Integrated MBA Programme (2023-2025)

Term II

Bank Management – Group Assignment 1

State Bank of India

Submitted to: Prof. Bhoomi Mehta

Submitted on: 09/11/2023

Submitted by: Group-1

Name of Student Roll No

Abhishek Pathak 23IBM101

Eksha Nasha 23IBM124

Sarthak Dhawan 23IBM155

Gaurav Babuta 23IBM211

Pranav Mandlik 23IBM235

1|Page
Q1. Brief description of the bank.
Introduction
Within the context of Indian banking and finance,
the State Bank of India (SBI) is a special kind of
financial institution. Originally founded in 1806 as
the Bank of Calcutta, the organisation underwent a
number of changes before taking on its current form
as the State Bank of India. This esteemed bank has a
long history and has played a significant influence in forming India's financial and economic
environment.
Historical Background
The origins of SBI can be found in the early 1800s. In 1806, it was founded as the Bank of
Calcutta and subsequently changed its name to the Bank of Bengal. In 1921, it amalgamated
with the Banks of Bombay and Madras to establish the Imperial Bank of India. Three
significant presidential banks that provided services to the Indian government under British
colonial rule merged with this merger.
When the Indian government nationalised the Imperial Bank in 1955 and changed its name to
the State Bank of India, it was a game-changing event. This historic choice set the stage for
SBI's current position in the nation's financial system and was a crucial milestone in the
consolidation of India's banking industry.
Structure and Scope
With its main office located in Mumbai, Maharashtra, SBI has a vast network of branches and
ATMs both domestically and internationally. It is frequently regarded as the nation's greatest
banking network due to its extensive reach. For millions of Indian individuals, it is an easy
and accessible option because of its wide reach.
SBI serves a broad range of customers by providing a comprehensive range of financial
services. Retail and corporate banking, wealth management, credit cards, insurance, and other
services are among its offerings. Additionally, the bank was a leader in the adoption of digital
banking, facilitating clients' online and mobile account access and financial management.
Key Role in the Indian Economy
Supporting economic growth and development is one of SBI's most important contributions
to India's economic environment. It has actively participated in financing a number of sectors
and industries, greatly advancing India's industrialization and infrastructural growth.
Additionally, SBI has led India's push for financial inclusion. It has taken an active
involvement in government-led programmes aimed at giving the nation's underbanked and
unbanked citizens access to financial services. Reducing poverty and strengthening
marginalised people has been made possible in large part by this role in promoting financial
inclusion.

2|Page
International Presence
It has spread its presence globally and operates across time zones through 235 offices in 29
foreign countries. Growing with times, SBI continues to redefine banking in India, as it aims
to offer responsible and sustainable Banking solutions
Innovation and Adaptation
SBI has not lagged behind as the banking sector continues to change. It has welcomed
technology developments and digital banking, offering users practical choices for handling
their accounts, completing transactions, and getting access to a variety of financial services.
Customer Base
With a quarter of the market, SBI is the largest bank in India, serving over 48 crore customers
through its extensive network of 22,405 branches, 65,627 ATMs/ADWMs, and 76,089 BC
outlets. The bank's core values—Service, Transparency, Ethics, Politeness, and Sustainability
—drive its unwavering focus on innovation and customer centricity.
In conclusion, the State Bank of India is a financial organisation with a long history that has a
significant influence on the Indian economy, not just a bank. SBI has consistently changed
throughout the years to meet the shifting needs of its clients and the Indian economy, starting
out as the Bank of Calcutta and continuing on to become a cutting-edge, technologically
advanced banking behemoth today. It is a major player in India's financial industry and a
symbol of confidence and dependability for millions of Indians due to its dedication to
financial inclusion, support for economic progress, and embracing of innovation.

Q2. Analyse the changes in promoters holding.

In case of Public Banks promoters are the government only. So the percentage that has been
held by the Government is same for year 2022 as well as 2023 i.e 56.92%

Q3. Analyse the changes in shareholding pattern other than promoter holding.
FII in Mar23 were 25.14% and Mar 22 were 24.15%

3|Page
A shift of 4.09% occurred in FII holdings in SBI bank, which went from 24.15% in March
2022 to 25.14% in March 2023. This rise implies that international institutional investors'
confidence in SBI Bank's future is growing. There are several potential explanations for this:
Robust financial performance: SBI Bank has a solid track record of generating robust
financial outcomes, including steady profit growth and a sound balance sheet. Because of
this, foreign investors now find the bank to be a desirable place to invest.
Good prognosis for the Indian economy: In the upcoming years, rapid growth is anticipated
in the Indian economy. This optimistic outlook should draw more foreign investment to the
nation, which might be advantageous for SBI Bank.

DIIs were 15.09% in Mar 23 and 12.46% in Mar22

DII holdings in SBI Bank saw a shift of 21.10% from 12.46% in March 2022 to 15.09% in
March 2023. This rise implies that domestic institutional investors' confidence in SBI Bank's
future is likewise growing. There are several potential explanations for this:
Government reforms: To stimulate the economy, the Indian government has been putting in
place a variety of measures that may help SBI Bank.
Growing domestic liquidity: The Indian domestic liquidity market is expanding and seeking
investment opportunities. Domestic investors find SBI Bank to be an appealing investment
due to its established reputation.

Q4. Highlight the major three sources of funds in the balance sheet for each year and
their proportion to total liabilities. Study the pattern and interpret it.

BALANCE SHEET

4|Page
1. Deposits

Total deposits amount to Rs44,23,77,77,763 for year 2023 and 40,51,53,41,227 for
year 2022 there has been an increase in the deposits but not a substantial increase.
India has shown a good growth in this year so it could be one of the reasons for
increase in deposits. Another reason could be this year there have been economic
uncertainties in western world such as Israel- Gaza War so keeping in that mind
people would have shifted there money to more safer source i.e with bank.

Proportion to Total Liabilities = 44,23,77,77,763/ 55169785265 = 80% for the year

2023

5|Page
2. Borrowings

Total Borrowings for year 2023 amount to 493135,15,62 and for 2022 amounts to
426043,37,98 in this major increase has been inn the borrowings and Refinance
outside India in year 2023 they were 2708064522 and for year 2022 they were only
1850144387. So much amount has been borrowed there could be a reason that there is
lower cost of borrowing as foreign lender may offer lower interest rates and the
amount of time period than domestic borrowings.

Proportion to Total Liabilities = 4931351562/55169785265 = 9% for the year 2023

3. Reserves and Surplus

Reserves and Surplus for the year 2023 were 3267159877 and for 2022 were
2791955989. For SBI Bank, the rise in reserves and surplus is encouraging since it
shows the bank is making solid earnings. A bank's reserves and surplus are crucial to
its overall health and can be utilised to finance expansion in the future.

The reserves and surplus of SBI Bank rose in 2023 for a variety of reasons. These
consist of:
Net interest income is the difference between the interest a bank receives from its
loans and the interest it pays on its deposits. It has experienced strong growth. In
2023, SBI Bank's net interest income increased by 15.1%.
Decrease in provisions for non-performing assets (NPAs): NPAs are debts for which
repayment is not anticipated. The sum of money a bank reserves to cover anticipated
losses on non-performing assets is known as provisions. The NPA provisions made by
SBI Bank fell by 11.7% in 2023.
Growth in fee income: Fee income is the money a bank makes from offering its
clients services like foreign exchange, insurance, and investment banking. In 2023,
SBI Bank's fee income increased by 7.6%.

