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BANK INFORMATION

Head /Corporate office: New Administrative Bldg.

Madam Cama Road,

Mumbai 400021.

Incorporation year: 1955

Ownership group: State Bank of India Group

Main activity: Banking services

Listed on: Bombay Stock Exchange (BSE)

Calcutta Stock Exchange

London Stock Exchange (FTSE)

National Stock Exchange (NSE)


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STRUCTURE

SBI Group

SBI Group consists of,

A) Seven Associate Banks

State Bank of Hyderabad

State Bank of Indore

State Bank of Mysore

State Bank of Patiala

State Bank of Saurashtra

State Bank of Travancore

State Bank of Bikaner and Jaipur

B) One Wholly Owned Banking Subsidiary

SBI Commercial and International Bank

C) Seven Non Banking Subsidiaries

SBI Capital Markets Merchant banking, lease and hire purchase

SBI Funds Management Mutual fund

SBI Gilts Govt. Securities

SBI Factors & Commercial Service Factoring Services

SBI Securities Investment banking

SBI Cards and Payment Services Ltd

SBI Life Insurance Company Ltd

E) Six Overseas Subsidiaries/Joint Ventures

SBI(Canada)

SBI(California)

SBI International (Mauritius) Ltd.

Indo-Nigerian Merchant Bank Ltd.

SBI Finance Inc., New York SBI Servicos Limitada, Sau Paulo


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PROFILE

State Bank of India was constituted through an Act of Parliament on 8 May 1955 to carry on the

business of banking and other business in accordance with provisions of the State Bank India

Act and for the purpose of taking over the undertaking of the Imperial Bank with effect from 1st

July 1955. The origin of State Bank date back to 1806 when the Bank of Calcutta (later Bank of

Bengal) was established. This was the first of the Presidency banks to be set up in British India

to meet the needs of the mercantile community. The Bank of Bombay and Bank of Madras

followed this in 1840. These three banks pioneered the spread of banking in the country and in

1921 the three banks were amalgamated to form Imperial Bank of India. In 1955 the controlling

interests in the Imperial Bank were acquired by Reserve Bank of India and the bank became

State Bank of India under the State Bank of India Act. During the process of nationalization, the

private ownership was retained, though on a minority basis.

SBI group consisting of State Bank of India and its seven associates handles a significant part of

the day-to-day banking business of both Central and State governments and is the main banker

to most of the public sector corporations set up after independence. It plays a major role in

financing procurement of grains and other commodities like cotton, jute and tobacco. It also

handles special schemes such as gold bonds, gold replenishment schemes (against export of

jewellary), the national deposit scheme, etc. Its activities cover industrial finance, internationalbanking, agricultural finance, etc. SBI Capital Markets Ltd., the merchant banking and leasing

subsidiary of SBI, co-promoted SBI Home Finance Ltd. A new company SBI Funds

Management Ltd. was incorporated to take over the management of mutual fund activities from

SBICAP. SBI Factors and Commercial Services Pvt. Ltd. (SBI Factors) were established to

provide factoring services in the western region.

Indias largest public sector bank, State Bank of India (SBI) has been a brilliant performer this

year. Post September 11, while the BSE Sensex has remained flat, SBIs stock has soared by29%. Also, since the beginning of the current fiscal, the stock has gained 19%, as against a 14%

fall in the Sensex. The State Bank of India is the largest commercial bank in India in terms of

profits, assets, deposits, branches and employees. At the end of the financial year 2000-01

(April-March), the Bank had total assets of Rs.3,156.44 billion (US$67.71 billion), total deposits

of Rs.2,428.28 billion (US$52.09 billion), and made a net profit of Rs.16.05 billion (US$344


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million) during the year. The Bank has a vast domestic network of 9,019 branches and staff

strength of 214,845. It commanded one-fifth of deposits and loans of all scheduled commercial

banks in the country.

The performance has not been driven by a general positive sentiment towards banking sector.

Rather, SBIs ongoing restructuring initiatives and business aggressiveness have percolated into

its financial performance and consequently its stock price. The sleeping banking giant has

awakened and is likely to pose challenges for the private sector stalwarts. Starting from

realigning the organization structure through VRS, the bank has taken quick steps in

implementation of technology and diversifying its foray into retail finance and other related

businesses including insurance. The bank with 9,085 of its own branches and 4,500 branches of

its subsidiaries is catching up with its private sector peers to provide one-stop financial solutions.

With the slowdown in the corporate loan demand and deteriorating asset quality, the bank eyed

the retail finance market, which offered immense growth opportunities. It has made a vengeful

entry into housing finance market becoming the third largest player within a short time. Its

housing loan portfolio nearly doubled in FY02, forming 33% of total retail loans. SBI aims to

grow its housing loan disbursements by over 75% in the current fiscal. With bias towards softer

interest rates and tax benefits for investments in housing loans, the bank is likely to achieve its

target. In the overall personal finance segment, SBI has targeted to achieve 40% growth. With

growing retail assets, the contribution of retail banking to total loan assets is expected to go upfrom 15% in FY02 to 20% in the next three years. Since default rate in retail finance is relatively

low, the banks asset quality is likely to improve. SBI has targeted to bring down its net NPAs to

advances ratio to 5% in the second half of 2002-03 from 5.6% in FY02.


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From the Chairman's Desk

Dear Shareholders,

I am pleased to place before you the Report of the Board of Directors of your Bank for the year

2001-02. You will be happy to see your Bank's excellent performance, details of which are

presented in the Report.

The year 2001-02 witnessed mixed trends with GDP growth largely driven by good agricultural

performance. Low inflation, robust growth in foreign exchange reserves and large stocks of food

grains added to the strength of the economy.

A decade of economic reforms has strengthened the fundamentals of the Indian economy and

the second generation reforms will serve to put the country on to a higher growth trajectory.

There is no doubt that banking sector reforms have increased the profitability, productivity and

efficiency of banks, but in the days ahead banks will have to prepare themselves to face new

challenges including growing competition in the face of falling spreads and squeeze on

profitability. In order to leverage technology for growth, banks need to develop a greater

understanding of the impact of technology and a sense of urgency for implementing the changes

along with putting in place new strategies to manage risks in the changing environment.

Ultimately, there is need for greater customer orientation and future business models of bankswill not be based on interest margins but rather on value added services to the customer. Other

issues that compel attention in the changing environment are corporate governance and

adoption of international standards and best practices.

You will be happy to see that your Bank is addressing these issues and has taken path-breaking

initiatives in introducing IT driven products and services. Your Bank is fast growing into a

technology-driven bank, with a range of products for customers, multiple delivery channels for

business growth and a strategy to reduce costs, improve profitability and stay ahead of thecompetition. A state-of-the-art core banking solution has been identified which provides

anywhere banking for our customers. The task of implementing the solutions has been entrusted

to Tata Consultancy Services (TCS). Implementation has already commenced and we expect to

see tangible results in a year's time. Networking project will lead the way with 20 cities

connected by October 2002 and 49 cities by December 2002.


