PROJECT REPORT ON BANKING REFORMS IN INDIA

1) Bank – It’s Definition and Introduction:-

• Definition of Bank:- In general parlance a Bank is defined as an

organization, usually a corporation, chartered by a state or federal
government, which does most or all of the following: receives demand
deposits and time deposits, honors instruments drawn on them, and pays
interest on them; discounts notes, makes loans, and invests in securities;
collects checks, drafts, and notes; certifies depositor's checks; and issues
drafts and cashier's checks.

• Functions of Banks: -
The Banking sectors provides a mix of functions essential to run the economy at large
and thereby helps the business community and others to fulfill their day to day financial
obligations, however in today’s modern world the Bank provides varied services apart
from lending and deposit of money which are stated as Primary and Secondary functions
of Banks.

A) Primary Functions of Banks: -.The primary functions of a commercial bank include:

a) Accepting deposits; and
b) Granting loans and advances;

a) Accepting deposits
The most important activity of a commercial bank is to mobilize deposits from the public.
People who have surplus income and savings find it convenient to deposit the amounts
with banks Depending upon the nature of deposits, funds deposited with bank also earn
interest. Thus, deposits with the bank grow along with the interest earned. If the rate of
interest is higher, public are motivated to deposit more funds with the bank. There is also
safety of funds deposited with the bank.

b) Grant of loans and advances:-

The second important function of a commercial bank is to grant loans and advances. Such
loans and advances are given to members of the public and to the business community at
a higher rate of interest than allowed by banks on various deposit accounts. The rate of
interest charged on loans and advances varies depending upon the purpose, period and the
mode of repayment. The difference between the rate of interest allowed on deposits and
the rate charged on the Loans is the main source of a bank’s income.
 i) Loans:- A loan is granted for a specific time period. Generally, commercial
banks grant short-term loans. But term loans, that is, loan for more than a
year, may also be granted. The borrower may withdraw the entire amount in
lump sum or in instalments. However, interest is charged on the full amount
of loan. Loans are generally granted against the security of certain assets. A
loan may be repaid either in lump sum or in instalments.

ii) Advances:- An advance is a credit facility provided by the bank to its

customers. It differs from loan in the sense that loans may be granted for
longer period, but advances are normally granted for a short period of time.
Further the purpose of granting advances is to meet the day to day
requirements of business. The rate of interest charged on advances varies from
bank to bank. Interest is charged only on the amount withdrawn and not on the
sanctioned amount.

Modes of short-term financial assistance:- Banks grant short-term financial assistance

by way of cash credit, overdraft and bill discounting.

a) Cash Credit: - Cash credit is an arrangement whereby the bank allows the borrower to
draw amounts upto a specified limit. The amount is credited to the account of the
customer. The customer can withdraw this amount as and when he requires. Interest is
charged on the amount actually withdrawn. Cash Credit is granted as per agreed terms
and conditions with the customers.

b) Overdraft:- Overdraft is also a credit facility granted by bank. A customer who has a
current account with the bank is allowed to withdraw more than the amount of credit
balance in his account. It is a temporary arrangement. Overdraft facility with a specified
limit is allowed either on the security of assets, or on personal security, or both.

c) Discounting of Bills:- Banks provide short-term finance by discounting bills, that is,
making payment of the amount before the due date of the bills after deducting a certain
rate of discount. The party gets the funds without waiting for the date of maturity of the
bills. In case any bill is dishonoured on the due date, the bank can recover the amount
from the customer.

ii) Secondary functions: -Besides the primary functions of accepting deposits and
lending money, banks perform a number of other functions which are called secondary
functions. These are as follows –

a) Issuing letters of credit, travellers cheques, circular notes etc.

b) Undertaking safe custody of valuables, important documents, and securities by

providing safe deposit vaults or lockers;
 c) Providing customers with facilities of foreign exchange.

d) Transferring money from one place to another; and from one branch to another branch
of the bank.

e) Standing guarantee on behalf of its customers, for making payments for purchase of
goods, machinery, vehicles etc.

