State Bank of India - Case

8/2/2019 State Bank of India - Case

1/14

1

State Bank of India*

The 200 years old State-run bank with a huge legacy is innovating to

outpace competition. Will it succeed?

Dr. Narender L. Ahuja,International Management Institute, New Delhi

On taking over as the Chairman of State Bank of India (SBI) in 2006, O.P. Bhatt announced hisplans to increase the SBI groups market share by 1% every year. His pronouncement was received

with mixed reactions.

Some thought the targeted increase was not ambitious enough, and given the banks status as th ecountrys largest bank, its huge financial muscle, a nation-wide branch network and an enviablebase of over 100 million customers, SBI should be able to do better than that.

Others however pointed out that the bank, despite its relative Gorilla size, had in fact been losingout on market share for the past several years, and reversing the trend would not be easy in view ofthe intense competition from private sector banks. They claimed that the efficiency of SBIs

operations was also on the decline.

The worst of competition was yet to come, as in a couple of years, from 2009-10, foreign bankswere set to enter India in a big way. Though a number of foreign banks had been operating in Indiafor long, there were restrictions on their expansion which were set to be removed in 2009-10. Giventheir gigantic financial might, they would gobble up private sector local banks and make lifedifficult for the public sector (PSU) banks like the SBI.

The critics probably underestimated the resilience of the 200 years old SBI, and its capacity anddetermination to re-engineer and innovate its business to not only recapture the lost market shareand improve profitability but also to meet competition head-on. At heart, even the critics wouldreckon that SBI was the only home-grown bank that had the potential of competing and battling itout with foreign banks in the post-2009 era, and thwart their plans to take over the Indian bankingsector.

With competition knocking at the door-step, time was running out for SBI to set its house in order,innovate and strategize its business to thwart competition and resurrect itself to the position ofleadership in Indian banking. Will it succeed?-----------------------------------------------------------------------------------------------------------

* Case prepared by Dr. Narender L. Ahuja, Professor, International Management Institute, New Delhi for

the academic purpose of facilitating class-room discussion. The case is registered with the European Case

Clearance House (ECCH). Contact: [email protected].


2/14

2

SBI History

The State Bank of India completed 200 years of its operations in 2006. Right from its birth, thebank had been associated with many innovations and firsts as far as banking in India was

concerned. The origin of the State Bank of India goes back to 1806 when the Bank of Bengal wasset up as the first limited-liability joint-stock bank sponsored by the Government of Bengal. TheBank of Bombay (1840) and the Bank of Madras (1843) followed the Bank of Bengal. A bankinginnovation of those days was that these three banks were allowed to issue currency notes, which

would be accepted for payment of public revenues within a limited geographical area. These banks,known as Presidency Banks, also innovated the concept of deposit banking in India, as at that timepeople in general were not in the habit of leaving money with banks for safekeeping.

In 1921 these three banks were amalgamated to form the Imperial Bank of India, thus creating agiant among Indian commercial banks, with 70 branches. The Imperial Bank performed the triplerole of a commercial bank, a banker's bank and a banker to the Government, and continued to play adominant role in Indian banking until the setting up of the Reserve Bank of India (RBI) in 1935.

With the establishment of RBI as the central bank of the country, the quasi-central banking role ofthe Imperial Bank came to an end and the Imperial Bank was converted into a purely commercial

bank. By the time India attained independence in 1947, the Imperial Bank had expanded its networkto 172 branches and more than 200 sub offices spread all over the country.

The Era of Social Banking

In the years after independence, the Imperial Bank and other commercial banks in India increased theiroperations substantially but the banks were mostly located in a few metropolitan and urban cities,while the vast rural areas remained almost completely un-banked. In order to serve the economy ingeneral and the rural sector in particular, the Government in 1955 decided to create the State Bankof India by taking over the Imperial Bank. The State Bank of India was constituted through an Actof Parliament after Reserve bank of India acquired a majority stake in the Imperial Bank. At that

time it had 480 branches and offices, and owned more than a quarter of the resources of the Indianbanking system. Later in 1959, the State Bank of India was allowed to take over eight former State-run banks as its subsidiaries, known as SBI Associate banks.

In order to further enforce the flow of bank credit to the rural and other priority sectors of theeconomy including agriculture, artisans and small scale industry, the Government nationalized 14 largecommercial banks in 1969, and 6 more banks in 1980, thus bringing majority of the banking sectorunder direct control of the State.

Between 1969 and 1991, the major achievements of the banking system in India were twofold: (i) arapid expansion of bank branches in rural and semi-rural areas - the total number of bank branches of

all scheduled banks in India increased from 8,269 in June 1969 to 61,724 by March 1991; moreimportantly, out of the new branches opened during this period, about 64% were opened in the ruralareas, and (ii) the flow of bank credit to priority sectors increased to about 40% of the total bank credit.Social banking had taken firm roots in India.

However, profitability of the PSU banks suffered as enthusiastically interfering politicians used thebanking system to achieve their political objectives. Important decisions - whom to lend, how much tolend and at what terms to lend - which normally should be taken by bank managements were virtually


3/14

3

snatched away from them and bank managers were instead expected to achieve Government-stipulatedtargets of subsidized loans with little regard to asset quality, recoverability of loans or even interestserviceability.

