Banking Chapter-4 "SBI, Its Management & Functions "

State Bank of India was established on the Recommendation of All India Rural Credit Survey Committee (AIRCSC) with the aim of providing banking services in the rural areas of the country. SBI was Established in 1955 under the State bank of India Act,1955.

How SBI was established ?

SBI was set up on 1st July 1955 when it took over the assets and liabilities of the Imperial bank of India. Imperial bank of India was established on 27 January 1921 by J.M.Keynes, When the 3 Presidency Banks of India were amalgamated (merged) to form a single banking entity. The 3 Presidency Banks were

·        Bank of Bengal, Established on 2 June 1806

·        Bank of Bombay, Established on 15 April 1840

·        Bank of Madras, Established on 1843

The Imperial Bank of India was christened (renamed) on 30 April 1955 as the State Bank of India. The day on which the Imperial Bank of India (IBI) became the State Bank of India, IBI had 480 branches, sub-offices, and three local head offices 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 2007 Reserve Bank of India transferred its stake in the State Bank of India to the Government of India.

SBI is the largest commercial bank in the public sector banks of India.

CMD  - Smt. Arundathi Bhattacharya (First woman to be appointed Chairperson of the bank on October 7, 2013)

Headquarters - Mumbai

Associate Banks of SBI:-

SBI has five associate banks & its associates Banks are governed under the State Bank Of India (Subsidiary Banks) Act, 1959. All Associates of SBI Use the State Bank of India logo, which is a blue circle, and all use the "State Bank of" name, followed by the regional headquarters' name:

·        State Bank of Bikaner & Jaipur

·        State Bank of Hyderabad

·        State Bank of Mysore

·        State Bank of Patiala

·        State Bank of Travancore

Earlier SBI had seven associate banks. State Bank of Saurashtra and State Bank of Indore merged with SBI on 13 August 2008 and 19 June 2009 respectively.

Non-banking subsidiaries - Apart from its five associate banks, SBI also has the following non-banking subsidiaries:-

·        SBI Capital Markets Ltd

·        SBI Funds Management Pvt Ltd

·        SBI Factors & Commercial Services Pvt Ltd

·        SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

·        SBI DFHI Ltd

·        SBI Life Insurance Company Limited

·        SBI General Insurance

Taglines Of SBI:-

·        Pure Banking, Nothing Else

·        With You - All The Way

·        A Bank Of The Common Man

·        The Banker To Every Indian

·        The Nation Banks On Us

Branches Of SBI:-

17000 Branches as on December 2013

ATMs Of SBI:-

It has 43,515 ATMs and the SBI group (including associate banks) has 51,491 ATMs (As of 31 March 2014)

Logo:-

The logo of the SBI (blue circle with a small cut in the bottom) was inspired by the Kankaria Lake of Ahmedabad. It depicts perfection and the small man the common man - being the center of the bank's business.

Management:-

· A Chairman and a Vice-chairman appointed by the Central Government in consultation with the Reserve Bank

·   Maximum 2 Managing Directors appointed by the Central Board with the approval of the Central Government

·   6 Directors elected by the shareholders other than the Reserve Bank

· 8 Directors nominated by the Central Government in consultation with the Reserve Bank to represent territorial and economic interests & not less than two of whom shall have special knowledge of the working of co-operative institutions and of the rural economy

·  1 Director nominated by the Central Government

·  1 Director nominated by the Reserve Bank.

Functions:-

The State Bank of India performs all the functions of a commercial bank and acts as an agent of the Reserve Bank in those places where the RBI has no branch offices.

(A) Central Banking Functions

It acts as the agent of the Reserve Bank in all those places where the RBI does not have its own branches. The State Bank of India acts as an agent of the Reserve Bank of India and performs the following functions: 

1. It acts as the Bankers Bank:-

·        It receives deposits from the commercial banks

·        It grants loans to the commercial banks on demand.

·        It rediscounts the bills of the commercial banks.

·        It acts as the clearinghouse for the other commercial banks.

2. It acts as the Government’s Banker - It collects money from the public on behalf of the government and also makes payments. The bank also manages the public debt of the Central and State Governments.

3. Remittance - The State Bank of India facilitates the remittance of money from one place to another. It helps in the transfer of the funds of the State and Central Government. 

(B) Ordinary Banking Functions

The ordinary banking functions of the State Bank are as follows:

·Receiving Deposits from the Public - The State Bank receives different types of deposits from the public for example Fixed Deposits, Recurring Deposits Savings Account, and Current Accounts.

·Investment in Securities - Like other commercial banks, the State Bank invests its surplus funds in the Securities of Government of India, the State Governments, Railway Securities, Securities of Corporations, and Treasury Bills.

·Loans and Advances - The State Bank grants loans and advances to people against the approved security. It lends money to merchants and manufacturers for short periods. It also lends to farmers and cooperative institutions. It lends mostly to the security of easily realizable commodities like rice, wheat, cotton, oil-seeds, cloth, gold, and government securities. The Bank can lend against agricultural bills up to a maximum period of fifteen months and in case of other bills up to a maximum period of six months. 

·Subsidiary functions - The State Bank performs various subsidiary services also. It collects checks, drafts, bills of exchange, dividends interest, salaries, and pensions on behalf of its customers. It purchases and sells securities on behalf of its customer. It receives valuables and documents for safe custody and maintains safe deposit vaults.

(C) Prohibited Functions of the SBI

·The State Bank of India Act has enumerated certain businesses which cannot be done by the State Bank.

·The State Bank cannot grant loans against stocks and shares for a period exceeding six months.

·The State Bank can purchase no immovable property except for its own offices.

·The State Bank cannot re-discount those bills which do not carry at least two good signatures.

·The State Bank could neither discount bills nor extend credit to individuals or firms above the sanctioned limit.

·The State Bank can neither re-discount nor offer loans against the security of those exchange bills whose period of maturity exceeds six months.