f) Collecting and supplying business information;

g) Issuing demand drafts and pay orders; and,

h) Providing reports on the credit worthiness of customers

The Other Non Core functions as provided by today’s Banks broadly fall under two
categories:

i) Agency services, and

ii) General utility services.

i) Agency Services:- Agency services are those services which are rendered by
commercial banks as agents of their customers. They include the following

a) Collection and payment of cheques and bills on behalf of the customers;

b) Collection of dividends, interest and rent, etc. on behalf of customers, if so instructed
by them;
c) Purchase and sale of shares and securities on behalf of customers;
d) Payment of rent, interest, insurance premium, subscriptions etc. on behalf of
customers, if so instructed;
e) Acting as a trustee or executor;
f) Acting as agents or correspondents on behalf of customers for other banks and
financial institutions at home and abroad.

ii) General utility services: -General utility services are those services which are
rendered by commercial banks not only to the customers but also to the general public.
These are available to the public on payment of a fee or charge. They include the
following:

a) Issuing letters of credit and travellers’ cheques;

b) Underwriting of shares, debentures, etc.;
c) Safe-keeping of valuables in safe deposit locker;
d) Underwriting loans floated by government and public bodies.
e) Supplying trade information and statistical data useful to customers;
f) Acting as a referee regarding the financial status of customers;
g) Undertaking foreign exchange business.

• History of Banking in India: -

Pre Independence Scenario of Banking in India: - Banking in India originated in the

last decades of the 18th century. The first banks were The General Bank of India which
started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest
bank in existence in India is the State Bank of India, which originated in the Bank of
Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was
one of the three presidency banks, the other two being the Bank of Bombay and the Bank
of Madras, all three of which were established under charters from the British East India
Company. For many years the Presidency banks acted as quasi-central banks, as did their
successors. The three banks merged in 1921 to form the Imperial Bank of India, which,
upon India's independence, became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as
a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in
1865 and still functioning today, is the oldest Joint Stock bank in India.(Joint Stock
Bank: A company that issues stock and requires shareholders to be held liable for the
company's debt) It was not the first though. That honor belongs to the Bank of Upper
India, which was established in 1863, and which survived until 1913, when it failed, with
some of its assets and liabilities being transferred to the Alliance Bank of Simla.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire
d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in
1862; branches in Madras and Puducherry, then a French colony, followed. HSBC
established itself in Bengal in 1869. Calcutta was the most active trading port in India,
mainly due to the trade of the British Empire, and so became a banking center.
The Bank of Bengal, which later merged with the Bank of Bombay and the Bank of
Madras to form the Imperial Bank of India in 1921.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in
1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established
in Lahore in 1895, which has survived to the present and is now one of the largest banks
in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative
period of stability. Around five decades had elapsed since the Indian Mutiny, and the
social, industrial and other infrastructure had improved. Indians had established small
banks, most of which served particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also some exchange
banks and a number of Indian joint stock banks. All these banks operated in different
segments of the economy. The exchange banks, mostly owned by Europeans,
concentrated on financing foreign trade. Indian joint stock banks were generally under
capitalized and lacked the experience and maturity to compete with the presidency and
exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it
seems we are behind the times. We are like some old fashioned sailing ship, divided by
solid wooden bulkheads into separate and cumbersome compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by the
Swadeshi movement. The Swadeshi movement inspired local businessmen and political
figures to found banks of and for the Indian community. A number of banks established
then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,
Bank of Baroda, Canara Bank and Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks in

Dakshina Kannada and Udupi district which were unified earlier and known by the name
South Canara ( South Kanara ) district. Four nationalised banks started in this district
and also a leading private sector bank. Hence undivided Dakshina Kannada district is
known as "Cradle of Indian Banking".

