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    The roots of the State Bank of India rest in the first

    decade19thcentury, when theBank of Calcutta, later renamed theBank of Bengal, was established on 2

    June 1806. The Bank of Bengal and two other

    Presidency banks, namely, theBank of

    Bombay(incorporated on 15 April 1840) and theBank

    of Madras(incorporated on 1 July1843). All three

    Presidency banks were incorporated asjointstock companies, and were the result of the royal

    charters.These three banks received the exclusive

    right to issue paper currency in 1861with the Paper

    Currency Act, a right they retained until the formation of

    theReserve Bank of India. The Presidency banks

    amalgamated on27 January 1921, and the reorganized

    banking entity took as its nameImperial Bank of India.

    The Imperial Bank of India continued to remain a

    joint stock company. Pursuant to the provisions of the

    State Bank of India Act (1955), the Reserve Bank of

    India, which is India's central bank ,acquired a

    controlling interest in the Imperial Bank of India. On

    30 April 1955the Imperial Bank of India became the

    State Bank of India. TheGovt. of India recently acquiredthe Reserve Bank of India's stake in SBI so as to remove
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    any conflict of interest because the RBI is the

    country's banking regulatory authority. Offices of the

    Bank of Bengal In 1959 the Government passed the

    State Bank of India (Subsidiary Banks) Act, enabling

    theState Bank of India to take over eight former State

    associated banks as its subsidiaries.

    There are six associate banks that fall under SBI, and

    together these six banks constitute the State Bank Group.All use the same logo of a blue keyhole and all the


    of"namefollowed by the regional headquarters' nam

    e. Originally, the thenseven banks that became the

    associate banks belonged toprincely states until thegovernment nationalized them between October , 1959and May, 1960. In tune with the first Five Year Plan,

    emphasizing the development of rural India, the

    government integrated these banks into State Bank of

    India to expand its rural outreach. There has been a

    proposal to merge all the associate banks

    into"mega bank" and streamline operations. The fi

    rs t step along these lines occurred on 13 August

    2008 when State Bank of Saurashtra merged with State

    Bank of India, which reduced the number of state
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    banks from seven to six. Furthermore on 19th

    June 2009 the SBI board approved the merger of

    its subsidiary, State Bank of Indore, with itself. SBI

    holds 98.3% in the bank, and the balance 1.77%

    owned by individuals, who held the shares prior t

    o its takeover by thegovernment.The acquisition o

    f State Bank of Indore will he lp SBI add 470 br

    anches to its existing network of 11,448. Also, fo

    llowing theacquisition, SBIs total assets will inchvery close to the Rs 10lakhcrore mark. Total assets of

    SBI and theState Bank of Indorestood at Rs 998,119crore as on March 2009.GROWTH OF STATE BANK OF INDIA

    State Bank of India has often act ed as guaranto

    r to theIndian Government,most notably during

    Chandra Shekhar 's tenure asPrime Minister of India.

    With 11,448 branches and a further 6500+ associate bank

    branches, the SBI has extensive coverage. State Bank

    of India has electronically networked all of its

    branches under Core Banking System (CBS). The bankhas one of the largestATMnetworks in there on. Morethan 8500 ATMs across India. The State Bank of India

    has had steady growth over its history, though it was
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    marred by the Harshad Mehtascam in 1992. In recentyears, the bank has sought to expand its overseas

    operations by buying foreign banks. It is the only Indian

    bank to feature in the top 100 world banks in theFortune Global 500rating and various other rankings


    The bank has 92 branches, agencies or offices in 32

    countries. It has branches of the parent


    ndonand environs,Los Angeles, Malein theMaldives,MuscatNew York ,Osaka,Sydney, andTokyo. It has offshore banking units in

    theBahamas,Bahrain, andSingapore,and representative

    offices inBhutanandCape

    Town.SBI operates several foreign subsidiaries.In 1990 it established an offshore bank, State Bank

    of India (Mauritius). It has two subsidiaries in North

    America, State Bank of India (California), and State

    Bank of India (Canada). In 1982, the bank established

    its California subsidiary, named State Bank of India

    (California), which now has eight branches - seven

    branches in the state of Californiaandone in Wa sh in g ton DC wh ich w as r ecen t l

