TASK 14

PROMOTERS AND MANAGEMENT

State Bank Of India was incorporated in the year 1806. Its today's share price is
187.15. Its current market capitalisation stands at Rs 169076.77 Cr. In the latest
quarter, company has reported Gross Sales of Rs. 2573235.92 Cr and Total Income
of Rs.3025450.7 Cr. The company's management includes Chandan Sinha,
Debasish Panda, Sanjeev Maheshwari, Purnima Gupta, Pushpendra Rai, B
Venugopal, Basant Seth, Bhaskar Pramanik, Sanjiv Malhotra, Challa Sreenivasulu
Setty, Arijit Basu, Dinesh Kumar Khara, PK Gupta, Rajnish Kumar.

It is listed on the BSE with a BSE Code of 500112 , NSE with an NSE Symbol of
SBIN and ISIN of INE062A01020. It's Registered office is at State Bank
Bhavan,Corporate Centre , Madame Cama Road,Nariman PointMumbai-400021,
Maharashtra

STATE BANK OF INDIA SHARE HOLDINGS

 Description Percent of Share (%)

Promoters 57.64
Mutual Funds/Uti 13.18
Fi/Banks/Insurance 11.35
Non-Institution 9.55
Government 0.2
FII 0

SHARE HOLDING PATTERN (% OF SHARES

HELD)
Particulars Jun 2020 Mar 2020 Var%

Promoter and Promoter Group

Indian Promoters 57.64 57.63 0.02

Central Government/State Government(s) 57.64 57.63 0.02

Particulars Jun 2020 Mar 2020 Var%

Total of Promoter and Promoter Group 57.64 57.63 0.02

Public Shareholding

Institutions 32.61 34.25 4.79

Mutual Funds / UTI 13.18 13.62 3.23

Financial Institutions / Banks 0.08 0.07 14.29

Insurance Companies 11.27 10.59 6.42

Foreign Institutional Investors

Venture Capital Funds 0.02 0.01 100

Foreign Venture Capital Investors

Alternate Investment Funds 0.15 0.27 44.44

Foreign Portfolio investors 7.91 9.59 17.52

Central Government / State Government(s) 0.2 0.11 81.82

Non-Institutions 9.55 8.12 17.61

Bodies Corporate 0.78 0.69 13.04

Individual shareholders holding nominal share capital up to Rs. 1 lakh 7.09 5.72 23.95

Individual shareholders holding nominal share capital in excess of Rs. 0.22 0.29 24.14
1 lakh

Clearing Members 0.19 0.28 32.14

    Non Resident Indians 0.3 0.22 36.36

    Trusts 0.96 0.89 7.87

    Hindu Undivided Families

    Foreign Corporate Bodies 0.01 0.02 50

Total Public Shareholding 42.36 42.37 0.02

Particulars Jun 2020 Mar 2020 Var%

Total of Promoter and Public Shareholding 100 100 0

Grand Total 100 100 0

STATE BANK OF INDIA HELD BY MUTUAL FUND

SCHEMES
Scheme Holding(%)  

Kotak PSU Bank ETF 29.71

Nippon India ETF PSU Bank BeES 29.63

Nippon India ETF Bank BeES 10.87

Kotak Banking ETF 10.87

SBI-ETF Nifty Bank 10.87

Edelweiss ETF - Nifty Bank 10.85

ICICI Pru Bank ETF 10.81

Aditya Birla SL Banking ETF 10.81

Motilal Oswal Nifty Bank Index Fund-Reg(G) 10.68

Franklin India Focused Equity Fund(G) 9.55

SBI PSU Fund-Reg(G) 8.99

Nippon India Banking Fund(G) 8.17

Franklin Build India Fund(G) 7.92

HDFC Equity Fund(G) 7.49

Franklin India Bluechip Fund(G) 7.33

HDFC Balanced Advantage Fund(G) 7.27

HDFC Infrastructure Fund(G) 7.09

Scheme Holding(%)  

