PROJECT REPORT ON

“A STUDY ON FINANCIAL ANALYSIS AT STATE BANK OF

INDIA”
SUBMITTED BY: -
AAKASH PAI P
REG. NO. 203431361101
SUBMITTED IN PARTIAL FULFILMENT FOR THE AWARD
OF
MASTER OF BUSINESS ADMINISTRATION OF
MANGALORE UNIVERSITY

UNDER THE VALUABLE GUIDANCE OF

DR. PRAMEELA S SHETTY
ASST. PROFESSOR

SDM COLLEGE OF BUSINESS MANAGEMENT FOR POST

GRADUATES CENTRE FOR MANAGEMENT STUDIES AND
RESEARCH, MANGALORE - 575003
2021 – 2022
 CHAPTER-1

INTRODUCTION
Financial analysis is an assessment of the viability, stability and profitability of a business or

project. Banking plays an important role in the economic development of a country and
forms the core of the money market in an advanced country.

The banks now focus on integrated balance-sheet management where all the relevant factors
which effect an appropriate balance sheet composition deserve consideration. It is performed

by professionals who prepares reports using ratios and other techniques.

Therefore, various components of balance sheet will be analyzed keeping in view the
strengths of a bank. Analyzing Asset and Liability behaviour means managing both assets
and liabilities simultaneously for the purpose of minimizing the adverse impact of interest
rate movement, providing liquidity, and enhancing the market value of equity.

The success and survival of a bank depends to a great extent upon the dedication and
competence of its managers.

A careful designing and management of Asset and Liability behaviour is integral part of
banking business particularly because over three forth of its resources to originate from the
depositors.

OBJECTIVES OF FINANCIAL ANALYSIS:

 To present the complex data contained in the financial statement in simple and
understandable firm.
 To classify the items contained in the financial statement in convenient and rational
forms.
 To make comparison between various groups to draw various conclusion.

PURPOSE OF FINANCIAL ANALYSIS:

 To know the solvency

 To know the financial strength
 To know the trend of the business
 To know the efficiency of management
  To provide useful information to management

PROCEDURE OF FINANCIAL ANALYSIS:

 The extent of analysis should be determined, and work may be decided.

 The financial data given in statement should be recognized and rearranged.

RATIO ANALYSIS:

Ratio analysis is a quantitative method of gaining insight into a company’s liquidity,

operational efficiency, and profitability by studying its financial statement such as balance
sheet and income statement. Ratio analysis is a cornerstone of fundamental equity analysis.

It is done to analyse the company’s financial and trend of the company’s results over years.
Ratio analysis is widely used tool of financial analysis. It can be used to compare the risk and
return relation of firms of different size.

The term ratio refers to the numerical or quantitative relationship between any two
items/variables. This relationship can be expressed as:

 Percentage
 Fraction
 Proportion of number

These alternative methods of expressing items, which are related to each other for the
purpose of financial analysis.

DEFINITION OF RATIO ANALYSIS:

Ratio analysis mainly aims to compare various line financial statement pertaining the
business. It is targeted to evaluate various metrics required to understand company
performance. This is particularly helpful for analysts outside the company.

On the other hand, corporate have information about the company ratio analysis are not that
important.
OBJECTIVES OF RATIO ANALYSIS

 To assess the comparative change and the degree of improvement in the financial of
the enterprise profitability or liquidity position.
 To provide a proper base for decision making purpose for the use of financial
statement.
 To highlight the company’s performance by giving a glance information to the
management and others.
 To determine short- term and long-term solvency.
 It is a vital tool for analysis.
 It maintains liquidity.
 Helps in comparing certain ratios to better outlook of a company’s financial
performance and position.
 Helps in Evaluating Operational efficiency.

MERITS OF RATIO ANALYSIS

 Ratio analysis helps in forecasting and planning by performing trend analysis.

 Ratio analysis helps in estimating budget for the firm by analysing previous trends.
 It has comparison of two or more firms.
 It is to determine both liquidity and long-term solvency.
 Ratios are used in establishing standard costing system and budgetary control.
 Ratios helps in co-ordination. Better communication of strength and weakness of an
organization results better co-ordination.
 It is used the budget of future activities on the basis of past experience.
 Ratio analysis are used in the form of effective communication and plays a vital role
in informing the position and progress made by the business concern to the owners or
other parties.
 It helps to take decisions like whether to supply goods on credit to a firm.
DEMERITS OF RATIO ANALYSIS

 Ratio seems to be complicated.

