Much had changed since the time when he himself had started his career as a probationer in 1976. Branch expansion had been phenomenal, turnover had increased substantially, the very nature of competition itself had changed. Nevertheless, the nature of decision making had remained the same: banking after all was a serious subject.
Surprisingly, the SBI was not a nationalized bank./ It had been created by an Act of Parliament in 1955, a logical successor to the Imperial Bank of India, which in turn had been created merging the four Presidency Banks in the 1930s. Their immediate objective in 1955 was to create within the next ten years a network of over 500 branches within the length and breadth of the country! As the only large state sponsored bank in those days, it was given the privileged status of being the treasury bank, and in the places where the RBI did not have any branches, SBI would step in for carrying on the functions, like “presiding over the clearing”. Mishra wistfully recalled the stories of yore when in the absence of the Collector in the District, the next officer that could give the order for firing, was none other than the Agent of the State Bank of India. By the time the 1969 nationalization had come around, all pretensions towards these grandiose existence had fallen by the wayside.
In 1971, SBI was the uncrowned market leader, but the top management had realized that in the increasingly competitive environment, the position that had been assumed as given, was no longer something that could be taken for granted. Other commercial banks, now nationalized since 1969, were asking for their share of the government business as also questioning the exclusive subordinate status to the RBI that was bestowed on the Bank. The bank’s management also realized that the operating environment had changed totally. With increasing amounts of bank funds being earmarked for the statutory SLR and CRR, operating margins were being reduced. Bank profitability was increasingly dependent on reducing operational logistics time. There was also the danger of expanding beyond a size that could supplement the growth efforts of the organization. Thus in 1971, SBI commissioned IIM-Ahmedabad to suggest a new structure for the organization.
The IIM team had done a wonderful job of organizing the 3000 odd branches in 1971. The basic unit of the structure continued to be the branch. Some thirty odd branches made up a region, and some 4-5 regions made up a circle, enshrined in the Local Head Office. The LH was more or less continuous with states of the Indian Union. Thus the Patna Circle would represent Bihar; Bhopal Circle would represent MP and so on. This was however, not a hard and fast rule. Delhi Circle would consist of part of UP, Rajasthan, and Punjab. Each circle was headed by a Chief General Manager, supported by two General Managers, looking after Operations and Planning respectively. Under the GMS, would be the Regional Managers and the Branch Managers. Decisions regarding loans would be cleared at the BM, M or CMC level depending on the amount. (The CMC was the Circle Management Committee consisting of the CGM, GMO and GMP). Each Circle was also authorized to have a local board, consisting of local representatives of Bureaucrats, eminent personalities etc. Only major decisions would need to be referred to the Central Office in Mumbai.
The LHO was the nerve centre of the operations. Housing the all-powerful CMC, meant that decisions were taken fast enough, keeping the local imperatives into account....