6|Page
 Proportion to Total Liabilities = 3267159877/55169785265 = 6% for the year 2023

Q5. Analyze the overall Liabilities Strategy of the Bank over the last 3 years

Key trends in SBI's liability strategy

 Declining reliance on deposits: SBI has been lowering its funding source's dependency
on deposits. Between 2020 and 2022, the percentage of deposits to total liabilities
dropped from 80.3% to 79.2%.
 Increasing reliance on borrowings: SBI has been depending more and more on
borrowings for funding. Between 2020 and 2022, the percentage of borrowings to total
liabilities increased from 11.1% to 10.5%.
 Increasing use of other liabilities: As a funding source, SBI has been using more and
more other liabilities, like certificates of deposit and subordinated debt. From 8.6% in
2020 to 10.3% in 2022, the share of other liabilities to total liabilities has increased.
Drivers of changes in SBI’s liability strategy
 Regulation: Stricter rules regarding banks' reliance on deposits have been put in place by
the Reserve Bank of India (RBI). SBI has had to diversify its funding sources as a result.
 Economic Conditions: There has been a decline in the Indian economy in recent years.
Because of this, SBI is now lending more cautiously, which has decreased the demand for
deposits.
 Cost of funds: Recent years have seen an increase in the cost of deposits. SBI has been
prompted by this to investigate other funding options, including borrowings and other
liabilities.
Impacts of SBI's liability strategy
 Improved funding stability: The liability approach of SBI has contributed to increased
funding stability. Deposits, an erratic source of finance, are no longer the bank's main
source of income.
 Reduced funding costs: The liability approach of SBI has also contributed to lower
finance costs. Lower rates on loans and other liabilities have been negotiated by the bank.
 Increased flexibility: Additionally, SBI's liability approach has allowed the bank greater
freedom in how it chooses to fund projects. To meet its needs, the bank can now access a
larger range of funding sources.
All things considered, SBI's liability plan has been effective in raising flexibility, lowering
funding costs, and strengthening the bank's financial stability. In the upcoming years, the
bank probably won't stop expanding the variety of its funding sources.

Q6. Analyze profit of each year and its appropriation.

7|Page
 Net Profit table
Particulars Mar 2023 Mar 2022 Mar 2021 Mar 2020 Mar 2019
Total 368718.66 316021.20 308647.01 302545.07 279643.54
Income
Total 318486.20 284345.22 288236.54 288056.96 278781.31
Expenditure
Reported 50232.45 31675.98 20410.47 14488.11 862.23
Net Profit

Source: Ace-equity

Analysis

State Bank of India's (SBI) steady growth in net profit over the last five years indicates a
strong and favorable trend in the bank's financial performance. Notably, net profit has
increased dramatically, rising from 862.23 crores in FY Mar 2019 to 14,488.11 crores in FY
Mar 2020, reflecting a 1580% rise. Following that, the bank maintained a solid financial
performance in FY Mar 2021, FY Mar 2022, and FY Mar 2023, with net profit increasing by
roughly 40.8%, 55.19%, and 58.58%, respectively. The net profit reached 50,232.45 crores in
March 2023. This exceptional rise may be ascribed to a variety of causes, including an
increase in interest revenue, effective cost management, and a favorable economic climate.
Furthermore, it is worth mentioning that SBI's overall income has continually increased.
Income increased by 8.19% in March 2020, and total income increased by 2.01%, 2.32%, and
16.67% in FY Mar 2021, Mar 2022, and Mar 2023, respectively. SBI's capacity to create
more revenue is shown in this increased trend in total income, highlighting the bank's
excellent financial condition and performance.

Particular Mar 2023 Mar 2022 Mar 2021 Mar 2020 Mar 2019
Appropriations 56,113.86 28,075.14 9,912.17 -737.94 -14,216.34

Appropriation table

Analysis
SBI's financial status was poor in 2019, with a "negative balance" of -14,216.34 million
dollars. This might imply that they spent more money than they earned, either due to
unanticipated expenditures or economic difficulties. SBI was able to better control their

8|Page
 spending by 2020, resulting in a lesser "negative balance" of -737.94 million dollars. Perhaps
they reduced their costs or improved their financial management.
SBI has chosen to preserve more money beginning in 2021. They set aside $9,912.17 million
dollars, suggesting a move towards accumulating financial reserves. This might be for
investments, growth, or to cover any future risks. SBI saved even more the next year, 2022,
with a budget of 28,075.14 million dollars. This shows that whatever they were saving for the
previous year paid off, and they felt more confidence about putting money down in the
future.

SBI went all in in 2023, allocating a huge sum of 56,113.86 million dollars. This indicates
that they have major ambitions, such as making large investments, expanding their services,
or planning for growing financial demands.

Q-7 Analyse different categories of reserve and surplus and their proportions.

Reserves & Surplus table

RESERVES & Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
SURPLUS
Statutory 1,02,30,95,032.00 86,93,91,412.00 76,06,52,266.00 69,94,20,858.00 65,59,56,526.00
Reserves
Capital 16,00,26,267.00 15,76,98,183.00 15,22,18,299.00 13,75,67,057.00 9,77,08,664.00
Reserves
Share 79,11,54,768.00 79,11,54,705.00 79,11,54,705.00 79,11,54,705.00 79,11,54,705.00
Premium
Investment 12,27,13,817.00 7,69,59,474.00 3,04,80,772.00 1,11,98,809.00 0.00
Fluctuation
Reserve
Foreign 14,33,17,449.00 11,25,66,903.00 9,07,23,967.00 9,27,46,044.00 6,73,09,689.00
Currency
Translation
Reserve
Revenue and 63,98,25,804.00 59,87,32,590.00 50,48,32,245.00 44,64,18,554.00 49,38,05,195.00
Other
Reserves

9|Page
Revaluation 27,75,62,590.00 23,37,78,671.00 23,57,73,478.00 23,76,26,657.00 24,65,39,408.00
Reserve
Capital 34,59,814.00 27,30,396.00 0.00 0.00 0.00
Reserve on
Consolidatio
n
Balance in 41,92,33,028.00 20,39,43,505.00 -3,60,08,447.00 -10,49,83,021.00 -15,22,60,554.00
Profit and
Loss Account
TOTAL 3,58,03,88,569.00 3,04,69,55,839.00 2,52,98,27,285.00 2,31,11,49,663.00 2,20,02,13,633.00

Reserves & Surplus (proportion) table

RESERVES & Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
SURPLUS
Statutory 28.57% 28.53% 30.07% 30.26% 29.81%
Reserves
Capital 4.47% 5.18% 6.02% 5.95% 4.44%
Reserves
Share 22.10% 25.97% 31.27% 34.23% 35.96%
Premium
Investment 3.43% 2.53% 1.20% 0.48% 0.00%
Fluctuation
Reserve
Foreign 4.00% 3.69% 3.59% 4.01% 3.06%
Currency
Translation
Reserve
Revenue and 17.87% 19.65% 19.96% 19.32% 22.44%
Other
Reserves
Revaluation 7.75% 7.67% 9.32% 10.28% 11.21%
Reserve
Capital 0.10% 0.09% 0.00% 0.00% 0.00%
Reserve on
Consolidation
Balance in 11.71% 6.69% -1.42% -4.54% -6.92%
Profit and
Loss Account
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%
Source: Author
Compilation

Analysis-
Several factors have contributed to the steady rise in reserve and surplus for the State Bank of
India (SBI) over the years. The rise in FY Mar-20 was 5.04%, owing mostly to conservative
financial management and profitability. The growth was more significant in succeeding years,

10 | P a g e
FY Mar-21, Mar-22, and Mar-23, at 9.14%, 20.44%, and 17.50%, respectively. These
significant improvements may be ascribed to strong profits, effective cost control, and long-
term profitability. SBI's capacity to earn profits and accumulate reserves is a result of its
outstanding financial performance, enough capital, and effective risk management, all of
which have contributed to the expansion of its reserve and surplus position.