 It has several organisations work in various enterprises each processing different
environmental positions such as market structure, regulation etc.
 Ratio analysis illustrates the associations between prior data while users are more
concerned about current and future data.
 Ratios are computed from the data found in the financial statement from a numerous
limitation, which means the accuracy of ratios is dependant upon the accuracy of the
data found in the financial statement.
 There is no steadiness in the meaning of certain accounting ratios used in the
calculation of ratios differ from one analyst to another analyst.
 Ratios are calculated in a quantitative aspect only.
 Qualitative aspects of ratio influence the conclusion drawn are ignored.
 Changes in the price level misleads in the calculation of accounting ratios.
 There is no well accepted standards or roles for all ratios which can be accepted. It
makes interpretation of the ratio difficult.
RATIOS USED FOR THE ANALYSIS

1. Current Ratio:
The current ratio shows the firm’s ability to its short-term obligation, which measures
whether a firm has enough resources. The ratio is used by analyst to determine
whether they should invest or lend money to the business. It has sufficient resources
to recover its debt over the financial period.
Since the ratio is current assets divided by current liabilities, the ratio essentially
implies that current liabilities can be liquidated to pay for current assets.
The actual current ratio, ascertain with the help of relevant accounting figure, must be
compared with the standard current ratio of 2:1.

Current Ratio = Current Assets

Current Liabilities

2. Investment Turnover Ratio:

It compares the revenues produced by the business. The ratio is used to evaluate the
ability of management team to generate revenue with a specific amount of funding.

Investment Turnover Ratio = Total Income

Total Assets

3. Debt to Total Assets Ratio:

It shows how much of a business owned by creditors compared with how much of the
company’s assets are owned by shareholders.
 Debt Total Assets Ratio = Total Debt

Total Assets

4. Deposit To Advance Ratio:

It means a bank will not have significant reserves available for expected or
unexpected contingencies. It is exactly as its name implies loan. It has been raised in
the form of deposits.

Deposit to = Deposits
Advance Ratio Advances

5. Total Income Ratio:

It largely constitutes of fee income such as commission, exchanges and brokerage
fees. It also includes profit on exchange transactions, profit from sale of investments
and other transactions, profit from sale of investments and other miscellaneous
income.

Total Income Ratio = Other Income

Total Income

6. Return on Net worth:

It is calculated by estimating the value of the business on the company’s books and
adding unrealized gains. It is a useful way to compare the company’s relative value to
other insurance companies.
 Return on Annual Net worth
Net worth = Equity Share Capital

7. Cash Ratio:
It is a measurement of a company’s liquidity. It specifically calculates the ratio of a
company’s total cash and cash equivalents to its current liabilities. This ratio
calculates a business ability to pay current liabilities using only cash available with
the company. If the company is required to pay all current liabilities immediately, this
ratio shows the company’s ability to sell the other assets.

Cash Ratio = Cash

Current Liabilities

8. Interest earned Ratio:

It is a measure of a company’s ability to honour its debt payments based on current
income. It measures how easily a company can pay its debts with its current income.

Interest Earned Ratio = Interest Expended

Interest Earned

9. Debt- Equity Ratio:

It is a measure of the relative contribution of the creditors and shareholders or owners
in the capital employed in business. It calculates the value of total debt and financial
liabilities against the shareholder’s equity. It is a proportion of firm’s total liability
and company’s shareholders equity.
 If there are low ratio, it shows that the organization has less risk against its debt
holder. If there is high debt equity firm, the firm should meet liability against creditors
and firm should maintain financial position.

Debt- Equity Ratio = External Debt

Shareholder’s equity

10. Return on Assets Ratio:

This ratio indicates how well a company’s investments generate value. It is calculated
by dividing the company’s earnings after tax by its total assets. A company can earn
return on investments in assets. Its profitability can be measured in term of
relationship between net profit and assets. This ratio is also known as Net profit to
Total Assets ratio.

Return on Assets Ratio = Net Profit

Total Assets
 CHAPTER -2
PROJECT DESIGN
Project Design is the systematic procedure with which a study would be conducted. A project
design is the arrangement of the condition for data collection and analysis of data that aims to
combine relevance to the research purpose.

