Analysis on Capital Structure, Dividend Policy & Working Capital Requirements of

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SELDOM CORPORATE India recognizes a PSU (Public Sector Unit) and considers its executives worthy of an award for efficiency and business performance. In the corporate arena, ICICI, HDFC, HSBC etc. are the banks which are always considered for one award or the other. Some PSU banks have won awards in the past but those awards were for achieving computerization and other such ‘achievements’. Seldom has a a PSU bank been seen by corporate India as a potential avenue and as one capable of scaling new heights in the banking industry with the presence of more competitive private banks. But now SBI has started to dance, to jump and to take big strides for achieving the business goal, which hitherto have been the characteristics of the small and beautiful players in the space. The age-old mammoth institution, SBI in just a short span of 18 months, has blasted its way out of the struggle, where it has been losing its market-share to its main competitors like ICICI Bank, Axis Bank and HDFC Bank. In this 18-month period, the price of the SBI share has risen from a modest Rs 800 to Rs 2,400, thanks to the proposed merger of the seven associate banks with SBI. The huge jump in the share price has raised SBI’s market capitalization to Rs 1, 21,064.79 crores (as on November 30, 2007). Bringing down the net NPA (non-performing asset) from 1.88 per cent in 2006 to 1.56 per cent in 2007, given an asset base of Rs 5, 66,565.24 crores, is no child’s play too. All these bind boggling results have been possible through the policies and the indispensable role of the policy makers, i.e. management who have taken State Bank of India to become one of the most prestigious & promising banks of India. The policies pertaining to Capital Structure & Dividend policy play a major role in the successful and efficient working of the bank. The objectives of the bank are the criteria for a bank to frame its policies. And it is very much clear that the objectives and the policies at SBI go...
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