Strategy can be defined as the periodic changes a business must introduce to its structure and operations in order to ensure continuity in the face of environmental changes. The strategic evolution of a business can thus be understood in terms of major social institutions such as the State, the market, community or civil society and their interrelationships that may have a bearing on its working and thereby the achievement of the principle objectives of its establishment. Historians recognize moments of profound change when the balance of power or influence shifts between these institutions. The SBI is a dynamic organization and has been continuously changing its form to adapt to its environment. Here, we have examined its vicissitudinal nature with respect to three key environmental factors: •Ownership and governance •Business processes •Structures and systems.

Mission Statement:
To retain the its position as the premier Indian financial services. It also aims to be a group with world class standards and significant global business commitments to excellence in customer, shareholder and employee satisfaction so as to play a leading role in expanding and diversifying financial services while continuing emphasis on its development banking role.

To be a premier Indian financial services group with global perspective, world class standard of the efficiency and professionalism and also its core institutional values, To retain its position in the country as a pioneer in developing countries, It also aims to maximize its shareholders value through high sustained earnings per share, To become an institution with a culture of mutual care and commitment. It also focuses on a pleasant working environment to have continuous learning opportunities.

Values: •Excellence in customer service •Profit orientation •Belonging and commitment to bank •Fairness in all dealings and relations •Risk taking and innovations •Team playing •Learning and renewal •Integrity •Transparency and discipline in policies and systems .

Following is a list of major strategic changes introduced at the bank. . SBI has continuously rechristened itself. These have been dealt with in detail in successive paragraphs.OVERVIEW OF VARIOUS AVATARS OF SBI With the view of adapting to the extra-institutional changes mentioned above and maintaining continuity.

the State Bank of India (SBI) was established on 1 July 1955. Subsequently. on 27 January 1921. As a result. sector bank. It was the first ever joint-stock bank of the British India. with its operations carried out by the480 offices comprising branches. Subsequently. on 2 June 1806.In order to serve the economy as a whole and rural sector in particular. International Banking. Later on.The State Bank of India is a govt. GENERIC STRATEGIES ADOPTED BY STATE BANK OF INDIA: . Instead of serving as mere repositories of the community's savings and lending to creditworthy parties. the All India Rural Credit Survey Committee recommended the formation of a state-partnered and state-sponsored bank. until when they were amalgamated to form the Imperial Bank of India. the Bank of Bombay (established on 15 April 1840) and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal. the State Bank of India (Subsidiary Banks) Act was passed in 1959.The State Bank of India emerged as a pace-setter. It began with the establishment of the Bank of Calcutta in Calcutta. the State Bank of India catered to the needs of the customers. by banking purposefully Key Areas of Operations The business operations of SBI can be broadly classified into the key income generating areas Such as National Banking. three years later. the former stateowned or state-associate banks. on 2 January 1809. an Act was passed in the Parliament of India in May 1955. sub offices and three Local Head Offices. Hence the committee proposed the takeover of the Imperial Bank of India. & Treasury operations. inherited from the Imperial Bank. These three banks dominated the modern banking scenario in India. The evolution of State Bank of India can be traced back to the first decade of the 19th century. and integrating with it. The bank was redesigned as the Bank of Bengal. Corporate Banking. established under the sponsorship of the Government of Bengal.

• Institution for advanced learning: to provide state of the art training in financial products to middle level and senior level executives. So in term of decision making centralization is high and low decentralization where in the managers have some powers to take decision but at a limited base. model business strategies. ➢ Focus on a lean structure and ➢ Technological up gradation. SBI planned a major organizational restructuring exercise. The centralized credit processing cells are being formed at certain centers for sanction of personal segment loans and under SBI segments. Centralization And Decentralization It has a well defined system for decision making process. Regarding the sanction of loan each officer of the bank considers the loan proposals and takes a decision in terms of scheme of delegation of powers. on merits of proposal. The Restructuring To overcome the intense competition from private and foreign banks. • Internal consultant/change agent: to act as a catalyst for change in attitudes and orientation of banking staff and to provide expertise and consultative support • • • Feedback supplier: to capture and structure feedback from trainees and from the market Think tank: to provide expert and inform suggestions. Research and development role: to carry out research on contemporary subjects that are relevant to the banks short term and medium term and operational needs and policy formulation • Overlapping staff training centers: to validate and closely monitor the staff training centers in seven circles attached to the academy. The financial decisions are taken at various levels by different officials depending upon their positions and also through committee approach. If the bank needs to purchase any kind of equipment like computers or software branch managers are required to take permission from high authority. analysis of market developments from a banker perspective. The key aspects involved ➢ Redesigning of branches. .  Providing alternate channels. Its branches source the applications and forward them to the respective credit processing sale for their consideration.