During the First World War (1914-1918) through the end of the Second World War
(1939-1945), and two years thereafter until the independence of India were challenging
for Indian banking. The years of the First World War were turbulent, and it took its toll
with banks simply collapsing despite the Indian economy gaining indirect boost due to
war-related economic activities. At least 94 banks in India failed between 1913 and 1918
as indicated in the following table:

Numberofbanks Authorisedcapital Paid-upCapital

Years
that failed (Rs. Lakhs) (Rs. Lakhs)
1913 12 274 35
1914 42 710 109
1915 11 56 5
1916 13 231 4
1917 9 76 25
1918 7 209 1

Post Independence Scenario of Banking in India:-

The partition of India in 1947 adversely impacted the economies of Punjab and West
Bengal, paralyzing banking activities for months. India's independence marked the end of
a regime of the Laissez-faire for the Indian banking. The Government of India initiated
measures to play an active role in the economic life of the nation, and the Industrial
Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This
resulted into greater involvement of the state in different segments of the economy
including banking and finance. The major steps to regulate banking included:

• In 1948, the Reserve Bank of India, India's central banking authority, was
nationalized, and it became an institution owned by the Government of India.
• In 1949, the Banking Regulation Act was enacted which empowered the Reserve
Bank of India (RBI) "to regulate, control, and inspect the banks in India."
• The Banking Regulation Act also provided that no new bank or branch of an
existing bank could be opened without a license from the RBI, and no two banks
could have common directors.

However, despite these provisions, control and regulations, banks in India except the
State Bank of India, continued to be owned and operated by private persons. This
changed with the nationalisation of major banks in India on 19 July 1969.

Nationalisation of Banks: -
The RBI was nationalized on January 1, 1949 in terms of the Reserve Bank of India
(Transfer to Public Ownership) Act, 1948 (RBI, 2005b).[Reference www.rbi.org.in]

By the 1960s, the Indian banking industry had become an important tool to facilitate the
development of the Indian economy. At the same time, it had emerged as a large
employer, and a debate had ensued about the possibility to nationalise the banking
industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the
GOI in the annual conference of the All India Congress Meeting in a paper entitled
"Stray thoughts on Bank Nationalisation." The paper was received with positive
enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance
and nationalised the 14 largest commercial banks with effect from the midnight of July
19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a
"masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the
Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking)
Bill, and it received the presidential approval on 9 August 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The

stated reason for the nationalization was to give the government more control of credit
delivery. With the second dose of nationalization, the GOI controlled around 91% of the
banking business of India. Later on, in the year 1993, the government merged New Bank
of India with Punjab National Bank. It was the only merger between nationalized banks
and resulted in the reduction of the number of nationalised banks from 20 to 19. After
this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the
average growth rate of the Indian economy.

Liberalisation of Banking Sector:-

In the early 1990s, the then Narsimha Rao government embarked on a policy of
liberalization, licensing a small number of private banks. These came to be known as
New Generation tech-savvy banks, and included Global Trust Bank (the first of such new
generation banks to be set up), which later amalgamated with Oriental Bank of
Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move,
along with the rapid growth in the economy of India, revitalized the banking sector in
India, which has seen rapid growth with strong contribution from all the three sectors of
banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been set up with the proposed relaxation in the
norms for Foreign Direct Investment, where all Foreign Investors in banks may be given
voting rights which could exceed the present cap of 10%,at present it has gone up to 74%
with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time,
were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning.
The new wave ushered in a modern outlook and tech-savvy methods of working for
 traditional banks.All this led to the retail boom in India. People not just demanded more
from their banks but also received more.

Currently (2007), banking in India is generally fairly mature in terms of supply, product
range and reach-even though reach in rural India still remains a challenge for the private
sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks
are considered to have clean, strong and transparent balance sheets relative to other banks
in comparable economies in its region. The Reserve Bank of India is an autonomous
body, with minimal pressure from the government. The stated policy of the Bank on the
Indian Rupee is to manage volatility but without any fixed exchange rate-and this has
mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-
especially in its services sector-the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong. One may also
expect M&As, takeovers, and asset sales.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake
in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor
has been allowed to hold more than 5% in a private sector bank since the RBI announced
norms in 2005 that any stake exceeding 5% in the private sector banks would need to be
vetted by them.

