CHAPTER I

INTRODUCTION

HISTORY OF BANKING
A banker or bank is a financial institution that acts as a payment agent for
customers, and borrows and lends money. In some countries such as Germany
and Japan banks are the primary owners of industrial corporations while in other
countries such as the United States Banks are prohibited from owning non
financial companies.
Banks act as payment agents by conducting current accounts for customers
paying cheques drawn by customers on the bank, and collection cheques
deposited to customers current accounts for customer payment via other
payment methods such as telegraphic transfer. Banks borrow money by
accepting funds deposited on current account, accepting term deposit and by
issuing debt securities such as banknotes and bonds. Banks lend money by
making advances to customers on current account, by making installment loans,
and by investing in marketable debt securities and forms of lending.
Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that
provide payment services such as remittance companies are not normally
considered an adequate substitute for having a bank account.
Banks borrow most funds borrowed from households and non-financial
businesses, and lend most funds lent to households and non-financial
businesses, but non-bank lenders provide a significant and in many cases
adequate substitute for bank loans ,and money market funds, cash management

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trusts and other non-bank financial institution in many cases provide an

adequate substitute to banks for lending saving to.
GROWTH OF BANKING IN INDIA:
Banking in India back to 1786 where the first bank that was
established in India. Then the nationalization of banks in 1969 liberalisation in
1991.In India, Banking sector is segregated as public sector banks, private
sector banks and co-operative banks.
Banks can be categorized into non-scheduled banks and scheduled banks.
Scheduled banks constitute of commercial banks and co-operative banks. There
are about 67,000 branches of scheduled banks spread across India. During the
first phase of financial reforms, there was a nationalization of 14 major banks in
1969. This crucial step led to a shift from Class banking to Mass banking. Since
then the growth of the banking industry in India has been a continuous process.
As far as the present scenario is concerned the banking industry is in a transition
phase. The Public Sector Banks (PSBs), which are the foundation of the Indian
Banking System account for more than 78 percent of total banking industry
assets. On the other hand the Private Sector Banks in India is witnessing
immense progress. They are leaders in Internet banking, mobile banking, phone
banking, ATMs. On the other hand the Public Sector Banks are still facing the
problem of unhappy employees. There has been a decrease of 20 percent in the
employee strength of the private sector in the wake of the Voluntary Retirement
Schemes (VRS). As far as foreign banks are concerned they are likely to
succeed in India.
Indus land Bank was the first private bank to be set up in India. IDBI, ING
Vysya Bank, SBI Commercial and International Bank Ltd., Dhanalakshmi Bank
Ltd., Karur Vysya Bank Ltd., Bank of Rajasthan Ltd etc are some Private Sector

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Banks. Banks from the Public Sector include Punjab National Bank, Vijaya
Bank, UCO Bank, Oriental Bank, Allahabad Bank.

Banking industry has revolutionized the transactions and financial services

system worldwide. Through the development in technology, banking services
has been availed to customers at all times, even after the normal banking hours.
Banking industry services is nothing but the access of most of banking related
services (Verification of account details, going with transaction, etc.).

DEFINITION OF BANKING:
Sec(1)(b) defines banking as accepting for the purpose of lending or
investments of deposits of money from the public repayable on demand or
otherwise and withdrawal by cheque , draft, order, or otherwise.

IMPORTANCE OF BANKING IN INDIA:

Banking plays a very important role in economic development of a country.
They touch every aspect of the modern banking. Some of the important roles
played by banking for the developments of Indian economy are as follows.
Banking mobilizes the small, scattered and ideal saving of the
people and make available for the productive purpose i.e. they help
in the process of capital formation.
By offering interest banks attracts depositors and promote the habit
of thrift and saving among people.
Bank is a convient and economic means payment and transfer of
funds i.e. cheques, DD, bankdrafts.

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 Bank helps the movement of funds from region where they are not
very useful to regions where they can be more usefully employed.
Though the supply of money (bank money and credit money)bank
exert a powerful influence on the interest rates in the money
market.
Banks helps trade and commerce. Industry and agriculture by
meeting their financial needs.
Bank directs flow of funds into productive channels. While lending
money they discriminate in favor of essential activities and against
non-essential activities.
In the modern economy people who save people who undertakes
investment are different hence there is a need for financial
intermediaries like banks that should help the flow of funds from
savers to investors.