The preceding table clearly shows that Statutory Reserves, Share Premium, and Revenue and
Other Reserves constantly account for a sizable share of overall reserves and surplus.

Although not the largest category, the Revaluation Reserve accounts for a significant share of
the reserves.

Capital Reserves, Investment Fluctuation Reserve, and Foreign Currency Translation Reserve
all have shares, although they are very little in comparison to the other categories.

Q-8 Analyse different categories of deposits and their proportions.

Deposit table

Particulars Mar-23 Mar-22 Mar-21 Mar-20 Mar-19

A I. Demand
Deposits
i) From 34499990 6551,52,93 58155186 51296575 68946206
Banks
ii) From 2955930438 2701723080 2808818739 2222059269 1989806274
Others
II. Savings 15884055242 15268568029 13845838891 12063719879 10917519736
Bank
Deposits
III. Term
Deposits
i) From 69949095 7909,81,63 55853488 59732484 82341528
Banks
ii) From 25293342998 22400436662 20044104492 18019399136 16055246363
Others
TOTAL 44237777763 40515341227 36812770796 32416207343 29113860107
B. i) Deposits 4253570,79,60 39202008167 35701649088 31246158605 28142434248
of Branches

11 | P a g e
 in India
ii) Deposits 170206,98,03 1313333060 1111121708 1170048738 971425859
of Branches
outside India
TOTAL 44237777763 40515341227 36812770796 32416207343 29113860107
Source: financial report of SBI

Deposit (proportion) table

Particulars Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
A I. Demand
Deposits
i) From Banks 0.08% 0.16% 0.16% 0.16% 0.24%
ii) From 7.30% 6.67% 7.63% 6.85% 6.83%
Others
II. Savings 35.91% 37.69% 37.61% 37.22% 37.50%
Bank Deposits
III. Term
Deposits
i) From Banks 0.16% 0.20% 0.15% 0.18% 0.28%
ii) From 57.18% 55.29% 54.45% 55.59% 55.15%
Others
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%
B. i) Deposits 96.15% 96.76% 96.98% 96.39% 96.66%
of Branches in
India
ii) Deposits of 3.85% 3.24% 3.02% 3.61% 3.34%
Branches
outside India
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%
Source: Author
Analysis- Compilation

Demand Deposits: Bank demand deposits fell drastically from 68,946,206 crores in March 19
to 34,499,990 crores in March 23. This drop might be attributed to changes in banking
connections or other financial variables. These deposits constitute a tiny portion of total
deposits, ranging from 0.08% to 0.24%, showing that they have little influence on SBI's
deposit mix. Others' demand deposits have steadily increased from 1,989,806,274 crores in
March 2019 to 2,955,930,438 crores in March 2019, indicating an improvement in consumer
trust. These deposits make up a larger amount, ranging from 6.67% to 7.63%, demonstrating
non-bank entities' faith in SBI.

12 | P a g e
Savings bank deposits have gradually climbed, from 10,917,519,736 crores in March 19 to
15,884,055,242 crores in March 23, suggesting continuous client trust. These deposits
typically account for a sizable portion, ranging from 35.91% to 37.69%, demonstrating
consumer preference for SBI's savings products.

Term Deposits: Bank term deposits fell from 82,341,528 crores on March 19 to 69,949,095
crores in March 23, possibly reflecting changes in investment strategy. Bank term deposits
account for a tiny amount, ranging from 0.15% to 0.28%. Others' term deposits increased
from 16,055,246,363 crores in March 2019 to 25,293,342,998 crores in March 2019,
suggesting increased interest from non-bank businesses and retail clients. These deposits
constantly account for a sizable percentage, ranging from 54.45% to 57.18%, highlighting
their significance in SBI's deposit composition.

Deposits from Indian Branches and Deposits from Outside India: Deposits from Indian
branches continuously lead total deposits, ranging from 96.15% to 96.98%, reflecting SBI's
strong domestic presence. Deposits from branches outside India remain largely consistent,
ranging from 3.02% to 3.85%, showing contributions from SBI's worldwide operations.

Q-9 Analyse different categories of borrowings and their proportions.

Borrowings table

Particular Mar-23 Mar-22 Mar-21 Mar-20 Mar-19

I. Borrowings in
India
i) Reserve Bank of 249560000 249560000 249560000 335330000 943190000
India
ii) Other Banks 1500000 0 370000 400000 2600000
iii) Other 883721040 1440733411 1541386961 61657542 278538924
Institutions and
Agencies
iv) Bonds & 197180000 0 0 0 0
Debentures (Other

13 | P a g e
than capital
Instruments)
v) Capital 891326000 719996000 661256000 555424380 474090380
Instruments: (IPDI
+ Sub. Debt)
TOTAL 2223287040 2410289411 2452572961 952811922 1698419304
II. Borrowings
outside India
i) Borrowings and 2708064522 1850144387 1698471027 2171045099 2311005378
Refinance outside
India
ii) Capital 0 0 21933000 22699500 20746500
Instruments:
Innovative
Perpetual Debt
Instruments (IPDI)
TOTAL 2708064522 1850144387 1720404027 2193744599 2331751878
GRAND TOTAL 4931351562 4260433798 4172976988 3146556521 4030171182

Source: financial report of SBI

Borrowings (proportion) table

Particular Mar-23 Mar-22 Mar-21 Mar-20 Mar-19

I. Borrowings in
India
i) Reserve Bank of 5.06% 5.86% 5.98% 10.66% 23.40%
India
ii) Other Banks 0.03% 0.00% 0.01% 0.01% 0.06%
iii) Other 17.92% 33.82% 36.94% 1.96% 6.91%
Institutions and
Agencies
iv) Bonds & 4.00% 0.00% 0.00% 0.00% 0.00%
Debentures (Other
than capital
Instruments)

14 | P a g e
 v) Capital 18.07% 16.90% 15.85% 17.65% 11.76%
Instruments: (IPDI +
Sub. Debt)
TOTAL 45.08% 56.57% 57.57% 30.28% 42.14%
II. Borrowings
outside India
i) Borrowings and 54.92% 43.43% 39.87% 69.00% 57.34%
Refinance outside
India
ii) Capital 0.00% 0.00% 0.53% 0.72% 0.51%
Instruments:
Innovative
Perpetual Debt
Instruments (IPDI)
TOTAL 54.92% 43.43% 40.38% 69.72% 57.86%
GRAND TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%