In recent years critics have charged that the non-government owned banks are too
aggressive in their loan recovery efforts in connection with housing, vehicle and personal
loans. There are press reports that the banks' loan recovery efforts have driven defaulting
borrowers to suicide.

• Structure of Banking in India:-

 2) ROLE OF RESERVE BANK OF INDIA IN THE INDIAN BANKING
SECTOR:-

Reserve Bank of India

 The RBI headquarters in Mumbai

Mumbai, Maharashtra, India

Headquarters

1 April 1935
Established
Current Governor Duvvuri Subbarao

Currency Indian Rupee Symbol: `

$287.37 billion(2009)
Reserves
5.2%
Base borrowing rate
8.5% (projected for 2010-11)
Base deposit rate
Website rbi.org.in

The Reserve Bank of India (RBI, Hindi: भारतीय िरजवर बैक) is the central banking system
of India and controls the monetary policy of the rupee as well as 287.37 billion US-Dollar
(2009) currency reserves. The institution was established on 1 April 1935 during the
British-Raj in accordance with the provisions of the Reserve Bank of India Act, 1934 [1]
and plays an important part in the development strategy of the government.

History of RBI: -
1935 – 1950: -

The central bank was founded in 1935 to respond to economic troubles after the first
world war.[2] The Reserve Bank of India was set up on the recommendations of the
Hilton Young Commission. The commission submitted its report in the year 1926,
though the bank was not set up for another nine years. The Preamble of the Reserve Bank
of India describes the basic functions of the Reserve Bank as to regulate the issue of Bank
Notes, to keep reserves with a view to securing monetary stability in India and generally
to operate the currency and credit system in the best interests of the country. The Central
Office of the Reserve Bank was initially established in Kolkata, Bengal, but was
permanently moved to Mumbai in 1937. The Reserve Bank has continued to act as the
central bank for Myanmar till Japanese occupation of Burma and later up to April 1947,
though Burma seceded from Indian Union in 1937. After the partition, the Reserve bank
served as the central bank for Pakistan up to June 1948 when the State Bank of Pakistan
commenced operations. Though originally set up as a shareholder's bank, the RBI has
been fully owned by the Government of India since its nationalization in 1949.[3]

1950 - 1960

Between 1950 and 1960 the Indian government developed a centrally planned economic
policy and focused on the agricultural sector. The administration nationalized commercial
banks and established, based on the Banking Companies Act, 1949 (later called Banking
Regulation Act) a central bank regulation as part of the RBI. Beside that the central bank
was ordered to support the economic plan with loans.

1960 - 1969

As a result of bank crashes the reserve bank was requested to establish and monitor a
deposit insurance system. It should restore the trust in the national bank system and was
initialized on 7. December 1961. The Indian government founded funds to promote the
economy and used the slogan Developing Banking. The Gandhi administration and their
successors restructured the national bank market and nationalized a lot of institutes. As a
result the RBI had to play the central part of control and support of this public banking
sector.

1969–1985

Between 1969 and 1980 the Indian government nationalized 20 banks. The regulation of
the economy and especially the financial economic was reinforced by the Gandhi
administration and their successors in the 1970s and 1980s. The central bank became the
central player and increased her policies for a lot of tasks like interests, reserve ratio and
visible deposits. The measures aimed at a better economic development and had a huge
effect on the company policy of the institutes. The banks lent money in selected sectors
like agri-business and small trade companies.
The branch was forced to establish two new offices in the country for every new founded
office in a town. The Oil crises in 1973 resulted in increasing inflation and the RBI
restricted the monetary policy to reduce the effects.[12]

1985–1991

A lot of committees analysed the Indian economy between 1985 and 1991. Their results
had an effect on the RBI. The Board for Industrial and Financial Reconstruction, the
Indira Gandhi Institute of Development Research and Security & Exchange Board of
India investigated the national economy as a whole and the security and exchange board
proposed better methods for more effective markets and the protection of investor
interests. The Indian financial market was a leading example for - so called - "financial
repression" (Mackinnon uand Shaw). Discount and Finance House of India began his
operations on the monetary market in April 1988, the National Housing Bank, founded in
July 1988, was forced to invest in the propoerty market and a new financial law improved
the versatility of direct deposit by more secirity measures and liberalisation.