Financial Analysis of any companies reflect their financial results and financial position at
particular point of time. This study makes an attempt to evaluate the financial performance
through financial statement analysis. A study has been conducted on the financial aspect of
the “STATE BANK OF INDIA”

TITLE OF THE STUDY:

A study on “Financial Analysis on STATE BANK OF INDIA”

LITERATURE REVIEW:

1. S. Subalakshmi, S. Grahalakshmi and M. Manikandan, SBI is the India’s largest

commercial bank in terms of assets, deposits and employees. SBI is the preferred
banker for most of public sector corporations. It occupies a unique place in the Indian
money market as it commands more than one third of India’s bank resources. Public
has enormous faith in State bank of India because of its dedicated services. This study
aims at analyzing the Financial Ratio analysis of State Bank of India. Various
empirical studies have been conducted from time to time to examine the different
aspects of growth pattern and performance of small-scale industrial sectors in India.
Therefore, the study was undertaken to analyze financial status of public sector bank
especially to SBI (State Bank of India).

2. Fago (2010) measures “Performance measurement using Balance score card”. For the
overall performance of two commercial banks of Nepal using a Balance score card
from four different interlinked perspectives. The primary data of this study have been
collected through banks websites and annual reports. The data have been analyzed
through percentage, ratios and presented using graphs and tables.
3. Aurora and Malhotra (2010) studied the level of customer satisfaction and
marketing strategies in both private and public sector banks in India. It revealed six
factors of customer satisfaction in public sector banks viz, routine operations, price,
situational environmental technology and interaction. But in private banking sector,
they found seven factors in total, having staff factors as the top ranked and situational
factors as the lowest ranked items.

4. Dutta K. and Dutta A (2010) investigated the perception of expectation of customers

across all the banks in India. This study showed that customers are most satisfied with
the services of foreign banks followed by private and public banks. This study
suggested that Indian public banks should improve their banking services.

5. Asante (2010) in his study on “Divisional Performance Evaluation tools employed by

indigenous Ghanian Banks”. It is the collection of primary data, a survey method
using structured and unstructured interviews were used. It has been concluded that
banks uses both financial and non-financial measures, in assessing the performance of
their branches.

6. Baber and Akhter (2016) “An Empirical Study on Balance Score card” has
significant impact on the performance of banks and mentioned for the banking sector.
For the study 26 banks were selected as the samples using stratified random sampling
technique. Data have been collected through self- administered questionnaires that
were filled by top managers and senior officers. They conducted that bank should
develop their own intellectual capabilities.

7. Mobarez and Effar (2016) study on “Banking Information Technology to Sustain

the Banking Performance”. It is aimed to determine the role performance of
information technology in raising banking sector. The study concluded that the
information technology positively affects the performance of the banks.

8. Habib (1972) through his study came to the conclusion that small scale industries
play an important role in the economic development by providing numerous chances
of income generation and improves the standard of living.
 9. Sharma (2017) Research on the ratios of the bank for the past decade show
economies of scale. It infers from this fact that the bank is progressing in terms of its
profits and is reducing its costs simultaneously. This bank also builds on the fact that
the bank is expanding every day.

10. Vimala (2015) This study shows that Internet Banking is very convenient and fast
and it is mired with several security issues. Banking institutions have taken several
measures to ensure safety measures of their customers while performing various
transactions through online banking sector. From this study, it is observed that very
few works have focused on Internet Banking.

OBJECTIVES OF THE STUDY:

 To study the financial system and the role of finance of STATE BANK OF INDIA.
 To study the turnover and market-based ratios performance of STATE BANK OF
INDIA.
 To analyse the financial position of the company.

SCOPE OF THE STUDY:

The scope of the study is STATE BANK OF INDIA, Mangalore. With reference period from
analyse the financial performance which includes liquidity, profitability, leverage and
turnover.

The study on “Financial Analysis of STATE BANK OF INDIA” is an analysis of financial

performance undertaking at the organizational level. The present study does not cover the
human resource practices employee performance, performance of mutual fund in the Indian
stock market.

LIMITATIONS OF THE STUDY:

 It was difficult to obtain a confidential data from the concerned department due to the
secrecy policy that the bank follows.
 The time period of the study is limited.
 The study is mainly based on the available published information. It is bound to suffer
from certain limitations. It is not been possible to have an in-depth study as certain facts
of the bank are not revealed.

METHODOLOGY:

 Study design: - The study will be conducted with reference to the data related to
SBI. The study will examine the financial analysis of some variables and analytical in
nature with an attempt to explore the financial analysis of SBI.
 Sources of data/ Sampling Method & Sampling Details:

RESEARCH METHODOLOGY:

The present study is based on secondary data. The analysis will be based on liquidity,
profitability and leverage ratios, which are calculated with the help of data from financial
statements of the State Bank of India. All the data will be related to State Bank of India
Auditors reports, Internet, Books, Journals and Magazines.
 CHAPTER – 3

INDUSTRY PROFILE
INDIAN BANKING INDUSTRY:

In India the banking is originated in 18th century. The oldest bank in India is the ‘State
Bank of India’, it is the largest commercial bank in India. Its responsibilities taken
by Reserve Bank of India. The Imperial Bank of India was taking over these
responsibilities in 1935 relating to the functioning of commercial Banks. After the
Independence the RBI was become nationalized and it got the all powers. And 14
largest commercial banks were nationalized in 1961.