UTI Banking and Financial Services Fund-Reg(D) 7.04

Bharat 22 ETF 6.74

Templeton India Value Fund(D) 6.58

FRAUDS AND SCAMS

The State Bank of India in its annual reports stated that the lender has observed a jump in
total frauds for this year as compared to the previous financial year FY19. SBI has seen a
jump over three-fold as it reports the total of fraud in FY20 to be at Rs 44,622.45 crore from
last year’s Rs 12,387.13 crore.The number of cases for the mentioned frauds also reflected a
two-fold jump going from 2,616 cases in the last financial to 6,964 cases reported in the
current financial year. Under Fraud Reported and Provision made during the year, A report
said, “Out of the total frauds of ` 44,622.45 crore in 6,964 cases (Previous year ` 12,387.13
crore in 2,616 cases) reported during the year, an amount of ` 44,419.46 crore in 651 cases
(Previous year ` 12,310.90 crore in 581 cases) represents advances declared as frauds”.

The lender has made full provisions for outstanding balance as on 31st March 2020 in regards
with the frauds reported during the year “except advance account declared as fraud during the
year where Bank has chosen to make provision over four quarters”.In view of frauds
increasing as institutions moved to digital modes to observe social distancing due to corona
outbreak, the Reserve Bank of India (RBI) has levied an aggregate penalty of Rs 7 crore in
case of violation of directions issues on Income Recognition and Asset Classification norms
and a penalty of Rs 50 lakh for the non-compliance of the central bank’s directions issues in
regards with reporting of fraud.

CORPORATE ACTIONS

Stock Split
Announcement Date Old FV New FV Ex-Split Date

24-09-2014 10 1 20-11-2014

State Bank of India NSE 1.23 %, India’s largest public sector lender, moved higher in trade
as 1:10 stock split comes into effect.The SBI board had fixed November 21, as the record
date for a stock split in the ratio of 1:10, i.e. a share of face value Rs 10 is split into 10 shares
of face value Rs 1 each.The stock price has split from Rs 2,913 per share to close at Rs
297.10 per share after the split.

Right Issue

Announcement Rights Face Premiu Record Ex-Rights

Date Ratio Value m Date Date

14-01-2008 1:5 10 1580 04-02-2008 28-01-2008

26-11-1993 3:5 10 50 24-12-1993 26-11-1993

The Indias largest lender, State Bank of India (SBI), issued rights at a discount of 54.85%, or
Rs 872.25, compared to its closing price.SBI will offer the rights shares to shareholders in the
ratio of one rights share for every five shares held. The rights share with a face value of Rs 10
each will be offered at a premium of Rs 1,580.SBI stock ended the day at Rs 2,462.25,
gaining Rs 25 or 1.03%, on the BSE on that day.
The ratio for the rights issue has been fixed at 1:5, that is, one share for every five shares held
by the eligible shareholders on the record date. The central board of the bank at its meeting
held on Monday decided to raise an aggregate amount of Rs 16,736.31 crore by way of the
rights issue offer to the government and other eligible existing shareholders, including GDR
holders, at Rs 1,590 per equity share of Rs 10 each. The bank would also issue shares to
employees under the employees stock purchase scheme.The board has also decided to
increase the issued capital of the bank from Rs 526.30 crore to Rs 650 crore.

Divident

Announcement Effective Dividend Dividend

Remarks
Date Date Type (%)

19-05-2017 26-05-2017 Final 260.00 Rs.2.6000 per

Announcement Effective Dividend Dividend
Remarks
Date Date Type (%)