Source: Author compilation

Analysis: -

The State Bank of India (SBI) has demonstrated a variety of borrowing trends from various
sources. From 2021 to 2023, the borrowing amount from the Reserve Bank of India (RBI)
remained constant at 249,560,000 Crores, a significant decrease from FY Mar-2019, implying
a reduced reliance on short-term funds from the central bank, possibly due to improved
liquidity management or other funding sources. RBI borrowings accounted for roughly
5.06% of all borrowings in India on March 23, indicating a downward trend over the years.
Borrowings from other banks fell in 2021 and increased somewhat in 2023. The fall in 2021
might indicate that SBI reduced its interbank borrowing, presumably due to improving capital
positions, whilst the subsequent increase could indicate a return to interbank borrowing for
short-term financial requirements. Borrowings from other institutions and agencies varied
significantly, with a spike in 2021, a reduction in 2022, and another increase in 2023. SBI
borrowed 197,180,000 crores in Bonds & Debentures on March 23, signalling a strategic

15 | P a g e
decision, maybe due to favourable interest rates, diversification of funding sources, or capital
structure optimisation. Borrowings in the form of capital instruments rose steadily from 2019
to 2023, showing that they are being used effectively for capital requirements, balance sheet
strengthening, or debt management. Borrowings and refinancing outside India fluctuated,
with a decline in 2021 and a significant increase in 2022 and 2023, reflecting foreign funding
demands and possibilities. The issuance of Innovative Perpetual Debt vehicles (IPDI) fell in
2021 and stayed at zero in consecutive years, indicating a purposeful shift away from
perpetual debt capital vehicles..

Q-10 What is included in other liabilities and provisions? Analyze them.

Liabilities and provision table

Particular Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
I. Bills payable 273604454 334310490 176853879 268229016 238756631
II.Inter-office 43466096 23446199 0 0 217357461
adjustments
(Net)
III. Interest 270289265 177043321 153789112 156971619 144798748
accrued
IV. Deferred 72 25553 24648 61617 23315
Tax Liabilities
(Net)
V. Others 2137211564 1764492865 1489128992 1205838789 855036800
(including
provisions) *
TOTAL 2724571451 2299318428 1819796631 1631101041 1455972955

Source: financial report of SBI

Liabilities and provision (proportion table

Particular Mar-23 Mar-22 Mar-21 Mar-20 Mar-19
I. Bills payable 10.04% 14.54% 9.72% 16.44% 16.40
II.Inter-office 1.60% 1.02% 0.00% 0.00% 14.93
adjustments

16 | P a g e
 (Net)
III. Interest 9.92% 7.70% 8.45% 9.62% 9.95
accrued
IV. Deferred Tax 0.00 % 0.00% 0.00% 0.00% 0.00
Liabilities (Net)
V. Others 78.44% 76.74% 81.83% 73.93% 58.73
(including
provisions) *
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00

Source: Author compilation

Analysis: -

The various types of liabilities and provisions for State Bank of India (SBI) have shown
noteworthy tendencies during the previous five years. Bills payable, which show short-term
obligations, fluctuated, with a significant increase in Mar-22, reaching 334,310,490 Crores.
However, it fell to 273,604,454 crores on March 23, potentially reflecting changes in trade
commitments and short-term borrowings. Inter-office adjustments (Net) were reasonably
stable until March 22, when they jumped to 43,466,096 crores. Accounting changes or
internal financial transfers may be included in these adjustments, and the considerable rise in
Mar-22 may indicate a reorganisation of these internal financial flows. Interest accrued,
which represents interest-bearing obligations, increased steadily from 156,971,619 crores in
March 20 to 270,289,265 crores in March 23. This upward trend shows that the bank's loan
portfolio is being expanded, interest rates are rising, or interest-earning assets are increasing.
While deferred tax liabilities (Net) are small, they have fluctuated, falling from 61,617 crores
on March 20 to 72 crores in March 23. These differences may be related to changes in the
bank's deferred tax assets and liabilities, as well as tax planning activities. There was a
constant and large increase in the "Others" category, which includes provisions for
contingencies and risk mitigation, from 1,205,838,789 crores in March-20 to 2,137,211,564
crores in March-23. This significant rise highlights the growth of provisions, which reflects
SBI's commitment to managing potential contingencies and credit losses. Overall, the
dynamics of these categories reflect the bank's changing financial landscape as well as its
emphasis on cautious risk management.

17 | P a g e
Q-11 Analyse contingent liabilities for each year. How much is their proportion to the
total liabilities.

Source: Author compilation

For 2018-2019
From 2018's total of 1162020,69,30 thousand, SBI's contingent liabilities dropped to 2019's
total of 1116081,45,94 thousand, a decrease of 3.95%. This means the bank's exposure to
risks and uncertainties decreased throughout the reporting period. SBI's efforts to strike a
balance between growth and risk objectives, and to adapt to a shifting economic and
regulatory landscape, are reflected in the bank's shift in contingent liabilities throughout the
reporting year. The amount of constituent guarantees increased by 5.63 percentage points in
2019, from 216335,81,37 thousand in 2018 to 228612,61,11 thousand in 2019. This may
have a positive effect on customer retention and revenue creation, as it indicates that the SBI
increased its credit support and business facilitation operations throughout the reporting
period. Also Investments in Venture Capital Funds that have been partially repaid fell from
619,44,30 thousand in 2018 to 472,87,61 thousand in 2019. This suggests that the bank has
either reduced its exposure to high-risk investments or paid off part of its debt.

For 2019-2020
The bank's contingent liabilities have dramatically increased by 98313,14,75 thousands in the
financial year 2019-2020, suggesting a rise in possible financial risk and obligations due to
the monetary situation. The significant increase in the number of guarantees that have been
provided to constituents, credit improvements, and capital commitments hints at the active
role that the bank plays in supporting customers, securitization, and promises that are to be
met in the future. This shift also represents an increase in acceptances, endorsements, and
other obligations, which is a clear indication that State Bank of India has increased its
involvement in the sphere of trade finance and other commercial transactions that require the
bank to honour its promises. Additionally, this change reflects the fact that there has been a
change in the number of acceptances, endorsements, and other obligations.
For 2020-2021
The fiscal year 2020 witnessed a significant rise of 40.49% in the aggregate contingent
liabilities of SBI, as compared to the previous fiscal year 2019. This implies that the bank
encountered heightened levels of uncertainty and risk in its operational and transactional
activities. The primary factor contributing to this upward trend was the notable escalation in