The Winds of Change

The year 1991 witnessed India entering into a phase of transition from a semi-controlled to a market-oriented economy. In the process of economic reforms, banking industry was deregulated to a large

extent and the Reserve Bank of India initiated reforms aimed at the following, amongst others:(i) strengthening competition by encouraging entry of private banks and abolition of branchlicensing;

(ii) increasing bank profitability by reducing Statutory Liquidity Ratio (SLR) from a high of38.5% in 1992 to 25% and reducing Cash Reserve Ratio (CRR) from a high of 15% in1992 to less than 6%. Another milestone step taken was to deregulate interest rates on bankdeposits and loans, thus allowing banks to determine their interest rates according toprevailing market conditions, and

(iii) improving the quality of financial management in banks by setting capital adequacy norms.Banks were required to have a capital adequacy of 4% by 1993, which was raised to 8% by1996, and is set to further enhance in 2008. Banks were also asked to improve accounting

practices and make provisions for NPAs.

By the time financial sector reforms were undertaken in 1992, the accumulated losses of the PSUbanks (which accounted for about 85% of the banking system in India) had become so high thatmajority of them had run through their capital, and a staggering 25-30% of the bank loans wereclassified as non-performing, with the underlying situation probably much worse.

The change in business environment came as a rude shock to PSU banks which had for longfunctioned in a highly controlled environment. The new deregulated system meant that they had tooperate in a competitive, market-oriented environment. In addition to the threat of competition, thePSU banks had to fight other challenges including outdated technology, powerful staff unions and

extremely poor financial health. Social banking coupled with political intervention had resulted in anindiscriminate branch expansion, over-employment, low efficiency and poor loan recoveries whichmade many bank branches unviable.

Between 1992 and 2000, the managements of SBI and other PSU banks spent much of their time andenergies in revamping their businesses. The most important change was the message that the PSUbanks were expected to be financially viable and profitable. The PSU banks started computerization ofbranches and added fee based services to increase income as well as initiated improved accounting andrisk management practices.

The progress was initially very slow due to tough opposition by the staff unions, particularly tocomputerization of banking operations which they thought would affect their employment. It goes tothe credit of the managements of the PSU banks that in spite of many obstacles, they were able toconsiderably improve the performance of their banks. Slowly the losses of PSU banks reduced andprofits started rising. While majority of these banks had run out of their capital by the advent ofreforms, all the 28 state-run banks had transformed into profit making institutions by 2006. Equallysignificant was the decline in the average ratio of their net non-performing assets (NNPA) to the totaladvances which came down to below 2%; the remaining NPAs had either been sold out to assetreconstruction companies such as ARCIL, or written off.


4/14

4

The improved performance of the state run banks was enabled by a high rate of GDP growth in thecountry, leading to a phenomenal increase in banking business and credit appetite of the industry andother sectors. It was supported by a good degree of political will on part of the Government. The PSUbanks were also lucky that during 1990s, the private sector banks were just getting started and did notpose any major threat.

Competition

Hardly had the PSU banks emerged from the 1990s shake-up when they came up againstunprecedented cut-throat competition that began in the early years of the new millennium. Privatesector banks like ICICI Bank that had come of age along with new tech-savvy banks like KotakMahindra Bank and Yes Bank had started pinching on the business of the PSU banks. Another threatwas the emergence of large and powerful non-banking finance companies (NBFC) such as RelianceCapital, Bajaj Capital and Mahindra & Mahindra Finance which competed with PSU banks in theirlending operations. Some foreign banks had also set up NBFCs (like Citibanks Citi Financial

Consumer Finance Limited) to add to the competition. The real battle however was still a few yearsaway when foreign banks would enter the fray in a big way.

In 2006, the Indian banking system consisted of 28 PSU banks (SBI, its seven associate banks and 20nationalized banks), 33 private banks and 35 foreign banks. In addition there were local area banks,regional rural banks, urban co-operative banks and a huge number (over 109,000) of rural co-operativebanks, which together served a large rural clientele but represented only a small proportion of bankingbusiness in the country.

In the FY06 and FY07, the Indian economy witnessed a high growth rate of close to 9%, the secondfastest in the world behind only China. Booming conditions prevailed in almost all sectors of theeconomy. Banking was at the centre-stage, supporting corporate endeavours to expand domestically aswell as overseas.

While banking business in the country was fast increasing, SBIs market share had been declining.In 2006, SBI had a market share (as a % of all banks deposits + advances as per data published bythe RBI) of around 17%, down by more than 3% since the turn of the century. SBI was not the onlyPSU bank complaining, Our real threat emanates from the new-generation private banks like ICICIbank and foreign banks, which are every day making fast inroads into our market share. They arenow entering our traditionally strong areas of SME (small and medium enterprises) andagriculture, said the chairman of Punjab National Bank.

In the deregulated environment, private sector banks were growing fast, even though they were stillsmall in size as compared to SBI. In particular, ICICI bank was like a tiger on prowl, determined tocapture a considerable market share at any cost and by any means organic or inorganic. In recentyears, it had made several strategic acquisitions including Sangli bank, Bank of Madura, AnagramFinance and ITC Classic Finance etc. to expand its reach in various parts of the country.

Bhatt was confident of increasing the market share, We are losing our market share and this has tobe reversed. I want the SBI group to gain at least 1% market share every year of which SBI shouldget over 0.50%. [Financial Express, March 2007].


5/14

5

He was aware that increasing market share was not an end in itself, and better performance shouldalso be reflected in increasing profits and the return on net worth (RONW). For the first time,ambitious profits targets were being set for not only SBIs own operations but also for its associate

banks and its subsidiaries. SBI set a target of increasing its associate banks profit by 26% (CAGR),and 33% for the subsidiaries. The management of ICICI Bank had also declared in a meeting with themedia that its business and profits were expected to grow at a compound rate of about 30% per annum.