In 1786 the first General Bank was established in the country. And the Indian banking
system was classified into 3 phases.

 Indian Banks from 1786 to 1969.

 Nationalization Banks of India and up to 1991 reforms.

 Reforms of Indian Banking sector after 1991.

SBI enjoys a monopoly of the government business. The Reserve Bank of India owns about
60% of the bank equity. To its credit, SBI mobilized 4.2 billion dollars through the Resurgent
Indian Bonds.

SBI enjoys a pool of best managerial talent, assured government business, a countrywide
network of branches and strong brand credibility in the Indian market. With the government
offering an assured business, nationalized banks and State Bank of India in particular bank
will not take a complacent view. They should evolve service-intensive products and make
their employees and customer friendly.

The bank is continuously restructuring itself and for this, they even hire the services of
foreign consultants but the price has to be hastened. These are estimated to collectively
command a value of 30,000 crores.
PRIOR TO INDEPENDENCE:

In 1786 the first General Bank of India was established with as joint stock. After that
Bank of Bengal and Bank of Hindustan was started till 1906. And later 3 Banks are
started by the East India Company, i.e., Bank of Bengal in 1809, Bank of Bombay in
1840, and Bank of Madras in 1843. And they are the Presidency Banks and Independent
units and well functioned. After, these three Banks combined together and established
the new one i.e., Imperial Bank of India in 1920. A number of Banks with Indian
management these are namely, Bank of India ltd, Canara Bank ltd, Punjab National
Bank ltd.

In 1949 the Reserve Bank of India was established as the country’s central bank. RBI
got the powers and authorities to control the Indian Banks and supervision and licensing
powers and also inspection powers.

AFTER INDEPENDENCE:
In the year 1955, Imperial Bank of India was nationalized and renamed as “State Bank
of India”. It was established under SBI Act 1955. After that RBI was empowered to
force the compulsory merger of the weak banks with the strong banks.

It reduces the number of Banks from 566 in 1951 to about 89 in 1969.In 1969,14 major
banks were nationalized and it became 20 in number of total Nationalized banks in India.
The recommendation of Narasimhan Committee, the Banking Regulation Act was
amended in 1933 and for these new Private sector banks are opened.

VIRTUAL BANKING:
SBI has yet to computerize its operations and network of all its branches. The computers
commonly available to serve only to revile the banks of the clerical staff of maintaining
ledgers and not to penetrate into areas of customer service. These computers are the best
remain only as desk ornaments with the New Telecom Policy (NTP).

It has not having overhead of physical branches, people expect virtual bank to offer
higher interest rates on their accounts. It entails making various banking services
available in a extensive use of IT without the need for the physical services.
Therefore, it is a financial institution that provides traditional banking services online.
This means a customer can make account inquiries, get loans, pay bills online, and even
withdraw and deposit money whenever customer requests.

PRIVATIZATION AND CREDIT DISBURSEMENT:

It takes about privatization of the bank’s ownership have been initiated but the SBI act of
1955 does not permit RBI’s ownership to be diluted to below 55%. This act is outdated
and needs to be re- addressed. However, efforts have been initiated by SBI to privatize
its non- banking subsidiaries.

It has hastened that the investments can migrate to more important areas like
development of new technologies of the product in customer service and incentive areas.
Privatization helps to professionalize the banks day to day operation, which will allow
the management more freedom in decision making during credit disbursement.

To aid privatization and effect a better price realization the bank is attempting the
change over its accounting and reporting for complying. It is perquisition for trying out
its ADR route.
 CHART SHOWING PRESENT INDIAN BANKING STRUCTURE

Indian Banking System

Reserve Bank of India (Central Bank and Monetary Authority)

Commercial Banks Regional Rural Banks Co-operative Banks

Public Sector Private Sector State Co-operative Banks

Banks Banks

Indian Foreign Central Co-Operative Banks

State Bank Nationalized Primary Credit Societies

India Banks

BUSINESS:
It is initially confined to discounting of bills of exchange or other negotiable private
securities, keeping cash accounts and receiving deposits and circulating cash notes. Loans
were restricted to Rs 1lakh and the period of accommodation confined to three months only.
The security for such loans was public securities

All commodities were beginning to be financed later, which were either pledged or
hypothecated to the bank. The demand of promissory notes were signed by the borrower,
which was in turn endorsed to the bank.

