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Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). 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 1861 with the Paper Currency Act, a right they retained until the formation of the Reserve Bank of India. The Presidency banks amalgamated on 27 January 1921, and the re-organized banking entity took as its name Imperial Bank of India. The Imperial Bank of India remained a joint stock company. Pursuant to the provisions of the State Bank of India Act of 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. The government 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. In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, enabling the State Bank of India to take over eight former state-associated banks as its subsidiaries. On 13 September 2008, the State Bank of Saurashtra, one of its associate banks, merged with the State Bank of India. SBI has acquired local banks in rescues. For instance, in 1985, it acquired the Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the State Bank of Travancore, already had an extensive network in Kerala. EVOLUTION
The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921. Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework. Establishment The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues
Demand promissory notes were signed by the borrower in favour of the guarantor. including tea. Loans were restricted to Rs. The three banks were governed by royal charters. It meant an accretion to the capital of the banks. the Banks of Bombay and Madras. sugar and jute. Major change in the conditions A major change in the conditions of operation of the Banks of Bengal. keeping cash accounts and receiving deposits and issuing and circulating cash notes. invariably civil servants. a capital on which the proprietors did not have to pay any interest. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings. Loans against goods like opium. which were revised from time to time. Indians were the principal borrowers against deposit of Company's paper. Lending against shares of the banks or on the mortgage of houses. cotton piece goods. which managed the affairs of each bank. The rest were government nominees. But the main function of the three banks. were mostly proprietary directors representing the large European managing agency houses in India. plate. four-fifth of which were privately subscribed and the rest owned by the provincial government. however.one lakh and the period of accommodation confined to three months only. land or other real property was. commonly called Company's Paper. But as soon as the three presidency bands were assured of the free use of government Treasury balances at . were either pledged or hypothecated to the bank. Each charter provided for a share capital. All commodities. The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. Business The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities. was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities. salt woollens. as far as the government was concerned. Bombay and Madras occurred after 1860. But. treasure. The members of the board of directors. bullion. indigo. or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. and especially upto the time that the three presidency banks had a right of note issue. even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. which began to be financed later. cotton.within a restricted geographical area. The security for such loans was public securities. one of whom was elected as the president of the board. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases. bank notes and government balances made up the bulk of the investible resources of the banks. mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India. forbidden. jewels. for a long time. which was in turn endorsed to the bank. With the passing of the Paper Currency Act of 1861.
the branches. it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland centres of the presidency. Bank of Madras Note Dated 1861 for Rs. in the case of the Bank of Madras. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries. the Bank of Madras went into the financing of small-scale industries in a way which had no parallel elsewhere. manufacturing and mining activity in the subcontinent. however. The Government could lend to the presidency banks from such Reserve Treasuries but the latter could look upon them more as a favour than as a right. All these resulted in the expansion of India's international trade more than six-fold. seasonal branches and sub agencies. terminated. The proprietary connection of the Government was. a portion of which found its way into the foreign markets. which came into operation on 1 May 1876. The pace of expansion witnessed in the previous decade fell sharply although. the hills of Assam and the Nilgiris into regions of estate agriculture par excellence. Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops.places where they would open branches. Not only was such business . India witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. Bombay and Madras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. and the custody of a part of the government balances. Tea and coffee plantations transformed large areas of the eastern Terais. they embarked on branch expansion at a rapid pace. though the banks continued to hold charge of the public debt offices in the three presidency towns. New irrigation networks in Madras. The Act also stipulated the creation of Reserve Treasuries at Calcutta. the Banks of Bombay and Madras had fifteen each. Bank of Madras The decision of the Government to keep the surplus balances in Reserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the growth of new branches after 1876. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading. agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen branches including its head office. By 1876. But the three banks were rigorously excluded from any business involving foreign exchange. the Bank of Madras went into the financing of large modern manufacturing industries. brought the three presidency banks under a common statute with similar restrictions on business.10 Presidency Banks Act The presidency Banks Act.
Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. This exclusion continued till the creation of the Reserve Bank of India in 1935. But it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. investments and advances. . The management of the bank clearing houses also continued with it at many places where the Reserve Bank did not have offices. the increases in some cases amounting to more than six-fold. Bank of Bombay Presidency Banks of Bengal The presidency Banks of Bengal. The triad had been transformed into a monolith and a giant among Indian commercial banks had emerged. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and trustee business for the first time.considered risky for these banks. it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. reserves. The new bank took on the triple role of a commercial bank. It also acted as a bankers' bank by holding their surplus cash and granting them advances against authorised securities. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of government business at centres at which the central bank was not established. The bank was also the biggest tenderer at the Treasury bill auctions conducted by the Reserve Bank on behalf of the Government. What eventually emerged was a 'half-way house' combining the functions of a commercial bank and a quasi-central bank. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life. a banker's bank and a banker to the government. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. Imperial Bank The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices. which held government deposits. deposits. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But this creation was preceded by years of deliberations on the need for a 'State Bank of India'. The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank.
94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. the development of rural India was given the highest priority.275. The concept of banking as mere repositories of the community's savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking subserving the growing and diversified financial needs of planned economic development. the State Bank of India (Subsidiary Banks) Act was passed in 1959. First Five Year Plan In 1951. The State Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of national development. Later. .11. and integrating with it.72. In order. the All India Rural Credit Survey Committee recommended the creation of a state-partnered and statesponsored bank by taking over the Imperial Bank of India. The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices comprising branches. sub offices and three Local Head Offices inherited from the Imperial Bank. when the First Five Year Plan was launched. to serve the economy in general and the rural sector in particular. the Imperial Bank had a capital base (including reserves) of Rs. the former state-owned or state-associate banks.Stamp of Imperial Bank of India When India attained freedom. therefore. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates). deposits and advances of Rs.14 crores and Rs. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State.85 crores.
and the SBI Indore branches started functioning as SBI branches on 26 August 2010.) The acquisition of State Bank of Indore added 470 branches to SBI's existing network of 12. the government integrated these banks into the State Bank of India system to expand its rural outreach. reducing the number of state banks from seven to six. Originally.3% in State Bank of Indore.448 and over 21. State Bank of Indore. with itself. emphasising the development of rural India. NON BANKING SUBSIDIARIES Apart from its five associate banks.000 ATMs. SBI General Insurance . (Individuals who held the shares prior to its takeover by the government hold the balance of 1. Then on 19 June 2009 the SBI board approved the merger of its subsidiary. the then seven banks that became the associate banks belonged to princely states until the government nationalised them between October 1959 and May 1960. The total assets of SBI and the State Bank of Indore stood at 9. SBI's total assets will inch very close to the 10 trillion mark. SBI holds 98.190 million as of March 2009.981. In tune with the first Five Year Plan. all use the same logo of a blue circle and all the associates use the "State Bank of" name.ASSOCIATE BANKS SBI has five associate banks. The process of merging of State Bank of Indore was completed by April 2010. The first step towards unification occurred on 13 August 2008 when State Bank of Saurashtra merged with SBI. Ltd. following the acquisition. (SBICPSL) SBI DFHI Ltd SBI Life Insurance Company Ltd. Also.77%. SBI also has the following non-banking subsidiaries: SBI Capital Markets Ltd SBI Funds Management Pvt Ltd SBI Factors & Commercial Services Pvt Ltd SBI Cards & Payments Services Pvt. There has been a proposal to merge all the associate banks into SBI to create a "mega bank" and streamline operations. followed by the regional headquarters' name: State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore Earlier SBI had only seven associate banks that constituted the State Bank Group.
