CONSTITUTION, POWERS AND FUNCTIONS of THE STATE BANK OF INDIA

CONSTITUTION, POWERS AND FUNCTIONS ofTHE STATE BANK OF INDIA

INTRODUCTIONSBI is the premier banking institution in India.The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank 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 (2 January 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 of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.The Bank is actively involved since 1973 in non-profit activity called Community Services Banking. All our branches and administrative offices throughout the country sponsor and participate in large number of welfare activities and social causes. Our business is more than banking because we touch the lives of people anywhere in many ways.CONSTITUTIONThe Central Government together with such other persons as may from time to time become shareholders in the State Bank in accordance with the provisions of this Act.CENTRAL BOARD:-The general superintendence and direction of the affairs and business of the State Bank shall be entrusted to the Central board which may exercise all powers and do all such acts and things as may be exercised or done by the State Bank and are not by this Act expressly directed or required to be done by the State Bank in general meeting.The Central board in discharging its functions shall act on business principles, regard being had to public interest.Composition of the central boardA chairman to be appointed by the central government in consultation with the reserve bank of India.Not exceeding four managing directors to be appointed by the central government in consultation with the reserve bank.Total amount of holdings of share holders whose names are on three months before the date fixed for election of directorsNot more than 10 percent of total issued capital.More than 10 percent of such capitalMore than 25 percent of such capital to be elected by prescribed manner by such shareholdersOne director among the employees of the state bank who are workmen, to be appointed by the central govt by the said rules of the actAre not workmenNot less than two and not more than six directors to be nominated by the govt ,having special knowledge of the working of co-operative institutions and of rural economy or experience in commerce, industry banking or finance.One director to be nominated by the central govt One director possesing necessary expertise in matters relating to regulation or supervision of commercial banks to be nominated by the central govt on the recommendation of RBI.

Local Boards & Local Committees:-There shall be constituted at each place where the State Bank has a local head office, a Local Board which shall consist of the following members, namely :-

1[(a) the chairman, ex officio or the managing director nominated by the chairman;]

(b) Such number not exceeding four to be elected by the shareholders whose names are entered on the branch register or nominated by the Central Government in consultation with the Reserve Bank as may be prescribed.

(2) A Local committee may be constituted by the Central Board for any area consisting of such number of members as it may determine.POWERSThe powers of the State Bank of India are embodied in: The State Bank of India Act 1955 The State Bank of India General Regulations 1955The State Bank of India Act 1955

Sec 10A- Power to nominate individual for vesting of rights in case of death.Every individual registered Shareholder of State Bank of India may, at any time, nominate, in the prescribed manner, an individual to whom all his rights in the shares shall vest in the event of his death.Sec 21BPowers of Local Board.- In respect of the area falling within the jurisdiction of thelocal head office for which the Local Board has been constituted, a Local Board shall, subject to such general or special direction as the Central Board may give from time to time, exercise such powers and perform such duties and functions as may be entrusted or delegated to it by the Central Board.

Sec 27Power of Chairman-The chairman shall preside at all meetings of the Central Board and, subject to such general or special directions as the Central Board may give, exercise all such powers and do all such acts and things as may be exercised or done by the State Bank .Sec 29Power of Managing Director- A managing director -(a) shall be a whole-time officer of the State Bank(b) subject to the general control of the chairman shall exercise such powers and perform such duties as may be entrusted or delegated to him by the Central Board and when authorised by the chairman, shall preside at the meetings of the Central Board in his absence.Sec 35- Power to acquire business of other banking institutions.The State Bank may, with the sanction of the Central Government, and shall, if so directed by the Central Government in consultation with the Reserve bank, enter into negotiations for acquiring the business, including the assets and liabilities, of any banking institution.Sec 43- Apointment of Officers and employees:The State Bank may appoint such number of officers, advisers and employees as it considers necessary or desirable for the efficient performance of its functions, and determine the terms and conditions of their appointment and service.Sec 50- Power of Central Board to make regulations:The Central Board may, after consultation with the Reserve Bank and with the previous sanction of the Central Government 194[by notification in the official Gazette] make regulations, not inconsistent with this Act and the rules made thereunder, to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act.The State Bank of India General Regulations, 1955

Regulation 04-Control over shares and branch registers:Subject to the provisions of the Act and these regulations and such directions as the Central Board may give from time to time, the register of shareholders kept at the Central Office shall be maintained by, and be under control of the Central Board or its Executive Committee and the decision of the Central Board or its Executive Committee as to whether or not a person is entitled to be registered as a shareholder in respect to any share shall be final. Regulation 09- Inspection of registers:The register shall, except when closed under the provisions of these regulations, be open to the inspection of any shareholder, free of charge, at the places where they are maintained during business hours, subject to such reasonable restrictions as the State Bank may impose, but so that not less than two hours in each working day shall be allowed for inspection.

Regulation 16-Power to refuse and suspend transfers:The Central Board or its Executive Committee may decline to register any transfer of shares unless:--the instrument of transfer is accompanied by the certificate of the shares to which it relates, and such other evidence as the State Bank may reasonably require to show the right of the transferor to make the transfer;it is satisfied after such inquiry as it may consider necessary that the transferee is qualified to be registered as a shareholder of the State Bank in respect of the shares covered by the instrument of transfer.The Central Board or its Executive Committee may suspend the registration of transfer during any period in which the registers are closed.Regulation 55- Powers of Local Board with regard to staff:Save as provided in sub-regulation (2), and as may be directed by the Central Board, a Local Board may exercise all the powers of the State Bank in respect of the staff serving in the areas in its jurisdiction.FUNCTIONSThe functions of SBI can be grouped under two categories, viz., the Central Banking functions and ordinary banking functions.A. Central Banking Functions:The SBI acts as agent of the RBI at the places where the RBI has no branch. Accordingly, it renders the following functions:Banker to the governmentBanker to banks in a limited wayMaintenance of currency chestActs as clearing houseRenders promotional functions.

B. General Banking Functions:Besides the above specialized functions, the SBI renders the following functions under Section 33 of the Act:Accepting deposits from the public under current, savings, fixed and recurring deposit accounts.Advancing and lending money and opening cash credits upon the security of stocks, securities, etc.Drawing, accepting, discounting, buying and selling of bills of exchange and other negotiable instruments.Investing funds, in specified kinds of securities.Advancing and lending money to court of wards with the previous approval of State Government.Issuing and circulating letters of credit.Offering remittance facilities such as, demand drafts, mail transfers telegraphic transfers, etc.Acting as administrator, executor, trustee or otherwise.Selling and realizing the movable or immovable properties that come into the banks in satisfaction of claims.

10) Transacting pecuniary agency business on commission stocks.11) Underwriting of the issue of authorized shares debentures, and other securities. (This function is done through subsidiaries now).12) Buying and selling of gold and silver.13) It operates Public Provident Fund Accounts for the general public.14) It operates Non-Resident External Accounts and Foreign Currency Accounts.15) Providing Factoring service (through subsidiaries).16) Provides shipping finance.17) Promotes Export through Export Credit. Provides Project Export Finance.18) Promotes housing finance through "SBI Home Finance Ltd ".19) Provides Leasing Finance and Project Finance Facilities.20) Provides specialized services like "Global Link Services ".