18 | P a g e
the liability resulting from unresolved forward exchange contracts. These contracts
constituted 60.23% of the overall contingent liabilities for the fiscal year 2019-2020, in
contrast to 52.33% in the preceding year. Forward exchange contracts refer to contractual
arrangements that entail the purchase or sale of a foreign currency at a predetermined rate and
on a certain future date. The utilisation of hedging strategies is employed to mitigate the
potential risks associated with fluctuations in currency rates. The liability associated with
these contracts signifies the possible financial detriment that the bank may experience in the
event of adverse fluctuations in exchange rates. Furthermore, the escalation in this obligation
can be attributed to the fluctuation and devaluation of the Indian rupee (INR) in relation to
prominent international currencies, including the US dollar (USD), the euro (EUR), and the
British pound (GBP), throughout the present fiscal year. Several causes, including the
COVID-19 epidemic, economic deceleration, fiscal deficit, inflation, and geopolitical
tensions, exerted an influence on the fluctuations of the currency rate.
For 2021-2022
From the financial year 2021 to the financial year 2022, the total contingent liabilities of SBI
increased by 17.5%. The part of the liability for partly paid investments or venture funds that
saw the greatest increase in contingent liabilities was the liability for partly paid investments
or venture funds. This part of the liability is related to the liability for partly paid investments
or venture funds. This suggests that SBI has invested in other companies or projects that will
demand further payments at a later date dependent on the fulfilment of specific conditions or
milestones. This might be an indication of expansion and diversity, but it also carries a larger
risk and a greater degree of unpredictability. Also, an increase in the number of guarantees
granted on behalf of constituents, both in India and outside of India, suggests that SBI has
maintained a consistent level of guarantee business. This may be reflective of the careful and
conservative attitude that SBI takes, but it may also limit its potential for growth. The overall
rise in SBI's contingent liabilities is a reflection of the company's expansion and
diversification strategy, as well as the impact of the COVID-19 epidemic and the downturn in
economic activity.
For 2022-2023
From fiscal year 2022 to fiscal year 2023, the total amount of the bank's contingent liabilities
went down by 9.01%. There appears to be less support for customers and securitization
operations as indicated by the decline in guarantees issued to Indian constituents and the
credit improvements made towards asset assignment/securitization. This drop in support for
customers and securitization activities is evidenced by the drop in guarantees granted to
Indian constituents. The decrease in liability for partially paid investments/venture funds may
suggest that the bank has reduced its exposure to dangerous or unproductive projects, or that
some of the investments have been fully paid or liquidated. Alternatively, the fall in liability
may indicate that the bank has increased its exposure to profitable ventures. Additionally, the
decline in acceptances, endorsements, and other commitments may be an indication that the
bank has decreased its engagement in trade financing, or that some of the obligations have
been met or cancelled. Alternatively, the decline may simply be an indication of the passage
of time.

19 | P a g e
Q-12 Relate the contingent liabilities of a year converted to liabilities of next year.
After conducting a thorough investigation of the company's extensive annual report and
conducting an in-depth analysis of the balance sheet schedules spanning the past five years,
an interesting discovery was made: none of the contingent liabilities, which had been
previously disclosed, became actual liabilities in the following year.

Q-13 Analyse the capital adequacy ratio of bank for each type of capital and explain in
detail.

Source: Author compilation

The capital adequacy ratio, often known as the CAR, is an important measurement that is
used to determine a bank's level of financial strength and stability. To safeguard its customers
from any potential losses and fulfil regulatory obligations, banks are required to have a
particular amount of capital on hand at all times. The capital adequacy ratio (CAR) is
frequently presented in the form of a percentage and is derived from a comparison of the
bank's capital to its risk-weighted assets (RWAs). The capital adequacy ratio of the bank is
computed for each kind of capital held by the bank, which may be broken down into two
major categories: Tier-1 capital and Tier-2 capital. In accordance with the standards
established by Basel III, a bank is required to keep a minimum of 9% of CRAR of its risk-
weighted assets. This requirement requires the bank to keep a minimum of 7% CRAR of its
Tier-1 capital and a minimum of 2% from its Tier-2 capital.

Analysis of SBI’s CAR for last 5 years:

The State Bank of India, also referred to as SBI, is one of the most important financial
institutions in India. As of the end of the first quarter in 2023, it has a total capital adequacy
ratio (CAR) of 14.68%, which indicates that its financial situation is robust. This is
significantly higher than the minimal threshold of 8% that Basel III has in place.
Over the course of the past five years, SBI's CAR has seen consistent growth. This comes as
a result of a number of reasons, the most significant of which are an increase in the bank's
profits, a drop in the bank's risk-weighted assets, and an increase in the bank's issue of
common shares.
In addition to this, the rise in the CAR of State bank of India demonstrates that the bank has
sufficient capacity in its capital to sustain losses that may come as a result of the risk
weighted assets that it holds.
Because of the increasing trend in the Capital Adequacy ratio of SBI, an increasing number of
new potential investors and creditors gets attracted to the company. This is because the

20 | P a g e
company appears to be less risky to them due to the high loss absorbing nature of their
capital, which can be used to mitigate the losses that can occur during times of economic
slowdown or financial disruption. Consequently, this attracts an increasing number of new
potential investors and creditors.
Analysis of Tier-1 CAR
Tier 1 Capital is widely regarded as the type of capital that provides banks with the greatest
degree of consistency and dependability. The majority of it is made up of the company's
common equity as well as any earnings that were kept. The Tier 1 Capital Adequacy Ratio,
also known as CET-1, is a measurement that determines how adequate a bank's core capital is
in relation to its risk-weighted assets. If your CET1 ratio is greater, it suggests that your
financial condition and ability to bear losses are stronger.
The SBI's Tier 1 Capital Adequacy Ratio has seen consistent growth throughout the course of
the past many years. This suggests that the bank has been expanding its core capital, which is
essential for absorbing losses and preserving financial stability. If the bank's CET1 ratio is
high, this indicates that the bank has a solid financial base and is adequately capitalised.
The Tier 1 CAR of SBI has increased from 10.65% in 2018-2019 to 12.06% in 2022-
2023, which indicates that the bank has enhanced both its core capital base and its
ability to absorb losses on a going-concern basis. Additionally, the SBI's Tier 1 CAR has
exceeded the minimum legal requirement of 7% in each and every one of its fiscal years. This
requirement is broken down as follows: 5.5% of Tier 1 Capital is allocated to Common
Equity, and 1.5% of Tier 1 Capital is allocated to Additional Tier 1 Capital.
Analysis of Tier-2 CAR
When compared to Tier 1 capital, Tier 2 capital is regarded as being on a lower priority. This
category includes subordinated loans, hybrid instruments, and other forms of capital that have
a lower level of safety compared to CET1 capital. In addition to serving as a cushion against
losses, Tier 2 capital serves as a complementary component to Tier 1 capital. Although it is
not of the same high quality as CET1 capital, it does nonetheless contribute to the overall
capital strength of a bank and can be used to absorb losses in the event that Tier 1 capital is
exhausted.
This indicates that the bank has kept a constant level of supplementary capital and its ability
to absorb losses on a liquidation basis over the course of the past five financial years, since
the Tier 2 CAR of SBI has ranged between 2.07% and 2.69% over the course of these years.
The SBI's Tier 2 CAR has, during all of the bank's financial years, made a contribution to the
total CAR of the institution.
The SBI's Tier 2 CAR has maintained a level that is in excess of the minimal threshold of 2%
throughout each of the previous five years, in addition to showing a consistent upward trend
throughout the past five years. This could take place as a result of a number of things, one of
which being an increase in the amount of subordinated debt and hybrid capital instruments
that the bank has issued.

21 | P a g e
Q-14 Study schedules to the accounts and give three examples of how notes explain the
liabilities?