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Internet banking services have been further expanded to reach out to 154 branches and an

exclusive Internet banking product for corporates was launched in March 2002. Other

technology solutions identified to leapfrog into IT-enabled operations relate to Asset Liability

Management and Treasury Management. More than 3000 branches (80.28% of the business)

are driven by computerized systems. One of the landmark achievements was the deployment of

1070 ATMs across the country catering to more than 1.8 million ATM cardholders. Of these

ATMs, 568 were networked across 102 centers. Your Bank vigorously marched ahead taking

giant strides in traditional IT initiatives like full branch computerization, remote login for corporate

customers, tele-banking, electronic payment system, expanding web presence, SWIFT based

services and cheque processing systems. Your Bank launched its country-wide Video

Conferencing network spanning 24 locations- the largest such network in the country.

In line with customer expectations, your Bank launched several new products during the year.

Housing emerged as a major thrust area and loans were offered at very competitive rates. A

flexible tailor-made housing loan scheme was launched wherein the customer could fix his

installments for various years of repayment aligning these with his repayment capacity keeping

in view other financial obligations. The Bank also introduced a short-term housing loan scheme

offering the benefit of lower rate of interest to customers having the capacity to repay their loans

in a shorter period up to a maximum of five years. New products proposed to be offered during

the current year include up gradation of ATM cards to Debit cards, upgraded version of tele-

banking, smart cards, co-branded credit cards, railway reservation through ATM and Internet,etc.

Maintaining the thrust on development banking, your Bank's advances to the priority sector as a

proportion of net bank credit stood at 41.53% at the end of March 2002 against the benchmark

of 40%. During the year, the Bank launched new schemes to increase the flow of credit to the

agricultural sector viz., Kisan Gold Card, Land Purchase Scheme for small and marginal farmers

and scheme for financing purchase of Combine Harvesters. So far your Bank has issued 14.04

lakh Kisan Credit Cards covering aggregate credit limits of Rs 2873 crore and has a target ofissuing more than 8.20 lakh Kisan Credit Cards and 1.15 lakh Kisan Gold Cards during 2002-03.

Your Bank has also launched three new products for the benefit of SSI units viz., SME Credit

Plus, General Purpose Term Loan and Small Business Credit Card. Your Bank has stepped up

its activities under Project Uptech to make SMEs more quality and cost competitive. So far 22

clusters covering various industry groups have been taken up under Project Uptech. Under its


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initiatives for Micro Credit, your Bank has so far linked itself with 127,820 Self Help Groups

(SHGs) covering more than 23 lakh members and has plans to link itself with 27,560 new SHGs

during the year.

Your Bank has a well documented NPA Management Policy, which emphasizes, inter alia, early

identification of problem loans, effective response to early warning signals and vigorous

approach to recovery including one time settlement (OTS). The Bank widely publicized various

OTS schemes formulated by RBI. Due to efforts at the grass roots in motivating the staff and the

borrowers, the schemes yielded good results. The gross and net NPA levels of your Bank have

come down from 12.93% and 6.03% respectively in March 2001 to 11.95% and 5.63%

respectively in March 2002.

In a deregulated environment risk management holds the key to success; opportunities do not

come alone but bring in their wake risks in new forms and of varying magnitudes. Banks need to

usher in a risk management culture and develop review and control systems encompassing

credit, market and other forms of risk. This calls for tremendous amount of reskilling of staff,

developing a cadre of specialists and introduction of technology driven management information

systems. Our Business Development and HR systems will have to rise to meet the various

challenges and exploit opportunities thrown up by the paradigm shift in banking. Efforts are

already on in that direction.

With all these initiatives, your Bank is well poised to move ahead rapidly in the current year and

achieve the financial goals and strategies we have set for ourselves.

With warm regards,

Yours sincerely

(Janki Ballabh)


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BALANCE SHEET OF THE STATE BANK OF INDIA AS ON31ST MARCH 2002

[000s omitted]

As on 31.03.2002(Current Year)

As on 31.03.2001(Previous year)CAPITAL AND LIABILITIES SCHEDULE

Rs. Rs.

Capital 1 5262989 5262989

Reserves & Surplus 2 146980804 129352414

Deposits 3 2705601437 2428283800

Borrowings 4 93239446 107010418

Other Liabilities andProvisions

5 531197807 486532484

TOTAL 3482282483 3156442105

As on 31.03.2002(Current Year)

As on 31.03.2001(Previous year)ASSETS SCHEDULE

Rs. Rs.

Cash and balances withReserve Bank of India

6 218725347 184958687

Balances with banks andmoney at call & short notice

7 430576316 422133168

Investments 8 1451420317 1228764928

Advances 9 1208064653 1135902708Fixed Assets 10 24152273 25933018

Other Assets 11 149343577 158749596

TOTAL 3482282483 3156442105

Contingent Liabilities 12 1022129848 836689825

Bills for Collection -- 101766049 80803219


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ASSETS ANALYSIS

ASSETS

Rs. CroreNon-Annualized Mar-98 Mar-99 Mar-00 Mar-01 Mar-02

Cash and bank balance 32645.82 53212.6 47136.44 60709.18 64930.16Cash in hand 508.15 497.97 558.27 867.86 1052.58Deposit account 1010.57 1680.8 2675.95 3139.35 3296.56Money at call 821 11038.61 9540.16 21185.87 23085.95Balance outside India 17305.82 23002.07 15924 17771.83 16546.53Current account 460.31 3528.66 3931.51 9016.52 6529.48Deposit account 1215.57 983.86 974.73 1306.01 2242.33

Money at call 15629.94 18489.55 11017.76 7449.3 7774.72Balance with RBI 12906.42 16894.32 18344.78 17628.01 20819.95

Investments 54982.24 71286.52 91878.68 122876.5 145142Government securities 39177.27 51752.76 68068.27 96416.82 117323

Approved securities 7157.97 6464.39 5913.72 5704.99 5220.32Assisted companies 0 0 0 0 0Subsidiaries/associates 1424.41 1540.13 1619.83 1338.62 1344.82Mutual funds 0 0 2932.06 0 0

Others 7222.59 11529.24 13344.8 19416.05 21253.85Investments outside India 2221.46 2690.45 3199.94 3976.49 4741.86Quoted investment 0 0 0 0 0Market value of quotedinvestment 0 0 0 0 0

Advances & loans 74237.33 82359.84 98101.97 113590.3 120806.5Bills receivables 7933.47 7741.25 9235.12 12840.01 11555.36Short term/demand advances 43553.46 45991.24 54979.16 61197.15 64178.41

Term advances 22750.4 28627.35 33887.69 39553.11 45072.7Assisted companies 0 0 0 0 0Institutions & banks 0 0 0 0 0

Other advances 0 0 0 0 0Foreign currency advances 0 0 0 0 0


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Secured advances 71884.05 77291.42 92161.81 90357.88 98526.09Unsecured advances 2353.28 5068.42 5940.16 23232.39 22280.38Advances to priority sector 19522.82 23090.38 25877.55 30153.35 31591.48Advances to public sector 12088.19 13465.12 9490.49 20271.27 21990.35

