State Bank of India: Transforming a State-

Owned Giant

AKSHAY KANNOLY              PGP/23/315

ASHMIL IBRAHIM PGP/23/197             
Group 9 RAHNA VIJAYAN                  PGP/23/350
JESWIN JOY       PGP/23/018
NIHA MOL PGP/23/032
VISHNU MURALI                     PGP/23/369
 INTRODUCTION
SBI is an Indian multinational, public sector banking and public sector banking and financial
services statutory body headquartered in Mumbai
Traces its ancestry back to the Bank of Calcutta , which was established in 1806
The Bank of Madras merged into the other two presidency banks in British India, the Bank of
Calcutta and the Bank of Bombay, to form the Imperial Bank of India, which in turn became the
State Bank of India in 1955
Oldest commercial bank in the Indian subcontinent

Government-owned and is the Largest bank in India 190 foreign offices

Govt acquired RBI’s 60% stake for 35,531 Cr in 2007 across 35 countries

23% of Market share

Ranked 236th on Largest by Assets
the Fortune Global Branch(24000) and
500 ATM network 25% share of total
loan and deposits
Issues faced by SBI because of internal issues within the bank
Competition
• New entrants in the banking sector posed a significant threat to the incumbents like SBI. New private banks like ICICI
bank and HDC bank entered the field in the past decade. Foreign banks like Standard Chartered Bank, Citibank and HSBC
expanded their India footprint
• SBI lost 20% market share in the past decades due to this competition

Technology
• The new entrants invested in technology and customer service
• The concept of remote banking through phone and internet banking was introduced by the competitors. This ‘Anywhere,
Anytime Banking’ gave the new banks advantage over SBI’s physical branch network system
• The customers were part of the bank and not branch with this new technology initiatives

Customers & Employees

• The new banks offerred ‘relationship banking’ which lured the younger and technologically adept customers
 The new entrants hired best talent with attractive salaries that the government banks couldn’t offer
Issues faced by SBI because of internal issues within the bank
Employees & Customers
• SBI had a closed hierarchical approach which sapped the enthusiasm of employees
 Highly politicized unions which opposed the internet banking because they feared it would expose their low
productivity levels
• The SBI’s HR policies on promotions and transfers were outdated
• VRS scheme resulted in good employees leaving the bank and the ones who cannot find other jobs staying at the bank
 Employees were not aware of the problems that the bank faced since the employees had less contact with the senior
management and the communication was one way from top to bottom
 Customers were neither respected nor treated well. Even the family members of SBI staff went to the private banks

Technology
• Decentralized computerized systems. Customers belonged to the branches than the bank, reducing the flexibility of
customers to bank from branches other than the home branch
 SBI’s technology was not good enough to offer the products and the services that the competitors were offering
 CBS rollout by SBI was not successful and had around 700 bugs when Bhatt took over as Chairman
Changes brought by Bhatt

 STRUCTURAL TRANSFORMATION : Formation of new strategic business group headed by Deputy Managing
Directors -
 Restructured the organisational hierarchy: eliminated the modular structure (zonal offices) within each circle
 Successful roll out of CBS
 People Initiatives : - Conclaves to communicate vision and to change mindset of top management, employees and
unions where people are free to voice their ideas, criticise and accept criticism , to build consensus and alignment.
- Process re engineering to streamline operating process to suit the CBS
- Measures to improve customer satisfaction
- PARIVARTAN- an inhouse mass internal communication program
- CITIZEN SBI
Changes brought by Bhatt

 Strengthened and integrated risk management system and created a new position as Chief Credit and Risk
Officer
 New system for measuring business performance
 Merged 2 subsidiaries – State Bank of Saurashtra and State Bank of Indore – to itself to exploit synergies
and cut operating cost
 Changed Individual performance metrics: Other Initiatives like Win Back the Indian Middle-Class
Customer, Own Rural India, ‘Smart’ Global Expansion, etc to increase their market share and customer
base
 Impact

 A study done by Xavier Institute of Management showed that the changes brought about considerable changes in overall customer
satisfaction
 In January 2008, SBI became number one in India in terms of market cap, overtaking ICICI Bank
 State Bank is now the country’s 5th largest company in terms of market cap, from 14th in 2006
 SBI entered the Fortune Global 500 Listing
 In 2007, SBI was rated the best bank in India in terms of customer service, brand loyalty, and branch strength
 Business and profit per employee soared from Rs 3 crores and 2 lakhs in 2005-06 to over Rs 5.5 crores and 5 lakhs respectively in 2008-09.
 The share of non-interest income grew from 62 percent to 68 percent. Treasury profits started contributing almost a quarter of SBI’s total
profits
 Bank also expanded at breakneck speed. The number of SBI branches grew by over 50 percent. The number of ATMs grew almost four-
fold, from 5443 in March 2006 to over 21,000 in 2010.
 The bankers ranking of SBI in 2014 is 46. with total assets of $400 billon.
 This change won back the Indian middle class and young customers
 Customer service improved tremendously. SBI customer changed from a “branch customer” to a “Bank customer”
 WAY AHEAD FOR SBI

Leadership in corporate banking- Focus on corporate lending, treasury and tenor management; Raise some more capital
for the bank to give out bigger loans to companies to be able to gain more customers

Retail banking- 30 million people gets added to India’s middle-income group every year; SBI needs to adapt their
products and services to cater to the needs of customers; High income segment customers require more convenience in
banking

Organizational monitoring- Hold more organizational confrontation meetings so that the managers could regularly meet
to evaluate the effectiveness of SBI in meeting its goals and maintaining its position in the market

Employee engagement- Build Quality circles so that the employees can form groups to meet regularly to discuss the way
work is done and to suggest new ways of improving efficiency, as the banking sector is growing in competition and SBI
needs to keep on adapting to keep ahead of competition
 WAY AHEAD FOR SBI

Personalised services to customers- To battle the new age private banks, SBI has to offer more convenient digital services focussing
on providing a seamless customer experience

Going digital-As the world is moving towards digital solutions and services each day, SBI needs to enhance their technological
capabilities with the implementation of tailor-made ERP and SAP solutions; Improving the efficiency of resource allocation by
enabling real-time information access of allocated and unallocated resources

Provide effective workforce trainings- Advancement and innovation in areas of human capital management and enterprise resource
planning such as e- learning, virtual classrooms, career development ,competency assessment, performance management

Remembering Bhatt’s statement, “India needs a very strong banking system to sustain its current growth rate of about 9%
over the next decade. Currently India lacks this system; however, SBI is in the best position to take this leap in terms of
size, sophistication and reach” .
Thank You