mutual fund. called EXIMBILLS. ➢Increasing the profitability through higher market share and improved process efficiency New Products and Services Apart from restructuring. The banks trade finance solutions. ➢Enhancing SBI's competitiveness in the market. SBI launched several innovative. SBI extended the tenure of car loans from five to seven years. insurance. Alliances and Tie-Ups To boost its business. Finance Unlike other competitors that relied on reduced interest rates to get business. and remote login at 269 branches. It launched a special service for corporate customers called 'telebanking and remote login' to support transactional requests. to provide loans for purchase of Maruti cars at the rate of 10. The BPR's basic goal was to create an operating architecture that would facilitate service delivery of international standards. value-added products and services to project a customer friendly image. The project objectives were defined as ➢Increasing customer satisfaction and convenience. Auto.➢A business process reengineering (BPR) team was constituted in June 2003 with McKinsey & Company as consultants. This facility would be available at 593 branches. SBI also launched different customized loan programs to cater to various sections of society depending on income levels and repayment capabilities. were intended to handle trade finance transactions efficiently and enhance the range of services provided to corporate and network branches. SBI emerged . After the scheme was introduced. SBI entered into several alliances and tie-ups with automobile. thereby lowering the monthly debt repayment burden of the loan seeker. ➢Freeing up time for branch manager and ➢Branch staff to focus on sales and marketing. SBI entered into a tie-up with Maruti.05 per cent and 11. All the branches in Mumbai would provide this facility by December 2004. project finance and medical equipment companies. SBI announced that it would introduce ‘anywhere banking’ facility for its customers over 9000 branches across India in the next two years. ➢Simplifying process for employees. Interest rates and repayment periods were tailor-made to suit the customer groups. In March 2004.25 per cent for three years and above three years respectively. the largest automobile manufacturer in India.

➢Setting up call centers and outbound sales force to secure new customers. ➢cross sales of other products. The Marketing Initiatives SBI carried out various marketing initiatives to enhance its reach. ➢Plans were also made to utilize database marketing to pursue large and medium sized corporate. lower costs and increased customer loyalty. Looking Ahead-Result .. They included ➢segregating and targeting existing high value customers.. government and trade finance customers Database marketing was expected to draw increased revenue from cross selling.SBI also introduced various other ways of reaching out to customers like ➢extension of hours of work (SBI increased daily working hours by two hours and Sunday banking was introduced) and ➢Aggressive marketing through print and television the largest financier for Maruti cars in India and the number of Maruti vehicles financed grew by 17 per cent in the fiscal 2003-04 over fiscal 2002-03.

2 per cent in the 1970s to11. an increase of 18. “there are a few non-core business areas where SBI is and wherever we have partners. also they increased fully integrated ATM network from 4. Net profits stood at Rs 36. Cardiff. while the growth rate of the volume of long-term credit has in fact declined from 20.3 per cent. the decadal average growth rate of the volume of short-term institutional credit to agriculture has stagnated at around 15 per cent. For example SBI Cards — we are the third largest card company and second fastest growing card company after ICICI. This is the most profitable card company in the country and SBI is doing very well.5 per cent in the fiscal 2002-03 to 3. On interest rate. Among commercial banks. and for cards. all the 13. There could be a revision in interest rates in the medium to long-term period.000 in 2004 to6000 today across the country. Elaborating on the importance of the right tie-ups and partnerships for the bank. mainly due to additional contribution to pension fund and provision for leave encashment. the global majors are our partners. SBI in its own quiet manner is trying to provide world-class services. GE is our partners.05 bn the previous fiscal.5 per cent in2003-04.SBI's restructuring exercise and growth strategies resulted in an increase in profits for the fiscal 2003-04. On technological up gradation. In the current financial year the government targeted for a 30 per cent increase in the aggregate agricultural credit over the previous year.In spite of SBI's efforts to reduce workforce. in insurance. Two thirds of their branches were in rural and semi-urban areas and it was believed to be a profitable business. SBI`S STRATEGIES IN THE CURRENT SCENARIO . SBI with its vast network is well placed to fulfill the large commitments of the new government to the farm sector.81 bn for the fiscal ended 2003-04 as against Rs31. any likely revision would depend on external factors than domestic factors. The net NPA level came down from 4. We are becoming a very major player in the Indian economy.650 branches of the bank were fully computerized. Further. Operating profits stood at Rs95. National Bank for Agriculture and Rural Development (Nabard) and commercial banks.754 bn in the fiscal 2002-03. SBI aimed at 2 per cent NPA by 2004-05Till June 2004.55 per cent. Since the Seventies. staff costs rose by 13. For instance.9 per cent in 1990s. the rates would remain stable in the short-term. Among the factors that will help in realizing this full potential were access to institutional credit to more farmers and appropriate quantity and quality of agriculture credit.The government has anxiously examined the question of agriculture credit and related issues in consultation with the Reserve Bank of India (RBI).535 bn compared to Rs 77.