Lending against shares of the banks or on the mortgage of houses, land or other real
property was however forbidden. Indians were the principal borrowers against deposit of
Company’s paper, while the business of discounts on private as well as salary bills.

It is almost the exclusive monopoly of individuals Europeans and their partnership

firms.

It was helped to raise the loans from time to time and also provide a degree of stability to
the prices of government securities.

MAJOR CHANGE IN THE CONDITION:

It is in the operation of the Banks of Bengal, Bombay and Madras occurred after 1860,
which was passed on the Paper Currency Act of 1961, the right of note issue of the
presidency banks was abolished and the Government of India assumed from 1 st March
1862 of the sole power of issuing paper currency with British India.

The task of management and circulation of 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 bank would open branches.

Although the charters had given such authority, but as soon as three presidency banks
were assured of the free use of government Treasury balances at places where they
would open branches, they embarked on branch expansion at rapid pace.
By 1876, the branches, agencies and sub- agencies of three presidency banks covered
most of the major parts and many of the inland trade centers in India. While the Bank of
Bengal has 18 branches including head office, seasonal branches and sub- agencies, the
Banks of Bombay and Madras had 15 each.

PRESIDENCY BANKS ACT:

This act, came into existence on 1st May 1876, brought the three presidency banks under
a common statute with the similar restriction on business. It has respect of shares which
is to further regulate the exercise of voting rights by a financial company and it
associates with respect of shares.

The proprietary connection was under the control of the Government. However, it was
terminated through the banks continued to hold charge of the public debt offices in the
three presidency towns, and the custody of a part of the government balances.

The act was stipulated the creation of Reserve Treasuries at Calcutta, Bombay and
Madras only at their head offices were to be lodged.

The Government could lend to the presidency banks from such Reserve Treasuries but
the latter could look upon them more as a favour.

CORE BANKING:
It provides the state of the art anywhere, anytime banking for customers. This facility is
available at 1012 branches. This may access their bank account and perform basic
transactions from any of the member branch offices.

Core banking include transaction accounts, loans, mortgages and payments. Banks
makes these services available across multiple channels like ATM, Internet banking,
Mobile banking and branches.

Banking software and network technology allows a bank to centralize its record keeping
and allow access from any location.

Before 1970’s it is used to take at least a day for transaction to reflect in the real account
because each branch had their local servers, and the data from the server in each branch
was sent in a batch to the servers in the data center only.

Core banking became possible with the advent of computer and telecommunication
technology that allowed information to be shared between bank branches quickly and
efficiently.

Over the following 30 years most of the banks moved to core banking applications to
support their operations. This is meant that all banks’ branches could access applications
from centralized data centers.

There are few providers that help leverage to the existing legacy systems itself, by
following out customer engagement functions from the core system and managing it as a
horizontal cross- enterprise layer. This layer provides banks with enhanced product
innovation capabilities and customer data management, with this approach banks can
quickly adopt new technologies add more functionally and capabilities, offer customized
products and enhance the customer experience.

TRANSACTION BANKING:
A transaction account is a deposit account held at a bank or other financial institution. It
is available to the account owner on demand and is available for frequent and immediate
access by the account owner or to others as the account owner may direct.

Transaction accounts are operated by both business and personal users. Depending on
the country and local demand economics earning from interest rate varies.

This concept spread to other countries including England and its colonies in North
America, where land owners in Boston in 1681 mortgaged their land to cashiers who
provided an account against which they do.

In the 18th Century in England, preprinted checks, serial numbers and the word “cheque”
appeared. By the late 18th century, the difficulty of clearing checks gave rise to the
development of clearing houses. All transactions accounts offer itemized lists of all
financial transactions, either through a bank statement or a passbook.

TRADE FINANCE:
The solution has been implemented, providing efficiency in handling Trade finance
transactions with Internet access to customers and greatly enhances the bank’s services
to Corporate and Commercial Network branches.

Trade finance signifies financing for trade and it concerns both domestic and
international trade transactions. A trade transaction requires a seller of goods and
services as well as buyer. Various intermediaries such as banks and financial institutions
can facilitate these transactions by financing the trade.

