REV: APRIL 19, 2011
State Bank of India: Transforming a State Owned
SBI is India’s biggest bank, possibl the bank which touches the most amount of emotional chord in the people, but maybe which is no longer considered the best bank. …Somehow we seem to be losing out on our leadership position.
— O. P. Bhatt, January 2006
We have regained our thought leadership. This required a positive attitude born out of conviction and faith in our people. Now we should aim to be in at least the top twenty, if not the top ten banks in the world. e
— O. P. Bhatt, February 2011
February 2011: O. P. Bhatt reflected contentedly on his five-year term as Chairman of State Bank of India (SBI), India’s largest commercial bank. He had led SBI on a journey of transformation from an old, hierarchical, transaction oriented, government bank to a modern, customer focused, and technologically advanced universal bank. In 2006, when Bhatt assumed leadership, SBI had been losing market share for over two decades to private and foreign banks. Analysts and industry observers had predicted that at the prevailing growth rates ICICI Bank, a private bank launched in 1994, would overtake SBI in terms of deposits in four years. However, by 2010, SBI had more than doubled its profits, deposits and advances; regained market share and won the Asian Banker Achievement award for the strongest bank in the Asia Pacific region. However, Bhatt had a lot to think about on this flight to Delhi. He was on his way to attend a i
meeting at the Ministry of Finance to provide inputs to the bank’s succession plans as he was due to retire on March 31, 2011. Bhatt had been asked to advise on the qualities that would be required in his successor to lead SBI into the next era. He also had to think about the steps he needed to take to ensure a smooth transition and SBI’s continued success. SBI’s transformation journey had just begun; it had to evolve to meet the changin requirements of the growing retail segment and the aggressive ng
international aspirations of Indian companies. Bhatt had huge aspirations for SBI’s future; he wanted the bank to play a leading role in the growth of the Indian economy. Bhatt’s successor would have to carry the mantle of sustaining and building on Bhatt’s legacy.
________________________________________________________________________________________________________________ Professor Rajiv Lal and Research Associate Rachna Tahilyani from the HBS, India Research Centre prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
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State Bank of India: Transforming a State Owned Giant
History of SBI
SBI, a bank with 60% government stake, was India’s largest commercial bank and the 43 largest bank in the world with a market capitalization of over $36.5 billion in 2011.a It along with its five associate banks and 22 subsidiaries, which constituted the State Bank Group, had more than 267,000 employees; a pan India network of over 18,000 branches, and 25,000 ATMs; and delivered profits of $2.6 billion.
SBI traced its lineage to the Bank of Calcutta, established in the eastern part of India in 1806. Bank of Calcutta, later rechristened as the Bank of Bengal was the first joint stock or limited liability bank of British Indiab; it was part owned by the government and part by private individuals. The government of India granted the...