As Table-1 shows, SBI was still the largest bank in India, with assets amounting to Rs. 4,940 billion,

net worth of Rs. 276.4 billion and net profits of Rs. 44.07 billion for the year ending March 2006.ICICI Bank was the leading private sector bank with assets worth Rs. 2,521 billion, net worth of Rs.225.6 and net profit of Rs. 25.4 billion. Other leading PSU banks (such as Punjab National Bank andCanara Bank) and private sector banks like HDFC Bank were left far behind. Foreign banks operatingin India at that time including Citibank and Bank of America had relatively a much smaller presence inthe country in terms of assets base, net worth and profits.

Table-1: SBI Vs. Peers: Assets, Profits and Net Worth

(Year ending March 2006)

Total assets

Rs. Billion

Net worth

Rs. Billion

Net Profit

Rs. Billion

State Bank of India 4940 276.4 44.07

ICICI Bank 2521 225.6 25.40

Punjab National Bank 1453 93.8 14.39

Canara Bank 1328 71.3 13.43

HDFC Bank 735 53.0 8.71

ICICI Bank had clearly emerged as a strong competitor with capacity to dethrone SBI from the topposition in the future. While SBI was losing market share, ICICI was increasing its market share andeven expanding the size of the market by carefully tuning its business to the customers needs. It hadinvested heavily in building the ICICI brand, the effect of which was obvious when a market surveycarried out in 2005 showed that a majority of the sample respondents thought ICICI was the largestbank in India, while in fact it was the old SBI. [Business India, Dec, 2005]. ICICI had outperformedcompetition on almost all parameters of growth in business, profitability, productivity and efficiency.

The Technology Front

What was the secret of ICICIs successful business model? One major factor that initially tilted the

balance in favour of ICICI bank was its modern technology platform which was regarded as beingat par with foreign banks if not better. The technology platform adopted by ICICI bank had anentirely web-based architecture which would not require the backing of huge servers placed in itsbranches. It was cost-efficient and capable of handling large volumes of low ticket transactions,virtually creating a branchless banking model where more and more customers could be servedwithout them having to visit the banks branches. Using its superior technology platform, ICICI Bank

defined and packaged its products and services in such a way that they could be mass sold.


6/14

6

ICICI was particularly popular among the younger generation due to its high level of efficiency andbeing the leader in introducing modern methods of banking, including ATMs, debit and credit cards,anywhere banking, internet banking, phone banking as well as allied services such as bank accountlinked online investments and share trading services and so on. Through its subsidiaries, it alsodiversified into insurance, BPO, share broking and even trading gold coins.

Though SBI had the largest number of branches in India, they were working on a standalone basis andthis was proving to be a big disadvantage. To overcome the problem, SBI has undertaken the world's

largest centralized core banking project to link up its branch operations and transform into amodern, competitive entity. This is a multi-year project spanning a variety of areas. The projectstarted in 2003 and by end of March 2007, SBI had covered 4820 branches accounting for 85% ofits business under the core banking project. The project is likely to complete by end March 2008 butit is already having an impact on the Indian banking system. A more sophisticated SBI with moderntechnology and processes would challenge India's leading private banks and economically expand itsservices to remotest rural areas, giving a thrust to potential business.

Thanks to the technology up-gradation, SBI now had the largest number of ATMs (5572 of its ownand another 3743 ATMs of its associate banks) in the country. Along with its associate banks, it hada huge network of 13908 branches to serve its over 100 million customers.

SBI was also investing in upgrading technology for faster transfer of funds through the bankingsystem. Indian banking achieved an important milestone in this respect with the implementation ofthe Real Time Gross Settlement (RTGS) system in May 2004 which would enable electronic transferof funds on real time basis. Predictably, SBI took a lead and was involved in the first transactionusing RTGS, when Standard Chartered Bank transferred an amount of Rs. 100 million to SBI onbehalf on Hindustan Lever Limited. RTGS is very useful for instant settlements of high-value inter-bank payments in a secure environment. It would help companies in better management of funds,with time and cost savings.

Orgnizational Review

As a part of its evolving strategy to increase its market share, SBI created three new strategic businessunits (SBUs): (i) the rural business group, to focus on rural and semi-urban markets, (ii) treasurybusiness group to focus on growth in fee based services, and (iii) new business group, that wouldconsider a number of new ideas including private equity and renovating card business. The bankplanned to build a 10,000-15,000 people strong team for the marketing function in these areas toincrease business.

Rural banking was the new buzz word in banking circles. As the fruits of high economic growth in thecountry percolated to rural areas, the income levels in the semi-urban and rural areas were bound torise providing an unprecedented opportunity to banks to expand business in these regions. ICICI Bankand SBI as well as other players in the banking sector were looking at rural thrust as the next big thingin banking. In this respect, SBI groups large net work of branches might in future prove to be a

blessing, as the rural thrust could turnaround even the unviable branches and add to the banks bottomline. But clearly it would not happen by itself and needed appropriate strategy and action.

The right choice of technology would play a crucial role in this respect. But would technology work inrural India where literacy levels are still at pitiable levels? According to ICICIs chief of retail

banking Vaidyanathan, "What is surprising is that even in rural India, technology works. The rural


7/14

7

people might not be literate but they are intelligent. In fact, I was surprised to know that nearly 18per cent of our transactions in rural areas are online" [Business India, December 2006]. Thisproportion is fast increasing.

Marketing Innovations

In a marketing innovation, SBI decided to use outsourcing as a way to increase its outreach andimprove market share in the rural and semi-urban area. Outsourcing was already being extensively

used by private banks for non-cash transactions such as creating new business, but recently theReserve Bank of India had allowed banks to use outsourcing even for cash transactions. This wouldinvolve engaging NGOs, micro-finance institutions, cooperative societies and post-offices forcreating new business, collection of deposits and disbursal of small- ticket loans. The SBIsemployees associations opposed the move on account of security concerns. According to them,

allowing third parties to handle cash transactions on behalf of banks was dangerous for the bankingindustry and economy as a whole. The SBI management however decided to go ahead in spite ofopposition from the employees associations.