INDIAN BANKING SYSTEM

The Indian banking system can be broadly classified into nationalized, private
banks and specialized banking institution, the RESERVE BANK OF INDIA
acts as a centralized body monitoring any discrepancies and shortcoming in the
system. Since the nationalization of bank in 1969 the public sector banks like
THE SBI BANK have acquired a place of prominence and has since then seen
tremendous progress.
The need to become highly CUSTOMER FOCUSSED has forced the
slow moving public sector banks to adopt a fast track approach, the varieties of
products and services through e-banking has increased the scope of our banking
system.
The conservative banking practices allowed Indian. Banks to be insulted
partially from the Asian currency crisis. Indian banks are now quoting all higher
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valuation when compared to banks in other Asian countries (Via, Hong Kong,
Singapore, Philippines etc.) that have major problems linked to huge Nonperforming assets (NPAs) and payments defaults. The SBI are growing its
revenue through the efficient branch networks mainly focused on the retail
segments like car finance, housing loans, track finance etc.
The Indian banking has finally worked up to face the competitive dynamics of
the new Indian market and is addressing the relevant issues to take on the
multifarious challenges of globalization. Banks that employ INFORMATION
TECHNOLOGY SOLUTION are perceived to be FUTURISTICS and
PROACTIVE players capable of meeting the multifarious requirement of the
large customers base.
Now the private banks have been fast on the uptake and are reorienting their
strategies using E-BANKING as a medium, the E-BANKING has emerged as
the new a challenging frontier of marketing with the conventional physical
world being just as applicable like in any other marketing medium.
The Indian banking has come from a long way from being a sleepy business
institution to a highly proactive and dynamics entity. This transformation has
been largely brought about by the large close of liberalization and economic
reforms that allowed banks to expose new business opportunities rather then
generating revenues from conventional streams (i.e. borrowing and lending).
The banking in India is highly fragmented with 30 banking units contributing to
almost 50% of deposits and 60% of advance.
Indian nationalized banks (i.e. Government owned) continue to be the
major lenders in the economy due to their sheer size and penetrative networks
which assures them high deposit mobilization.
ESSENTIAL CHARACTERISTICS OF BANK:

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The essential characteristics of a bank are:

Acceptance of deposits from the public on fixed, current or savings bank
account
Allowing of withdrawal of such deposits by cheques, drafts, orders or
otherwise.
Utilization of deposits in hand for the purpose of lending or investments.
Performance of other activities called subsidiary , in addition to the
principal activities.
About Subject
FINANCE:
MEANING OF FINANCE:
Finance is defined as the provision of money at the time when it
is required. Every Enterprise, whether big, medium or small,
needs finance to carry on its operation achieve its targets
finances is some indispensable today that it is rightly said that
it is the life blood of an enterprise.
DEFINITION OF FINANCE:
According to OXFORD DICTIONARY finance may be defined as:
The management of money.
Monetary support for an organisation.
FINANCIAL MANAGEMENT:
According to Phillip hates: FM is concerned with the
managerial decisions that results in acquisition and finance
of long term and credit for the firm as such it deals with
solution that require selection of specific assets selection of
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liabilities as well as problems of size and growth of

enterprise. The analysis of these decisions is based on the
expected inflow and outflow of funds and their effect upon
management function.
Financial management is that part of management which is
concerned mainly with raising funds in the most economic
and suitable manner, using these funds as profitable as
possible, planning future operations and controlling current
performance and future development through financial
accountancy , cost accountancy , budgeting ,statistics and
other means.
Financial Management provides the best guide for
the future resources allocation of firm. It provides relatively
uniform yardstick for judging most of the enterprises
operations and projects.

OBJECTIVES OF FINANCIAL MANAGEMENT:

Profit maximisation:
Profit earning is the main aim of every economic
activity. A business being an economic institution must
earn profit to cover its cost and provide funds for
growth. No business can survive without earning profit.
Profit is a measure of efficiency of a business enterprise
.Profit also serves as an protection against risk which
cannot

be

ensured.

Thus,

profit

maximisation

is

considered as the main objective of the business.

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 Wealth maximisation:
Wealth maximisation is the appropriate objective of an
enterprise.
Financial theory asserts that wealth maximisation is a
single substitute for a stockholders utility. When the
firm maximises the stockholders wealth, the individual
stockholders can use this wealth to maximise his
individual

utility.

It

means

that

by

maximising

stockholders wealth the firm is operating consistently

towards maximising stockholders utility.

IMPORTANCE OF FINANCIAL MANAGEMENT:

It is necessary for the smooth running of an Enterprise.
Financial management provides complete coordination
between various functional areas such as purchase,
stores, production, marketing, etc.
Financial management helps the top management to
evaluate the profitability of operational activities of the
organisation.
Financial management is important to all level of
management for decisions.
Financial management helps to determine the financial
soundness of a firm.