Deferred tax 0 0 0 0 312.9

Other assetsStock in trade 72.54 69.67 67.97 74.18 76.44Stock hired 0 0 0 0 0

Stock of securities 0 0 0 0 0Stock others 72.54 69.67 67.97 74.18 76.44

Receivables 16228.42 13386.74 21842.28 13529.53 13794.38

Accrued income 3005.48 3348.96 4278.57 5133.28 5737.66Lease receivables 0 0 0 0 0

Non-banking assets 0.22 0.24 0.25 1.26 0.27Inter office adjustments 2924.35 0 8760.74 58.89 0Exchange fluctuation

receivables 0 0 0 0 0

Advance payment of tax 1647.34 2403.95 1957.55 2007.06 1861.14Other receivables 8651.03 7633.59 6845.17 6329.04 6195.31

Future lease rent receivable 0 0 0 0 102.66

Gross fixed assets 2347.61 3338.31 3976.97 4458.99 4678.09Less: cumulative

depreciation 841.3 1144.65 1499.36 1865.68 2262.86Net fixed assets 1506.31 2193.66 2477.61 2593.31 2415.23

Land & building 653.62 687.74 749.86 855.88 920.32Revalued assets 0 0 0 0 0Leased assets 289.33 1002.51 1386.51 1258.05 1434.53

Intangible assets/expensesn.w.o 0 0 0 2271.24 1063.54

TOTAL ASSETS 179672.7 222509 261505 315644.2 348541.2


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DETAILED ANALYSIS OF ASSETS

1997-98

The cash and bank balances amounted to Rs. 32 645.82 crores. The money at call was low at

821 crores. The bank was maintaining a balance of 12906.42 crores with RBI. The investments

in India were worth 54982.24 crores. However there was no investment in mutual funds. The

investments outside India stood at 2221.46 crores. The figures were low, as the impact of

globalization was not yet felt. The advances and loans amounted to 74237 crores which was

41.32% of the total assets. Of this short-term loans amounted to 69.35% of the total loans. The

ratio of loans to priority and public sector stood at 1.6. The percentage of secured loans was

96.83%. Inter-office adjustments amounted to 2924 crores. This was attributed to the fact that

reconciliation of inter-office accounts continues for some time after the accounts are closed.

Gross Assets were valued at 2347 crores. The depreciation amount was 841.3 crores and the

method used was written down value method prescribed under the Income Tax Act.

Depreciation of leased assets was provided for on capital recovery method. Leased Assets

valued at 289.33 crores.

1998-99

Cash and Bank Balance increased to 53212.6 (increase of 61% over the previous year) while

Cash in Hand reduced to 497.97 crores. Money at call increased drastically this year. Due to this

fact the current account assets surged. The interest expenses on deposits (excluding RIBs) inIndia during 1998-99 recorded an increase of 17.5% as compared to the previous year, primarily

due to the increase in average level of deposits by 16.9% (excluding RIB deposits) during the

year. While the maximum interest rate on domestic deposits came down from 12% at the

beginning of the fiscal to 10.5% at the end, the average cost of deposits registered a marginal

increase from 8.01% in 1997-98 to 8.05% in 1998-99. Introduction in May 1998 of term deposits

for a minimum period of 15 days (earlier, the minimum period for which a term deposit could be

taken was 30 days) as well as the differential (higher) rates for single deposits of Rs.15 lakh and

above, contributed to the additional cost under this head. Investments increased by 40%.Investment in government securities contributed a lot. Investments in approved securities

decreased from the previous year. Advances and loans increased marginally. Stocks in trade

decreased to 69.67. Inter-office adjustments had been completed by the end of the accounting

year. Hence the receivables decreased. There was a drastic increase in amount of leased

assets.


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1999-00

Cash and Bank Balance decreased but the cash in hand increased marginally. Money at call

followed the previous trend and decreased. Money at call with RBI decreased by around 6000

crores. Investments increased continuously. This year the bank invested in mutual funds, which

thereby increased investments. Advances and loans continued to increase. But the ratio of

advances to priority sector versus the public sector changed radically. It increased from 1.6 to 3

in two years. The receivables increases this year because of inter office adjustments of 8760

crores.

2000-01

On 30 March 2001, IRDA had granted license to the joint venture for carrying out the life

insurance business in the country. In June 2001, life insurance company has launched its first

product-Sanjeevan. It is a single-premium money-back product providing life cover up to a

maximum of 75 years of age. The company is also looking at launching pension products in few

days. During the year, the Bank, pursuant to the Voluntary Retirement Scheme for eligible

employees made a payment in respect of encashment of leave salary amounting to Rs.203.63

crore. In terms of the accounting policy consistently followed by the Bank, the entire amount has

been charged to the Profit and Loss Account of the current year (accounting on payment basis)

including an amount of Rs.123.19 crore being encashment of leave salary related to prior

periods, as determined by an actuarial valuation. The amount of unsecured surged to 23232.39

crores. Advances to public sector which had gone down last year increased again. Receivablesagain went down due to less money kept for inter office adjustments. Intangible assets showed

at 2271.24 crore

2001-02

The Bank implemented a Voluntary Retirement Scheme (VRS) for eligible employees during FY

2000-01. Expenditure thereof aggregated to Rs. 2271.24 crore, of which Rs. 853.19 crore was

charged to the Profit and Loss Account of FY 2000-01. Of the balance, an amount of Rs. 354.51

crore has been charged to the Profit and Loss Account of FY 2001-02. The remaining amount ofRs. 1083.54 crore is being treated as deferred revenue expenditure included under Schedule 11

"Other Assets", to be amortized equally over a further period of 3 years in accordance with RBI

guidelines. All the statistics increased as per the continuing trends.


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CAPITAL AND LIABILITIES: BANKING COS.

State Bank Of India Mar-98 Mar-99 Mar-00 Mar-01 Mar-02Rs. Crore Non-Annualized

Capital 526.3 526.3 526.3 526.3 526.3

Equity capital 526.3 526.3 526.3 526.3 526.3Preference capital 0 0 0 0 0

Bonus equity capital 0 0 0 0 0Reserve funds & surplus 9081.88 9876.01 11620.98 12935.24 14698.08

Share premium reserves 3510.57 3510.57 3510.57 3510.57 3510.57Statutory reserves 4321.46 5108.77 6595.83 7789.55 9686.6Other specific reserves 172.17 53.1 58.09 557.43 781.22

Revaluation reserves 0 0 0 0 0Revenue reserves 1077.68 1203.57 1456.49 1077.69 719.69

Deposits 131091.32 169041.93 196821.07 242828.37 270560.14Demand deposits 27813.65 30692.03 36182.05 40328.08 42312.79Saving deposits 29207.85 34321.25 41506.53 47893.42 56396.36Term deposits 74069.82 104028.65 119132.49 154606.87 171850.99

Deposits by financial

institutions 0 0 0 0 0Demand deposits frombanks 4400.39 4520.9 5206.04 5641.56 6913.88Term deposits from banks 3470.18 5793.73 5500.66 6499.52 6746.43Deposits outside India 7542.58 8787.09 9182.34 7932.42 8011.33