1991–2000

The national economy came down in July 1991 and the Indian rupee was devalued The
currency lost 18% related to the US-Dollar and the Narsimahmam Committee adviced to
restructure the financial sector by a temporal reduced reserve ratio as well as the statutory
liquidity ratio. New guidelines were published in 1993 to establish a private banking
sector. This turning point shound reinforce the market and was often called neo-liberal
The central bank deregulated the bank interests and some sectors of the financial market
like the trust and the proporty market.[17] This first phase was a success and the central
government forced a diversity liberalisation to diversify the owner structures in 1998.[18]

The National Stock Exchange of India took the trade on in June 1994 and the RBI
allowed nationalized banks in July to interact with the capital market to reinforce their
capital base. The central bank founded a subsidiary company - the Bharatiya Reserve
Bank Note Mudran Limited - in February 1995 to produce banknotes.

since 2000

The Foreign Exchange Management Act from 1999 came into force in June 2000. It
should improve the foreign exchange market, international investments in India and
transactions. The RBI promoted the development of the financial market in the last years,
allowed online banking in 2001 and established a new payment system in 2004 - 2005
(National Electronic Fund Transfer).[20] The Security Printing & Minting Corporation of
India Ltd., a merger of nine institutions, was founded in 2006 and produces banknotes
and coins.
The national economy's growth rate came down to 5,8% in the last quarter of 2008 - 2009
and the central bank promotes the economic development.

Structure of the Central Board of Directors

The Central Board of Directors is the main committee of the central bank and has not
more than 20 members. The government of the republic appoints the directors for a four
year term.

Central Board of Directors

Name Position
Duwuri Subbarao Governor
Shyamala Gopinath Deputy Governor
Usha Thorat Deputy Governor
K. C. Chakrabarty Deputy Governor
Subir Gokarn Deputy Governor
Y. H. Malegam Regional of the West
Suresh D. Tendulkar Regional of the East
U. R. Rao Regional of the North
Lakshmi Chand Regional of the South
H. P. Ranina Lawyer Supreme Court of India
Chairman Firstsource Solutions
Ashok S. Ganguly
Limited
Azim Premji Chairman WIPRO Limited
Chairman Aditya Birla Group of
Kumar Mangalam Birla
Companies
Shashi Rajagopalan Advisor
Suresh Neotia former Chairman Ambuja Cement Co.
A. Vaidyanathan Economist, Professor Madras Inst.
Chemist, Professor Mumbai
Man Mohan Sharma
University
Chairman Lakshmi Machine Works
D. Jayavarthanavelu
Limited
Sanjay Labroo CEO Asahi India Glass Ltd.
Ashok Chawla Government representative

Supportive bodies

The reserve bank of India has four regional representations: North in New Delhi, South in
Chennai, East in Kolkata and West in Mumbai. The representations are formed by five
members, appointed for four years by the central government and serve - beside the
advice of the Central Board of Directors - as forum for regional banks and to deal with
delegated tasks from the central board. The institution has 22 regional offices.

The Board of Financial Supervision (BFS), formed in November 1994, serves as a

CCBD committee to control the financial institutions. It has four members, appointed for
two years, and takes measures to strength the role of statutory auditors in the financial
sector, external monitoring and internal controlling systems.

The Tarapore committee was setup by the Reserve Bank of India under the chairmanship
of former RBI deputy governor S S Tarapore to "lay the road map" to capital account
convertibility. The five-member committee recommended a three-year timeframe for
complete convertibility by 1999-2000.

On 1 July 2006, in an attempt to enhance the quality of customer service and strengthen
the grievance redressal mechanism, the Reserve Bank of India constituted a new
department — Customer Service Department (CSD).

