CHAPTER 1

INTRODUCTION TO BANKS:

Bank may be defined as a financial institution which is engaged in the business of keeping
money for savings and checking accounts or for exchange or for issuing loans and credit etc.

A set of services intended for private customers and characterized by a higher quality than the
services offered to retail customers.

The essential function of a bank is to provide services related to the storing of deposits and the
extending of credit. Basic function may include Credit collection, Issuer of banking notes,
Depositor of money and lending loans.

Now a days banking is not in its traditional way, with the advancement of technology its
focusing  on more  comfort of customer  providing services such as:

• Online banking
• investment banking
• electronic banking
• internet banking
• pc banking /mobile banking
• e-banking

The importance of banking sector is immense in the progress and prosperity of any State or
country. The economic progress and prosperity comes from the well-rounded development and
an impeccable banking management. Banks in general, governmental and private, have eased our
financial transactions, security, and facilitated the funding for establishing a business or industry.

1
HISTORY OF BANKING:

The History of banking in India dates back to the early half of the 18th century. 3 Presidency
Banks that were established in the country namely the Bank of Hindustan, Bank of Madras and
Bank of Bombay can also be referred to as some of the oldest banking institutions in the country.
The State Bank of India that was earlier known as the Bank of Bengal is also one of the oldest in
the genre. To know about the types of banks in India, it is necessary that we first comprehend the
banking system so as to be able to distinguish about its various types.

TYPES OF BANKS IN INDIA:

All types of Banks in India are regulated and the activities monitored by a standard bank called
the Reserve Bank of India that stands at the apex of the banking structure. It is also called the
Central Bank, as major banking decisions are taken at this level. The other types of banks in
India are placed below this bank in the hierarchy. 

The major types of banks in India are as follows: 

1. Public sector banks.

2. Private sector banks.

3. Cooperative banks.

2
 CHAPTER 2

STATE BANK OF INDIA

INTRODUCTION:

State Bank of India (SBI) is the largest state-owned banking and financial services company

in India, by almost every parameter - revenues, profits, assets, market capitalization, etc. The
State Bank of India was earlier known as Imperial Bank. 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 $352 billion and $285
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 loans. The State bank of India is the 29th most reputed company in the world.

HISTORY:

The evolution of State Bank of India can be traced back to the first decade of the 19th century. It
began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806. 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.

3
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. An
important turning point in the history of State Bank of India is the launch of the first Five Year
Plan of independent India, in 1951. The Plan aimed at serving the Indian economy in general and
the rural sector of the country, in particular. Until the Plan, the commercial banks of the country,
including the Imperial Bank of India, confined their services to the urban sector.

The State Bank of India emerged with its operations carried out by the 480 offices comprising
branches, sub offices and three Local Head Offices, inherited from the Imperial Bank. Instead of
serving as mere repositories of the community's savings and lending to creditworthy parties, the
State Bank of India catered to the needs of the customers, by banking purposefully.

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 nationalized them between October, 1959 and
May, 1960.

The first step towards unification occurred on 13 August 2008 when State Bank of
Saurashtra merged with SBI, 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 State Bank of Indore. (Individuals who held the shares prior to its takeover
by the government hold the balance of 1.77 %.)

The bank is also looking at opportunities to grow in size in India as well as internationally. It
presently has 82 foreign offices in 32countries across the globe. It has also 7 Subsidiaries in
India – SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and SBI
Cards - forming a formidable group in the Indian Banking scenario. It is in the process of raising
capital for its growth and also consolidating its various holdings.

4
Branches:

The corporate center of SBI is located in Mumbai. In order to cater to different functions, there
are several other establishments in and outside Mumbai, apart from the corporate center. The
bank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at major
cities throughout India. It is recorded that SBI has about 10000 branches, well networked to cater
to its customers throughout India. 

 State Bank of India has 131 foreign offices in 32 countries across the globe.
 SBI has about 21000 ATMs and SBI group (including associate banks) has about 45000
no of ATMs.
 SBI has 26500 branches, inclusive of branches that belong to its Associate banks.
 SBI alone has 13076 Branches (including the branches of State Bank of Indore), as on 26
August 2010.