Borrowings 9080.79 10063.13 11193.41 15133.62 12781.6

RBI 0 0 670.29 0 0Banks 0.8 0 0 0.01 1.21

Financial institutions 836.77 1076.39 1669.6 2537.4 2152.61Government 0 0 0 0 0Foreign institutions 7255.87 8002.67 6938.18 8163.63 7170.12

Debentures & bonds 987.35 984.07 1915.34 4432.58 3457.66Others 0 0 0 0 0


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Secured loans 912.13 1413.11 2596.11 3067.01 2634.77Deferred tax 0 0 0 0 330.85

Other liabilities &provisions 29892.37 33001.66 41343.19 44220.66 49644.18

Bills payable 8754.94 10796.43 10562.53 13598.42 13875.17Inter office adjustment 0 555.41 0 0 4722.18

Interest accrued and due 7619.88 10100.69 13080.79 16966.05 19285.58Earmarked funds 0 0 0 0 0Others (incl. provisions) 13517.55 11549.13 17699.87 13656.19 11761.25

TOTAL LIABILITIES 179672.66 222509.03 261504.95 315644.19 348541.15

Contingent liabilitiesBills for collection 0 9265.1 2309.78 8080.32 10176.6Bills discounted 8646.15 0 0 0 0

Endorsement obligation 10830.12 9785.72 12941.7 12894.58 12591.26Disputed taxes 0 0 0 0 0Letters of credit 0 0 0 0 0

Future lease rent payable 0 0 0 0 0


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DETAILED ANALYSIS OF CAPITAL AND LIABILITIES

Equity Capital remained constant at 526.3 crore. No preference capital was issued. Neither any

bonus was issued to shareholders. Reserves and surplus increased every year from 9081 to1498 crores. Revenue reserves increased till 2000 and then began to decrease as the bank

began to diversify and invest more money in restructuring. On the monetary front, liquidity

conditions remained easy. During 2001-02, the year-on-year growth in money supply (M3) at

14.0% was in line with the growth projected by RBI, as against 16.8% in 2000-01, when growth

was boosted by India Millennium Deposit inflows. For the same reason, growth in aggregate

deposits of all scheduled commercial banks at 14.3% was lower than 18.4% during 2000-01.

Reflecting the deceleration in industrial production, growth in non-food credit was lower at 12.8%

during 2001-02 than the growth of 14.9% in the previous year. During the same period, theincrease in total flow of funds from banks including banks' investments in bonds, debentures,

shares, CPs, at 11.8% was also lower than the increase of 15.7% during 2000-01. Deposits

doubled their amounts in the last 5 years. Borrowings increased till 2001 and then decreased in

2002. Issue of debentures and bonds also decreased in 2002. This can be attributed to the fact

that the borrowings from FII decreased considerably due to Sept. 11 crisis. Also these figures

decreased in 2000 due to economic crisis of 2000. Inter-office adjustments were added in

liabilities in 1999 and 2002.


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CASH FLOW ANALYSIS

Cash Flow

State Bank Of India

Mar

1998

Mar

1999

Mar

2000

Mar

2001

Mar

2002Rs.Crore

SOURCES OF CASH

Opening Balance 27752.75 32645.82 53212.59 47136.44 60709.19Revenue Inflow 1985.92 3488.81 4639.5 5241.89 7082.06Non operating income 50.11 62.44 64.84 77.05 102.67

Sale of fixed assets 0 0 0 0 0Sale of investments 0 0 0 166.78 0Capital proceeds 0 0 0 0 0Loan proceeds 0 0 1134.88 2520.98 0

Decrease in operating assets 23889.98 42835.64 27779.14 46007.31 27731.76Deposits 20390.15 37950.61 27779.14 46007.31 27731.76Advances 0 0 0 0 0

Others 3499.83 4885.03 0 0 0

Total cash inflow 53678.76 79032.71 86830.95 101150.5 95625.68

APPLICATION OF CASH

Disbursements 0 0 0 0 0Purchase of fixed assets 498.4 999.09 649.6 517.61 246.88Purchase of investments 8177.6 16320.63 20075.65 0 0.09Repayment of loans 4.71 3.28 4.6 3.74 974.93

Loans to group companies 0 0 0 0 0Loans to other companies 0 0 0 0 0Tax paid 0 0 803.89 1017.59 1459.43Dividend paid 199.46 231.57 233.68 306.57 290.13Other cash expense 0 0 0 0 0

Increase in operating assets 12004.13 8122.51 17790.89 38277.29 27296.65


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Deposits 0 0 0 0 0Advances 12004.13 8122.51 17006.36 16921.22 9368.49

Others 0 0 784.53 21356.07 17928.16

Closing balance 32645.82 53212.59 47136.44 60709.19 64930.17

Total cash outflow 53530.12 78889.67 86694.75 100832 95198.28Increase/Decrease in cashbalance 4893.07 20566.77 -6076.15 13572.75 4220.98

Cash flow before operatingassets charges 1985.92 3488.81 4639.5 5241.89 7082.06Cash flow from operations 13871.77 38201.94 14627.75 12971.91 7517.17

Cash used in investing activity 8676 17319.72 20725.25 350.83 246.97Cash from financing activity -4.71 -3.28 1130.28 2517.24 -974.93


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DETAILED CASH FLOW ANALYSIS

The basic purpose of cash flow statements is to provide information about cash receipts and

cash payments. The basic classifications of cash flow are

- Operating (primary business activities, bank must generate a positive net cash flow if it to

survive. It is a key measure of liquidity)

- Investing (cash flows from purchases and disposal of plant assets, Not necessarily positive.

Growing businesses may have negative investing cash flow)

- Financing (cash flow of the bank with its owners and creditors. For e.g. Issuance of stock,

Growing businesses may have negative financing cash flow)

Cash flow from operations has decreased with the exception of 1998-99. This implies that the

liquidity has been decreasing. The investing cash flow increased radically from 8676 to 17319

crores and then increased marginally to 20725 crores. However it fell sharply from 1999-00 to

2000-01 because the bank did not invest. Financing cash flow has been negative in 1997-99 as

the loan repayments have been exceeding loan proceeds. In 1999-01 the loan proceeds

increased to a large amount and thereby exceeding the repayments. In 2002 again the proceeds

reduced to zero.


