CHAPTER - 5

CHAPTER 5

CUSTOMER SERVICE
IN
STATE BANK OF INDIA

1.1 STATE BANK OF INDIA – EVOLUTION

The roots of State Bank of India can be traced back to the early 19th century when
the Bank of Calcutta was established on 2nd June 1806. This bank, which was the first joint
stock bank of British India sponsored by the government of Bengal, was renamed as the Bank
of Bengal on 2nd January 1809.

On the 15th of April 1840 the Bank of Bombay was established followed by the
Bank of Madras on 1st July 1843. These three banks along with their seventy branches
remained the apex of modern banking in India till their amalgamation as the ‘Imperial Bank
of India’ on the 27th of January 1921.This giant monolith after amalgamation took on the
triple role of – commercial bank, banker to the bank and banker to the government.

The Reserve bank of India was established as the central bank of the country in
1935. The formation of RBI ended the quasi central bank role of Imperial Bank. The latter
ceased to be a banker to the government and instead became the agent of Reserve Bank of
India for the transaction of government business at places where the RBI was not present.
The Imperial Bank during its 35 years of existence grew impressively in terms of the
number of offices, deposits, advances and reserves. When India attained freedom the
imperial bank had a capital base of Rs 11.85 crore, deposits and advances worth Rs 275.14
and Rs 72.94 crore along with 172 branches and 200 sub offices.

In 1951 when India was designing its first five year plan, the focus of the
planners was on the development of rural India specially the agricultural sector. It was then
that the planners realized that Imperial bank and all the then existing commercial banks had
their focus only on the urban sector. In order to therefore serve the economy in general and
rural sector in particular the planners recommended the creation of a government -partnered
and government-sponsored bank by taking over the Imperial Bank of India, and integrating
with it, all its associate banks. Accordingly in May 1955 an act was passed in the
Parliament and the State Bank of India was constituted on 1 July 1955 (Figure: 5.1).

BANK OF BANK OF BANK OF

BENGAL BOMBAY MADRAS
(1809) (1840) (1843)

IMPERIAL BANK OF INDIA

(27TH JANUARY1921)

STATE BANK OF INDIA

(1ST JULY 1955)

Figure: 5.1
Formation of State Bank of India
5.1.2 State Bank of India – Growth and Current Status

SBI, which is currently under the chairmanship Ms. Arundhati Bhattacharya , is

the oldest and the largest commercial bank in India in terms of number of branches,
employees, balance sheet, deposits and assets. The government of India is the single largest
shareholder of this fortune 500 entity with 61.5 percent ownership which it bought from RBI
in the year 2008.

State Bank of India net profits increased by 20.3 percent from Rs.10,891 cores in
March 2014 to Rs. 13,102 core in March, 2015.While the banks operating profits increased by
21.9 percent to 38 ,914 crore; its NPA came down by 70 basis points from 4.95 to 4.25
percent. At the end of the financial year 2015, SBI had deposits worth Rs 15,76,793 crore and
advances of Rs 13,35,424 crore1 .

The bank has a total customer base of approximately 10 crore which are being
served by nearly ten thousand branches and 27,000 ATMs. SBI is said to have the second
largest banking network in the world, only next to Chinese Industrial Commercial Bank of
China (ICBC).

SBI also has the largest number of debit card issued 46 million and the second
largest credit card base of 3 million in India. Apart from this the bank is the largest provider
of infrastructure debt and the largest arranger of external commercial borrowings in the
country.

In 2015State Bank of India was among the top 50 most valued banks of the world
as per the ranking done by Bloomberg Data show. The Bank was estimated to have a market
capitalization of $ 39 billion making it the 46th most valuable bank of the world (Chakraborty
and Modak 2015)2.

The bank was ranked as the 152nd biggest company of the world as per the 13th
Annual Global 2000 list by Forbes published in 2015.