the bank will be able to increase its operating margins by 250-300 basis points in overseas markets where syndication opportunities arise often. The bank’s overseas operations have been instructed to thrust more on promoting retail banking locally. Advisory Services. while people may be generally cautious about some other brands. today it offers the largest banking network to the Indian customer. and other electronic channels such as Internet banking. SBI is planning to hire 11. looking at the vast untapped potential in the hinterland and proposes to cover 100.  Country’s largest lender. Mobile Banking. given the huge untapped potential. With about 8500of its own 10000 branches and another 5100 branches of its Associate Banks already networked. General Insurance. SBI is assessing that by opening more branches across foreign locations and promoting retail services by mobilizing deposits at interest rates as low as 3-3.SBI is expected to open seven new branches over next eight months in the United Kingdom where it operates six branches currently. structured products etc – each one of these initiatives having a huge potential for growth. at a cheaper cost. It is consolidating its global treasury operations and entering into structured products and derivative instruments.The Bank is forging ahead with cutting edge technology and innovative new banking models. this is also the best time to benefit from their past expansion. Its time for them to follow overall SBI philosophy of planning new branches. The bank is entering into many new businesses with strategic tie ups – Pension Funds. Today. etc. Point of Sale Merchant Acquisition. Some of the strategies to cope with the current scenario are listed below:  It is the part of SBI`s philosophy to open new branches . on whole sale banking capabilities to provide India’s growing mid / large Corporate with a complete array of products and services. Also. Such strategy would help the bank to promote its lead in syndication of loans in the overseas market.000 villages in the next two years. SBI’s Washington office is expected to get upgraded as a full-fledged branch by December 2009 and plans are afoot to open more branches across North America under the control of California State chartered subsidiary of State Bank of India (California) . Private Equity. mobile banking. It is the only Indian bank to feature in the Fortune 500 list. The Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs. the Bank is the largest provider of infrastructure debt and the largest arranger of external commercial borrowings in the country. Brand SBI is very strong. State Bank of India (SBI) has prepared a blueprint to go retail in its international operations. Custodial Services. The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience. debit cards.It is also focusing at the top end of the market. since there is a lot of trust in SBI.5%.000 employees in the current fiscal . Besides.SBI have set up capacity in places where they are not very strong. They can not only tap the potential better but can also provide a safe and transparent insurance alternative to the public. to expand its Rural Banking base.

auto loans at 10%. which has seen a growth of 26%in the current year. The latest to join the bandwagon is SBI Life insurance with SBI Smart ULIP.. In response to signals from the central bank. .  With market-linked products finding fewer takers.75% to 12. special products for SMEs and. insurance companies are launching more “guaranteed” products to lure investors. a product that guarantees returns based on the highest NAV recorded by the fund in the first seven years .000 crores. For the year 2008 the Rs 10. out of which project worth Rs 8000 crore is in pipeline.. and further softening in interest rates cannot be ruled out.SBI is introducing loan products at sub-PLR rates . SBI have progressively reduced their PLR from 13. but it may not be possible for them to reduce the interest rate beyond a certain home loans at 8%.25% during the past few months in stages.  SBI is working on infrastructure sector projects. Agriculture sector at 8%.000 crores was sanctioned for the infrastructure projects while in the current year from April 08 to February 09 the amount sanctioned for the infrastructure project is Rs 13. Despite of various viability issues the growth in this sector for SBI is been intact.

With an asset base of $126 billion and its reach. it has the highest non performing assets (NPAs) in the industry. and ranked219 in 2008Forbes Global 2000. if once customer has relationship with the bank. ➢Wide Distribution Network: Excellent penetration in the country with more than10000 core branches and more than 5100 branches of associate banks (subsidiaries). ➢Modernsation: SBI lags with respect to private players in terms of modernization of its processes. Insufficient capital may restrict the growth prospects of the bank going forward. ➢Diversified Portfolio: SBI Bank has all the products under its belt. infrastructure. is a barrier to change. although strength in some respects. it is a regional banking behemoth. ➢Delay in technology up gradation could result in loss of market shares. centralisation. . Some Products.28 % (Dec 2007). etc.SWOT ANALYSIS: Strengths: ➢Brand name: SBI Bank has earned a reputation in the market over the period of time (Being the oldest bank in India tracing history back to 1806) ➢Market Leader: SBI is ranked at 380 in 2008Fortune Global 500list. Weaknesses: ➢The existing hierarchical management structure of the bank. which stand out to be at16. This gives SBI an edge over private banks in terms of customer security. ➢Though SBI cards are the 2nd largest player in the credit card industry. ➢Management indicated a likely pension shortfall on account of AS-15 to be close to Rs50bn. ➢SBI is currently operating at a lowest CAR(8%). which help it to extend the relationship with existing customer’s Bank has umbrella of products to offer their customers. which SBI Bank is offering are: Retail Banking Business Banking Merchant Establishment Services (EDC Machine) Personal loans & Car loans Insurance Housing Loans ➢Government Owned: Government owns 60% stake in SBI. ➢Low Transition Costs-SBI offers very low transition costs which attracts small customers. ➢Continued effort to increase low cost deposit would ensure improvement in NIMs and hence earnings.