5
 CHAPTER 3

PRODUCTS AND SERVICES:

 PERSONAL FINANCE

 DEPOSIT SCHEMES

 SERVICES

 PERSONAL FINANCE:

State Bank of India has a variety of schemes under Personal Finance to satisfy varying needs of
the banking public. The Bank offers the following schemes with attractive rates of interest: 
Housing Loan
Property Loan
Car Loan
Educational Loan
Personal Loan
EMI Calculator

 DEPOSIT SCHEMES:

Open an account with any of the branches, all of them are fully computerised, and realise the
advantage of vast network. Place funds in Multi Option Deposit Scheme, a term deposit which is
not fixed at all and comes with a unique break-up facility which provides you full liquidity as
well as benefits of higher rates of returns, through your savings bank account. Alternately, keep
that deposit intact by availing an overdraft facility, to meet your occasional temporary funds
requirements.

6
Want to build up savings slowly? Discover our Recurring Deposit Account.Can save a little
every month to build up the desired corpus to meet future requirement of funds.

The products are designed with flexibility to suit your personal requirements. Enjoy 24 hour
banking facility through our Internet Banking/ widest network of ATMs.

 SERVICES:

The State Bank of India is the largest state-owned bank. It provides many products and services
to their customers for transacting smoothly.

The services are as follows:

 ONLINE TRADING

State Bank of India in alliance with SBI Cap Securities Limited and Motilal Oswald Securities
Limited now offers you an online trading account which will let you trade from the comfort of
your home or office either through the internet. This service provides you with a 3-in1 account
which is an integrated platform of savings bank a/c, Demat a/c and an online trading a/c to give
you a convenient and paper free trading experience under one roof.

 MOBILE BANKING

State Bank Freedom – Your Mobile Your Bank

Away from home, bills can be paid or money sent to the loved ones or balance enquiries done
anytime 24x7!!! That is what State Bank Freedom offers -convenience, simple, secure, anytime
and anywhere banking. Mobile Banking Service over Application/ Wireless Application Protocol
(WAP)

 ATM SERVICES

State Bank offers you the convenience of over 12,000 ATMs in India, the largest network in the
country and continuing to expand fast! This means that you can transact free of cost at the ATMs
of State Bank Group (This includes the ATMs of State Bank of India as well as the Associate
Banks - namely, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore,
State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, and State Bank of

7
Travancore) and wholly owned subsidiary viz. SBI Commercial and International Bank Ltd.,
using the State Bank ATM-cum-Debit (Cash Plus) card.

 DEMAT SERVICES

SBI offers Demat services that would ensure free transferability of securities with speed,
accuracy and security. SBI is Depository Participant both with - National Securities Depositories
Limited (NSDL) and Central Depository Services Limited (CDSL) through more than 1000
branches.

 INTERNET BANKING

The Internet banking portal of our bank enables its retail banking customers to operate their
accounts from anywhere anytime, removing the restrictions imposed by geography and time. It's
a platform that enables the customers to carry out their banking activities from their desktop,
aided by the power and convenience of the Internet.

 SAFE DEPOSIT LOCKER

For the safety of your valuables we offer our customers safe deposit vault or locker facilities at a
large number of our branches. There is a nominal annual charge, which depends on the size of
the locker and the centre in which the branch is located.

8
  BROKING SERVICES

SBI Capital Markets Ltd. has expanded its retail broking network to help investors carry out their
broking transactions with confidence. At present the investors can buy/sell shares at both NSE
and BSE through their Retail Broking Centers in the cash market. We furnish hereunder the
location of these Centers with full particulars of the contact persons. All investors can approach
these branches for their broking needs.

 INTERNATIONAL BANKING

International banking services of State Bank of India are delivered for the benefit of its Indian
customers, non-resident Indians, foreign entities and banks through a network
of 131offices/branches in 32 countries as on 31 July 2009, spread over all time zones. The
network is augmented by a cluster of Overseas and NRI branches within India and correspondent
links with over 522 banks, the world over. Bank's Joint Ventures and Subsidiaries abroad further
underline the Bank's international presence.

The services include corporate lending, loan syndications, merchant banking, handling Letters of
Credit and Guarantees, short-term financing, collection of clean and documentary credits and
remittances.

9
COMPETITION

 Punjab National bank - Punjab National Bank (PNB) is the second largest government-
owned commercial bank in India with about 4,500 branches across 764 cities This
financial institution offers services in personal and corporate banking, including
industrial, agricultural, and export finance, as well as international banking. It competes
with SBI mostly in retail lending and wholesale businesses.