share(260%)Dividend

16-05-2016 03-06-2016 Final 260.00 Rs.2.6000 per

share(260%)Dividend

22-05-2015 28-05-2015 Final 350.00 Rs.3.5000 per

share(350%)Dividend

14-05-2014 29-05-2014 Final 150.00 Rs.15.0000 per

share(150%)Dividend

04-03-2014 11-03-2014 Interim 150.00 Rs.15.0000 per

share(150%)Interim Dividend

14-05-2013 28-05-2013 Final 415.00 Rs.41.5000 per

share(415%)Dividend

12-05-2012 24-05-2012 Final 350.00 -

11-05-2011 20-05-2011 Final 300.00 -

11-05-2010 09-06-2010 Final 200.00 -

25-01-2010 05-02-2010 Interim 100.00 -

11-05-2009 10-06-2009 Final 290.00 -

02-05-2008 29-05-2008 Final 215.00 -

09-05-2007 13-06-2007 Final 140.00 -

10-05-2006 19-06-2006 Final 140.00 -

20-05-2005 17-06-2005 Final 125.00 -

11-05-2004 25-06-2004 Final 110.00 -

05-06-2003 04-07-2003 Final 85.00 -

24-05-2002 11-07-2002 Final 60.00 -

30-05-2001 02-07-2001 Final 50.00 -

-2001 02-07-2001 Final 50.00 -

Mergers and Acquisition

SBI has merged with State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM),
State Bank of Travancore (SBT), State Bank of Patiala (SBP), State Bank of Hyderabad
(SBH) and BMB in 2017. Results in 50 crore customers, global proportions with an asset
base of Rs 37 trillion (Rs 37 lakh crore) or over USD 555 billion, 22,500 branches and 58,000
ATMs.

With the merger of all the five associates, SBI is expected to become a lender of global
proportions with an asset base of Rs 37 trillion (Rs 37 lakh crore) or over USD 555 billion,
22,500 branches and 58,000 ATMs. It will have over 50 crore customers.

SBI first merged State Bank of Saurashtra with itself in 2008. Two years later, State Bank of
Indore was merged with it.The board of SBI earlier approved the merge plan under which
SBBJ shareholders will get 28 shares of SBI held. Similarly, SBM and SBT shareholders will
get 22 shares of SBI for every 10 shares.SBI had approved separate schemes of acquisition of
State Bank of Patiala and State Bank of Hyderabad. There will not be any share swap or cash
outgo as they are wholly-owned by the SBI.

Buy Back

SBI will buy-back shares worth over Rs 99 crore in its primary dealership subsidiary
company SBI DFHI.As per the approval, SBI will buy back 1,911,974 equity shares it held in
SBI DFHI for Rs 520 per share aggregating to Rs 99.42 crore.SBI has the largest
shareholding of 72.17 percent in the company, while 22.32 percent is owned by nationalised
banks and the rest of 5.51 percent by financial institutions/ private banks.

Corporate Spin Off

State Bank of India (SBI) is gearing up to increase the number of card-acceptance swipe
machines in the country. In line with its objective, the bank is planning to spin off its point of
sales (PoS) terminal business into a separate company. According to the latest RBI data,
SBI’s network of PoS machines is the largest in the country. The bank dominates the space
with 3.3 lakh card swipe terminals of the 14.6 lakh installed in India.
As the country continues to reel under the cash crunch following the Centre’s demonetisation
move, SBI is also trying to cater to needs of every sector and geographies. The bank said as
part of its ‘Cash@POS’ initiative, it is providing cash through POS machines including tea
gardens, hospitals and trains in a bid to reach out to maximum number of people possible.

SITUATION ANALYSIS
Target Market

Founded in 1806, State Bank of India (SBI) is an Indian multinational, public sector bank and
financial service company headquartered in Mumbai, Maharashtra. The bank descends from
Bank of Calcutta making it the oldest commercial bank of the subcontinent

SBI segments . the market on the basis of geographic, demographic, behavioral

psychographic variables like people from Rural, Urban and Metropolitan who are self-
employed, students, corporate or government employed also behavioral and psychography
includes people who trusted banking system and frequently used bank and its value-added
services.It targets students, the lower class who are deprived of banking services, the tech-
savvy business class for whom time is more important.

Positioned as peoples most trusted bank, it has high accessibility with over 25,000 branches,
it finds relevance to young customers with its value-added services like net banking,
telebanking etc.Customers of SBI includes farmers and workers in rural, students, early
jobbers, both Public and private sector working professionals, businessmen,
young entrepreneurs. Customers of SBI doesn’t cant be put in a specific income group
bracket and thus ranges from lower class looking to open zero balance account for
government benefits transfer through Direct Benefit transfers to high-
class individuals seeking loans for their business.