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ABOUT TOPIC
DUE AND OVERDUE :
Any amount becomes due on the fixed time of payment. It becomes overdue if
it is not paid on that due date .In the same manner in customer banker
relationship any amount due to the bank under any credit facility, if not paid by
the due date fixed by the bank becomes overdue.

HISTORY OF NPA
The concept of NPA is introduced by RBI to reflect a banks actual financial
health in its balance sheet and as per the recommendations made by the
committee on Financial

System (Chairman shri M.Narasimham). The

provisioning should be made on the basis of the classification of assets into

different catogories.
Before 31-03-2001, the concept of PAST DUE was in practice to consider any
asset as Non Performing Asset. An amount is considered as past due , when it
remains outstanding for 30 days beyond the due date. An asset becomes nonperforming when it ceases to generate income for the bank. A non performing
asset was defined as credit in respect of which interest and / or instalment of
principal has remained past due for a specific period of time. The specific
period was reduced in a phased manner as under:
Year ended March,31
1993

Specific period
4 quarters

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1994

3 quarters

1995

2 quarters

NPA CLASSIFICATION
With effect from 31-03-2001, With a view to moving towards international best
practices and to ensure greater transparency, 90 days overdue norms for
identification of NPAs have been made applicable from the year ended March
31, 2004. As such, with effect from March 31,2004, a non performing asset
shall be a loan or an advance where:
1. Interest and/ or installment of principal remain overdue for a period of
more than 90 days in respect of a term loan,
2. The account remains out of order as indicated at paragraph 2.2 below ,
in respect of an Overdraft/Cash Credit (OD/CC),
3. The bill remains overdue for a period of more than 90 days in the case of
bills purchased and discounted,
4. The installment of principal or interest thereon remains overdue for two
crop seasons for short duration crops,
5. The installment of principal or interest thereon remains overdue for one
crop season for long duration crops,
6. The amount of liquidity facility remains outstanding for more than 90
days , in respect of a securitisation transaction undertaken in terms of
guidelines on securitisation dated February 1,2006.
7. In respect of derivatives transactions , the overdue receivables
representing positive mark-to-market value of a derivative contract, if
these remain unpaid for a period of 90 days from the specified due date
for payment.
8. An account should be treated as out of order if the outstanding balance
remains continuously in excess of the sanctioned limit / drawing power.
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In case where the outstanding balance in the principal operating account

is less than the sanctioned limit / drawing power, but there are no credits
continuously for 90 days or credits are not enough to cover the interest
debited during the same period , these accounts should be treated as .out
of order.
Regular and ad-hoc credit limits need to be reviewed / regularised not
later than three months from the due date / date of ad-hoc sanction. In
case of constraints such as non availability of financial statements and
other data from the borrowers , the branch should furnish evidence to
show that renewal / review of credit limits is already on and would be
completed soon. In any case, delay beyond six months is not considered
desirable as a general discipline. Hence, an account where the regular /
ad-hoc credit limits have not been reviewed or have not been renewed
within 180 days from the due date/date of ad-hoc sanction will be treated
as NPA, which period will be reduced to 90 days with effect from March
31,2004.

Banks should ensure that drawings in the working capital accounts are
covered by the adequacy of current assets, since current assets are first
appropriated in times of distress.
Considering the practical difficulties of large borrowers, stock statements
relied upon by the banks for determining drawing power should not be
older than three months. The outstanding in the account based on drawing
power calculated from stock statements older than three months would be
deemed as irregular. A working capital borrowal account will become
NPA if such irregular drawings are permitted in the account for a
continous period of 90days (with effect from March 31,2004).
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If the government guaranteed advances become NPA, the interest on such

advances should not be taken to income account unless the interest has
been realised.
Advances against term deposits ,NSCs eligible for surrender , IVPs
,KVPs and Life policies need not be treated as NPAs although interest
thereon may not have been paid for more than 90 days provided adequate
margin is available in the accounts .
The investments are also subject to the prudential norms on income
recognition. Banks should not book income on accrual basis in respect of
any security irrespective of the category in which it is included , where
the interest / principal is in arrears for more than 90 days.
The system of identification of NPA should be ongoing basis. Banks
should also make provision for NPAs at the end of each calendar quarter
i.e. as at the end of March /June /September/December, so that the
income and expenditure account for the respective quarters as well as the
P&L account and balance for the year end reflects the provision made for
NPAs.
Interest realised on NPAs may be taken to income account provided the
credits in the accounts towards interest are not out of fresh/additional
credit facilities sanctioned to the borrower concerned.
In the absence of a clear agreement between the bank and the borrower
for the purpose of appropriation of recoveries in NPAs (i.e. towards
principal or interest due ), banks should adopt an accounting principal
and exercise the right of appropriation of recoveries in a uniform and
consistent manner.