The reach and strength of SBI surges many folds when its associates are combined
with it to form the SBI Group- which includes the State Bank of India and its five associate
banks , which are:
[1] State bank of Bikaner and Jaipur
[2] State bank of Hyderabad
[3] State bank of Patiala
[4] State bank of Trancore
[5] State bank of Mysore

The group operates through a network of nearly 20,000 branches and 45,000
ATM’s and commands a share of nearly 22 percent of the domestic banking market. Apart

1
State Bank of India stand-alone results March 2015- Press Release:FY2015
2
Chakraborty, Somasroy and Modak, Samie. 2015. HDFC Bank and SBI now among top 50 most Valued
Global Banks . Business Standard , January 17th 2015 , 9-15
from India the group also operates in 34 other countries through a network of nearly 173
offices.

Apart from its five associate banks, State Bank of India likewise has the following
non-banking subsidiaries:
1) SBI Funds Management Company Limited
2) SBI Factors and Commercial Services Company Limited
3) SBI Cards and Payments Services Company Limited
4) SBI Capital Markets Company Limited
5) SBI DFHI Company Limited
6) SBI Life Insurance Company Limited,
7) SBI General Insurance Company Limited

 Innovative Banking by State Bank of India

 SBI has been the leading bank of India since time immemorial and to sustain this
apex position of its, the bank keeps on taking various initiatives. One of such
initiatives was taken in December 2008 when the bank launched its mobile banking
service, 'State Bank Freedom'. Through this service the customers can do a cell
phone top-up, a utility bill payment. Some of the other facilities which can be
availed through the new initiative include balance enquiry, mini statement for last
five transactions, order for issuance of a cheque book and fund transfer within the
bank. This initiative becomes even more laudable when we think of the many public
sector banks which are yet not even completely computerized.

 State Bank of India (SBI), the country’s largest lender taking a hint of differentiated
customer service from the new generation private banks decided to set up ‘by-
invitation-only’ branches under the ‘Kohinoor’ brand in 20 cities to serve urban-rich
clients and non-resident Indians (NRIs). These branches are open 24X7 and have
facilities like lounges, conference rooms, personal business centers and cafeterias.
The branches offer all the banking products and services of SBI and its subsidiaries.
The first Kohinoor –Banjara -branch was opened in Hyderabad in the year 2010 and
is a great success.

 State Bank of India and Corporate Social Responsibility

State Bank of India is surging ahead not only in its business but is equally
focused and committed towards corporate social responsibility.

 One of the most important corporate social responsibilities being shouldered by all
the banks in India these days is that of Financial Inclusion. SBI in order to fulfill its
duty towards financial inclusion and in order to expand its rural base the bank is
forging ahead with a cutting edge technology and innovative new banking models.
Under its the financial inclusion plan, the bank is currently providing basic banking
services in 11,300 villages. This number is expected to increase up to to 22,421
villages by March-end 2015. Acknowledging SBI great contribution towards
financial inclusion Skoch Financial Inclusion in the year 2013 awarded the bank for
its kiosk banking model .
 In the year 2012 , State Bank of India was convened with the National Award by
the Ministry of Micro, Small and Medium Enterprises , Govt of India, for its
outstanding performance in implementation of Prime Minister's Employment
Generation Programme (PMEGP) Scheme. SBI surpassed the target set under
PMEGP scheme for Financial Year 2011-12. SBI has bagged this award
consecutively for the four year for its best performance under the scheme since
inception (PMEGP Scheme was launched during the FY 2008-09).

 On June 2013 SBI added another feature in its cap of CSR activities buy taking a
step towards women empowerment Programme. The bank opened its first all-
women branch in the north-eastern circle in the city's Lachit Nagar area in
Guwahati. The branch like other SBI branches is equipped with latest modern
banking technology with only female employees and customers.
5.2 CUSTOMER SERVICE IN SBI
 State bank of India realizing that only good customer service and satisfaction are
the keys to its future success and survival, on July 1st 2008, unveiled a new vision statement
which contained the essence of the views of over 1,40,000 staff who participated in a unique
exercise conducted by human resource management department of SBI. The exercise was
conceptualized so as to re-define the bank’s mission, vision and values. The staff, who
displayed understanding of the challenges of achieving excellent customer service which alone
can enable the bank to continue to maintain its leadership position in future, were
overwhelmingly of the opinion that the Bank’s vision should focus primarily on customer
service. The new vision and mission statement thus designed were as follows-

Vision “My SBI, my customer first, my SBI: first in customer satisfaction”

We will be prompt, polite and proactive with our customers.