Competitors and comparison of market cap and profit margin

Name Last Price Market Cap. Net Interest Net Profit Total Assets
(Rs. cr.) Income
 SBI 191.20 170,638.57 257,323.59 14,488.11 3,680,914.25

IDBI Bank 40.00 41,522.38 20,825.14 -12,887.34 320,284.49

PNB 32.75 30,819.81 53,800.03 336.20 774,949.46

Union Bank 29.70 23,957.94 37,231.12 -2,897.78 494,038.83

Bank of Baroda 47.35 21,878.38 75,983.65 546.18 780,987.42

IOB 10.65 17,505.39 17,406.11 -8,527.40 250,007.52

Bank of India 46.75 15,319.62 42,353.26 -2,956.89 625,222.84

Canara Bank 100.25 14,571.35 48,934.99 -2,235.72 694,766.69

UCO Bank 14.00 13,885.68 15,134.34 -2,436.83 230,484.07

Central Bank 17.50 9,992.08 23,562.47 -1,121.35 330,717.67

Balance Sheet ------------------- in Rs. Cr. -------------------

SBI IDBI Bank PNB Union Bank Bank of Baroda

Mar '19 Mar '19 Mar '19 Mar '19 Mar '19

Capital and Liabilities:

Total Share Capital 892.46 7,736.29 920.81 1,763.02 530.36

Equity Share Capital 892.46 7,736.29 920.81 1,763.02 530.36

Share Application Money 0.00 0.00 0.00 0.00 5,042.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 195,367.42 23,147.71 40,284.09 22,489.18 45,410.73

Revaluation Reserves 24,653.94 6,727.69 3,582.23 2,234.81 0.00

Net Worth 220,913.82 37,611.69 44,787.13 26,487.01 50,983.09

Deposits 2,911,386.01 227,371.72 676,030.14 415,915.27 638,689.72

Borrowings 403,017.12 45,287.72 39,325.91 42,863.82 67,201.30

3,314,403.1
Total Debt 272,659.44 715,356.05 458,779.09 705,891.02
3

Other Liabilities & Provisions 145,597.30 10,013.35 14,806.28 8,772.74 24,113.29

 3,680,914.2
Total Liabilities 320,284.48 774,949.46 494,038.84 780,987.40
5

SBI IDBI Bank PNB Union Bank Bank of Baroda

Mar '19 Mar '19 Mar '19 Mar '19 Mar '19

Assets

Cash & Balances with RBI 176,932.42 12,730.47 32,129.13 20,796.46 26,661.73

Balance with Banks, Money at Call 45,557.69 8,503.23 43,158.91 22,249.51 62,567.89

2,185,876.9
Advances 146,790.44 464,474.05 296,932.15 468,818.74
2

Investments 967,021.95 93,072.63 202,128.22 126,046.64 182,298.08

Gross Block 38,508.94 7,763.37 0.00 3,718.72 6,990.30

Accumulated Depreciation 0.00 0.00 0.00 0.00 0.00

Net Block 38,508.94 7,763.37 0.00 3,718.72 6,990.30

Capital Work In Progress 688.63 467.61 0.00 43.57 0.00

Other Assets 266,327.70 50,956.74 33,059.15 24,251.78 33,650.68

3,680,914.2
Total Assets 320,284.49 774,949.46 494,038.83 780,987.42
5

Contingent Liabilities 1,113,678.05 150,489.06 332,736.03 217,846.93 429,372.92

Bills for collection 0.00 0.00 0.00 0.00 0.00

Book Value (Rs) 219.91 39.92 89.50 137.56 173.66

Market share
Ranked 216th on the Fortune Global 500 list of the world’s biggest corporations 2017, SBI is
India’s largest bank with a 23% market share of assets and 25% share of the total loan and
deposits market of the country.
Challenges

The country's leading lender SBI is upgrading its existing work-from-home policy to work-
from-anywhere, as it gears up to adjust to the new challenges posed by Covid-19.On the
business side, the focus of the bank in the days ahead would be on revisiting risk assessment
and business procedures in addition to rapid adoption of digital technology, said State Bank
of India's annual report.This fiscal will be challenging as the full impact of the Covid-19
outbreak will be felt in this financial year.However, from the bank's point of view, the true
impact Covid pandemic must also consider the behavioral impact on Bank's customers, and
composition of portfolio,

As of now, only 21.8 per cent of the customers have availed the benefit of moratorium, it said
and added that the bank was able to achieve 98 per cent branch operability as well as 91 per
cent alternate channel operability during the period of lockdown.