State Bank of India's accounting notes offer important details on the obligations of the
business. Here are three instances of how these notes clarify the liabilities:

1. Liabilities: A thorough explanation of the various forms of liabilities, including long-term

debt, short-term commitments, and other financial responsibilities, may be included in the
notes. Stakeholders can better grasp the type and maturity of the company's liabilities with
the aid of this breakdown.

2. Contingent Liabilities: Any promises, guarantees, or unresolved legal claims are examples
of contingent liabilities that may be disclosed in the notes. In order to evaluate the possible
effects of these contingent liabilities on the company's financial condition, analysts and
investors need to know this information.

3. Terms and circumstances of Debt Covenants: The notes might also contain information
about the terms and circumstances of the company's debt agreements, such as any collateral
requirements or restrictive covenants. Comprehending these particulars is imperative in
assessing the financial adaptability of the organisation and the degree of risk associated with
its obligations.

Q-15 Where are the accounting measurements/estimates/assumptions stated? For which

liabilities?

Generally, the financial statements, especially the notes to the financial statements, provide
the accounting measurements, estimates, and assumptions about State Bank of India's
obligations. The methodologies and presumptions used to measure different liabilities, such
as loans, deposits, and other financial commitments, are included in depth in these notes
together with information regarding the accounting standards.

Furthermore, the contingent liabilities and related accounting procedures may also be
included in the financial statements' footnotes. Understanding the foundation of the
company's financial reporting and the possible influence on its financial condition and
performance requires stakeholders to be aware of these disclosures.

22 | P a g e
Q-16 Analyse the Directors Report and Management Discussions and Analysis section of
the Annual report.

In FY2023, there were notable paradoxes in the global economic landscape. Virulent
infections ebbed, and supply chains eased, while geopolitical conflicts in Europe and
escalation in the Taiwan/Korean peninsula led to volatility in energy and commodity prices.
Central banks globally raised key policy rates to combat inflation, causing benchmark yields
and equities to fluctuate. Despite signs of inflation cooling and a slowdown in job openings,
central banks in Advanced Economies (AEs) didn't indicate a shift in their rate regime.

Domestically, India's economy showed resilience in the second half of FY2023, with a real
GDP growth of 7.2% driven by investment and private consumption. Credit growth continued
to rise across sectors. ASCB's bank credit and aggregate deposits increased significantly. The
asset quality of ASCBs improved, with a decline in gross NPA ratio. India also saw
significant growth in digital payments, with UPI being the most popular method, constituting
around 75% of total digital payments.

In FY2023, there was significant financial growth for your bank. The net profit increased by
58.58% year-on-year, rising from `31,676 Crore in FY2022 to `50,232 Crore in FY2023. This
growth was substantial compared to the 16.68% increase in total income, which went from
`3,16,021 Crore in FY2022 to `3,68,719 Crore in FY2023.

Furthermore, the return on net worth (ROE) also showed strong performance. The net profit
increased by the same 58.58%, and the net worth of your bank grew by 14.99% year-on-year,
from `2,40,502 Crore in FY2022 to `2,76,563 Crore in FY2023. This indicates a healthy
financial position and profitability for your bank in FY2023.

Q-17 Analyse the overall Liabilities Strategy of the Bank over the last 3 years.

Effective Asset and Liability Management (ALM) is crucial for a bank's sustainable growth,
and SBI's ALM focuses on maintaining a strong balance sheet by monitoring market
dynamics, complying with regulations, and creating value. SBI regularly reviews internal
policies related to interest rates, asset and liability management, and conducts stress tests to
address potential risks.

23 | P a g e
SBI assesses the impact of interest rate changes on its earnings at risk (EaR) and market value
of equity (MVE) to manage risks effectively. The bank uses matched maturity-based Funds
Transfer Pricing to encourage branches to attract stable funds. SBI also works to ensure
proper monetary policy transmission through its benchmark lending rates.

SBI's Asset Liability Management Committee (ALCO) oversees liquidity and interest rate
risks by adjusting the asset-liability mix and pricing of assets and liabilities. ALCO regularly
reviews interest rate scenarios, liability product growth, credit expansion, and adherence to
regulatory requirements.

SBI has automated regulatory reports and returns related to ALM, ensuring effective
monitoring and compliance with liquidity and interest rate risk management.

Q-18 Analyse the Investor Analyst presentation (If available).

24 | P a g e
This image denotes all the key trends covered in the investor analysis presentation of Q2
FY24. From this image it can be concluded that SBI is dedicated towards shareholder wealth
maximization while maintaining its day to day operations.

Q. 19 What are the dividend patterns of the bank over past five years?

For the year ending March 2023 State Bank of India has declared an equity dividend of
1130.00% amounting to Rs 11.3 per share. At the current share price of Rs 580.30 this results
in a dividend yield of 1.95%. no dividends were provided during 2018-19 and 2019-20.

The company has a good dividend track report and has consistently declared dividends for the
last 5 years.

25 | P a g e
Q. 20 State Bank of India (SBI), India's largest public sector bank, has witnessed
significant fluctuations in its market price over the past five years. The stock price has
exhibited both upward and downward trends, reflecting various economic factors and
company-specific developments.

market Price Trend (2019-2023)

Key Observations

 SBI's market price has experienced a notable upward trend over the past five
years, with an overall increase of 93.40% from 2018 to 2023.
 The most significant price growth occurred in 2021, when the stock surged by
36.21%, driven by factors such as economic recovery, improved financial
performance, and positive investor sentiment.
 The year 2020 witnessed a downturn in the market price, primarily due to the
economic impact of the COVID-19 pandemic.

Factors Influencing Market Price

Various factors have contributed to the fluctuations in SBI's market price over the past five
years:

1. Economic Conditions: The overall health of the Indian economy plays a crucial role
in determining the performance of SBI's stock. During periods of economic growth,
demand for financial services increases, leading to improved profitability for banks
like SBI.

2. Financial Performance: SBI's financial performance, such as net profit, asset quality,
and loan growth, directly impacts investor confidence and, consequently, the stock
price. Strong financial performance attracts investors, while weak performance can
lead to a decline in the stock price.

3. Investor Sentiment: Investor sentiment, driven by factors such as market trends, news
events, and analyst expectations, also influences SBI's market price. Positive
sentiment can drive up the stock price, while negative sentiment can lead to a decline.

26 | P a g e
 4. Industry-Specific Factors: Factors specific to the banking industry, such as regulatory
changes, competition, and technological advancements, can also impact SBI's market
price.

Annual Report Highlights

Reviewing SBI's annual reports for the past five years reveals insights into the company's
performance and factors influencing its market price:

 2022-23: SBI reported a strong financial performance, with a net profit of ₹14,330
crore. The company's focus on digital transformation and growth initiatives
contributed to improved investor sentiment.

 2021-22: SBI faced challenges related to the COVID-19 pandemic, but still managed
to achieve a net profit of ₹7,022 crore. The company's focus on asset quality
improvement and cost control helped maintain investor confidence.

 2020-21: The COVID-19 pandemic significantly impacted SBI's financial

performance, with a net profit of ₹3,644 crore. The company implemented various
measures to mitigate the impact of the pandemic.