    y o p e n e d o n 2 3 r d November, 2009. The seven

    branches in the state of California are located in Los

    Angeles, Artesia, San Jose, Canoga Park, Fresno,,_Oman,_Oman,_Oman
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    SanDiego and Bakersfield. The Canadian subsidiary

    too dates to 1982and has seven branches, four in the

    greaterToronto area, and three inBritish

    Columbia.InNigeria, SBI operates as INMB Bank. Thisbank began in 1981 as the Indo-Nigerian Merchant Bank

    and received permission in 2002 to commence retail

    banking. It now has five branches in Nigeria. In Nepal

    SBI owns 50% of Nepal SBI Bank, which has

    branches throughout the country. In Moscow SBI

    owns 60% of CommercialBank of India,with Canara

    Bank owning the rest. In Indonesiait owns 76% of PTBank Indo Monex. State Bank of India already has a

    branch in Shanghaiand plans to open one up inTianjin.


    The State Bank of India, the countrys oldest Bank and

    a premier in terms of balance sheet size, number of

    branches, market capitalization and profits is today going

    through a momentous phase of Change and

    Transformationthe two hundred year old Public sector

    behemoth is today stirring out of its Public Sector

    legacy and moving with an agility to give the Privateand Foreign Banks a run for their money. The bank is

    entering into many new businesses with strategic tie ups

    Pension Funds, General Insurance, Custodial Services,

    PrivateEquity,Mobile Banking, Point of Sale Merch
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    ant Acquisition, AdvisoryServices, structured

    products etceach one of these initiatives havinga huge

    potential for

    growth.The Ban k is fo rg ing ahe ad wit h cut t in ge dge technology and innovative new banking

    models, to expand its Rural Banking base, looking at

    the vast untapped potential in the hinterland and

    proposes to cover 100,000 villages in the next two years.

    It is also focusing at the top end of the market, on whole

    sale banking capabilities to provide Indias growing

    mid / large Corporate with a complete array of products

    and services. It is consolidating its

    globaltreasury operations and entering into struc

    tu red produc ts andderivative instruments. Today,

    the Bank is the largest provider of infrastructure debt

    and the largest arranger of external

    commercial borrowings in the country. It is the onlyIndian bank to feature in the Fortune 500

    list.The Bank is changing outdated front and back

    end processes tomodern customer fri endly proce

    sses to help improve the totalcustomer experience.

    With about 8500 of its own 10000 branches and

    another 5100 branches of its Associate Banks alread

    y networked, today it offers the largest bankingnetwork to the Indian customer.

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    The Bank is also in the process of providing com

    plete paymentsolution to its clientele with its over 8500

    ATMs, and other electronic channels such as Internet

    banking, debit cards, mobile banking, etc.

    With four national level Apex Training

    Colleges and 54 learning Centres spread all over the

    country the Bank is continuously engenged

    in sk i l l enhancement o f i t s employees . Someof the t ra in ing programmes are attended by bankers

    from banks in other countries. The bank is also looking

    at opportunities to grow in size in India

    aswell as Internationally. It presently has 82 forei

    gn off ices in 32countries across the globe. It has also

    7 Subsidiaries in India SBI Capital Markets,

    SBICAP Securities, SBI DFHI, SBI Factors,

    SBILife 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.

    Throughout all this change, the Bank is also attempting to

    change old mindsets, attitudes and take all employeestogether on this

    excitingroad to Transformation. In a recently co

    nclud ed mass in te rn al communication programme

    termed Parivartan the Bank rolled out over 3300 two

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    day workshops across the country and covered

    over 130,000 employees in a period of 100 days using

    about 400

    Trainers,to dr iv e ho me th e mes sa ge of Ch an geand inc lus iveness . Theworkshops fired the

    imagination of the employees with some other banks

    in India as well as other Public Sector Organizations

    seeking to emulate

    the programme.T h e C N N I B N , N e t w o r k 1 8 r e

    cognized th i s momentous t rans format ion

    journey, the State Bank of India is undertaking, and

    has awarded the prestigious Indian of the Year

    Business, to its Chairman, Mr. O. P. Bhatt in January


    EVOLUTION OF SBIThe origin of thegoes back to the first decadeof thenineteenth century with the establishment of theBank of Calcutta in Calcutta on 2 June 1806.