We will speak the language of young India.
We will create products and services that help our customers achieve their
goals.
Mission
We will go beyond the call of duty to make our customers feel valued.
We will be of service even in the remotest part of our country.
We will offer excellence in services to those abroad as much as we do to
those in India.
We will imbibe state of the art technology to drive excellence.

The new vision and mission statement appropriately reflects the view of the staff of
SBI and is now the guiding principle for all the plans, activities and strategies of the bank.

1.2.1 Customer Service Initiatives by SBI

In order to achieve its vision of customer satisfaction the bank has taken several initiatives
like:

a) It has established Toll-free helpline numbers available 24 x 7 for all product enquiries
and technology related issues. The contact center also provides information on account,
products and other services offered by the bank.
b) A comprehensive analysis of customer grievances is done every quarter to identify
common systemic issues that need rectification.

c) SBI also launched in December 2009 a portal-linked service which enables a dissatisfied
customer to ‘SMS unhappy’ to 8008202020, which is connected to a “happy room” at
the SBI Head Office. Within minutes of sending the SMS the customer will receive a
call from the head office.

d) The most recent initiative by SBI is that of enabling the customer to share their
suggestion and grievance with the manager of their respective branches. The bank has
fixed the time between 2:30 pm to 4:30pm on the 15th and the 25th of every month when
the managers of all the branches of SBI all over India will attend to the grievances of
their customers.

1.2.2 The Grievance Redressal Procedure

In order to ensure that the customer can easily reach the bank in times of trouble,
the bank deigned the following grievance redressal procedure (the details of which are
displayed on the bank website):

Step 1- In case of any feedback or complaint the customer can firstly

a) Meet the branch manager of their respective branch on the 15th and 20th of every
month between 2:30 pm to 4:30 pm.

b) Can call on the two toll free numbers given on SBI website.
c) Customers can also submit their grievance/ feedback online.
d) The customers can simply SMS ‘unhappy’ on the banks given number.

Step 2- In case the grievance is not resolved within ten days from the date of registration or if
the customer is not satisfied with the resolution given by the branch then the customer can
meet / write to the network nodal officer ( different for different branches) the contact details
of which are available on the bank website.

Step 3- In case the grievance is not resolved within 5 days from the date of escalation to the
Network Nodal officer or the customer is not satisfied with the resolution offered by the
Nodal Officer then the customer can meet/ write/ email to the Principal Nodal Officer in
Mumbai.

Step 4- The customer is always free to write/email / fax any feedback or complaint to the
chairman of the bank the address of which is available on the website.
Step 5- As the last resort the customers can lodge their complaint with their jurisdictions
Banking Ombudsman. The list of which has been made available by the bank on their
website.

Table: 5. 1
Bank Group-Wise Distribution of Complaints Received
Bank group Total number of Complaint Received

2008- 2009- 2010- 2011- 2012- 2013- 2014-

2009 2010 2011 2012 2013 2014 2015
Total complaints
received by
Scheduled 69,117 79,266 71,274 72,889 65255 76573 78599
Commercial
Banks.
14,974 19,092
Nationalized 20,417 22,326 23133 23710 28075
(22%) (24%)
bank (29%) (31%) (35%) (31%) (36%)

SBI and 18,167 22,832 22,307 25,854 20793 21208 26573

Associate (26%) (29%) (31%) (35 %) (32%) (28%) (34%)

(Figures in bracket indicate percentage to total complaints of respective years.)

Source: Compiled from Banking Ombudsman Reports 2009-2015

From Table 5.1 it can be analyzed that on an average 30 percent of total

complaints are against SBI. The percentage of complaints though have reduced in
comparison to the nationalized banks, however when compared with itself the number of
complaints have increased significantly.