SBI had also intensified its promotion and advertising campaign to reinforce its brand, mobilizedeposits and increase business. The bank branches were being renovated and given a more welcome

look. The internal functions were also being reorganized to improve efficiency.

To expedite delivery of retail loans, SBI started a project in which Retail Assets Central ProcessingCentres (RACPC) would be set up in major cities. In alliance with Indias largest car maker MarutiUdyog, it launched a new facility which would enhance online connectivity between RACPC andMaruti dealers and allow centralized processing of loan facilities on real time basis. These stepswould significantly reduce the time for appraisal of loans and ensure faster delivery of services toretail and small customers.

Managing Profit Margins

Among other things, profit margins in banking to a large extent depend on the net-yield on the loansadvanced by a bank as well as management of operating costs.

Credit deposit ratio which reflected the banks ability to convert deposits into loans was regarded ascrucial for a banks viability. The statutory regulations required that 40% of the loans should bemade to the priority sector. Therefore, only a careful allocation of advances to various sectors andclients could help in satisfactory management of yield on advances while keeping the risk factorlow, and meeting the statutory regulation.

A part of the bank funds could be invested in Government securities and other financial securities.There was a trade off between risk and return: for example, industry loans would typically be moreprofitable but were considered more risky, while investment in Government securities would havelow risk but also low return. The managements of some PSU banks were seen to play safe andpreferred investing in Government securities (even above the minimum statutory limit) to avoidbeing blamed for poor decision making if the loans disbursed turned out to be bad.

In addition to increasing income from fund-based business, SBI was trying to increase income fromfee based services. Towards this objective, it had set up subsidiaries to diversify into specializedfinancial services such as life insurance (SBI Life Insurance Company Ltd), funds management


8/14

8

(SBI Funds Management Private Ltd), cards and payment services (SBI Cards and PaymentsServices Private Ltd), factoring (SBI Factors and Commercial Services Private Ltd.), and also asubsidiary for investment banking and retail cum institutional broking called SBI Capital MarketsLtd (SBI CAPs). However it did not yet have an online share trading portal like ICICI Bank, and

was behind its rival in launching new products and services.

Cost management was another crucial factor if SBI wanted to achieve sustainable competitiveness.A significant cost item was the interest expense on deposits because deposits formed the major

source of funds for any commercial bank. Banks in India offered three types of deposit accounts:current account deposits, savings account deposits and the term (or fixed) deposits. Banks did notpay any interest on current account deposits which made it the cheapest sources of funds. Interestpaid on savings accounts deposits was around 3.5% - 4.00% per annum, while the term depositswas the costliest source with interest rates going as high as 9.5-10.50 % per annum in May 2007 onfixed deposits for 3-5 years.

SBI which had a higher proportion of term-deposits as compared to its peers had for some timebeen focusing on current and savings accounts deposits to reduce its overall interest cost. Suchefforts had started showing results, as the SBIs average cost of deposits saw a healthy decline from7.6 percent in 2002 to 4.9 per cent in 2006, even though it was still higher than its peer group. To

sustain the lower cost of deposits and to further reduce it, SBIs quality of customer service wouldhave to be at par with or even better than the competing private and foreign banks. In a meetingwith the media, Bhatt pledged to make SBI number-1 bank in customer service.

Manpower issues

As compared to its lean and mean competitors, SBI was over staffed even though it had effectivelyreduced its work force by about 5% over the past five years. Over staffing resulted in a miserableperformance in terms of productivity measures such as business per employee, in addition to a

huge wage bill.

Retaining talent was another concern. 'That's a big issue. Earlier, some of the best talent used to joinus. Today, that's certainly not the case,' said SBI Managing Director Bhattacharya. Due toGovernment restrictions, PSU banks including SBI could not pay competitive pay packages whichwere much lower than those prevailing in the private banks, not to speak of foreign banks. As aresult, the more talented staff often would change jobs. Many foreign and private sector banks hadsucceeded in hiring staff from the PSU banks, which ironically went to prove that the PSU banksdid have talent which was not properly harnessed. In contrast, ICICI was able to retain its talentwhich ensured successful implementation of strategic moves.

The employees of SBI had been for long demanding a raise in their remuneration and had evenstruck work on several occasions to protest against low compensation levels. A possible solution tothe compensation issue was to implement ESOP (employees stock option) schemes, so that when

the equity market values increased, the additional value to the employees would compensate for thelower wages.

However, there was a catch with regard to stock market prices. The current regulation allowedforeign investors to hold a maximum of 20% equity in PSU banks, as against up to 74% foreignshareholding permitted in private sector banks. There was a strong demand from foreign investorsfor good Indian banking stocks as was reflected by the fact that over 71% of ICICI equity shares


9/14

9

were held by foreign investors, either directly or through the route of ADRs. The ICICI shares atthat time were trading at a P/E multiple of 36 times, as compared to the P/E multiple of merely 11times in case of SBI. ICICI Bank had a much higher market capitalization of Rs. 817 billion ascompared to SBIs Rs. 715 billion, even though ICICI Bank was a much smaller bank with a lowerEPS as compared to SBI. Market operators felt that if the upper limit of 20% foreign shareholdingin PSU banks was relaxed, it would allow free play of market forces to determine a fair valuation ofSBI and other PSU banks equity shares.