Nevertheless, an elaborate Business Continuity Plan (BCP) is in place to manage disruptions,

said SBI.Business continuity hub branches have been identified to cater to customers in case
of emergency and BCP sites identified to support essential backend services, it said.

With global acceptability of Work-from-Home (WFH) arrangements, the Bank is in process

of upgrading its existing WFH policy to Work from Anywhere (WFA).Productivity tools and
technology are in already place to perform administrative work remotely.Furthermore, WFA
reduces commute time that can be utilised for providing better services to customers as well
as ensuring better work life balance.However, Covid-19 pandemic has also opened
opportunities for the banks.Reordering of global supply chains presents unique opportunity to
India to position itself as manufacturing hub to meet global demand.

To the extent state governments are able to secure such relocation of businesses from China;
banks will see opportunities to expand business, it said.The report emphasised that rapid
adoption of digital technology in response to the Covid-19 also augurs well from point of
view of the banks as it may accelerate the adoption of digital offerings by the lenders."In a
nutshell, the outlook on Bank's business and the economy will be conditional on time frame
by which the virus is completely eliminated, and normalcy restored," SBI said.The recently
released fiscal stimulus package, its priorities and funding strategy will decide how banks
will respond in the post-Covid scenario.SBI had posted a net profit of Rs 14,488.11 crore for
2019-20, as compared to Rs 862.23 crore in FY2019.

One of the major challenges for public sector banks in the near future is the merger process.
In August last year, Finance Minister Nirmala Sitharaman had announced merger of 10 banks

In April 2017, SBI had merged its five associate banks- State Bank of Bikaner  and Jaipur,
State Bank of Patiala, State Bank of Travancore State Bank of Hyderabad, State Bank of
Mysore.

The four new set of proposed mergers included Punjab National Bank, Oriental Bank of
Commerce and United Bank of India will combine to form the nation's second-largest
lender; Canara Bank  and Syndicate Bank will merge; Union Bank of India will amalgamate
with Andhra Bank and Corporation Bank; and Indian Bank will merge with Allahabad
Bank.These mergers will bring the number of state-run banks to 12 as against 27 in 2017.

Competitors company differentiators

State Bank of India’s digital transformation is a subject of much curiosity, with its sheer size,
legacy, and scale of operations . SBI is the largest commercial bank in India in terms of
assets, deposits, profits, branches, customers and employees. With an IT budget of Rs 3000
crores and a 4000-strong IT department, the 226 year old bank is well on track to bolster its
digital initiatives.

The younger generation of customer prefers to do transactions and other banking related
activities things themselves. So the InTouch branches have been modeled in such a way that
they have been divided into two parts. The front part of the branch is a self service area. So
there is an account opening kiosk where you can open the account yourself. While opening
the account we can set your internet banking user name and password on your own. And you
can even get a personalized ATM card with your photograph on it. You can have that entire
thing done at the frontend. Besides, there is a Cash Deposit Machine (CDM) where you can
deposit and withdraw cash. So all the basic banking needs can be one at the front end but if
you need assistance in handling all of this you can avail it