    Three years later the bank received its charter and

    was re-designed as the Bank of Bengal (2January

    1809). A unique institution, it was the first joint-stock

    bank of British India sponsored by the Government of

    Bengal. The Bank of Bombay (15 April 1840) and the

    Bank of Madras (1 July 1843)followed the Bank ofBengal. These three banks remained

    theapex of modern banking in India till their amal

    gamation as theImperial Bank of India on 27 January

    1921.Primarily Anglo-Indian creations, the three

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    impact on services rendered. It has, presently, clients

    spread over 40 countries. The principal activities include:

    Acceptance of deposits in foreign currencies mainly USDollar, Pound Sterling, Euro and also other currencies.

    Attractive rates of interest are offered.

    International remittances in all major currenci

    es throughSWIFT, quickly and effectively.

    L o a n s / s y n d i c a t i o n s i n m a j o r c u r r

    e n c i e s , l i k e Euro/Dollar/Japanese Yen.

    Trade Services, including issuance of/negotiat

    ions under documentary letters of credits and issuance

    of bank guarantees.Hedging of exchange and interest rate risks on

    behalf of customers.

    Sales and Purchases of foreign currencies in th

    e Spot andForward Market.

    Rendering custodial services for offshore funds registered in Mauritius.

    Products tailored to suit the requirements of customers

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    SBI Life Insurance Company Ltd (SBI LIFE)SBI Life

    Insurance, Indias largest private life insurance, is a joint venturebetween State Bank of India and BNP Paribas Assurance

    SBIowns 74% of th e total capit al and BNP Pa ri

    bas Assurance theremaining 26%. SBI Life

    Insurance has an authorized capital of Rs.2,000 crore

    and a paid up capital of Rs 1,000 crores.BNP Paribas

    Assurance is the insurance arm of BNP Paribas -

    EuroZones leadingBank. BNP Paribas, part of the

    world top 10 groups

    o f b a n k s b y m a r k e t v a l u e a n d p a r t o f E u r o p

    e t o p 3 b a n k i n g companies, is one of the oldest

    foreign banks with a presence in India dating back to

    1860. BNP Paribas Assurance is the fourth largest life

    insurance company in France, and a worldwideleader in Creditor insurance products offering

    protection to over 50 million clients. BNPP aribas

    Assurance operates in 41 countries mainly through the

    banc assurance and partnership model.SBI Life

    Insurances mission is to emerge as the leading

    companyoffering a compr ehensiv e range of Life

    In su rance and pension products at competitiveprices, ensuring high standards of customer service and

    world class operating efficiency.SBI Life has a unique

    multi-distribution model encompassing

    Bancassurance, Agency and Corporate Solutions. SB

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    I Life extensively leverages the SBI Group

    relationship as a platform for cross-selling insurance

    products along with its numerous banking product

    packagess u c h a s h o u s i n g l o a n s a n d p e r s o n a l l o a n . Agency Channel, comprising of the most productive

    force of over 68,000 Insurance Advisors, offers door

    to door insurance solutions to customers.SBI Lifes

    Key Accomplishments.

    Bagged the coveted personal finance award-

    Outlook Money DTV Profit best Life Insurer

    2008.Globally topped at the

    prest igious MDRT 09, in

    terms of number of Million Dollar Round

    Table (MDRT)members. F i r s t l i f e i n s u r e r t o r ec e i v e C R I S I L s h i g h e s t f i n a n c i a l r a t i n g A

    AA/Stable. ICRA too has assigned iAAA rating

    indicatinghighest claims paying ability to SBI Life

    Insurance.Retains ISO 9001:2000 cer t i f icate

    f or su pe r io r c l a i m se t t le me n t process.