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INCOME & EXPENDITURE

State Bank Of IndiaMar

1998 Mar-99 Mar-00 Mar-01 Mar-02Rs. Crore Non-Annualized

REVENUE

Income 18634.85 22311.16 25649.31 29755.66 33781.48

Interest received 9487.24 11522.23 12694.76 14957.45 15538.21On advances 7829.12 8581.38 9553.95 11143.25 11063.4On deposits with RBI 631.55 1100.81 1573.35 1887.05 3054.88

On others 1026.57 1840.04 1567.46 1927.15 1419.93

Dividend earned 6441.73 7647.75 9571 11258.18 14374.54Security transactions 115.57 72.66 268.88 341.86 351.64

Leasing & hire services 47.04 120.64 218.25 262.18 292.94Bill discounting 0 0 0 0 0Exchange transactions 505.5 569.19 328.97 303.55 407.64

Commission & brokerage 2037.77 2378.69 2567.45 2632.44 2816.51Others - 0 0 0 0 0

Other income 63.11 82.25 111.33 270.89 233.61Non-recurring income 965.2 13.1 539.19 140.22 407.8

Gain on reval. of investments 0 0 0 0 0

Others 965.2 13.1 539.19 140.22 407.8

EXPENDITURE

Interest expended 10473.2 13044.44 15272.58 17756.02 20728.84On deposits 9586.24 12196.58 14396.64 16643.22 19554.27

On RBI loans 481.24 474.43 557.04 521.8 364.07Others 405.72 373.43 318.9 591 810.5

Lease rent 0 0 0 0 0

Other rent 344.82 379.9 425.55 471.31 524.44Interest Tax 0 0 0 0 0Loss on security transactions 0 0 0 0 0Loss on exchange transactions 0 0 0 0 0Prov. for diminution in

investments 13.55 28.37 0 24 198.49


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Personnel cost 3557.75 4147.4 4477.87 5158.46 4798.27Prov. for contingencies, NPA,etc. 1366.49 1570.02 1319.53 1470.48 2204.73Other operating expenses 60.15 74.32 98.3 107.94 142.5Other expenses 594.08 678.58 1157.62 2196.09 1320.74

Non-recurring expenses 100 622.36 0 0 19.2Loss on reval. of investments 0 0 0 0 19.2

Others 100 622.36 0 0 0

Less: Expenses capitalised 0 0 0 0 0

Interest capitalised 0 0 0 0 0

PBDT 3153.12 1861.12 3548.38 2982.47 4485.68

Depreciation 164.07 310.57 356.85 406.86 451.04Leased depreciation 17.91 53.92 108.93 143.93 175.37

PBT 2989.05 1550.55 3191.53 2575.61 4034.64

Tax provision 1127.85 522.75 1139.98 971.36 1603.02Corporate tax 1001 383 978.5 971 1602.57Other direct taxes 126.85 139.75 161.48 0.36 0.45

PAT 1861.2 1027.8 2051.55 1604.25 2431.62Appropriation of profit

Dividends 210.52 210.52 263.15 263.15 315.78Dividend Tax 21.05 23.16 43.42 26.84 0Retained earnings 1629.63 794.12 1744.98 1314.26 2115.84


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PROFITABILITY RATIOS

1998 1999 2000 2001 2002Break-Even Yield Ratio 17.15 15.63 15.56 15.83 14.10Cost of Funds Ratio 7.40 7.00 7.41 7.32 7.52Net Profit Margin 7.15 5.34 7.96 4.58 10.50

Adjusted Return On Net Worth 15.87 11.91 16.88 9.89 19.35Reported Return On Net Worth 15.97 11.91 16.88 9.88 19.37

Liberalization and deregulation have heightened competition among banks, which will only

intensify with financial liberalization under the WTO regime, and banks in India will have to

benchmark themselves against world class banks. In this context, the way to boost profitability

and stay ahead is by developing sophisticated and customized products, increasing volumes,

monitoring risks and reaching out to customers in diversified and distant markets by leveragingtechnology. In line with this, the Bank is also making all out efforts to adopt state-of-the-art

technology with far reaching consequences for efficiency and profitability.

2002

The Operating Profit of the Bank for 2001-02 stood at Rs.6,044.83 crore as compared to

Rs.3,966.78 crore. in 2000-01, recording a growth of 52.39%. The Bank has posted a Net

Profit of Rs.2,431.62 crore for 2001- 02 as compared to Rs.1,604.25 crore in 2000-01,

registering a growth of 51.57%.

It will be recalled that the Net Profit of 2000-01 was depressed by the IMD issue expenses

and VRS related expenses but was favorably impacted by write back of excess provision for

investment depreciation (net of tax).

Similarly, in 2001-02, the Net Profit has been depressed by provision for investment

depreciation (including amortization of premium on `Held to Maturity' category), as well as by

pro-rata write off of deferred revenue expenditure relating to VRS.

On a fully comparable basis, the adjusted Net Profit of 2001-02 (Rs.2,841.76 crore) hasrecorded a growth of 31.53% over the adjusted Net Profit of 2000-01 (Rs.2,160.48 crore).

The growth in profit in 2001-02 has been achieved through increases, both in Net Interest

Income and Fee Income.Profit on sale of investments in 2001-02 was Rs.351.64 crore as

against Rs.341.85 crore in 2000-01, and thus the increase under this head contributed to the

growth in profit of 2001-02 to the extent of only Rs. 9.79 crore.


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2001

The Operating Profit of the Bank for 2000-01 before reckoning the one-time issue expenses

of India Millennium Deposits and the VRS related expenses charged off during the year,

stood at Rs.5263.16 cr. as compared to Rs.4202.50 cr. in 1999-2000, recording an increase

of 25.24%.

After accounting for the above expenditure, the Operating Profit for 2000-01 was Rs.3966.78

cr.

The Published Net Profit of the Bank for 2000-01 is Rs.1604.25 cr. as compared to

Rs.2051.55 cr in 1999-2000. The reduction was due to the IMD issue expenses and VRS

related expenses charged off during 2000-01, as afore said, which depressed the profit by

Rs.640.98 cr. (net of tax).

Further, write back of excess provision for investment depreciation (net of tax) contributed

onlyto the extent of Rs.84.75 cr to the Net Profit of 2000-01, as against Rs.322.40 cr in 1999-

00.

The Net Profit, after adjusting for the above factors as applicable in both the years, would be

Rs.2160.48 cr in 2000-01as against Rs.1729.15 cr in 1999-00, i.e., a growth of 24.94%.

2000

The Bank posted a Net Profit of Rs.2,051.55 crore for the year 1999-2000 as against

Rs.1,027.80 crore in 1998-99. The write-back of excess provision for investment

depreciation (net of tax) contributed to the extent of Rs.322.40 crore to the growth in the Net

Profit of 1999-2000, as against Rs.8.51 crore in 1998-99.

It may also be recalled that the Net Profit of 1998-99 was affected to the extent of

Rs.207.47 crore (net of tax) by the charging off of the entire RIB issue expenses during that

year. Even after adjusting for both the above items of non-recurring nature, the Net Profit for

the year 1999-2000 from pure operations recorded a strong growth of 40.95% over 1998-

99.

The Operating Profit also recorded an increase of 21.77% from Rs.3,451.16 crore to

Rs.4,202.50 crore.

Income tax provision at Rs.978.5 crore was higher than the provision of Rs.383 crore made

in 1998-99 on account of higher operating profit for the year, tax on the amount of excess

investment depreciation written back and levy of 10% surcharge on income tax. Arrears of


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salary for the year 1999-2000 consequent upon the salary revision of supervising staff had

already been charged to the operating profit (Rs.153 crore). For salary revision arrears of

award staff, provision was made in the accounts of 1999-2000 to the extent of Rs.121 crore.

The Asset Liability Management Committee (ALCO) at the Corporate Centre is engaged in

evolving optimal asset/liability structure for the Bank on an on-going basis with a view to

containing mis-matches, optimising profits and ensuring the requirement of capital

adequacy. The mechanisms provide for detailed policy formulation within the broad

parameters laid down by the Bank and reviewing policy implementation as also facilitating

decision making in certain critical areas. The ALCO lays down parameters for efficient

management of the risks and oversees the process of product development and pricing.

