The Legacy of a Bank
The amazing transformation story of State Bank of India (SBI) is a milestone in the history of Indian Banking. During 1951, when the first five year plan was launched, need was felt for economic generation of rural areas and a bank who can work in the interest of rural development. On the recommendation of All India Rural Credit Survey Committee the creation of a state partnered Bank was taken. Subsequently the Imperial Bank of India was taken over by integrating it with the State owned Bank. The year 1955 marks the birth of the State Bank of India when Imperial Bank of India was nationalized and named as such by an Act of the Parliament and in 1959 it was joined by seven “Darbar Banks” formed under the princely states now known as its Associate Banks. In 2008 State Bank of Saurastra, one of the associate banks merged into the SBI and in August 2010 with the acquisition of State Bank of Indore, SBI has now five associate banks. With 480 offices comprising branches, sub offices and three local head offices inherited from Imperial Bank, the SBI started its journey with commitment to nation building by purposeful banking, catering the financial needs of the nation. The government has nearly 60 percent shareholding in the bank. Four out of nine external directors apart from Chairman and two managing directors are appointed by the government.
Today SBI is the largest Bank in India, with 13,000 branches across the country, right from the highest altitude branch at Leh to Kanyakumari. As on 30th September 2010 the five associate banks have a combined network of 4497 branches, making the total branches of SBI along with its associate bank to nearly 17,000. It has around 131 offices in 32 countries making it a huge organization with over 2,05,000 employees as on 2009, coming from different regions and cultures. The bank was ranked at 29th position in the Forbes, world’s most reputed companies leaving Microsoft behind in 2009. There were only two banks ahead of it: China Merchants Bank and SberBank of Russia. But for SBI “all was not well” if one have a look few years back. Before 1990s the country adopted a socialist model of economic development, government monopolies were ruling the industries paving the way to economic growth. But with the inception of industrial revolution there was a change in the outlook and privatization of public enterprises started setting its foot reforming the financial markets. With liberalization of policies many MNC’s stepped in the Indian Markets changing the working culture altogether within a short span of time. There was a total change in the environment in which the banks operated. The new private sector banks with different work culture snatched a major portion of the business from the public sector banks. The rich and young customers wanted better services within lesser time and hated queuing at the counters of public sector banks. The change was in the air and emerged in the face of ICICI Bank for the SBI. SBI the pioneer in the Indian Banking faced a major challenge as in the small span of 12 years ICICI Bank became the second largest bank in India and it was apprehended that by 2010 ICICI will take over the flagship of SBI the largest bank in India. As per Banker’s ranking SBI dropped to 107th position from 82nd while ICICI managed to climb up to 132nd position from 248th over the same period.
The major challenge before the Bank was to maintain its legacy of 200 years being the largest bank of India along with transformation in its work culture to match the pace of growth with private banks which are commercially propelled. The task was not easy as the Bank was conceived with the commitment for meeting out the financial needs of the remote areas of the country which is mainly a non-profitable market segment. Simultaneously it had to get hold of rich and young customers to keep intact its title for the largest bank. The Bank was facing acute lack of specialist...
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