 ICICI Bank (formerly Industrial Credit and Investment Corporation of India) is India's
largest private sector bank and second largest overall in terms of assets. Together with its
subsidiaries, ICICI Bank offers a complete spectrum of financial services and products
ranging from commercial banking to investment banking, mutual fund to insurance. It is
also the largest issuer of credit cards in India.

 HDFC - Housing Development Finance Corporation Limited Bank Limited or HDFC

Bank is the second largest private bank in India, catering to the whole universe of
financial services from commercial to investment banking, mutual fund to insurance. On
February 25, 2008 HDFC agreed to buy Centurion Bank of Punjab. The combined entity
has the largest branch network among private banks in India, a strong deposit base of
around Rs 1220 billion and net advances of around Rs 890 billion.

 Bank of Baroda - Bank of Baroda is another private player. It has a rich countrywide
network of over 2800 branches. It also has significant international presence with a
network of 74 offices in 25 countries.

10
 COMPARISON OF COMPETITORS

BANKS Total Total Net Total Branches

Deposits Advances profit Assets
State Bank of 4,355.21 3,373.36 45.41 5,665.65 10,186
India
ICICI Bank 2,305.10 1,958.66 31.10 3,453.12 1,400
Punjab 1, 398.60 1,990.48 20.48 1,990.48 4,500
National Bank
HDFC Bank 1,007.69 634.27 15.90 1,332.51 1,412
Bank of 1,520.34 1,067.01 14.35 1,795.99 2,800
Baroda

11
 CHAPTER 4

STATISTICAL DATA

Table 1
Deposits of STATE BANK OF INDIA
Deposits 2007 % 2008 % 2009 %
2007 2008 2009
a) 1 - 14 days 5699043 6638615 8369040
b) 15 - 28 days 523158 9.17 631786 9.52 1459293 17.44
c) 29 days to 3 1798035 343.69 2298365 363.79 3785331 259.39
months
d) Over 3 months to 1826634 101.59 2587169 112.57 5662741 149.60
6 months
e) Over 6 months to 4039361 221.14 3652564 141.18 8611419 152.07
one year
f) Over one year to 3 12001053 297.10 11849571 324.42 18190961 211.24
years
g) Over 3 years to 5 9536578 79.46 9335776 78.79 10286477 56.55
years
h) Over 5 years 8128246 85.23 16746548 179.38 17842051 173.45
Total 43552108 53740394 74207313

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 Table 2
Borrowings of STATE BANK OF INDIA
Borrowings 2007 % 2008 % 2009 %
2007 2008 2009

a) 1 - 14 days 946658 1162939 1236218

b) 15 - 28 days 165872 17.52 572692 49.24 553182 44.74
c) 29 days to 3 months 851972 513.63 1588711 277.41 1049096 189.64
d) Over 3 months to 6 436137 51.19 414276 26.07 852360 81.24
months
e) Over 6 months to 357961 82.07 713049 172.11 438483 51.44
one year
f) Over one year to 3 530465 148.19 586076 82.19 917388 209.21
years
g) Over 3 years to 5 557920 105.17 77199 13.17 305288 33.27
years
h) Over 5 years 123348 22.10 57799 74.87 19353 6.33
Total 3970333 5172741 5371368

13
 Table 3
Loans and Advances of STATE BANK OF INDIA
Loans and Advances 2007 2008 2009

a) 1 - 14 days 5677422 7830883 8722168

b) 15 - 28 days 547779 1246760 802604
c) 29 days to 3 months 1607960 1296663 3329925
d) Over 3 months to 6 months 1548272 1138072 2662089
e) Over 6 months to one year 1328192 1529844 1945219
f) Over one year to 3 years 14447801 16890779 24070690
g) Over 3 years to 5 years 3219500 4321208 4227620
h) Over 5 years 5356723 7422611 8490005
Total 33733649 41676820 54250320

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 Table 4

Investments of STATE BANK OF INDIA

Investments (at book Value) 2007 2008 2009

a) 1 - 14 days 14914888 8368 1802474

b) 15 - 28 days 65634 132532 449475
c) 29 days to 3 months 330368 372936 2173342
d) Over 3 months to 6 months 956963 520898 784899
e) Over 6 months to one year 347599 627424 677718
f) Over one year to 3 years 264709 3845591 3223861
g) Over 3 years to 5 years 2714216 3388813 6033176
h) Over 5 years 2141121 10053565 12450450
Total 19245640 18950127 27595395