Reserve Bank of India regional office, Delhi entrance with the Yakshini sculpture
depicting "Prosperity through agriculture"[25].
The RBI Regional Office in Delhi.

The RBI Regional Office in Kolkata.

Functions of Reserve Bank of India :-

Monetary Authority

The Reserve Bank of India is the main monetary authority of the country and beside that
the central bank acts as the bank of the national and state governments. It formulates,
implements and monitors the monetary policy as well as it has to ensure an adequate flow
of credit to productive sectors. Objectives are maintaining price stability and ensuring
adequate flow of credit to productive sectors. The national economy depends on the
public sector and the central bank promotes an expensive monetary policy to push the
private sector since the financial market reforms of the 1990s.

The institution is also the regulator and supervisor of the financial system and prescribes
broad parameters of banking operations within which the country's banking and financial
system functions. Objectives are to maintain public confidence in the system, protect
 depositors' interest and provide cost-effective banking services to the public. The
Banking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI)
for effective redressal of complaints by bank customers. The RBI controls the monetary
supply, monitors economic indicators like the gross domestic product and has to decide
the design of the rupee banknotes as well as coins.

Manager of exchange control

The central bank manages to reach the goals of the Foreign Exchange Management Act,
1999. Objective: to facilitate external trade and payment and promote orderly
development and maintenance of foreign exchange market in India.

Issuer of currency

The bank issues and exchanges or destroys currency and coins not fit for circulation. The
Objectives are giving the public adequate supply of currency of good quality and to
provide loans to commercial banks to maintain or improve the GDP. The basic objectives
of RBI are to issue bank notes, to maintain the currency and credit system of the country
to utilize it in its best advantage, and to maintain the reserves. RBI maintains the
economic structure of the country so that it can achieve the objective of price stability as
well as economic development, because both objectives are diverse in themselves.

Developmental role

The central bank has to perform a wide range of promotional functions to support
national objectives and industries. The RBI faces a lot of inter-sectoral and local
inflation-related problems. Some of this problems are results of the dominant part of the
public sector.

Related functions

The RBI is also a banker to the Government and performs merchant banking function for
the central and the state governments. It also acts as their banker. The National Housing
Bank (NHB) was established in 1988 to promote private real estate acquisition. The
institution maintains banking accounts of all scheduled banks, too.

There is now an international consensus about the need to focus the tasks of a central
bank upon central banking. RBI is far out of touch with such a principle, owing to the
sprawling mandate described above. The recent financial turmoil world-over, has
however, vindicated the Reserve Bank's role in maintaining financial stability in India.

3) Commercial, Public, Private and Foreign Banks in India: -

A) Commercial and PSU Banks in India

 • State Bank of India

State Bank of India

Type Public (BSE: 500112, LSE: SBID)

Banking
Industry
Financial services
Founded July 1, 1955
Headquarters Mumbai, Maharashtra, India
O. P. Bhatt
Key people
(Chairman)
Investment Banking
Consumer Banking
Commercial Banking
Retail Banking
Products Private Banking
Asset Management
Pensions
Mortgages
Credit Cards
Revenue ▲ $28.212 billion (2010)[1]
Profit ▲ $2.473 billion (2010)[1]
Total assets ▲ $323.043 billion (2010)[1]
Total equity ▲ $18.519 billion (2010) [1]
Owner(s) Government of India
Employees 205,896 (2010)
Website Statebankofindia.com
State Bank of India (Hindi: भारतीय सटेट बैक) (SBI) (BSE: 500112, LSE: SBID) is the
largest state-owned banking and financial services company in India, by almost every
parameter - revenues, profits, assets, market capitalization, etc. The bank traces its
ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of
the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent.
The Government of India nationalized the Imperial Bank of India in 1955, with the
Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In
2008, the Government took over the stake held by the Reserve Bank of India.
SBI provides a range of banking products through its vast network of branches in India
and overseas, including products aimed at NRIs. The State Bank Group, with over 16,000
branches, has the largest banking branch network in India. With an asset base of $260
billion and $195 billion in deposits, it is a regional banking behemoth. It has a market
share among Indian commercial banks of about 20% in deposits and advances, and SBI
accounts for almost one-fifth of the nation's loansSBI has tried to reduce over-staffing by
computerizing operations and "golden handshake" schemes that led to a flight of its best
and brightest managers. These managers took the retirement allowances and then went on
to become senior managers in new private sector banks.
The State bank of India is the 29th most reputed company in the world according to
Forbes. State Bank of India is the largest of the Big Four Banks of India, along with
ICICI Bank, Punjab National Bank and Canara Bank — its main competitors