In January 2000, a new product, Personal Loan against Mortgage of Immovable Property,

an omnibus scheme enabling individuals to take loans against their immovable assets to

meet any financial requirement, was launched. It has become popular owing to its flexibility

in terms of eligibility, purpose and mode of financing (term loan or overdraft). Another new

product launched during the year was Corporate Liquid Term Deposit Scheme, which

permits unitized break-up and enables corporates and business organizations to deploy

their short-term funds profitably. With the launch of this scheme, the Bank has made

unitized term deposits available for every segment of customers.

The Banks foreign offices play an important role in handling the countrys foreign trade

related business and providing foreign currency resources to the Indian corporates and

business houses. During the year, the Bank arranged foreign currency loans of US$ 600

million for 14 corporates. To mitigate forex and interest rate risks of the Indian corporates,

the Bank has structured a product Long Term Rupee-Foreign Currency Swap. During

1999-2000, such swaps worth US$ 65 million were put through.

During the year, foreign offices of the Bank achieved substantial success in improving core

assets, viz., loans and investments to corporates domiciled at foreign centres, thereby

reducing dependence on India related assets. The foreign branches contributed Rs.185

crore to the net profit of the Bank.

Non-resident Indians are important customers of the Bank. During the year, the Bank

mobilized NRI deposits of Rs.2,726 crore, recording a growth of 77% over the previous

year.


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ANALYSIS OF SOURCES & USES OF FUNDS

SOURCES & USES OFFUNDS

State Bank Of India Mar-98 Mar-99 Mar-00 Mar-01 Mar-02Rs.Crore Non-Annualized

Sources of funds

Deposits from public 20390.15 37950.61 27779.14 46007.3 27731.77Term deposits 13043.24 29958.83 15103.84 35474.38 17244.12Saving bank deposits 5179.72 5113.4 7185.28 6386.89 8502.94

Demand deposits 2167.19 2878.38 5490.02 4146.03 1984.71

Misc.deposits 0 0 0 0 0

Deposits outside India 608.75 1244.51 395.25 -1249.92 78.91Borrowings 1128.21 982.34 1130.28 3940.21 -2352.02

Inter-bank borrowings 0.79 -0.8 0 0.01 1.2Financial institutions -46.6 239.62 593.21 867.8 -384.79Government 0 0 0 0 0

RBI -0.06 0 670.29 -670.29 0

Foreign borrowing 1178.79 746.8 -1064.49 1225.45 -993.51Debentures -4.71 -3.28 931.27 2517.24 -974.92Other borrowings 0 0 0 0 0

Current liabilities &provisions 50.12 3109.29 8341.53 2877.47 5423.52

Capital Issues 0 0 0 0 0Fresh capital (excl. Bonus

issue) 0 0 0 0 0

Share premium 0 0 0 0 0Reserves & surplus 1786.42 1097.48 2099.68 -590.66 3367.72USES OF FUNDS

Cash and bank 4893.07 20566.78 -6076.16 13572.74 4220.98Other receivables -2187.79 -2844.55 8453.84 -8306.54 267.11


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Advances 12004.13 8122.51 15742.13 15488.3 7216.2Bills receivable 1277.06 -192.22 1493.87 3604.89 -1284.65

Short term advances 5081.35 2437.78 8987.92 6217.99 2981.26

Long term advances 5645.72 5876.95 5260.34 5665.42 5519.59Advances to assisted

companies 0 0 0 0 0Advances to

banks/institutions 0 0 0 0 0

Advances/loans from othercos 0 0 0 0 0Advances in foreigncurrency 0 0 0 0 0

Advances priority sector 2577.06 3567.56 2787.17 4275.8 1438.13Advances public sector 2024.12 1376.93 -3974.63 10780.78 1719.08

Investments 8154.68 16304.28 20592.16 30997.8 22265.55Government securities 5117.52 12575.49 16315.51 28348.55 20906.22Approved securities -313.64 -693.58 -550.67 -208.73 -484.67

Assisted companies 0 0 0 0 0Investment outside India 1106.33 468.99 509.49 776.55 765.37Associate banks/cos. 225.57 115.72 79.7 -281.21 6.2

Mutual funds 0 0 2932.06 -2932.06 0Gross fixed assets 490.81 990.7 638.66 482.02 219.1

Total sources/uses of funds 23354.9 43139.72 39350.63 52234.32 34170.99

Deposits from public 20390.15 37950.61 27779.14 46007.3 27731.77Borrowings 1128.21 982.34 1130.28 3940.21 -2352.02Current liabilities &provisions 50.12 3109.29 8341.53 2877.47 5423.52

Reserves & surplus 1786.42 1097.48 2099.68 -590.66 3367.72Cash and bank 4893.07 20566.78 -6076.16 13572.74 4220.98Advances 12004.13 8122.51 15742.13 15488.3 7216.2Investments 8154.68 16304.28 20592.16 30997.8 22265.55Total sources/uses of funds 23354.9 43139.72 39350.63 52234.32 34170.99


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DETAILED ANALYSIS OF FUNDS STATEMENT

The funds flow statement has become an important statement these days. It is a mandatory

attachment to the annual report.

Deposits from public have seen a zig zag trend over the past few years.

The trend has been largely due to increase and decrease in term deposits.

Deposits outside India have also seen the same trend. In 2000-01 the deposits have been

negative.

Similarly the borrowings have been have reduced when the deposits have increased.

This has also been largely due to changes in foreign lendings.

Borrowings from debentures have also increased and touched the maximum in 2000-01.

Reserves and Surplus have also followed the same trend as borrowings.


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Growth Indicators: Banking Cos.

State Bank Of IndiaMar-

98Mar-

99Mar-

00Mar-

01Mar-

02(In Percentage) Non-Annualized

Deposits 18.42 28.95 16.43 23.38 11.42

Term deposits 21.37 40.45 14.52 29.78 11.15Saving deposits 21.56 17.51 20.94 15.39 17.75Demand deposits 8.45 10.35 17.89 11.46 4.92

Deposits outside India 8.78 16.5 4.51-

13.61 0.99Borrowings 14.19 10.82 11.23 35.2 -15.54

From RBI -100 -100

Advances 19.29 10.94 19.11 15.79 6.35Short term 14.09 4.36 19.51 15.3 2.29

Long term 33.01 25.83 18.38 16.72 13.95

Assisted companies

Priority sector 15.21 18.27 12.07 16.52 4.77Public sector 20.11 11.39 -29.52 113.6 8.48

Total income 6.24 19.73 14.96 16.01 13.53

Interest income 0.62 21.45 10.18 17.82 3.88Profit on exchange transactions -27.69 12.6 -42.2 -7.73 34.29Commission & brokerage 12.91 16.73 7.94 2.53 6.99

Fund based income 5.48 20.1 15.8 17.51 14.16Fee based income 12.91 16.73 7.94 2.53 6.99

Total cost 10.45 17.84 8.99 25.52 -1.98Interest expended 9.19 24.55 17.08 16.26 16.74

Personnel cost 7.07 16.57 7.97 15.2 -6.98Provisions 49.36 14.89 -15.95 11.44 49.93

Deposits 18.42 28.95 16.43 23.38 11.42Borrowings 14.19 10.82 11.23 35.2 -15.54Advances 19.29 10.94 19.11 15.79 6.35Total income 6.24 19.73 14.96 16.01 13.53Interest income 0.62 21.45 10.18 17.82 3.88Total cost 10.45 17.84 8.99 25.52 -1.98


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DEPOSIT RATIOS

1998 1999 2000 2001 2002

Demand Deposit of Total Deposits 15.63 16.60 18.38 18.15 21.21

Saving Deposit of Total Deposits 20.84 19.72 21.08 20.30 22.28

Time Deposit of Total Deposits 63.51 63.66 60.52 61.54 56.50

Deposits within India as % to Total Deposits 97.03 96.73 95.33 94.80 94.24

Deposits Outside India as % to Total Deposits 02.96 03.26 04.66 05.19 05.75

2002:

On the monetary front, liquidity conditions remained easy.