Significant thrust on growing retail book poses higher credit risk to the bank. and has more plans of expansion in other global markets. ➢Planning to add 2000 branches and 3000 ATMs in 2008-2009. Bangladesh. which used to be the bastion of the State Bank and other PSU banks  Employee Strike: There was an employee strike in the year 2006 which disrupted SBI’s activities.  Growing retail & SMEs thrust would lead to higher business growth. This can increase the level of competition and prove a potential threat for the market share of SBI bank.  Private banks have started venturing into the rural and semi-urban sector.. etc) into SBI will create a mega bank which streamlines operations and unlocks value.. . especially in the retail segment.  Slow down in domestic economy would pose a concern over credit off-take thereby Impacting earnings growth.  Consumer expectations have increased many folds in last few years and the bank has not been responsive enough to meet them on time.SBM. Opportunities: ➢Merger of associate banks with SBI: Merger of all the associate banks (like SBH. could impact retail growth of SBI and Hence slowdown in earnings growth.  Global expansion: SBI already has expanded globally and start its operations internationally in 32 countries like Australia.  Strong economic growth would generate higher demand for funds pursuant to higher Corporate demand for credit on account of capacity expansion.➢Contribution of retail credit to total bank credit stood at 26%. etc.  Micro Finance: there is a lot of growth opportunity in the area of micro finance. Threats:  Advent of MNC banks: Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government. This will further increase its reach  Increasing trade and business relations and a large number of expatriate populations offers a great opportunity to expand on foreign soil.. This can be repeated in the future.  Stiff competition.

Dena Bank e. Threat of substitutes Investors as a substitute can always invest into the capitalmarkets instead of depositing in their capital in the bank. ICICI Bank c. increasing and decreasing disposable incomes. AXIS Bank d. Buying power of suppliers Changing policies and guidelines of RBI. HSBC Bank d. interest rates. 5. Vijaya Bank Top Performing Private Sector Banks a. increasing working class. Citibank b. The changing interest rates and the changing policies of RBI.1 crore in the FY2008-09. 4. Buying power of customers Changing scenarios. Centurion Bank of Punjab Top Performing Foreign Banks a. other attractive options available to customers BCG THEORY: CASH COW There is a lot of growth potential for the banking industry because of increasing disposable income of customers. Hence it can be concluded that SBI stands at cash cow in BCG matrix .ABN AMRO Bank e. CRR and SLR maintained by the banks as per RBI norms. HDFC Bank b. more volatility in other markets also increasing importance of savings and in this banking industry SBI has shown a growth rate of 13% with a 21 % increase in PAT standing to 62. Threat of competitors: Top Performing Public Sector Banks a. PORTERS FIVE FORCES THEORY: 1. Andhra Bank b. Allahabad Bank c. American Express 2. Standard Chartered c. Threat of new entrants: There have been many new entrants in banking sector like yes bank 3. Kotak Mahindra Bank e. Punjab National Bank d.

CONCLUSION: Banking sector in India has gone through a metamorphosis change in its concept perception and outlook quantitative expansion with quality has been a phenomenon in the operations of the banking system bank being a service selling show has to meet the need of the customers which vary from place to place. An increase in the income and saving of the urban population has raised hopes for banking institutions to fill up the gaps by catering to the need of the potential customers and also penetrate into new target markets like rural sectors through its innovative financial products like micro finance and SBI is doing the same and this has been proved by so many awards it has achieved in the recent past. In this span of time. It follows a centralized system. they have also come up with new strategies so as to compete in this fiercely competitive market where every next day a new scheme is introduced so as to grab the market share. A few of them being most preferred bank as declared by CNBC in Aug 2007. so as to bring synchronization in the decision making process which helps the organization to create better strategies so as to focus on theover all functioning and growth prospects of the bank. At the same time it can be concluded that they need to focus on the human resources in order to achieve the maximum market share . time to time and purpose to purpose and also at the same time it has to sustain the tough competition coming from all the four ends.State bank of India earlier known as Imperial Bank has proved its existence through introducing various innovative schemes and that also are considered as competitive in present market.