Banks and financial institutions offer the following products and services in their trade
finance branches. They are:
 Letter of credit: - It is an undertaking given by bank on behalf of the Buyer/
Importer to the Seller/ Exporter, if that Seller / Exporter presents the complying
documents to the Buyer’s designated Bank/ Financial Institute as specified by the
Buyer/ Importer in the Purchase agreement then the Buyer’s Bank/ Financial
Institute will make payment to the Seller/ Exporter.
 Bank guarantee: - It is an undertaking/ promise given by a Bank on behalf of
the Applicant and in favour of the Beneficiary. Whereas, the Bank has agreed
and undertakes that, if the Applicant failed to fulfill his obligations either
Financial or Performance as per the Agreement made between the Applicant and
the Beneficiary then the Guarantor Bank on behalf of the applicant will make
payment of the guarantee amount of the Beneficiary upon receipt of a demand or
claim from the Beneficiary.
 Collection and discounting of bills: - It is a major trade service offered by the
Banks. The Seller’s Bank collects the payment proceeds on the behalf of the
seller, from the buyer or buyer’s bank, for the goods sold by the seller to the
buyer as per the agreement made between seller and the buyer.

Supply chain intermediaries have expanded in recent years to offer importers a funded
transaction of individual trades from a foreign supplier to importers warehouse or
customers designated point of receipt.

The Supply chain products offer importers a funded transaction based on customer order
book.

WAN (WIDE AREA NETWORK)

The bank has set up a Wide Area Network, known as SBI connect, which provides
connectivity to 4819 branches/ offices of SBI Group across 385 cities. This network
provides across the bound benefits by providing nationwide connectivity for its business
applications.

Through its network has more than 22,000 branches across the country. SBI has been
driving radical changes to pave the way for digitally enabled banking.

It has always been responsive to changing customer preferences. The YONO app is the
best example, which has proven to be a huge success. While SBI stepped on the
accelerator to hit the digital highway in a big way by launching its new products and
services. It is based on launching of new applications, technology and resiliency
requirements was increasing manifold.

INFRASTRUCTURE:
It underlies every piece of technology layered on top. SBI has imperative to have their
data center, secure and available, with the integrity and flexibility being the bank core
values, it is to create a network infrastructure with the same attributes.

The IT team from the Bank along with the professors from the Indian Institute of
Technology started to carry out assessment and evaluation of various network
infrastructure solutions available in the marketplace.

After an intense evaluation, SBI selected to set up the network infrastructure for its data
center. The Bank took help of professional services for the design and implementation of
the project. It has Software- Defined- Networking (SDN) solution to provide the
necessary security, intelligence and flexible enough to support the applications and
services.

The joint team of SBI finalized the design to implement the network for the data center.
It also involved integration of various other components of the infrastructure like
security etc.

A project of this size and magnitude needed to be tested to remove any element of doubt
and discrepancies. The team brought in their expertise and carried out simulations to test
the various network paths and scout for issues.

Data center projects are complex undertakings. But it is a brand-new data center emerges
to support business objectives and meet current and anticipated future needs.

The new data center is highly resilient not only in terms of the network equipment’s, but
also in terms of the network design.

It also has security precautions that maintain the operational ability of the entire network
infrastructure.

ASSOCIATES OF STATE BANK OF INDIA:

State Bank of India is a nationalized bank owned by the government of India. Since, it
was merged in the year 2017.

SBI has become the largest bank in India. The evolution of SBI in recent years has been
noticeable. It is one of the oldest banks operating in India.

On 1st April 2017, SBI merged with 5 of its associate banks and one other bank. This
brought into SBI the 50 largest banks in the world.
The following six Associate Banks with controlling interest ranging from 75% to 100%,
They are: -

1. STATE BANK OF BIKANER AND JAIPUR

2. STATE BANK OF HYDERABAD
3. STATE BANK OF INDORE
4. STATE BANK OF MYSORE
5. STATE BANK OF PATIALA
6. STATE BANK OF TRAVANCORE

The six associate banks have combined network of 4502 branches in India which are
fully computerized and 2410 ATM networked with SBI atm, provided value added
services to clientele. The combined net profit of these banks increased by 12%. Deposits
and advances grew by 19% and 22% respectively.

There are many reasons that were cited for the merger. Some of these mergers will
decrease the unhealthy competition. Further, it was difficult for smaller banks to sustain
competition and various risk norms. It was due to the changes in regulations in the form
of risk norms as there was a requirement of compliance and technology.

The asset size of SBI became the largest in the world. Banks are now able to focus more
on defaulters, because of the merger multiple recoveries can be made easier.

SBI under its entity has more than 23,000 branches and employs more than 2,70,000
people. The deposit of SBI has also increased up to 26 lakh crores.