A bigger challenge was to change the mind-set at SBI, but finally it seemed to be happening.Competition was forcing the management to shed its inertia to reach out to the customers. Sharingthis perspective, the SBI Managing Director T.S. Bhattacharya elaborated on the change factor inSBI, "What did an MD do earlier on? He came into the office, attended meetings, pushed files andcalled on the bigwigs of the industrial world. Met top RBI and finance ministry officials. Then wenthome. Now, it is not so. We go out and meet Maruti dealers even in places like Jorhat, Jabalpur andGuwahati." Managers throughout the hierarchy in SBI have realized that from now on, it is hardwork. "The potential was always there to be engagingly different. We are now working towardsbeing so. [Business India, Dec05]

Has the efficiency-quotient at SBI really improved? Some of SBI clients would tend to agree, like

the director of a steel company who said, "The speed at which SBI now operates is far higher. In thecase of my working capital needs, SBI has already okayed it, while other banks have yet to clear thepaper-work. On the project finance side, they are still slow. These days, even the hierarchy involvedin decision making has been flattened. For a growing company like ours, this is very important."However, complaints of poor customer service persisted. Complex documentation and slowprocessing of the loan applications was reportedly a major irritant.

From social point of view, SBI would remain a mass banking institution as compared to foreignbanks which specialized in class banking and catered to the banking needs of only the creamy layer

of customers. Most foreign banks also specialized in a niche market. For example, Bank of Americastrategically exited the retail business in India way back in 1999, and has since then focused on

corporate and investment banking. ICICI has on the other hand built a business model based onuniversal banking and even diversifying beyond banking, with its advertisement campaignhighlighting Opportunities Unlimited for future expansion of the bank, clarifying its intention to

becoming a financial powerhouse covering a whole gamut of financial services under one roof.Though SBIs advertisements emphasized Pure Banking, Nothing Else, the bank seemed to

follow a business model similar to the ICICI bank.

Leadership

Building great institutions requires decision making autonomy as well as a dynamic leadership. Adistinct advantage that ICICI had was the complete independence of its board of directors to decideand implement strategy, under the stable leadership of chairman K.V. Kamath. In case of PSUbanks including SBI, the finance ministry called the shots and there were bureaucratic and politicalinterferences at all levels. As the majority shareholder, the Government appointed theChairman/Head of the PSU banks, and normally the Chairmans tenure was far too short to develop

and implement any long term strategy. Since early 1980s, the longest tenure that any SBI chairmanhad served was just 3.5 years by A.K. Purwar who retired in 2006. Bhatt would be the first SBIhead to have five years tenure in after a long time.


10/14

10

Post 2009 Scenario

The threat of severe competition in the post 2009 scenario was obviously a matter worrying Bhatt,Some say foreign banks will enter India in a big way. However, it all depends on the manner and

phases in which the RBI will allow foreign banks to enter India. This will be the majordeterminant. There will be substantial changes if any consolidation takes place in the Indianbanking system. Public sector banks would hope that the foreign banks would be allowed to enterIndia slowly rather than opening the flood gates all at once.

What about SBIs global ambitions? On the global front, SBI acquired a majority stake in a fewsmall foreign banks to expand its international operations, including the Indian Ocean InternationalBank in Mauritius, Giro Commercial Bank in Kenya and PT Bank IndoMonex in Indonesia. Therewas also a rapid increase in the number of SBIs foreign offices/branches from 54 in 2005 to 70 in

2006, expanding its operations overseas. No major acquisitions were in the pipeline.

The Indian Government and the Reserve Bank of India were encouraging consolidation in theIndian banking industry by way of mergers and acquisitions (M&A), to create a few large andstrong global size banks instead of a large number of small and weak banks which were unlikely tostand the heat of competition from foreign banks. A number of M&A moves had taken place in

recent years involving several private sector banks, and a few involving the public sector banks. InMay 2007, PSU bank Canara Bank was reportedly trying to take over another PSU bank DenaBank, but the move was resisted by the employees of Dena Bank. SBI was increasingly integratingoperations with its seven associate banks, out of which some were likely to be merged with SBIitself to consolidate operations.

Capital Adequacy and risk management

SBI has consistently maintained a higher capital adequacy ratio than the minimum required. Capitaladequacy norms prescribe the minimum amount of capital that a bank should have as a percentageof its risk-weighted assets. In 2006, banks in India were required to maintain a capital adequacy of9%, while SBIs capital adequacy stood at 11.88%. In fact at one time, in March 1998 it was as

high as 14.58%. While for risk coverage, higher the ratio the better, an unduly high ratio could beconsidered as burning the capital because the excess capital could have supported a higher volumeof business and help in earning a return for the shareholders.

From 31 March 2008, banks in India would be required to implement Basel-II norms for riskmanagement and capital adequacy. They would need to raise further equity resources to meetcapital adequacy norms for their expanding business. In June 2007, ICICI Bank pre-empted othersin raising capital and entered the capital market (for the third time in two years) with an additionalequity issue of $5 billion, partly domestic and the remaining in overseas markets. The issue metwith an encouraging response from institutional investors, and the domestic part of the issue wasfully subscribed within 20 minutes of its opening. SBI was also planning to raise a further equity of$1.5 billion by end 2007.

The Indian growth story remained intact and was likely to catch further momentum. With a GDPgrowth of 8-10% being targeted for the next 10 years, and banking business expected to grow at30% per annum, the Indian banking industry had the potential of writing a success story evenbrighter than the IT sector, provided the PSU banks could put their houses in order and achievesustainable competitiveness.


11/14

11

Stakeholders from within and outside the SBI were anxiously waiting for the financial statementsfor the year ended March 2007, which would reflect the impact of innovations and strategiesimplemented by Bhatt and his predecessor. Bhatt knew the agenda for innovations was far fromcomplete, but before deciding on the future strategy it was important to understand the key successfactors in the emerging scenario and make a critical assessment of SBIs performance vis --vis thecompetition. As he received the financial statements of ICICI Bank and his own, with a sense ofurgency he set out to make a comparative analysis using data given Exhibits 1-3 at the end as wellas other information available.