State Bank of India (SBI), Mumbai Main Branch.

The bank has 131 overseas offices spread over 32 countries as on 31st Dec 2009. It has
branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Johannesburg,
London and environs, Los Angeles, Male in the Maldives, Muscat, New York, Osaka,
Sydney, and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and
Singapore, and representative offices in Bhutan and Cape Town
SBI operates several foreign subsidiaries or affiliates. In 1990 it established an offshore
bank, State Bank of India (Mauritius).
In 1982, the bank established a subsidiary, State Bank of India (California), which now
has eight branches - seven branches in the state of California and one in Washington DC
that it opened on 23 November 2009. The seven branches in California are located in Los
Angeles, Artesia, San Jose, Canoga Park, Fresno, San Diego and Bakersfield.

The Israeli branch of the "State Bank of India" located in Ramat Gan.
The Canadian subsidiary, State Bank of India (Canada) too dates to 1982. It has seven
branches, four in the greater Toronto area and three in British Columbia.
In Nigeria SBI operates as INMB Bank. This bank began in 1981 as the Indo-Nigerian
Merchant Bank and received permission in 2002 to commence retail banking. It now has
five branches in Nigeria.
In Nepal, SBI owns 50% of Nepal SBI Bank, which has branches throughout the country.
In Moscow SBI owns 60% of Commercial Bank of India, with Canara Bank owning the
rest. In Indonesia it owns 76% of PT Bank Indo Monex.
State Bank of India already has a branch in Shanghai and plans to open one up in Tianjin.
History
The roots of the State Bank of India rest in the first decade of 19th century, when the
Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The
Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay
(incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843).
All three Presidency banks were incorporated as joint stock companies, and were the
result of the royal charters. These three banks received the exclusive right to issue paper
currency in 1861 with the Paper Currency Act, a right they retained until the formation of
the Reserve Bank of India. The Presidency banks amalgamated on 27 January 1921, and
the reorganized banking entity took as its name Imperial Bank of India. The Imperial
Bank of India continued to remain a joint stock company.
Pursuant to the provisions of the State Bank of India Act (1955), the Reserve Bank of
India, which is India's central bank, acquired a controlling interest in the Imperial Bank
of India. On 30 April 1955 the Imperial Bank of India became the State Bank of India.
The Govt. of India recently acquired the Reserve Bank of India's stake in SBI so as to
remove any conflict of interest because the RBI is the country's banking regulatory
authority.

