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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

associates

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

INTERNATIONAL PRESANCE OF SBI

The bank has 92 branches, agencies or offices in 32

countries. It has branches of the parent

inColombo,Dhaka,Frankfurt,HongKong,Johannesburg,Lo

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,

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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.

JOURNEY AND VISION OF SBI

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

2008.

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

Company.

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

programme.

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

Introduction

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

compute.

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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Connectivity

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.

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

Administrator

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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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