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On an account turning NPA, banks should reverse the interest already

charged and not collected by debiting Profit and Loss account , and stop
further application of interest .However, banks may continue to record
such accrued interest in memorandum account in their books. For the
purpose of computing Gross Advances, interest recorded in the
Memorandum account should not be taken in account.
The treatment of an asset as NPA should be based on the record of
recovery .Banks should not treat an advance as NPA merely due to
existence of some deficiency which are of temporary in nature such as
non availability of adequate drawing power , balance outstanding
exceeding the limit ,non-submission of stock statements and the non
renewal of the limits on the due date ,etc. where there is a threat of loss
,or the recoverability of the advances is in doubt, the asset should be
treated as NPA .
In respect of a borrower having more than one facility with bank ,all the
facilities granted by the bank will have to be treated as NPA and not the
particular facility or part thereof which has become irregular . However ,
in respect of consortium advances or financing under multiple banking
arrangements ,each bank may classify the borrowal accounts according to
its own record of recovery and other aspects having a bearing on the
recoverability of the advances. Banks cant classify all the a/Cs of a
group (i.e. common management by one or more directors /partners
having common in different firms) as NPA on ground of any one facility
being NPA. The classification of NPA is borrower wise and not group
wise.
Asset classification of accounts under consortium should be based on the
record of recovery of the individual member banks and other aspects
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having a bearing on the recoverability of the advances. Where the

remittances by the borrower under consortium lending arrangements are
pooled with one bank and / or where the bank receiving remittances is not
parting with share of other member banks , the account will be treated as
not serviced in the books of other member banks , and therefore, be
treated as NPA. The banks

participating in the consortium should

,therefore ,arrange to get there share of recovery transferred from the

lead bank or get an express consent from the lead bank for the transfer of
their share of recovery ,to ensure proper asset classification in their
respective books.

ASSET CLASSIFICATION
Banks should classify their assets into Performing Assets. Performing
assets are standard assets where as Non Performing assets are broadly
further classified into Sub standard Assets, Doubtful Assets and loss
assets. Further Doubtful assets are also classified into three category
namely D1, D2, D3 assets.
Standard assets are one which does not disclose any problems and which
does not carry more than normal risk attached to the business. Such an
asset should not be an NPA because here all the installments as well as
interest are regularly paid.
With effect from March 31,2005 an asset would be classified as substandard if it remained NPA for a period less than or equal to 12months.
In such cases, the current net worth of the borrowers/guarantees or the
current market value of the security charged is not enough to ensure
recovery of the dues to the banks in full. In other words, such assets will
have well defined credit weakness that jeopardise the liquidation of the
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debt and are characterised by the distinct possibility that the banks will
sustain some loss, if deficiencies are not corrected. An asset where the
terms of the loan agreement regarding interest and principal have been renegotiated or rescheduled after commencement of production, should be
classified as sub-standard and should remain in such category for at least
12months of satisfactory performance under the re-negotiated or
rescheduled terms. In other words, the classification of an asset should
not be upgraded merely as a result of rescheduling, unless there is
satisfactory compliance of this condition.
With effect from ms=arch 31,2005, an asset is required to be classified as
doubtful, if it has remained NPA for more than 12months.For Tier I
banks, the 12months period of classification of a substandard asset in
doubtful category is effective from April 1,2009. As in the case of substandard assets, rescheduling does not entitle the bank to upgrade the
quality of an advance automatically. A loan classified as doubtful has all
the weaknesses inherent as that classified as sub-standard, with the added
characteristic that the weaknesses make collection or liquidation in full,
on the basis of currently known facts, condition and a values, highly
questionable and improbable. An NPA need not go through the various
stages of classification in case of serious credit impairment and such
assets should be straightway classified as a doubtful /loss asset as
appropriate. Erosion in the value of security can be reckoned as
significant when the realisable value of the security is less than 50percent
of the value assessed by the bank or accepted by RBI at the time of last
inspection, as the case may be straightway classified under doubtful
category and provisioning should be made as applicable to doubtful
assets.