* * *Assignment questions

1. Analyze the emerging competitive environment for SBI.

2. What do you think are the key success factors (KSF) for SBI to achieve sustainablecompetitiveness in the Indian banking industry?

3. Using data provided in the case, carry out a financial ratios analysis for the period 2003 2007to review SBIs performance vis--vis ICICI Bank.

4. On the basis of your above analysis as well as other information available, make a SWOTanalysis for SBI highlighting its strengths, weaknesses, opportunities and threats?

5. In your opinion, what further steps should SBI take to improve its market share and financialperformance? What role can its major stake holders play to make SBI more successful in future?

* * *Exhibit-1: SBIs Balance Sheets and Profit & Loss Accounts

A. SBI Balance Sheets for the years 2003 to 2007

All figs in crores Rs

State Bank of India Balance Sheet

Year Mar 07 Mar 06 Mar 05 Mar 04 Mar 03

SOURCES OF FUNDS :

Capital 526.3 526.3 526.3 526.3 526.3Reserves Total 30,772.26 27,117.79 23,545.84 19,704.98 16,677.08Deposits 435,521.09 380,046.06 367,047.52 318,618.67 296,123.28Borrowings 39,703.33 30,641.24 19,184.31 13,431.33 9,303.62Other Liabilities & Provisions 60,283.15 55,829.23 49,767.97 55,791.18 53,521.84TOTAL LIABILITIES 566,806.13 494,160.62 460,071.94 408,072.46 376,152.12

APPLICATION OF FUNDS :

Cash & Balances with RBI 29,076.43 21,652.70 16,810.33 19,041.28 12,738.46Balances with Banks & money at Call 22,892.26 22,907.30 22,511.77 24,525.34 32,442.56Investments 149,148.88 162,534.24 197,097.91 185,676.48 172,347.90Advances 337,336.49 261,800.94 202,374.45 157,933.54 137,758.46Fixed Assets 2,818.87 2,752.93 2,697.69 2,645.11 2,388.55Other Assets 25,533.20 22,512.51 18,579.79 18,250.71 18,476.19TOTAL ASSETS 566,806.13 494,160.62 460,071.94 408,072.46 376,152.12

Note: 1 crore = 10 million
http://finsubdiv%28%27sharecap%27%2C%27bank%27%2C%271375%27%2C%27capital+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27restot%27%2C%27bank%27%2C%271375%27%2C%27reserves+total+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27totoloan%27%2C%27bank%27%2C%271375%27%2C%27deposits+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27sloan%27%2C%27bank%27%2C%271375%27%2C%27borrowings+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27totcliab%27%2C%27bank%27%2C%271375%27%2C%27other+liabilities+%26+provisions+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27cashrbi+othcash%27%2C%27bank%27%2C%271375%27%2C%27cash+%26+balances+with+rbi%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27cashrbi+othcash%27%2C%27bank%27%2C%271375%27%2C%27cash+%26+balances+with+rbi%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27money%27%2C%27bank%27%2C%271375%27%2C%27balances+with+banks+%26+money+at+call%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27money%27%2C%27bank%27%2C%271375%27%2C%27balances+with+banks+%26+money+at+call%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27invest%27%2C%27bank%27%2C%271375%27%2C%27investments++%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27advan%27%2C%27bank%27%2C%271375%27%2C%27advances+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27fixassets%27%2C%27bank%27%2C%271375%27%2C%27fixed+assets+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27loans%27%2C%27bank%27%2C%271375%27%2C%27other+assets+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27loans%27%2C%27bank%27%2C%271375%27%2C%27other+assets+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27fixassets%27%2C%27bank%27%2C%271375%27%2C%27fixed+assets+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27advan%27%2C%27bank%27%2C%271375%27%2C%27advances+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27invest%27%2C%27bank%27%2C%271375%27%2C%27investments++%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27money%27%2C%27bank%27%2C%271375%27%2C%27balances+with+banks+%26+money+at+call%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27cashrbi+othcash%27%2C%27bank%27%2C%271375%27%2C%27cash+%26+balances+with+rbi%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27totcliab%27%2C%27bank%27%2C%271375%27%2C%27other+liabilities+%26+provisions+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27sloan%27%2C%27bank%27%2C%271375%27%2C%27borrowings+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27totoloan%27%2C%27bank%27%2C%271375%27%2C%27deposits+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27restot%27%2C%27bank%27%2C%271375%27%2C%27reserves+total+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27sharecap%27%2C%27bank%27%2C%271375%27%2C%27capital+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/


12/14

12

B. SBI Profit & Loss Accounts for the years 2003 to 2007

P&L Account - State Bank of India


I. INCOME :

Interest Earned 39,491.03 35,979.57 32,428.00 30,460.49 31,087.02Other Income 7,498.94 7,528.16 7,121.73 7,671.06 6,454.36

Total 46,989.97 43,507.73 39,549.73 38,131.55 37,541.38II. EXPENDITURE

Interest expended 23,436.82 20,390.45 18,483.37 19,274.18 21,109.46Payments to/Provisions for Employees 7,932.58 8,123.05 6,907.35 6,447.69 5,688.72

Operating Expenses & AdministrativeExpenses 1,942.13 1,808.99 1,506.06 1,300.41 1,083.71