15
 TABLE NO 5

CAPITAL STRUCTURE

From To Class Of Authorized Issued Paid Up Paid Up Paid Up

Year Year Share Capital Capital Shares Face Capital
(No’s) Value
2000 2001 Equity Share 1,000.00 526.30 526298878 10 526.30
2001 2002 Equity Share 1,000.00 526.30 526298878 10 526.30
2002 2003 Equity Share 1,000.00 526.30 526298878 10 526.30

2003 2004 Equity Share 1,000.00 526.30 526298878 10 526.30

2004 2005 Equity Share 1,000.00 526.30 526298878 10 526.30
2005 2006 Equity Share 1,000.00 526.30 526298878 10 526.30

16
2006 2007 Equity Share 1,000.00 526.30 526298878 10 526.30
2007 2008 Equity Share 1,000.00 631.56 631470376 10 631.47
2008 2009 Equity Share 1,000.00 634.97 634880222 10 634.88
2009 2010 Equity Share 1,000.00 634.97 634882644 10 634.88
(SOURCE: moneycontrol.com)

Table 6

Sources of funds

Fund Mar ' 06 Mar ' 07 Mar ' 08 Mar ' 09 Mar ' 10
Owner's fund
Equity share 526.30 526.30 631.47 634.88 634.88
capital
Reserves & 27,117.79 30,772.26 48,401.19 57,312.82 65,314.32
surplus
Total 27644.09 31298.56 49032.66 57947.7 65949.2
Loan funds
Unsecured 3,80,046.0 4,35,521.09 5,37,403.94 7,42,073.13 8,04,116.23
loans 6
Total 4,07,690.1 4,66,819.65 5,86,436.60 8,00,020.82 8,70,065.43
4

17
 Table 7

Uses of funds

Fixed assets
Net block 4,117.72 3,574.41 3,139.22 2,676.91 2,673.11
Capital work-in- 295.18 263.44 234.26 141.95 79.82
progress
Investments 2,85,790.0 2,75,953.96 1,89,501.2 1,49,148.8 1,62,534.24
7 7 8
Net current assets
Current assets, 35,112.76 37,733.27 44,417.03 25,292.31 22,380.84
loans & advances
Less : current 80,336.70 1,10,697.57 83,362.30 60,042.26 55,538.17
liabilities &
provisions
Total net current -45,223.94 -72,964.30 -38,945.27 -34,749.95 -33,157.32
assets
Total 2,44,979.0 2,06,827.50 1,53,929.4 1,17,217.8 1,32,129.85
3 8 0

TABLE 8

PROFIT AND LOSS

Mar ' 06 Mar ' 07 Mar ' 08 Mar ' 09 Mar ' 10
Income
Operating income 37,869.52 43,860.57 56,821.55 74,880.76 85,909.36
Expenses
Personnel expenses 8,123.04 7,932.58 7,785.87 9,747.31 12,754.65
Selling expenses 109.44 88.43 173.23 251.23 224.05
Administrative expenses 2,911.29 4,628.38 5,970.47 7,361.98 11,029.66
Cost of sales 11,143.78 12,649.38 13,929.57 17,360.52 24,008.35
Operating profit 6,566.46 7,774.36 10,962.90 14,604.94 14,578.54
Other recurring income 1,413.65 1,008.35 901.33 894.26 1,051.15
Adjusted PBDIT 7,980.11 8,782.71 11,864.23 15,499.20 15,629.69

18
Financial expenses 20,159.29 23,436.82 31,929.08 42,915.29 47,322.48
Depreciation  729.13 602.39 679.98 763.14 932.66
Adjusted PBT 7,250.98 8,180.32 11,184.25 14,736.06 -32,625.45
Tax charges  2,499.48 3,083.77 3,929.20 6,115.12 6,166.62
Adjusted PAT 4,404.73 4,529.18 6,718.08 9,124.18 9,176.51
Non recurring items 1.94 12.13 11.04 -2.95 -10.46
Reported net profit 4,406.67 4,541.31 6,729.12 9,121.23 9,166.05
Earnings before appropriation 4,407.01 4,541.65 6,729.46 9,121.57 9,166.39
Equity dividend 736.82 736.82 1,357.66 1,841.15 1,904.65
Dividend tax 103.34 125.22 165.87 248.03 236.76
Retained earnings 3,566.85 3,679.61 5,205.94 7,032.38 7,024.99
(SOURCE: moneycontrol.com)