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A loss asset is one where loss has been identified by the bank or oriental
or external auditors or by the co-operation Department or by the Reserve
Bank of India inspection but the amount has not been written off, wholly
or partly. In other words, such an asset is considered un-collectible and of
such little value that its continuance as a bankable asset is not warranted
although there may be some salvage or recovery value. If the realisable
value of the security, as assessed by the bank/approved valuers/RBI is
less than 10percent of the outstanding in the borrowal accounts, the
existence of security should be ignored and the assets should be
straightway classified as loss asset. It may be either written off after
obtaining necessary permission from the competent authority as per the
co-operative Societies Act/Rules, or fully provided for by the bank.
Broadly speaking, classification of assets into above categories should be
done taking into account the degree of well defined credit weaknesses
and extent of dependence on collateral security for realisation of dues. In
respect of accounts where there are potential threats to recovery on
account of erosion in the value of security and existence of other factors
such as, frauds committed by borrowers, it will not be prudent for the
banks to classify them first as sub-standard and then as doubtful after
expiry of 12manths from the date the account has become NPA. Such
accounts should be straight away classified as doubtful asset or loss asset,
as appropriate, irrespective of the period for which it has remained as
NPA.
When the amounts due to a bank (present value of principal and interest
receivable as per restructured loans terms) are fully covered by the value
of security, duly charged in its favour in respect of those dues, the banks
dues are considered to be fully secured. While assessing the realisable
value of security, primary as well as collateral securities would be
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reckoned, provided such securities are tangible securities and are not in
intangible form like guarantee etc., of the promoter / others. However, for
this purpose the bank guarantees, State Government Guarantees will be
treated on par with tangible security.
PROVISIONS FOR STANDARD ASSETS
For urban coop banks the general provisioning requirement for all types
of Standard advances shall be 0.40percent. However, direct advances to
agricultural and SME sectors which are standard assets, would attract a
uniform provisioning requirement of 0.25per cent of the funded
outstanding on a portfolio basis.
Further, with effect from Dec 8, 2009, all UCBs (Both Tier-I & Tier-II)are
required to make a provision of 1.00percent in respect of advances to
commercial Real Estate Sector classified as Standard assets.
For commercial banks direct advances to agriculture and small and micro
enterprises(SMEs) sectors at 0.25 percent; advances to Commercial Real
Estates (CRE) sector at 1.00 percent; all other loans and advances not
included in (a) (b) and (c) above at 0.40 percent
The provisions on standard assets should not be reckoned for arriving at
net NPAs. The provisions towards Standard Assets need not be netted
from gross advances but shown separately as contingent Provisions
against Standard assets under other Liabilities and Provision others in
Schedule 5 of the balance sheet.

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PROVISION FOR SUB STANDARD ASSETS

For urban coop banks a general provision of 10 percent on total
outstanding should be made without making any allowance for ECGC
guarantee cover and securities available. The unsecured exposures
which are identified as substandard would attract additional provision of
10percent, i.e., a total of 25 percent on the outstanding balance. However,
in view of certain safeguards such as escrow accounts available in respect
of infrastructure lending, infrastructure loan accounts which are classified
as sub-standard will attract a provisioning of 20percent instead of the
aforesaid prescription of 25 percent.
PROVISION FOR DOUBTFULL ASSETS
For coop banks Provision should be for 100 percent of the extent to
which the advance is not covered by the realisable value of the security to
which the bank has a valid recourse should be made and the realisable
value is estimated on a realistic basis. For secured portions 20%,30% and
100% for D1,D2,D3 category respectively. (D1 = doubtful upto 1 year,D2
= doubtful 1 to 3 years, and D3 = doubtful more than 3 years).
For commercial banks 100 percent of the extent to which the advance is
not covered by the realisable value of the security to which the bank has a
valid recourse and the realisable value is estimated on a realistic basis.
For secured portions 25%,40% and 100% for D1,D2,D3 category
respectively. (D1= doubtfull up to 1 year, D2 = doubtful 1 to 3 years, and
D3 = doubtful more than 3 years).
PROVISIONS FOR LOSS ASSETS

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Loss assets should be written off. If loss assets are permitted to remain in
the books for any reason, 100 percent of the outstanding should be
provided for.
EXTRA PROVISION
The regulatory norms for provisioning represent the minimum
requirement. A bank may voluntarily make specific provisions for
advances at rates which are higher than the rates prescribed under
existing regulations, to provide for estimated actual loss in collectible
amount, provided such higher rates are approved by the Board of
Directors and consistently adopted from year to year. Such additional
provisions are not to be considered as floating provisions. The additional
provisions for NPAs, like the minimum regulatory provision on NPAs,
may be netted off from gross NPAs to arrive at the net NPAs.
The banks board of directors should lay down approved policy regarding
the level to which the floating provisions can be created. The bank should
hold floating provisions for advances and investment separately and
the guidelines prescribed will be applicable to floating provisions held for
both advances & investments portfolios. Floating provisions cannot be
reversed by credit to the profit and loss account. They can only be utilised
for making specific provisions in extraordinary circumstances. Until such
utilisation, these provisions can be netted off from gross NPAs to arrive at
disclosure of net NPAs. Alternativly, they can be treated as part of Tier-II
capital within the overall ceiling of 1.25% of total risk weighted assets.