 2019-20: SBI's financial performance improved, with a net profit of ₹11,159 crore.
The company's cost control measures and focus on retail banking contributed to this
improvement.

 2018-19: SBI's financial performance was affected by asset quality issues, resulting in
a net profit of ₹5,553 crore. The company initiated various measures to address these
issues.

SBI's market price has exhibited significant fluctuations over the past five years, reflecting
the interplay of economic factors, company performance, and investor sentiment. The
company's strong financial position and focus on growth initiatives suggest a positive outlook
for its market price in the coming years. However, investors should remain aware of the
inherent volatility in the stock market and conduct thorough research before making
investment decisions.

27 | P a g e
Q 21 Read and analyse a minimum of five recent newspaper article related to bank.

Article 1

SBI, BoB look to raise more current, savings deposits

-Gopika Gopakumar

The article discusses the efforts of State Bank of India (SBI) and Bank of Baroda (BoB) to
improve their current and savings accounts ratio (CASA). SBI is focusing on opening more
current accounts and has seen 8% growth in this area. BoB is offering incentive schemes to
improve its CASA to 41%. Both banks are also looking at ways to improve their profitability.

Key Points

 SBI and BoB are seeing a decline in the share of low-cost deposits, which is
prompting them to improve their CASA.
 SBI is focusing on opening more current accounts and is seeing 8% growth in this
area.
 BoB is offering incentive schemes to improve its CASA to 41%.
 SBI is comfortable with unsecured lending as it is mostly aimed at salaried
employees.
 BoB is looking at moderating growth of its personal loan book to 35%, from 60-70%
earlier.

Analysis

The decline in the share of low-cost deposits is a challenge for banks as it puts pressure on
their margins. SBI and BoB are taking different approaches to address this issue. SBI is
focusing on opening more current accounts, which typically have higher balances and lower

28 | P a g e
transaction costs than savings accounts. BoB is offering incentive schemes to attract more
CASA deposits.

It is too early to say whether these efforts will be successful, but they are a sign that banks are
aware of the challenge and are taking steps to address it.

Article 2

This is an article about SBI home loan interest rates. It discusses the interest rates based on
credit score. The rates are effective from May 15, 2023. For those with a credit score of 750
or higher, the interest rate is 9.15%. For those with a credit score of 650-699, the interest rate
is 9.45%. There is a risk premium added to the interest rate for those with lower credit scores.

 The article states that SBI home loan interest rates are based on credit score. This
means that borrowers with higher credit scores will qualify for lower interest rates.
 The article provides a table of interest rates for different credit score ranges. For
example, borrowers with a credit score of 750 or higher will qualify for an interest
rate of 9.15%, while borrowers with a credit score of 650-699 will qualify for an
interest rate of 9.45%.
 The article also states that there is a risk premium added to the interest rate for
borrowers with lower credit scores. This is because borrowers with lower credit
scores are considered to be a higher risk to lenders.

29 | P a g e
Article 3

State Bank of India (SBI) Raises Rs 10,000 Crore via Tier-II Bonds

In a move to strengthen its financial position and meet regulatory capital requirements, State
Bank of India (SBI), the country's largest lender, has successfully raised Rs 10,000 crore
through the issuance of Tier-II bonds. These bonds, with a coupon rate of 7.81%, have a tenor
of 15 years, with the first call option after 10 years. The issue, which attracted bids worth Rs
15,907 crore, was oversubscribed almost four times against the base issue size of Rs 4,000
crore. This overwhelming response from investors highlights the strong confidence placed in
SBI's financial stability and growth prospects.

Significance of Tier-II Bonds

Tier-II bonds are a type of debt capital that banks issue to supplement their core capital.
These bonds are subordinate to Tier-I capital, meaning that they are at a higher risk of being
wiped out in case of financial difficulties. However, they offer higher interest rates to
compensate for this increased risk. Tier-II bonds are an important source of capital for banks,
as they help them to meet regulatory requirements and support their business growth.

SBI's Capital Adequacy Ratio

The capital adequacy ratio (CAR) is a measure of a bank's ability to absorb losses. As of the
end of June 2023, SBI's CAR stood at 14.56%, with Tier-I accounting for 11.97% and Tier-II
2.56%. The issuance of Tier-II bonds will further strengthen SBI's CAR, providing it with a
greater buffer to withstand financial shocks.

SBI's Debt Capital Raising Strategy

30 | P a g e
SBI is actively pursuing a strategy of raising debt capital to support its business growth plans.
Earlier this financial year, the bank raised Rs 3,100 crore through the issuance of Additional
Tier-I (AT1) bonds. It is also planning to raise another Rs 7,000 crore through AT1 bonds to
replace maturing bonds. This focus on debt capital raising reflects SBI's commitment to
maintaining a strong capital base and ensuring its long-term financial stability.

Conclusion

The successful issuance of Tier-II bonds is a positive development for SBI, as it strengthens
the bank's financial position and supports its growth plans. The overwhelming response from
investors underscores the confidence placed in SBI's financial stability and its ability to
generate strong returns. As SBI continues to expand its business, its ability to raise debt
capital will be crucial for meeting its regulatory requirements and maintaining a healthy
capital base.

Article 4

The State Bank of India (SBI) has launched a new digital banking platform called YONO
Krishi, which is designed to empower farmers by providing them with a range of financial
services in four clicks. The platform offers a variety of features, including online banking,
bill payments, loan applications, and crop insurance. It is hoped that YONO Krishi will help
to improve financial inclusion for farmers and make it easier for them to access the services
they need.

Analysis

The launch of YONO Krishi is a positive development for SBI and for farmers in India. The
platform will help to improve financial inclusion for farmers by providing them with a range
of services that they may not have been able to access in the past. It will also make it easier
for farmers to manage their finances and access the information they need to make informed
decisions about their businesses.

31 | P a g e
The platform is particularly relevant in light of the recent government initiatives to promote
digital payments and financial inclusion. The government has set a target of providing all
Indians with access to a bank account by 2020. YONO Krishi will help to achieve this goal
by providing farmers with a convenient and accessible way to access banking services.

The platform is also likely to be popular with farmers as it is easy to use and requires no
specialist knowledge. The four-click interface is simple and intuitive, and the platform is
available in a variety of languages to make it accessible to farmers of all literacy levels.

Overall, the launch of YONO Krishi is a welcome development for farmers in India. The
platform will help to improve financial inclusion, make it easier for farmers to manage their
finances, and provide them with the information they need to make informed decisions about
their businesses.

Key Points

 YONO Krishi is a new digital banking platform launched by SBI to empower farmers.
 The platform offers a variety of features, including online banking, bill
payments, loan applications, and crop insurance.
 YONO Krishi is designed to be easy to use and requires no specialist knowledge.
 The platform is available in a variety of languages to make it accessible to farmers of
all literacy levels.
 YONO Krishi is expected to help improve financial inclusion for farmers and make it
easier for them to access the services they need.

Conclusion

The launch of YONO Krishi is a positive step forward for SBI and for farmers in India. The
platform has the potential to make a real difference to the lives of farmers by providing them
with the financial services they need to succeed.

Article 5

32 | P a g e
Summary

State Bank of India (SBI), India's largest lender, has increased its service charges for a variety
of services, including ATM withdrawals, cash deposits, and cheque clearances. The new
charges will be effective from May 1, 2023.