TABLE 9
RATIOS

1. PROFITABILITY RATIOS
YEAR 2006 2007 2008 2009 2010
Operating margin (%) 17.33 17.72 19.29 19.50 16.96
Gross profit margin (%) 15.41 16.35 18.09 18.48 15.88
Net profit margin (%) 11.21 10.12 11.65 12.03 10.54
Adjusted cash margin (%) 13.06 11.43 12.81 13.04 11.62
Adjusted return on net worth (%) 15.93 14.47 13.70 15.74 13.91
Reported return on net worth (%) 15.94 14.50 13.72 15.74 13.89
Return on long term funds (%) 97.89 99.20 86.83 100.35 95.02
(SOURCE: WWW.INDIASTATS.COM)

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 2. COVERAGE RATIOS
YEAR 2006 2007 2008 2009 2010

Adjusted cash flow time total debt 74.03 84.87 72.64 75.05 79.54

Financial charges coverage ratio 1.40 1.37 1.37 1.36 0.33

Fin. charges cov.ratio (post tax) 1.25 1.22 1.23 1.23 1.21

(SOURCE: WWW.INDIASTATS.COM)

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 3. LIQUIDITY RATIOS
YEAR 2006 2007 2008 2009 2010
Current ratio 0.40 0.42 0.53 0.34 0.43
Current ratio (inc. st loans) 0.05 0.05 0.07 0.04 0.03
Quick ratio 5.50 6.52 6.15 5.74 9.07
(SOURCE: WWW.INDIASTATS.COM)

21
 4. LEVERAGE RATIOS
YEAR 2006 2007 2008 2009 2010
Total debt/equity 13.75 13.91 10.96 12.81 12.19
Owners fund as % of total source 6.78 6.70 8.36 7.24 7.57
Fixed assets turnover ratio 5.10 5.44 6.32 7.20 7.26
(SOURCE: WWW.INDIASTATS.COM)

Table 10

ANNUAL RESULTS
Year  Mar ' 06 Mar ' 07 Mar ' 08 Mar ' 09 Mar ' 10
Sales 35,794.93 39,491.02 48,950.31 63,788.43 70,993.92
Operating profit 19,676.75 25,257.87 33,673.05 44,405.16 46,280.41
Interest 20,159.29 23,436.82 31,929.08 42,915.29 47,322.48

22
Gross profit 11,299.23 9,999.94 13,107.55 17,915.23 18,320.91
EPS (Rs) 83.73 86.29 106.56 143.67 144.37
Net Profit 4,406.67 4,541.31 6,729.12 9,121.24 9,166.05
(SOURCE: WWW.INDIASTATS.COM)

Table 5

Investment Made and Loss Suffered by State Bank Of India

(2006-2007 to 2009-2010)
2006-07 2007-08 2008-09 2009-10

23
 BANK INVEST- LOSS INVEST- LOSS INVEST- LOSS INVEST- LOSS
MENT MENT MENT MENT

State Bank of 1096.89 Nil 2696.1 Nil 2107.05 Nil 1432.09 Nil
India

(SOURCE: WWW.INDIASTATS.COM)

CHAPTER 5

RECOMMENDATIONS
 Bank should refocus on its interest rate as responded by people. Periodic review of the
interest rate should be done.

24
  There should be computerized system in the bank as it will reduce the time wastage of
manual work and will lead to the better performance of the bank.

 Banks is also advised to have proper internal control measures for monitoring its
functions and transactions.

 Communication gap within the bank and with the head-office should be reduced.

 Training of the employees should be there to meet the needs of the time.

 More mass awareness campaigns should be organized in order to enhance market share
of bank. So Bank should concentrate on its advertisement itself.
 Customer’s satisfaction must be the top priority of the bank.

BIBLOGRAPHY

BOOKS:

25
 1. Suresh Padmalatha (2010): “Management of Banking and
Financial Services”. Dorling Kindersley (India) Pvt.Ltd.

2. Yoshitaka Kitao (2007): “The SBI Vision& Strategy”. John Wiley

& Sons, Inc., Hoboken, New Jersey.

3. C. Rangarajan (1998): “Indian Economy”. UBS Publishers

Distributors.

WEBSITES VISITED:

www.indiastat.com
www.moneycontrol.com
www.sbi.com
www.sbi.co.in.com
www.wikipidea.com

26