CHAPTER II

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RESEARCH DESIGN

Title of the study

A Study

on Analysis of NON PERFORMING ASSET at SBI Bank.

Statement of Problem:This particular topic has been selected to analyse the NPA
level of SBI Bank and their impact on the performance of the Bank.
In India commercial Bank plays a major role in satisfying
the short demand of the customer. An in depth analysis of the study
revealed that due to of credit policy, classification of the asset customer
attitude circumstances, ever changing government, economic situation has
posed problem to the banking sector regarding NPAs.
Hence the attempt to study and analyse causes for the NPA in
the Bank and the role of the management in handling N.P.As and the impact on
the bank performance is important.

Purpose of the study:The Problem of NPA is not a matter of concern for the banks
and financial institution alone. It is a matter of grave concern for the entire
public as credit is the catalyst in the economic Growth of the country and any
bottleneck in the smooth flow of credit is bound to create adverse repercussions
in the economy.
The purpose of this project is to analyse how NPA affect the performance of a
bank and the extent to which SBI bank has been successful in controlling its
NPA level.
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Objectives of Study: To study the role of NPA in Banking Sector.

To study the NPA expansion of SBI
To understand the extent to which SBI Bank has been successful in
cutting down its NPA
To know the performance of the NPA in the SBI, in the last 3 years in
recovering of NPA
To give suggestions which would help them in controlling their level of
NPA
NPAs affect on the profits and relationship with the performance
Measures to be taken to manage NPA
Scope of the study:The study covers management of Non Performing Asset with respect to
SBI Bank, Bangalore, and the study covers information given by the banks staff
and vice president of special loans management groups department and obtained
from the other records of the bank.
The scope of the study is restricted to SBI only. The study covers the
performance on NPA for last 3years i.e. 2009 to 2012.
Research Methodology:It is a study, which is primarily directed to know about project financing.
The information has been collected from relevant data from the organisation.

Sources of data collection :

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Primary data :
`Data was collected from Bank manager and loan section people and
managing staff.
Secondary data :
Data was collected from bank balance sheet, Profit and loss account and
income statements. The data was also collected from internet, Bank annual
report and magazines and Publications.
Limitations of the study :
Despite all possible efforts to undertake to make the analysis more
comprehensive and scientific, a study of the present kind is bound to have
certain limitations, Researcher humbly submits at this stage the present day is
an Empirical work, presented in a descriptive manner. Since the objectives of
the study may well be realised by this kind of analysis, no attempt has been
made to provide comprehensive conceptual analysis.
The Following are some of the limitations of the study:1. This study is limited to income recognition and asset classification
statement provided by, SBI Bank.
2. The study is conducted only on the basis of the data provided by the
3.
4.
5.
6.
7.

Bank. Conclusions are drawn on the basis of limited data available.

The study was conducted for 2009 10, 2010 11, 2011 12 only.
Only few models are used in analysing the data.
Ambiguity details were detected and put aside.
Time constrain
The Study is confined only to SBI.
CHAPTER III
COMPANY PROFILE

YEAR OF ESTABLISHMENT OF BRANCH: 30.7.1992 (30th July 1992)

STATE BANK OF INDIA BRANCHES:
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State bank of India branches span the country with a vast network to reach out
to as many customers as possible making full contribution to the status of
Indias largest bank for SBI. Each SBI branch is provided an identification code
that is unique to each branch. The SBI bank branches are categorized according
to the banking services they provide.
These include SBI:
Core banking branch
Domestic Forex branch
Internet banking and
Personal banking (Real Time Gross Settlement) Branches.
State Bank of India being the largest bank provides specialized banking services
in accordance with the special requirement of a particular community or area.
The SBI branch type there by depends on the special banking services it aims to
provide. These include:
Agricultural business and development branches
Commercial retail branches
Corporate accounts and mid corporate group branches
Main branches
Industrial finance branches
NRI banking branch
Overseas branches
Personal banking branch
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 Rehabilitation and recovery branch

SSI and SIB branch
Services branches

MISSION STATEMENT:
To retain the banks position as the premise India financial services
Group with world class standards and significant global business commitment
to excellence in customer, shareholder and employee satisfaction and to play a
leading role in the expanding and diversifying financial services sector while
continuing emphasis on its development banking role.