    Bagged the coveted personal finance award-Outlook Money NDTV Profit best Life Insurer

    2008.Globally topped at the

    prest igious MDRT 09, in

    terms of number of Million Dollar Round

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    Table (MDRT)

    members . F i r s t l i f e i n su re r t o r ece ive CRIS

    I L s h i g h e s t f i n a n c i a l r a t i n g AAA/Stable. I

    CRA too has assigned iAAA rating ind icatinghighest claims paying ability to SBI Life

    Insurance.Retains ISO 9001:2000 cer t i f icate

    fo r su pe r i or c l a i m se t t le me nt process

    Non banking subsidiaryThe Bank has the following Non-Banking Subsidiaries in

    India :


    1.SBI Capital Markets Ltd

    2. SBI Funds Management Pvt Ltd

    3. SBI Factors & Commercial Services Pvt Ltd

    4. SBI DFHI Ltd

    SBI Capital Markets Ltd (SBICAP)

    SBICAP undertakes merchant banking activities, advisory

    services, project appraisal, credit syndication

    and securities broking. SBICAPscurrent focus is on

    infrastructure project advisory and syndication mandates,particularly in sectors, such as, urban infrastructure and

    power, which are reckoned as the growth drivers. The

    other focus areas are public issues of equity, book-

    building issues, debt placements, broking, and sales and

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    distribution. During the year, SBICAPs forged ahead

    in issue management, project advisory and structured

    finance, sales & distribution. It focused on infrastructure

    project advisory and syndication mandates, particularly inthe energy sector, which is reckoned as the critical growth

    driver in the growth of the economy. On the international

    front SBICAPs bagged an infrastructure (water) advisory

    assignment from the Ministry of National Economy,

    Omanand was an integral part of the team effort forSBIs first acquisitionof a bank overseas. It was also

    associated with SBI for providing advisory in respect of

    participation of Societe Generale Asset Management,

    France in SBI Mutual Funds. It handled seven public

    issues out of the thirty four issues, which hitthe primary

    market during the period. The Company recorded an

    improved financial performance during the year

    with gross income amounting to Rs.175.06 crore asagainst Rs.142.75 crore in the previous year, a y-o-y

    growth of approx. 23%. PAT of Rs.88.12 crore as against

    Rs. 63.23 crore in the last year shows a y-o-y growth

    of approx.40%.

    SBI Funds Management Pvt Ltd (SBI FUNDS)SBI FUNDS is the Asset Management Company (AMC)

    set up for managing the affairs of SBI Mutual Fund.During 2003-04, SBI FUNDS reported a total inflow of

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    Rs.12,450 crore in the open-ended funds. Total

    redemption amounted toRs.10,523 crore, leaving a net

    inflow of Rs.1,927 crore for the year as against a net

    inflow of Rs.686 crore in the previous year. The total netassets of domestic funds under management stood

    at Rs.5,340 crore as on the 31st March 2004 as against

    Rs.3,312 crores as on the 31stMarch 2003.SBI FUNDS

    recorded a profit after tax of Rs.10.09 crore in 2003-2004,

    as against Rs.6.21 crore in the preceding year and paid a

    dividend of 10%. The Bank holds 100% equity of the


    SBI DFHI, a Primary Dealer (PD), undertakes trading in

    Government and Non-Government securities, in the Debt

    Markets.S BI DF H I L td ca me i n to ex i s t e nc e

    i n A p r i l 2 0 0 4 w i t h t h e amalgamation ofDiscount and Finance House of India (DFHI), a

    subsidiary of RBI & SBI Gilts Ltd, a subsidiary of

    SBI. It is a major participant in the wholesale Debt

    Market both in the Primary and Secondary Market

    segment with an outright turnover of Government

    Securities and Treasury Bills in 2007-08 at Rs.54,

    919.39 crores andRs.5, 428 crores respectively.SBI

    DFHI Ltd is also active in retailing of Government

    securities, including small lots, and are the distributorsof Mutual Fund products of all leading funds, actively

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    participating in the domestic interest rate derivatives and

    equities/equity futures markets.SBI DFHI posted a

    post-tax profit of Rs.85.68 crores for the year 2007-

    08 and paid a dividend of 10%. The State BankGroup holds67% of the companys share

    capital.It posted an impressive turnover of Govern

    ment Securities andTreasury Bills in 2007-08 at

    Rs.54,919.39 crores and Rs.5,428 crores respectively.SBI Factors and Commercial Services Pvt Ltd (SBI

    FACTORS)SBI Factors, a subsidiary of State bank of India

    (SBI) is one of the leading factoring companies in India

    with an asset base of Rs. 700.10crores as on 30.09.2005.