Depreciation 631.51 763.68 752.21 698.34 493.69Other Expenses, Provisions &

Contingencies 5,422.34 5,516.29 5,379.62 5,440.15 3,898.66Provision for Tax 3,103.11 2,140.71 2,447.22 1,566.06 2,148.88Deferred Tax -19.83 357.89 -230.62 -276.28 13.26Total 42,448.66 39,101.06 35,245.21 34,450.55 34,436.38

III. Profit & Loss

Net Profit 4,541.31 4,406.67 4,304.52 3,681.00 3,105.00Source: www.capitaline.plus

Exhibit-2: ICICIs Balance Sheets and Profit & Loss AccountsA. ICICI Balance Sheets for the years 2003 to 2007

Balance Sheet ICICI Bank

All figs in crores Rs


SOURCES OF FUNDS :Capital 1,249.34 1,239.83 1,086.76 966.4 962.66Reserves Total 23,413.92 21,316.16 11,813.20 7,394.16 6,320.65Deposits 230,510.19 165,083.17 99,818.77 68,108.58 48,169.31Borrowings 51,256.03 38,521.91 33,544.50 30,740.24 33,178.53Other Liabilities & Provisions 38,882.96 25,897.60 22,172.11 18,940.17 19,129.12TOTAL LIABILITIES 345,312.44 252,058.67 168,435.34 126,149.55 107,760.27

APPLICATION OF FUNDS :

Cash & Balances with RBI 18,706.88 8,934.37 6,344.90 5,408.00 4,886.14Balances with Banks & money at

Call 18,414.44 8,105.85 6,585.08 3,062.64 1,602.86Investments 91,257.84 71,547.39 50,487.35 42,742.86 35,462.30Advances 195,865.60 146,163.11 91,405.15 62,647.62 53,279.41Fixed Assets 3,923.42 3,980.71 4,038.04 4,056.41 4,060.73Other Assets 17,144.26 13,327.24 9,574.82 8,232.02 8,468.83TOTAL ASSETS 345,312.44 252,058.67 168,435.34 126,149.55 107,760.27

Note: 1 crore = 10 million
http://finsubdiv%28%27sto%27%2C%27bank%27%2C%271375%27%2C%27interest+earned+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othinc%27%2C%27bank%27%2C%271375%27%2C%27other+income++%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27int%27%2C%27bank%27%2C%271375%27%2C%27interest++expended+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27omfgexp+sac+pfc-expcap%27%2C%27bank%27%2C%271375%27%2C%27operating++expenses+%26+administrative+expenses+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27omfgexp+sac+pfc-expcap%27%2C%27bank%27%2C%271375%27%2C%27operating++expenses+%26+administrative+expenses+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27depn%27%2C%27bank%27%2C%271375%27%2C%27depreciation+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%271375%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%271375%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%271375%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27tax%27%2C%27bank%27%2C%271375%27%2C%27provision+for+tax+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27deftax%27%2C%27bank%27%2C%271375%27%2C%27deferred+tax+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27sharecap%27%2C%27bank%27%2C%275418%27%2C%27capital+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27restot%27%2C%27bank%27%2C%275418%27%2C%27reserves+total+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27totoloan%27%2C%27bank%27%2C%275418%27%2C%27deposits+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27sloan%27%2C%27bank%27%2C%275418%27%2C%27borrowings+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27totcliab%27%2C%27bank%27%2C%275418%27%2C%27other+liabilities+%26+provisions+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27cashrbi+othcash%27%2C%27bank%27%2C%275418%27%2C%27cash+%26+balances+with+rbi%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27cashrbi+othcash%27%2C%27bank%27%2C%275418%27%2C%27cash+%26+balances+with+rbi%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27money%27%2C%27bank%27%2C%275418%27%2C%27balances+with+banks+%26+money+at+call%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27money%27%2C%27bank%27%2C%275418%27%2C%27balances+with+banks+%26+money+at+call%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27money%27%2C%27bank%27%2C%275418%27%2C%27balances+with+banks+%26+money+at+call%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27invest%27%2C%27bank%27%2C%275418%27%2C%27investments++%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27advan%27%2C%27bank%27%2C%275418%27%2C%27advances+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27fixassets%27%2C%27bank%27%2C%275418%27%2C%27fixed+assets+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27loans%27%2C%27bank%27%2C%275418%27%2C%27other+assets+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27loans%27%2C%27bank%27%2C%275418%27%2C%27other+assets+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27fixassets%27%2C%27bank%27%2C%275418%27%2C%27fixed+assets+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27advan%27%2C%27bank%27%2C%275418%27%2C%27advances+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27invest%27%2C%27bank%27%2C%275418%27%2C%27investments++%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27money%27%2C%27bank%27%2C%275418%27%2C%27balances+with+banks+%26+money+at+call%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27money%27%2C%27bank%27%2C%275418%27%2C%27balances+with+banks+%26+money+at+call%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27cashrbi+othcash%27%2C%27bank%27%2C%275418%27%2C%27cash+%26+balances+with+rbi%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27totcliab%27%2C%27bank%27%2C%275418%27%2C%27other+liabilities+%26+provisions+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27sloan%27%2C%27bank%27%2C%275418%27%2C%27borrowings+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27totoloan%27%2C%27bank%27%2C%275418%27%2C%27deposits+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27restot%27%2C%27bank%27%2C%275418%27%2C%27reserves+total+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27sharecap%27%2C%27bank%27%2C%275418%27%2C%27capital+%27%2C%27cbs%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27deftax%27%2C%27bank%27%2C%271375%27%2C%27deferred+tax+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27tax%27%2C%27bank%27%2C%271375%27%2C%27provision+for+tax+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%271375%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%271375%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27depn%27%2C%27bank%27%2C%271375%27%2C%27depreciation+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27omfgexp+sac+pfc-expcap%27%2C%27bank%27%2C%271375%27%2C%27operating++expenses+%26+administrative+expenses+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27omfgexp+sac+pfc-expcap%27%2C%27bank%27%2C%271375%27%2C%27operating++expenses+%26+administrative+expenses+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27int%27%2C%27bank%27%2C%271375%27%2C%27interest++expended+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othinc%27%2C%27bank%27%2C%271375%27%2C%27other+income++%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27sto%27%2C%27bank%27%2C%271375%27%2C%27interest+earned+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/