Offices of the Bank of Bengal

In 1959 the Government passed the State Bank of India (Subsidiary Banks) Act, enabling
the State Bank of India to take over eight former State-associated banks as its
subsidiaries. On September 13, 2008, State Bank of Saurashtra, one of its Associate
Banks, merged with State Bank of India.
SBI has acquired local banks in rescues. For instance, in 1985, it acquired Bank of
Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, State
Bank of Travancore, already had an extensive network in Kerala.
Associate banks
SBI has five associate banks that with SBI constitute the State Bank Group. All use the
same logo of a blue keyhole and all the associates use the "State Bank of" name followed
by the regional headquarters' name. Originally, the then seven banks that became the
associate banks belonged to princely states until the government nationalised them
between October, 1959 and May, 1960. In tune with the first Five Year Plan,
emphasizing the development of rural India, the government integrated these banks into
State Bank of India to expand its rural outreach. There has been a proposal to merge all
the associate banks into SBI to create a "mega bank" and streamline operations.
The first step towards unification occurred on 13 August 2008 when State Bank of
Saurashtra merged with State Bank of India, reducing the number of state banks from
seven to six. Then on 19 June 2009 the SBI board approved the merger of its subsidiary,
State Bank of Indore, with itself. SBI holds 98.3% in the bank, and the balance 1.77% is
owned by individuals, who held the shares prior to its takeover by the government
The acquisition of State Bank of Indore added 470 branches to SBI's existing network of
12,448 and over 21,000 ATMs. Also, following the acquisition, SBI's total assets will
inch very close to the Rs 10-lakh crore mark. Total assets of SBI and the State Bank of
Indore stood at Rs 998,119 crore as on March 2009. The process of merging of State
Bank of Indore was completed by April 2010.
The subsidiaries of SBI are:
State Bank of Indore
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore
Group companies
SBI Capital Markets Ltd
SBI Mutual Fund (A Trust)
SBI Factors and Commercial Services Ltd
SBI DFHI Ltd
SBI Cards and Payment Services Pvt Ltd
SBI Life Insurance Company Limited - Bancassurance (Life Insurance)
SBI Funds Management Pvt Ltd
SBI Canada
Branches of SBI
SBI has 21000 ATMs.
SBI has 26500 branches, inclusive of branches that belong to its Associate banks.
SBI alone has 18500 branches.
SBI is the only bank consisting 26% participation in public sector banks and 39%
participation in commercial banks in India.
[edit] Symbol and slogan
-> Symbol is the Key Hole, whose meaning is "Welcome to SBI".
-> Slogans are:
With you all the way
Pure banking nothing else
The Banker to every Indian
The Nation banks on

Banking in India

Central bank Reserve Bank of India

Nationalised banks Allahabad Bank · Andhra Bank · Bank of Baroda · Bank of

India · Bank of Maharashtra · Canara Bank · Central Bank of
India · Corporation Bank · Dena Bank · IDBI Bank · Indian
Bank · Indian Overseas Bank · Oriental Bank of Commerce ·
Punjab & Sind Bank · Punjab National Bank · Syndicate
Bank · UCO Bank · Union Bank of India · United Bank of
 India · Vijaya Bank

State Bank of India · State Bank of Bikaner & Jaipur · State

State Bank Group Bank of Hyderabad · State Bank of Indore · State Bank of
Mysore · State Bank of Patiala · State Bank of Travancore

Axis Bank · Bank of Rajasthan · Bharat Overseas Bank ·

Catholic Syrian Bank · City Union Bank · Development Credit
Bank · Dhanalakshmi Bank · Federal Bank · Ganesh Bank of
Kurundwad · HDFC Bank · ICICI Bank · IndusInd Bank · ING
Vysya Bank · Jammu & Kashmir Bank · Karnataka Bank
Private banks
Limited · Karur Vysya Bank · Kotak Mahindra Bank ·
Lakshmi Vilas Bank · Nainital Bank · Ratnakar Bank · Rupee
Bank · Saraswat Bank · SBI Commercial and International
Bank · South Indian Bank · Tamilnad Mercantile Bank
Limited · Yes Bank

ABN AMRO · Abu Dhabi Commercial Bank · Antwerp

Diamond Bank · Arab Bangladesh Bank · Bank International
Indonesia · Bank of America · Bank of Bahrain & Kuwait ·
Foreign bank
Bank of Ceylon · Bank of Nova Scotia · Bank of Tokyo
Mitsubishi UFJ · Barclays Bank · Citibank India · HSBC ·
Standard Chartered · Deutsche Bank · Royal Bank of Scotland

North Malabar Gramin Bank · South Malabar Gramin Bank ·

Regional Rural banks
Pragathi Gramin Bank · Shreyas Gramin Bank

Real Time Gross Settlement(RTGS) · National Electronic

Fund Transfer (NEFT) · Structured Financial Messaging
Financial Services
System (SFMS) · CashTree · Cashnet · Automated Teller
Machine (ATM)