From the above table it can also be concluded that the various initiatives of the
bank are not proving to be very helpful in improving the overall customer satisfaction level of
the bank customers, as the total number of complaints are increasing each year.
1.3 SBI LUCKNOW- AN OVERVIEW

Nawab Nassruddin Haider, the second king of Awadh (now known as Lucknow)
was famous for his amorous life style. After his succession to power 1827 AD he
commissioned construction of an observatory Jantar Mantar style on a raised ground opposite
Moti Mahal two furlong away from river Gomti in the city. It was completed in 1832 and was
famous as ‘Tara Wali Kothi’.

On 17th march 1883 Bank of Bengal opened its Lucknow branch in this ‘Tara
Wali Kothi’ and on 1st July 1955 this ‘Kothi’ came to be known as the State Bank of India -
Lucknow main branch.

SBI was the first bank in Lucknow and is also the bank which currently has the
maximum branches 45 (Figure: 5.3) serving nearly 4, 50,000 customers (Figure: 5.4) in
Lucknow3.

3
Refer Table 11.4 /Annexure IV.
 SBI Branches in
Lucknow 45

SBI Branches
Pan India
10,000

Figure:5.3
SBI Branches Pan India and Lucknow
 Customers SBI
lucknow-4,50,000

SBI Customers Pan India 100 million or

10, 00, 00,000 (ten crore)

Figure:5.4
SBI Customer Base4

4
Refer endnote 5.1
1.5 CUSTOMER PROFILE OF SBI LUCKNOW5

As banking and money handling is still considered the domain of male members
in the family majority of the customers of SBI were male (80%). Even the females (20%)
who had account in SBI either because their husbands or fathers had opened it for them or it
was a salary account. (Figure: 5.5).

FEMALE
20%

MALE
80%

Figure: 5.5
Percentage of Male and Female Customers of SBI Lucknow
Luckn

5
This information was collected with a help of a self -constructed questionnaire. (Annexure VI).
The purpose of conducting this survey was to have an overview of the demographics of the customers of SBI
Lucknow.
 The majority of SBI customers are middle aged 35
35-55
55 years of age followed by
the senior citizen age group. Not many youngsters have an account in SBI probably as they
don’t view it as a very technology savvy bank. The senior citizens usually either have their
pension account in the bank or have had an account in SBI since a long time and have not
changed over to the private sector bank. (Figure: 5.6)

4%

15%
30% Senior

Middle

Young

Minor

51%

Figure:5.6
Percentage of Customers in Different
Different Age Group in SBI Lucknow
 A majority of SBI Lucknow customers are government officials and have their
salary account in the bank and nearly 18 percent customers have a pension account in the
bank. Many of the SBI customers also belonged to the self-
self employed category especially in
the areas of Aminabad, Chowk and Hazartganj which are the primary business areas of
Lucknow.

Homemakers Others
2% 1%

Private Service
20%

Government
Service
SELF 45%
EMPLOYED
20%

Pensioners
18%
Student
2%

Figure 5.7
Percentage of Customers in Different Profession in SBI
1.6 CONCLUSION

State bank of India is the largest bank of India and this is not because it has a two
hundred year old legacy but because, it transformed and evolved itself with time. SBI was
the first public sector bank to adopt the CBS system of banking and computerized all its
branches in a very short period of time. SBI is also one of the first public sector banks to
appreciate the importance of good customer service for the future profitability and growth of
a bank, therefore in the year 2008 itself, the bank changed its mission and vision so as to
focus on its customers.
Over the years the bank has come up with many innovative customer service
strategies like SMS unhappy, call on toll free numbers, assured grievance redressal by the
branch managers and so on. However, the Banking Ombudsman report 2012 to 2015 shows
that inspite of all the efforts being put in by SBI the total number of complaints by the
customers continues to rise. Thus , SBI has to ensure proper implementation of the customer
centric strategies by its employees if it truly wants to live up to the status of “Banker to every
Indian”.

5.1 End Note

Total Customers of State Bank of India (SBI) in Lucknow

Total Customer Base Pan India - 100 million or 10, 00, 00,000 (ten crore)
Total Branches Pan India - 10,000 (ten thousand)
Average Customers per branch - 10,000 (10, 00, 00,000 / 10,000)
Branches in Lucknow - 45
Total Customer in Lucknow - 4, 50,000 (45 * 10,000)