VISION STATEMENT:
Premier India financial services group with global perspective, world class
standing of the efficiency and profession and core institution values
Retain its position in the country as a pioneer in developing countries.
Maximize shareholder value through high sustained earnings per share.
An institution with a culture of mutual care and commitment a satisfying and
exciting.
Work environment and continuous learning opportunity.

VALUES:

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 Excellence in customer service

Profit orientation.
Belonging and commitment to the bank.
Fairness in all dealing and relation.
Risk taking and innovation.
New business undertaking by SBI:
Due to completion from the private banks and in order to serve the
customers needs as well for the development of the economy state Banks of
India has been entered into the new market.
Recently SBI has started two new services providing area they are:
1. SBI LIFE INSUR INSURANCE
2. SBI MUTHAL FUNDS
3. SBI MEDICAL INSURANCE.
GOAL AND OBJECTIVES:
State Banks of India (SBI) is government-owned and is the largest banks in
India it has its own goal and objectives:
It traces its ancestry bank to the banks to Calcutta, which was established in
1806; this makes SBI the oldest commercial banks in the Indian subcontinent.
SBI aims at providing regular services to its customer.
It aims at managing the nations largest ATM network.

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 SBI aims at providing various domestic, international and NRI products and
services, through its vast network in India and overseas for the sake of customer
satisfaction.
In recent years the banks has focused on three priorities:
1. Reducing its huge staff through Golden handshake schemes know as the
voluntary Retirement scheme, which saw many of its best and brightest defect
to the private sector.
2. Computerizing its operations.
3. Trying to change the attitude of its largely rude staff through a program aptly
named parivartan or change.

SBI BRANCHES:
State Bank of India has 131 foreign offices in 32 countries across the globe.
SBI has about 21,000 ATMs; and SBI group (including associate banks) has
about 45,000 ATMs.
SBI has 26,500 branches, including branches that belong to its associate banks.
SBI includes 99345 officers in our country.
SYMBOL AND SLOGAN:
The symbol of the State Bank of India is a circle and not key hole and a small
man at centre of the circle. A circle depicts perfection and the common man
being the centre of the banks business.
SLOGANS:

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o With you all the way

o Pure banking nothing else
o The banker to every Indian

Trustees
SBI Mutual Fund Trustee Company Private Limited (the Trustee), through its
Board of Directors discharge its obligations as Trustee of the SBI Mutual Fund.
The Board of Directors of SBI Mutual Fund Trustee Company Private Limited
are as under:
Shri T.L. Palani Kumar

Shri C.M. Dixit

Independent
Ms. Sandra Martyres

Independent
Ms. Bharati Rao

Associate

Associate

Current Board of Directors

After the end of O. P. Bhatt's reign as SBI Chairman on 31st March, 2011, the
post was taken over by Pratip Chaudhuri, who is the former Deputy Managing
Director of the International Division of SBI. As on 4th August, 2011, there are
twelve members in the SBI Board of Directors, including Subir Gokarn, who is
also one of the four Deputy Governors of the Reserve Bank of India. The
complete list of the Board members are:
1.

Pratip Chaudhuri (Chairman)

2.

Hemant G. Contractor (Managing Director)

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3.

Diwakar Gupta (Managing Director)

4.

A Krishna Kumar (Managing Director)

5.

Dileep C Choksi (Director)

6.

S. Venkatachalam (Director)

7.

D. Sundaram (Director)

8.

Parthasarathy Iyengar (Director)

9.

G. D. Nadaf (Officer Employee Director)

10.

Rashpal Malhotra (Director)

11.

D. K. Mittal (Director)

12.

Subir V. Gokarn (Director)

Associate banks:
There are seven other associate banks that fall under SBI. They all use the
and quot; State Bank of India and quot; name followed by the regional
headquarters name.

State Bank of Bikaner and Jaipur

State Bank of Hyderabad
State Bank of Indore
State banks of Mysore
State Bank of Patiala
State bank of Travancore

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The Main branch of SBI at Mumbai

Foreign offices:
State Banks of India is present in 32 countries, where it has 84 offices
serving the international needs of the banks foreign customers, and in some
cases conducts retail operations. The focus of these offices is India-related
business.
SBI has branches in these countries:
Australia
Bahrain
Bangladesh
Belgium
Canada
Dubai
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 France
Germany
Hong Kong
Japan
Israel

The
Israeli branch of the State Bank of India located in Ramat Gan.
PRODUCTS:
Private Banking
Asset management
Pension
Mortgages
Credit Cards
State Bank of India- Financial and Strategic analysis review:
Summary:
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State bank of India (SBI) is a large financial services group operating in the
banking industry. The bank is engaged in providing trading services,
international banking and traditional banking and treasury operations. The
Reserve bank of India holds more than half of SBIs equity capital. SBI has a
network of over 10,000 branches. In addition, the seven associate banks of SBI
have more than 4900 branches. SBI along with its subsidiaries is engaged in
providing a wide range of financial services including Life Insurance, Merchant
banking, Mutual funds, credit card and factoring, security trading and primary
dealership in the money market.