The bank has cited rising operational costs as the reason for the hike. SBI has also said that
the new charges are in line with those charged by other banks.

Here are five key questions about the SBI service charge hike, answered:

1. What are the new service charges?

The new service charges for ATM withdrawals are as follows:

 For SBI customers withdrawing money from SBI ATMs: Free for the first five
transactions in a month, Rs 20 for each subsequent transaction.
 For SBI customers withdrawing money from non-SBI ATMs: Rs 25 for each
transaction.

The new service charges for cash deposits are as follows:

 For SBI customers depositing cash at SBI branches: Free for the first 10 transactions
in a month, Rs 25 for each subsequent transaction.
 For non-SBI customers depositing cash at SBI branches: Rs 50 for each transaction.

The new service charges for cheque clearances are as follows:

 For SBI customers clearing cheques at SBI branches: Free for the first 50 cheques in a
month, Rs 1 for each subsequent cheque.
 For non-SBI customers clearing cheques at SBI branches: Rs 2 for each cheque.

2. Why has SBI hiked its service charges?

SBI has cited rising operational costs as the reason for the hike. The bank has said that the
cost of maintaining ATMs and branches has been increasing, and that it needs to pass on
these costs to its customers in order to remain profitable.

3. Are other banks also hiking their service charges?

33 | P a g e
Yes, many other banks in India have also hiked their service charges in recent months. This is
due to the same factors that have driven SBI to hike its charges: rising operational costs and a
need to remain profitable.

4. What can I do to avoid paying the new service charges?

There are a few things you can do to avoid paying the new service charges:

 Use SBI ATMs whenever possible.

 Limit the number of cash transactions you make each month.
 Switch to online banking for bill payments and other transactions.

5. What is the impact of the service charge hike on customers?

The service charge hike is likely to have a negative impact on SBI customers, particularly
those who rely on ATMs and cash transactions. However, the bank has said that it is
committed to providing its customers with affordable banking services.

Conclusion

The SBI service charge hike is a significant development for the Indian banking industry. It is
likely to have a ripple effect across the industry, as other banks may follow suit. However, it
is important to note that the new charges are still relatively low compared to those charged by
banks in other countries.

Q 22 How many branches (domestic and foreign) and employees bank have? How they
are important?

SBI, the largest Indian Bank with 1/4th market share, serves over 48 crore customers through
its vast network of over 22,405 branches, 65,627 ATMs/ADWMs, 76,089 BC outlets, with an
undeterred focus on innovation, and customer centricity, which stems from the core values of
the Bank - Service, Transparency, Ethics, Politeness and Sustainability.

34 | P a g e
It has 235 overseas branches and SBI is present in 29 countries as per its annual report 2023.

SBI has a total of 2,35,858 employees. Employees of SBI are the cornerstone of the
company's success. They play a crucial role in shaping the customer experience, driving
innovation, and providing expert financial services. Their dedication, hard work, and
expertise keep the company running smoothly and contribute significantly to its growth and
reputation. SBI's employees are not just workers; they are the ambassadors of the company,
representing SBI's values and commitment to excellence in all interactions. Their
contributions are invaluable in making SBI a leading financial institution in India.

Q 23 Mention three important guidelines of RBI bank needs to follow for sources of
funds.
Three important guidelines of the Reserve Bank of India (RBI) that State Bank of India (SBI)
needs to follow for sources of funds:

1. Maintenance of Cash Reserve Ratio (CRR): SBI is required to maintain a certain

percentage of its deposits as cash with the RBI. This is known as the Cash Reserve
Ratio (CRR). The CRR is currently set at 3 percent. This means that SBI must keep 3

35 | P a g e
 percent of its deposits in cash with the RBI. The RBI uses the CRR to control the
amount of money in circulation.
2. Maintenance of Statutory Liquidity Ratio (SLR): In addition to the CRR, SBI is
also required to maintain a certain percentage of its deposits in liquid assets. This is
known as the Statutory Liquidity Ratio (SLR). The SLR is currently set at 14 percent.
This means that SBI must keep 14 percent of its deposits in liquid assets. Liquid
assets include cash, government securities, and approved securities. The RBI uses the
SLR to ensure that banks have enough liquid assets to meet their obligations.
3. Maintenance of prudential limits on exposure to individual and group
borrowers: SBI is also required to maintain prudential limits on its exposure to
individual and group borrowers. These limits are designed to prevent banks from
lending too much money to any one borrower or group of borrowers. The RBI sets
these limits based on the riskiness of the borrower or group of borrowers.

These are just three of the many guidelines that SBI must follow for sources of funds. The
RBI regularly reviews and updates its guidelines to ensure that they are in line with the latest
economic conditions. SBI must comply with all of the RBI's guidelines in order to maintain a
sound financial position.

References

1. https://sbi.co.in/documents/17826/35696/Annual_Report_2023.pdf
2. https://sbi.co.in/documents/17836/29141285/SBI_Annual_Report_2022.pdf
3. https://bank.sbi/corporate/AR2021/
4. https://sbi.co.in/corporate/AR1920/index.html
5. https://sbi.co.in/corporate/AR1819/

6. Gopakumar, G. (2023, November 5). SBI, BoB look to raise more current, savings
deposits | Mint. Mint. https://www.livemint.com/companies/news/sbi-bob-look-to-
raise-more-current-savings-deposits-11699203780408.html

7. Kulkarni, S. (2023, May 15). What are the latest SBI home loan rates: Interest rate
you will get based on your CIBIL credit score. The Economic Times.
https://economictimes.indiatimes.com/wealth/borrow/latest-sbi-home-loan-interest-
rates-what-interest-rate-you-will-get-based-on-your-cibil-credit-score/articleshow/
100243098.cms
8. Lele, A. (2023, November 1). SBI raises Rs 10,000 crore via Tier-II bonds at 7.81%
coupon rate. www.business-standard.com.
https://www.business-standard.com/companies/news/sbi-raises-rs-10-000-crore-via-
tier-ii-bonds-at-7-81-coupon-rate-123110101003_1.html
9. WebTeam, Z. (2020, August 14). SBI Kisan Credit Card! YONO Krishi review
launched by State Bank of India to empower farmers in four clicks. Zee Business.
https://www.zeebiz.com/personal-finance/news-sbi-kisan-credit-card-yono-krishi-
review-launched-by-state-bank-of-india-to-empower-farmers-in-four-clicks-

36 | P a g e
 133359#:~:text=With%20YONO%20Krishi%2C%20SBI%20has,YONO%20Mandi
%20and%20YONO%20Mitra.?
10. SBI hikes service charges including for ATM withdrawals: Five key questions
answered. (2021, June 30). Moneycontrol.
https://www.moneycontrol.com/news/business/sbi-hikes-service-charges-including-
for-atm-withdrawals-five-key-questions-answered-7109511.html
11. https://sbi.co.in/documents/17826/35696/Annual_Report_2023.pdf
12. https://www.moneycontrol.com/financials/statebankofindia/balance-sheetVI/SBI/1#SBI
13. https://sbi.co.in/web/corporate-governance/annual-report
14. https://sbi.co.in/web/investor-relations/analyst-presentation

37 | P a g e