During 2001-02, the year-on-year growth in money supply (M3) at 14.0% was in line with the

growth projected by RBI, as against 16.8% in 2000-01, when growth was boosted by India

Millennium Deposit inflows.

For the same reason, growth in aggregate deposits of all scheduled commercial banks at

14.3% was lower than 18.4% during 2000-01.

Reflecting the deceleration in industrial production, growth in non-food credit was lower at

12.8% during 2001-02 than the growth of 14.9% in the previous year.

During the same period, the increase in total flow of funds from banks including banks

investments in bonds, debentures, shares, CPs, at 11.8% was also lower than the increase

of 15.7% during 2000-01.

In this scenario, the overall stance of RBIs monetary policy during 2001-02 was provision of

adequate liquidity to support credit growth with a bias towards soft interest rate regime.

Reduction in the Bank Rate and Cash Reserve Ratio was announced in October 2001 and

measures to increase flexibility in deposit and lending rates were also introduced. During the

year, banking sector reforms continued to emphasize steps to secure the soundness and

stability of banks including improving asset quality, strengthening prudential norms,

streamlining credit delivery and, in general, making the Indian banking system comparable to

international standards.

The Bank has sponsored 30 RRBs spread over 85 districts in 16 States with a network of

2,342 branches. The aggregate deposits and advances of the sponsored RRBs stood at

Rs.6,042.89 crore and Rs.2,559.32 crore respectively. During the year ended 31st March

2001, 24 of the Banks RRBs made profit, as against 26 in the year ended 31 st March 2000.


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The Bank has, up to March 2002, contributed Rs.134.97 crore for re-capitalization of the 29

RRBs taken up for financial restructuring.

2001:

Cost of deposits (excluding Resurgent India Bonds/ India Millennium Deposits) witnessed a

reduction from 7.86% in 1999-2000 to 7.62% in 2000-01.

In a major initiative this year, the Bank collected USD 5,497 million from the non-residents

through the India Millenium Deposits (IMD) Programme (a five year deposit scheme),

launched in October 2000. The IMD Programme was aimed at raising long-term resources

for augmenting the country's forex reserves and for meeting the financial needs of

infrastructure projects.

The domestic deposits of the Bank (excluding RIBs / IMDs) grew by Rs.19,300 crore (13.1%)

during the year. Reflecting the thrust on Personal segment, these deposits grew by Rs.

15,901 crore (17.28%) and formed 57.95% of the total deposits of the Bank as against

56.5% at the end of March 2000.

2000:

The Banks aggregate liabilities (excluding capital and reserves) rose by 17.6% from

Rs.2,12,107 crore as on the 31st March 1999 to Rs.2,49,358 crore as on the 31st March

2000.

The increase in liabilities was mainly contributed by increase in deposits. Global deposits,

including RIB deposits, stood at Rs.1,96,821 crore as on the 31st March 2000, representing

an increase of 16.4% over the level as on the 31st March 1999. Global deposits, excluding

RIB deposits, grew by 18.4% from Rs.1,51,007 crore to Rs.1,78,802 crore.

In January 2000, a new product, Personal Loan against Mortgage of Immovable Property,

an omnibus scheme enabling individuals to take loans against their immovable assets to

meet any financial requirement, was launched. It has become popular owing to its flexibility

in terms of eligibility, purpose and mode of financing (term loan or overdraft).

Another new product launched during the year was Corporate Liquid Term Deposit

Scheme, which permits unitized break-up and enables corporates and business

organizations to deploy their short-term funds profitably. With the launch of this scheme, the

Bank has made unitized term deposits available for every segment of customers. With the


31/59

liberalization of the gold import policy, the Bank started sales of imported Non-resident

Indians are important customers of the Bank.

During the year, the Bank mobilized NRI deposits of Rs.2,726 crore, recording a growth of

77% over the previous year.

1999:

The interest expenses on deposits (excluding RIBs) in India during 1998-99 recorded an

increase of 17.5% as compared to the previous year, primarily due to the increase in

average level of deposits by 16.9% (excluding RIB deposits) during the year.

While the maximum interest rate on domestic deposits came down from 12% at the

beginning of the fiscal to 10.5% at the end, the average cost of deposits registered a

marginal increase from 8.01% in 1997-98 to 8.05% in 1998-99.

Introduction in May 1998 of term deposits for a minimum period of 15 days (earlier, the

minimum period for which a term deposit could be taken was 30 days) as well as the

differential (higher) rates for single deposits of Rs.15 lakh and above, contributed to the

additional cost under this head.


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INVESTMENTS PROJECTS

Project : Life Insurance Services Project

Location : Multi States, Multi States (MS)

Project Type : New Unit

Product : Life insurance services

Cost : Rs 175.00 Crores

Status : Under Implementation

Co-Promoter : B N P PARIBAS, France

Promoter : STATE BANK OF INDIA, India

Implementer : S B I LIFE INSURANCE CO. LTD.

SBI Life Insurance Company is a joint venture between State Bank of India (SBI) and

France-based BNP Paribas. In the joint venture, SBI will hold 74 per cent stake and the

remaining 26 per cent will be held by BNP.

On 30 March 2001, IRDA had granted license to the joint venture for carrying out the life

insurance business in the country.

In June 2001, life insurance company has launched its first product-Sanjeevan. It is a

single-premium money-back product providing life cover up to a maximum of 75 years of

age. The company is also looking at launching pension products in few days.

In September 2001, the insurance company has launched two new products, "Sukhjeevan"

and "Young Sanjeevan".


