at senior management level : i. The new structure provides at the apex level a set of staff functionaries in the charge of policy planning functions. ii. Set of group executives having operational responsibility for the SBUs attached to staff functionaries. iii. All these executive function under the leadership of the chairman and together constitute the senior management team.

ORGANIZATIONAL STRUCTURE OF APEX MANAGEMENT OF SBI

CHAIRMAN

(A) CORPORATE CENTRE

CHIEF VIGILANCE OFFICER CHIEF CREDIT OFFICER CHIEF FINANCIAL OFFICER CORPORATE DEVELOPMENT OFFICER INSPECTION AUDIT DEPARTMENT CORPORATE BANKING GROUP NATIONAL BANKING GROUP ASSOCIATES & SUBSIDIARIES GROUP INTERNATIONAL BANKING GROUP

(B) BUSINESS GROUP

Organizing Principles of SBI

Contd..

4. Streamlining of Key Processes It was decided to identify the key processes in the bank and streamline them. The following key processes were identified for streamlininga) Credit and risk management. b) Improved balance sheet and performance management. c) Human resources and technology management. d) Inspection and audit system.

A. After Reconstructing, Apex Management will have

1. 2.

Chairman - the Chief Executive Officer Four Staff functionaries under the Corporate Centre, i.e.
a) b) c) d)

Dy. Managing Director and Corporate Development Officer. Dy. Managing Director and Chief Financial Officer. Dy. Managing Director and Chief Credit Officer. Dy. Managing Director (Inspection and Audit).

3.

The four Business Group which will oversee the operations of the bank would be headed by
a) b) c) d)

Managing Director and Group Executive Corporate Banking Group. Managing Director and Group Executive National Banking Group. Dy. Managing Director Associates and Subsidiaries. Dy. Managing Director International Banking

4. 5.

All the above eight functionaries report directly to the chairman and are independently responsible for matters relating to their group/staff area. In addition to above, the Chief Vigilance Officer will also report directly to the Chairman.