drafts.The State Bank of India facilitates remittance of money from one place to another.500 branches. Bhatt on 31 March 2011. gold and government securities.It lends money to merchants and manufacturers for short periods. including branches that belong to its associate banks.000th ATM was inaugurated by the then Chairman of State Bank Shri O. SBI has 21. As an agent. India's number one ADB is in bellary i e State bank of India bellary ADB OBJECTIVES AND FUNCTIONS The State Bank of India acts as an agent of the Reserve Bank of India and performs the following functions: (1) Borrows money:. dividends interest. the bank provides loans to commercial bank when required and also rediscount their bill. The Bank also manages the debts floated by the State Governments. It purchases and sells securities on behalf of its customer.000+ ATMs (25. cloth. It also helps in the transfer on the funds of the State and Central Government. (4) Government’s Bank:. cotton. WORKING AND PROGRESS The State Bank of India.The Bank borrows money from the public by accepting deposits such as current account deposits. It also lends to farmers and co-operative institutions.000 ATMs. and SBI group(including associate banks) has about 45. salaries and pensions on behalf of its customers.The State Bank of India also acts as the agent of theReserve Bank of India. (6) Subsidiary functions: . SBI has about 26.The State Bank performs various subsidiary services also. In discharging this responsibility. wheat. market capitalization and profits is today going through a momentous phase of Change and Transformation – the two hundred year old Public sector .P. number of branches. oil-seeds. fixed deposits and savings deposits. The Bank can lend against agricultural bills upto a maximum period of fifteen months and incase of other bills upto a maximum period of six months. (2) Lends money:. It lends mostly on the security of easily realizable commodities like rice. SBI includes 99345 offices in India.BRANCHES OF SBI State Bank of India has 172 foreign offices in 37 countries across the globe. (5) Remittance:. It receives valuables and documents for safe custody and maintains safe deposit vaults. It collects checks. (3) Banker’s Bank:-The State Bank of India acts as the banker’s bank. the day of his retirement). It also acts as the clearing house of the commercial bank. the State Bank of India maintains the treasuriesof the State Government. the country’s oldest Bank and a premier in terms of balance sheet size. bill of exchange.
Bhatt in January 2008. debit cards.000 employees in a period of 100 days using about 400 Trainers. It has also 7 Subsidiaries in India – SBI Capital Markets.000 villages in the next two years. SBI DFHI. to drive home the message of Change and inclusiveness. etc. The workshops fired the imagination of the employees with some other banks in India as well as other Public Sector Organizations seeking to emulate the programme. It is also focusing at the top end of the market. Custodial Services. The elephant has indeed started to dance. . Throughout all this change. Mobile Banking. The CNN IBN. mobile banking.behemoth is today stirring out of its Public Sector legacy and moving with an agility to give the Private and Foreign Banks a run for their money. P. Mr. the State Bank of India is undertaking. to expand its Rural Banking base. SBICAP Securities. the Bank is also attempting to change old mindsets. In a recently concluded mass internal communication programme termed ‘Parivartan’ the Bank rolled out over 3300 two day workshops across the country and covered over 130. It is in the process of raising capital for its growth and also consolidating its various holdings. today it offers the largest banking network to the Indian customer. It is the only Indian bank to feature in the Fortune 500 list. The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience. to its Chairman. With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked. The Bank is also in the process of providing complete payment solution to its clientele with its over 21000 ATMs. attitudes and take all employees together on this exciting road to Transformation. and other electronic channels such as Internet banking. structured products etc – each one of these initiatives having a huge potential for growth. SBI Life and SBI Cards . Private Equity. SBI Factors. Some of the training programes are attended by bankers from banks in other countries. Today. It presently has 173 foreign offices in 33 countries across the globe. It is consolidating its global treasury operations and entering into structured products and derivative instruments. The bank is also looking at opportunities to grow in size inIndia as well as Internationally. With four national level Apex Training Colleges and 54 learning Centres spread all over the country the Bank is continuously engaged in skill enhancement of its employees. Point of Sale Merchant Acquisition. General Insurance. the Bank is the largest provider of infrastructure debt and the largest arranger of external commercial borrowings in the country.forming a formidable group in the Indian Banking scenario. looking at the vast untapped potential in the hinterland and proposes to cover 100. and has awarded the prestigious Indian of the Year – Business. The bank is entering into many new businesses with strategic tie ups – Pension Funds. on whole sale banking capabilities to provide India’s growing mid / large Corporate with a complete array of products and services. Network 18 recognized this momentous transformation journey. O. The Bank is forging ahead with cutting edge technology and innovative new banking models. Advisory Services.
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