This merger had caused a lot of criticism for SBI, because of associate banks which was
once ruled by the owners.

For example: - The merger of State Bank of Travancore employees observed a strike
against it due to the merger the bank lost its glory.
It was oppose the move for the merger. This was done because the State Bank of
Travancore was the only bank with its headquarters in Kerala.

The importance of that bank had among the people of the State was of immense value.
The proposed merger could result in widespread repercussions for the people.
 CHAPTER-4

COMPANY PROFILE
SBI is an Indian multinational, public sector banking and financial services company. SBI is
one of India’s major banks and is an industry leader in terms of size, business sector
promotion and initiatives for the progress and economic enhancement of the Indian economy.

SBI is entering into many new businesses with strategic tie up such as- Pension Funds,
General Insurance, Custodial Services, Private equity, Mobile Banking, Point of Sale
Merchant Acquisition, Advisory Services, organized items and so on. SBI is moving forward
with forefront innovation and imaginative new saving money models, to strengthen its
presence and widen its client base.

SBI had assets worth US$ 388 billion and 17,000 branches, including 190 foreign offices,
making it the largest banking and financial services company in India by assets. SBI has
acquired local banks as a part of rescue efforts. Bank of Bihar was acquired in 1969 along
with its 28 branches. Krishnaram Baldeo Bank was acquired in 1975 and the Bank of Cochin
in Kerala was acquired in 1985 along with its 120 branches.

SBI Vision, Mission and Values

Vision:

 Transforming India by choice of banks.

 To become synonymous with an inclusive idea of wealth creation with benefits
having a far reach point.
 First in customer satisfaction.
Mission:

 Committed to providing Simple, Responsive and Innovative Financial Solutions.

 To achieve the customer goals by offering different products and services.
 For excellent drive we consume the art technology of state.
 Offering of better services to abroad Indian customers.

Values:

 More ethical, transparent and honest in the services.

 Respect to our customers and other fellow associates.
 Driven of Knowledge.
 Relationship, Transparency, Passion.

EVALUATION OF STATE BANK OF INDIA:

State Bank of India started in the 19th century, with the establishment of bank of Calcutta in
1806. And in 1809, the Bank of Bengal. It is a unique institution and it is the first joint stock
bank of British India sponsored by Govt. of Bengal. And later in 1940, the Bank of Bombay,
and in 1853 the Bank of Madras were established. These three banks retained their position at
1st in modern banking in India till their combining as the Imperial Bank of India in 1921. SBI
has decided to link grant of extension for officers to ‘evaluation metrics’ comprising
parameters such as performance, attitude and credentials which includes integrity, conduct,
benchmark and qualifying score.
FOUNDATION OF STATE BANK OF INDIA:

The foundation of Bank of Bengal has the low or minimum liability in India as joint stock
Banking. Bank of Bengal has the decision to issue notes and accepted by public for payment
revenues within restricted in the graphical area. The note issue might not only for Bank of
Bengal but also for the remaining 2 banks i.e., Bank of Bombay and Bank of Madras. It
means gathering to the capital of Banks on which proprietor has belongs to pay any interest.

This concept of deposit banking was also an innovation being accepting money for
safeguarding by local bankers had not spread as a general habit as in the most parts of the
India. But for a long time 3 presidency banks have the right to issue the notes. Bank notes and
govt. balance made up the bulk of huge investible resources of the banks.
TABLE: BOARD OF DIRECTORS

SL Name Designation Under

NO Section of
SBI Act 1955

1 Shri Dinesh Kumar Khara Chairman 19(a)

2 Shri C.S. Shetty Managing 19(b)

Director

3 Shri Ashwani Bhatia Managing 19(b)

Director

4 Shri Swaminathan J Managing 19(b)

Director

5 Shri Ashwini Kumar Managing 19(b)

Tewari Director

6 Shri B. Venugopal Director 19(c)

7 Dr Ganesh Natarajan Director 19(c)
8 Shri Ketan S. Vikamsey Director 19(c)
9 Shri Mrugank M Director 19(c)
Paranjape

10 Dr Pushpendra Rai Director 19(d)

11 Shri Sanjeev Maheshwari Director 19(d)
12 Shri Debasish Panda Director 19(e)
13 Shri Anil Kumar Sharma Director 19(f)
CHART: SBI ORGANIZATION STRUCTURE
The Board of Directors broadly governs the SBI presided by the chairman and Managing
Director. The Government of India appoints the chairman and Managing Director. The
government of India appoints both the chairman and managing director. There are several
banking businesses. Each division is headed by the managing director, who then reports to
the chairman.