13/14

13

B. ICICI Profit & Loss Accounts for the years 2003 to 2007

P& L Account ICICI Bank

Year Mar 07 Mar 06 Mar 05 Mar 04 Mar 03)

I. INCOME :

Interest Earned 22,994.29 14,306.13 9,409.89 9,002.39 9,368.06Other Income 6,962.95 5,062.22 3,539.67 3,066.83 3,165.32Total 29,957.24 19,368.35 12,949.56 12,069.22 12,533.38

II. EXPENDITURE

Interest expended 16,358.50 9,597.45 6,570.89 7,015.25 7,944.00Payments to/Provisions for Employees 1,616.75 1,082.29 737.41 546.06 403.02

Operating Expenses & AdministrativeExpenses 1,510.43 1,126.66 850.41 679.34 528.83

Depreciation 544.78 623.79 590.36 539.44 505.94Other Expenses, Provisions &

Contingencies 6,281.74 3,844.55 1,676.29 1,389.31 2,373.45Provision for Tax 981.25 688.22 176.49 269.59 214.55Deferred Tax -446.43 -134.68 342.51 -6.88 -642.59Total 26,847.02 16,828.28 10,944.36 10,432.11 11,327.20

III. Profit & Loss

Net Profit 3,110.22 2,540.07 2,005.20 1,637.11 1,206.18

Source: www.capitaline.plus Note: 1 crore = 10 million

Exhibit-3: Reserve Bank of India: All Scheduled Banks-Business in India.Select StatisticsLast Reporting Friday March > > > 1990-91 2005-06 2006-07(P)

1 2 3 4

Number of reporting

banks 299 289 255

Aggregate deposits 1,99,643 2185810 2675595

Investment 76,831 749682 821448

Bank credit 125575 1572781 1998617

Cash-Deposit Ratio 13 6.6 7.5

Investment-Deposit Ratio 38.5 34.3 30.7

Credit-Deposit Ratio 62.9 72 74.7

http://www.rbi.org.in/scripts/BS_ViewBulletin.aspx , visited June 2007. (P): Provisional.
http://finsubdiv%28%27sto%27%2C%27bank%27%2C%275418%27%2C%27interest+earned+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othinc%27%2C%27bank%27%2C%275418%27%2C%27other+income++%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27int%27%2C%27bank%27%2C%275418%27%2C%27interest++expended+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27omfgexp+sac+pfc-expcap%27%2C%27bank%27%2C%275418%27%2C%27operating++expenses+%26+administrative+expenses+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27omfgexp+sac+pfc-expcap%27%2C%27bank%27%2C%275418%27%2C%27operating++expenses+%26+administrative+expenses+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27depn%27%2C%27bank%27%2C%275418%27%2C%27depreciation+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%275418%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%275418%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%275418%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27tax%27%2C%27bank%27%2C%275418%27%2C%27provision+for+tax+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27deftax%27%2C%27bank%27%2C%275418%27%2C%27deferred+tax+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://www.rbi.org.in/scripts/BS_ViewBulletin.aspxhttp://www.rbi.org.in/scripts/BS_ViewBulletin.aspxhttp://www.rbi.org.in/scripts/BS_ViewBulletin.aspxhttp://finsubdiv%28%27deftax%27%2C%27bank%27%2C%275418%27%2C%27deferred+tax+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27tax%27%2C%27bank%27%2C%275418%27%2C%27provision+for+tax+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%275418%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othexp%27%2C%27bank%27%2C%275418%27%2C%27other+expenses%2C+provisions+%26+contingencies%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27depn%27%2C%27bank%27%2C%275418%27%2C%27depreciation+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27omfgexp+sac+pfc-expcap%27%2C%27bank%27%2C%275418%27%2C%27operating++expenses+%26+administrative+expenses+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27omfgexp+sac+pfc-expcap%27%2C%27bank%27%2C%275418%27%2C%27operating++expenses+%26+administrative+expenses+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27int%27%2C%27bank%27%2C%275418%27%2C%27interest++expended+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27othinc%27%2C%27bank%27%2C%275418%27%2C%27other+income++%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/http://finsubdiv%28%27sto%27%2C%27bank%27%2C%275418%27%2C%27interest+earned+%27%2C%27cpl%27%2C%27plus%27%2C%27%27%2C%27%27%29/


14/14

14

ReferencesRoss Peter S., Commercial Bank Management, Irwin McGraw-Hill, Boston, International Edition,1999.Hitt Michael A., Ireland Duane R. and Hoskisson Robert E.,Strategic ManagementCompetitiveness and Globalization, South-Western Thomson Learning Publication, 2001.Van Horne James C., Financial Management and Policy, Prentice Hall of India, 1998.Business India, December 2005 and December 2006.Indias Best Banks, The Financial Express and Ernst & Young, March 2007.

Economic Times, Various issuesCMIE Report on Banking, March 2007Reserve Bank of India Bulletin: Various issuesLive MintWall street Journal, New Delhi, Various issues.www.statebankofindia.comwww.icicibank.comwww.capitaline.plushttp://www.rbi.org.in/scripts/BS_ViewBulletin.aspx

Documents

State Bank of India - Case