Global Markets Direct, the leading business information provider, presents an

in-depth business, strategic and financial analysis of State Bank of India. The
report provides a comprehensive insight into the company, including business
structure and operations, executive biographies and key competitors. The
hallmark of the report is the detailed strategic analysis and Global Markets
Directs views on the company
Scope:
-The companys strengths and weaknesses and areas of development or decline
are analyzed. Financial, strategic and operation factors are considered.
-The opportunities open to the company are considered and its growth potential
assessed competitive or technological threats are highlighted.
-The report contains critical company information-business structure and
operations, the company history, major products and services, key competitors,
key employees and executive biographies, different locations and important
subsidiaries.

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-It provides detailed financial ratios for the past five years as well as interim
ratios for the last four quarters.
-Financial ratios include profitability, margins and returns, liquidity and
leverage, financial position and efficiency ratios.
PRODUCTS AND SERVICES:
1. PERSONAL BANKING:
SBI Term deposits SBI loan for pensioners
SBI Recurring Deposits Loan Against Mortgage of Property
SBI Housing loan, Loan Against Share and Debentures
SBI Car Loan Rent Plus Scheme
SBI Educational loan Medi -Plus Scheme
2. NRI services
3. Agriculture/ Rural Banking
4. International Banking
5. Corporate Banking
6. Domestic Treasury
7. Services
8. Interest Rates
9. Safe Deposit Lockers
10. Other services:
ATM Services
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 Demat services
Internet Banking
Mobile banking
SME
RBIEFT
E-Pay
E- Rail
SBI Vishwa yatra foreign Travel Card
Broking Services
Gift Cheques

New products and services:

Apart from restructuring, SBI launched several innovation, value-added
products and services to project a customer friendly image. It launched a special
service for corporate customers called telebanking and remote login to support
transactional requests.
SCHEMES:
Now new schemes introduced by State Bank of India are:
Equity Scheme
Debt Scheme
Balanced Scheme
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 Exchange Traded Scheme.

WORK FORCE STRENGTH:
SBI Branch strength:
Main Branch strength:
SBI through the central Reserve Bank of India-also operates the worlds largest
network, with more than 13,500 branch offices throughout India, staffed by
nearly 2,20,000 employees.
Principal Competitors:
ICICI Bank
Vijaya bank
Bank of Baroda
Canara Bank
Punjab National Bank
Bank of India
Union Bank of India
Central Bank of India
HDFC Bank
Oriental Bank of Commerce
SOCIAL RESPONSIBILITY:
SBI branch:

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1. SBI provides loan to weaker sections.

2. It provides Home Loan, vehicle Loan, personal Loan, and Educational Loan.
State Bank of India: SBI has taken an initiative to encourage commercial
workers to save their earning. This project was implemented in sonagachi, one
of Asias largest red light areas, where residents were encouraged to open a
saving bank (SBI) account. While this can be called a social service, it also
reflects a sharp business sense.

Awards

At SBI Funds Management, we devote considerable resources to gain, maintain

and sustain our profitable insights into market movements. The trust reposed on
us by millions of investors is a genuine tribute to our expertise in Fund
Management and dedication to our singular focus. And this has resulted in
various awards and accolades for us from the fund industry, motivating us to do
better. Some of the awards won by us are listed below.

2011
Readers Digest Awards 2011 For Trusted Brand in Fund Management Category

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ICRA Mutual Fund Awards 2011 For Magnum Income Fund - Floating Rate
Plan - Long Term Plan

2010
ICRA Mutual Fund Awards 2010 For Magnum Global Fund

2009
ICRA Mutual Funds Awards 2009 For Magnum Tax Gain Scheme 1993
The Lipper India Fund Awards 2009 For Various Schemes

2008
Outlook Money NDTV Profit Awards 2008
The Lipper India Fund Awards 2008 For Magnum Balanced Fund Dividend
ICRA Mutual Fund Awards 2008 For Various Schemes

2007
Outlook Money NDTV Profit Awards 2007
CNBC Awaaz Consumer Awards 2007
The Lipper India Fund Awards 2007 For Various Schemes
ICRA Mutual Funds Awards 2007 For Various Schemes
CNBC TV18 - CRISIL Mutual Fund of the Year Award 2007 For Various
Schemes

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