    It was established in February 1991 with the primary

    objective to provide domestic factoring services to Smalland Medium Enterprises (SMEs). Factoring is a

    Collection and finance service designed to improve the

    cash flow position of SMEs by turning their credit

    invoices into ready cash. The major strength of the

    company is that it has put in place a technology driven

    platform for offering integrated receivables management.

    SBI and its Associates Banks hold 70% stake in SBIFactors. SBIF offers Domestic Factoring With Recourse

    and Without Recourse. Purchase Bill Factoring, Factoring

    of Usance Bills Under LC, Channel Financing of Dealers

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    / Distributors and Export Factoring Facilities. All its

    products have been well received by its clients.

    SBIF has ten branches all over the country and it has

    plans to open three more branches during the year. Ithas achieved a turnover of Rs.1489.54 Crores with

    Prepayment Outstanding of Rs. 459.35 crores for the year

    ended 31.03.2005. The profit before tax was Rs. 9.64

    croresand PAT Rs. 6.12 Crores for the year 2004-05. It

    has recorded a NIL NPA position as at 31.03.2005. It has

    declared a dividend of 8%during the year 2005. It has a

    market share of 40.30% as on30.09.2005.

    SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)1. Launch of SBI Delhi, SBI Hyderabad and SBI

    Bangalore cityaffinity cards.2. Launch of Flexi pay,an installment loan


    3. Market leadership in VISA petrol spends in India .

    4. Launch of e-bill payment of SBI Credit Card for SBI

    accountholders.5. Launch of Elite card which is offered by invitation only

    6. Ten per cent maiden dividend declared.

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    SBI Core Banking


    Meeting New Market Demands

    Banks and financial services organizations have

    long recognized the advantages of deploying technology

    to improve the value, speed and flexibility of their product

    offering to customers. Particularly in todayshighlycompetitive banking industry, core banking technology is

    a vital element that helps a bank differentiates itself. This

    is especially true on the retail front, and allows banks to

    offer many new technology driven channels to customers

    such as ATMs and Internet banking, thus pioneering the

    concept of Anywhere Banking, and eliminating the

    concept of branch banking. With features like real-timetransaction processing coming into effect, customers can

    experience the benefits of real-time

    banking and no longer need to wait days or weeks for

    their transactions to be completed. Another key advantage

    of technology is the significant decrease of product

    development and testing lead time, leading to faster launch

    of new products for the bank enhancing the organizations

    innovativeness and agility.

    The Business Challenge

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    While most banking organizations in India clearly

    recognized the advantages of deploying technology, they

    continued to hesitate before embarking on the process dueto a number of pain areas related tothe adoption

    and roll-out of technological platforms

    Long implementation periodsStandard banking technology software solutions

    were largely inapplicable individual organizations. As a

    result, the tailoring of the solution and its roll-out for the

    organization was a long and often drawn-out period.

    Return on investment (ROI)Making the very significant capital investment required for a

    technological package was a challenge in the environment of

    keen competition and slim margins. Senior management and

    shareholders demanded a clear quantification of the ROIinvolved, which was difficult to accurately evaluate and


    Technology absorption rate at Indias rural branchesParticularly in branches located in Indias rural areas,

    absorbing technology was a challenge on its own.

    Ease of training and ease of use was a critical componentthat determined the success or failure of any solution.

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    Given the sheer size of the Indian market in geographic

    terms, it was inevitable that connectivity at broadband

    levels could not be expected at every branch. The solutionneeded to be able to work even in areas with poor or

    intermittent Internet access.

    High costs

    High upfront investment was in many cases an inhibiting

    factor for investment.Physical Architecture

    Distributed Systems Components

    In general the Distributed Systems Componentssuffice for usual needs. But for The State Bank Of

    Indiasuch a structure will have limited scalability.

    Usually the general structure is as shown in the

    following illustration.


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    Distributed Systems Architecture To overcome

    the shortcomings of the model mentioned above a

    new model based on the general one was designedwhich was later implemented. Thus came CBS or

    Core Banking System. Disk lessnodes Banking

    Application Operating System, Database Internet

    Banking ATMLAN User Control Officer System


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    Chief Officer, Information Security,State Bank of

    India. As a result the data security of such a

    network can be assured. Desktop Branch ServersBanking Application Operating System, Database

    Internet Banking.

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