To each managing director, the deputy managing directors of respective departments are
aligned within the managing director to facilitate streamlined banking business. Two
managing directors are chosen by the central board of SBI with approval from the Indian
Government.

The private shareholders elect six directors. One director is nominated by the Government of
India and Reserve of India.

FUNCTIONS OF SBI:

 Provides a wide range of commercial banking services.

 Accepts deposits from the general public and institutional depositors.
 Offers loans to the entities that SBI believes capable of servicing loans.
 Additionally sells and purchases gold.
 Takes up the role of agent for the co-operative bank and the Reserve bank of India.
 Plays a role of a government’s bank and a banker’s bank.
 Underwrites issues of the stocks and bonds for its institutional clients.
 Bank is not authorized to lend funds corresponding to stocks for more than six
months.
 Not entitled to purchase any immovable properties, but it could purchase only offices
for official business purposes.
 Does not rediscount loans against securities.
 Does not lend additional funds to corporate entities and individuals.
SERVICES OF SBI:

 SBI offers a variety of commercial and personal banking services.

 Offers to open accounts in public provident fund schemes as well as in the Sukanya
Samriddhi scheme.
 Provide Inward foreign remittances.
 Provides ATM services across India and in different global locations.
 Provide internet banking and e- wallet services for individuals.
 Provides facilities of loans, overdrafts and working capital loans to facilitate business.
 Additionally provides home loans, consumer durable loans, educational loans and
loans against mutual funds and securities.
 Offer wealth management services to select clients and institutional investors.
 Provides complementary access every quarter to support lifestyle banking.
 Offers specially designed and customized salary accounts for corporates.

MERGING WITH OTHER BANKS

In 1st April 2017 the State Bank of India has merged with the six Banks, that is the State of
Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala,
State Bank of Travancore and Bhartiya Mahila Bank.

The business operations of SBI can be broadly classified into the key income generating areas
such as:

 National banking
 International Banking
 Corporate Banking
 Treasury Operations
 Associates and Subsidiaries
COMPETITORS OF STATE BANK OF INDIA

Top Performing Public Sector Banks

 Union Bank of India

 Punjab National Bank
 Bank of Baroda
 Canara Bank

Top Performing Private Sector Banks

 HDFC Bank
 ICICI Bank
 AXIS Bank
 Kotak Mahindra Bank

Top Performing Foreign Banks

 Citibank
 Standard Chartered HSBC Bank
REVITALIZING OF SBI:

It is defined and well-demarcated systems in place to ensure that the business operations are
managed effectively and that there are no conflicts or disputes.

The systems at Revitalizing State Bank of India are largely departmental in nature, and
include:

 Human Resource Management

 Finance
 Marketing
 Operations
 Sales
 Supply Chain Management
 Public Relation Management
 Strategic Leadership

The core values at State Bank of India include, but are not limited to:

 Creativity
 Honesty
 Transparency
 Accountability
 Trust
 Quality
 Heritage

It also ensures that all its activities and operations are conducted with high ethical and moral
standards that redefined and benchmarked against international criteria.
SWOT ANALYSIS OF STATE BANK OF INDIA:

Strengths:
 Better domestic position
 It has the very large network in India
 Very strong Capital position
 It has the better goodwill in the market
 Strong economic growth would generate higher demand for funds.
 It provides a wide variety of services to their customers includes, investment banking,
online banking and rural banking.
 The bank is active in 36 countries involved in currency traders around the world.

Weakness:
 Slow modernization
 It has the high margin of non-performing assets, repayment of loan issues.
 Compared to other private banks and foreign banks the customer waiting period is
long.
 Loss of market shares, because of delay in technology up-gradation
 Bad debts are the main problem of unable to resolve bad debts and non-repayment of
loans.
Opportunities:

 Global expansion in that especially in rural areas.

 Reduce transaction cost by merging with associated banks.
 Restructuring with the challenges of the new financial environment.
 Growth of per capita income and indicates a growing economy.
 Borrowing capacity of the customer is increasing.
 Through the help of technologies that is mobiles, internet, computers the services of
online banking are increasing.
 Aims to expand and invest in foreign activities due to a strong inflow of capital from
the Asian economy.

Threats:

 Threats of cyber will affect on bank image and information theft & security.
 Reduce in market shares of SBI, If the consolidation among private banks.
 Effect on operation when giving licenses by SBI for new banks
 Foreign banks that have advanced product in their business.
 Other government banks, such as GNP, Andhra, Allahabad Bank and Indian Bank are
coming up.
CHAPTER-5