SBI over the years has attained the leadership status in digital banking space by offering a
pool of seamless and secured services like, SBI YONO- an omnichannel banking and
lifestyle platform which has close to 10 million downloads already for which SBI has Tied up
Reliance JIO, State Bank Buddy- a wallet service, State Bank Anywhere- Mobile banking
platform.
With the set up 60 digital branches referred to as sbiINTOUCH, the bank aims to offer
advanced services like instant loan approvals, access to the latest mutual funds, assistance in
choosing investment portfolios and other financial services.Equipped with the latest
technology these creates an instant connection with the customers in real-time with an audio-
visual experience and an ability to print, scan, and share the document using touchscreen
controls ensuring the bank doesn’t lose a potential customer. Thus these digital branches
provide SBI an edge over its competitors and aim to help SBI expand its reach with
increasing profitability.
The banking industry in the recent past has been in a turnaround phase where PSU’s, Private
Banks are fighting neck to neck in order to re-establish itself in the competitive market.
Private Banks like ICICI Bank, AXIS Bank, HDFC revenue and profitability has seen the rise
by 3rd party products whereas PSUs revenue and profitability has been more driven by retail
lending and CASA share.Market share for SBI customers Saving Bank and Current Account
Deposits as of March 2020 stood at 38.20% and 6.96% respectively. Market share for home
loans stood at 13% and 67.65% share in Government business showing its dominance in the
Government sector. Market share for customers using the Debit card for the bank is as high
as 30.5% and a share of 31.79% for customers opening PM Jan Dhan Accounts.

SWOT Analysis
Stenghths

 A network of the bank: The bank around 198 offices in 37 countries; 301
correspondents in 72 countries, 278,000 employees, 420 million customers, and around
24,000 branches and 59,000 ATMs making it the owner of one of the
largest banking networks in the world.
 Goodwill: The bank is one of the oldest in the region and has been having a steady
inflow of customers from all income brackets. They have also had good relationships
with stakeholders which have created a goodwill amongst customers.
 Special privileges: Being one of the most popular nationalized banks, the bank has a
lot of special privileges including a special act for itself.
 Strong backing from the government: SBI is one of the first initiatives in the
government in the banking sector and since then has always been its top priority. The
bank is also a partner in the e-governance project of the government.
 A wide variety of services: The State Bank of India has a wide variety of services
like investment banking, online banking, stockbroking, rural banking and loans
amongst others.
 Strong brand: The bank has a very strong image amongst customers, visibility and
there have been numerous instances of strong word of mouth advertising about the
bank.

Weaknesses

Weaknesses are used to refer to areas where the business or the brand needs improvement.
Some of the key weaknesses of State Bank of India are:

 Limited market share growth: Earlier when banking was not privatized SBI had
undoubted leadership. But with the privatization of banking, there has been a surge in
the competition which has resulted in a drop in market share.
 Bad debts: State Bank of India has been facing a problem of being unable to resolve
bad debts which have resulted from the non-repayment of loans.
 Huge size: After the merger with five of its associate banks, SBI has become the
largest banker in India and the network in huge with branches even in remote locations.
This huge size can create serious challenges in management.
 Loan issues: There have been issues in loan repayment, bad loan, non-performing
assets and loan restructuring especially in the case of the associate banks.
  Customer service: Due to many salary accounts and government accounts with SBI,
the branches are overpopulated creating too much dissatisfaction and frustration for
users. Thur customer service is known to be bad from SBI.

 Opportunities 

 Restructuring: The banking industry in India was restructured by the government

helping the sector to cope up with the challenges of the new financial environment.
 Growing income brackets: There is a steady growth of per capita income in India
which in turn indicates a growing economy. These signals are positive for the growth
of the banking business.
 Increase in borrowing capacity: The society has undergone a change in the structure
of double income households with high disposable income. This has created a
resultant change which is an increase in borrowing capacity of the customer.
 Increased use of technology: The urban Indian is very comfortable with all latest
technologies such as mobile, internet and computers. This shows a lot of promise for
services such as online banking. This is also backed by a growth in internet shopping
behavior which makes credit cards a must.
 Digitisation: Banks have become more relevant with digitization and demonetization
and this will see an increase in the number of bank accounts as well as for credit card
usage.

Threats

 Bad Loans and Non-performing assets: India has a history of bad loans and
amounts to a total of Rs 10 lakh crores. Non-performing assets in India is 6.15% during
march 2020
 Cyber threats: There has been a lot of issues lately on information theft and security.
These cyber threats from a headache for the banks which can affect the image of the
bank if not managed well.

BIJOSH P THOMAS
Junior research analyst