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PROFITABILITY RATIOS

State Bank Of India Mar-98 Mar-99 Mar-00 Mar-01 Mar-02In percentage Non-Annualized

As % of operating incomePBDT 16.92 8.34 13.83 10.02 13.28

PAT 9.99 4.61 8 5.39 7.2

PBDT (before contingency,

NPA provision) 24.25 15.38 18.98 14.97 19.8PAT(before contingency,NPA provision) 17.32 11.64 13.14 10.33 13.72

Corporate tax as % of PBT 33.49 24.7 30.66 37.7 39.72

As % of Total assetsPBDT 1.9 0.93 1.48 1.04 1.37PAT 1.12 0.52 0.86 0.56 0.74

Operating cash flow 8.35 19.19 6.1 4.54 2.29

As % of Net worth

PBDT 35.86 18.6 31.47 25.56 35.39

PAT 21.17 10.27 18.2 13.75 19.18PAT(NNRT) 11.33 16.36 13.41 12.55 16.12Operating cash flow 157.77 381.82 129.74 111.17 59.3

Operational Efficiency

Avg. cost of deposits 7.93 8.13 7.87 7.57 7.62Avg. return on advances 12.85 12.18 11.69 11.75 10.54

Interest spread 4.92 4.05 3.82 4.18 2.92Interest spread / Deposits 0 0 0 0 0Interest income / Assets 5.71 5.79 5.29 5.24 4.73Interest expended /Borrowing/deposits 8.09 8.17 7.89 7.62 7.66

As % of Total income


34/59


35/59

DETAILED ANALYSIS OF PROFITABILITY RATIOS

The growth in non-interest income (other income) was 16.5% in 1998-99 as compared to

6.7% recorded in 1997-98. The non-interest income was Rs.3,284.69 crores compared to

Rs. 2,820.17 crores in 1997-98. This growth was contributed mainly by commission on

government business, exchange on remittances and other miscellaneous income. Leasing

income, which forms part of non-interest income, recorded a substantial increase of

Rs.73.60 crores over last year.

The gross interest income of the global operations of the Bank grew from Rs.15,878.89

crores in 1997-98 to Rs.19,107.54 crores in 1998-99, which was due to increases in the

average level of advances as well as the average level of resources deployed in treasury

operations, over the average levels of 1997-98. Lower levels of Prime Lending Rate (PLR)

during the year were reflected in a lower average yield on advances in India at 11.3% in

1998-99 compared to 11.9% in 1997-98. State Bank Advance Rate (the Prime Lending Rate

of the Bank), which was 14% at the beginning of the fiscal, stood at 12% at the end; for the

major part of the year, it was 13%. While this factor resulted in the reduced yield on

advances, the volume growth of Rs.9,072 crores in the average level of domestic advances

during the year as compared to the average level of 1997-98, resulted in a higher growth in

interest income on domestic advances at 9.2% compared to a decline of 4.6% recorded in

1997-98. Income from resources operations in India registered a higher growth of 23.3%

compared to 14.3% in 1997-98. This growth was driven by higher volume of resources

deployed which went up by Rs.14,929 crores as compared to 1997-98, as well as by

increase in the yield on resources operations, which went up from 9.7% in 1997-98 to 9.9%

in 1998-99.

The Net Interest Income of the Bank registered a growth of 8.33%, from Rs.8,382.58 crore in

2000-01 to Rs.9,081.24 crore in 2001-02. This was driven by volume growth. The Net

Interest Margin went down from 3.23% in 2000-01 to 2.91 % in 2001-02.

The gross interest income from the global operations grew from Rs.26,138.60 crore in 2000-

01 to Rs.29,810.09 crore in 2001-02. The substantial growth was contributed by increase in

the interest on resources deployed in treasury operations.

Interest income on advances showed a marginal decline, owing to decline in the interest on

advances at our Foreign Offices, primarily due to declining interest rates abroad. The interest


36/59

income on advances in India, however, registered an increase from Rs.10,113.68 crore in

2000-01 to Rs.10,410.51 crore in 2001-02.

Prime Lending Rate was stable throughout the year. State Bank Advance Rate (the Prime

Lending Rate of the Bank), which was reduced from 12.00% to 11.50% in February 2001,

remained at that level during the entire 2001-02. The Medium Term Lending Rate (SBMTLR)

remained at the level of 12.00% during the entire 2001-02. Lower rates (Short Term PLR) for

shorter maturity loans, which were introduced in March 2001, were in operation throughout

2001-02. Average yield on advances in India, as a result, came down from 10.17% in 2000-

01 to 9.66% in 2001-02.However, volume increase of Rs.8288 crore (i.e., by 8.33%) in the

average level of advances in India contributed to the increase in interest income from

advances.

Non-interest income grew by 7.51%, from Rs.3,883.04 crore in 2000-01 to Rs.4,174.48 crore

in 2001-02. The growth was contributed mainly by growth in forex income and

commission/exchange income.

During the year, the Bank earned an income of Rs.102.67 crore (Rs.77.05 crore in the

previous year), by way of dividends from Associate Banks/Subsidiaries and Joint Ventures in

India and abroad.

There was a decline of 14.29% in the staff cost from Rs.6,011.65 crore in 2000-01 to

Rs.5,152.78 crore in 2001-02. The staff cost of 2000-01 and 2001-02 included VRS

expenses amounting to Rs.853.19 crore and Rs.354.51 crore, respectively. After factoring

out the VRS related expenses in both the years, the staff cost of 2001-02 has still recorded a

decline of 6.98% from that of 2000-01.

Other Operating Expenses have also registered a decline of 10.01%. The one-time item of

IMD issue expenses was charged off in 2000-01. After factoring out this item, the Other

Operating Expenses of 2001-02 have registered an increase of 11.61% compared to 2000-

01.

Operating Expenses, comprising both staff cost and other operating expenses, have

registered a decline of 13.11%. After adjusting for VRS related expenses in both the years

and for IMD issue expenses in 2000-01, the Operating Expenses of 2001-02 have recorded

a decline of 2.09% compared to 2000-01.


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What is credit-deposit ratio?

It is the proportion of loan-assets created by banks from the deposits received. The higher the

ratio, the higher the loan-assets created from deposits.

What is the implication?

Some experts contend that a high credit-deposit ratio could lead to a rise in interest rates.

How?

Consider Bank X which has deposits worth Rs. 100 crores and a credit-deposit ratio of 60 per

cent. That means Bank X has used deposits worth Rs. 60 crores to create loan-assets. Only Rs.

40 crores is available for other investments.

Now, the Indian government is the largest borrower in the domestic credit market. The

government borrows by issuing securities (G-secs) through auctions held by the RBI. Banks,

thus, lend to the government by investing in these G-secs. And Bank X has only Rs. 40 crores to

invest in G-secs. If more banks like X have lesser money to invest in G-secs, what will the

government do? After all, it needs to raise money to meet its expenditure. The government has

two options. One, it can raise yields to make investment by banks in G-secs attractive. Or two,

force the RBI to take the securities into its books. Both the options have a tendency to push up

interest rates in the economy.

Deposits: The deposits grew from Rs.1820.47bn to Rs.9003.06bn at a CAGR of 16.69 %.

There was a spurt in the last 3-4 years of the decade indicating improving trend. In this decade

however, the savings accounts were the laggards in terms of growth at 13.34 % CAGR. The

term deposits grew at 18.38 % and current deposits grew at 15.23 %. This reversal of trend in

growth rates shows that the people are increasingly using banks to deposit money to be used for

transaction motive.

Advances: The advances increased from Rs.1287.85bn to Rs.4434.69bn at a CAGR of 12.46%. The lower growth in advances is due to the decline in credit-deposit ratio from 70.74 % in

1990 to 49.26 %. This shows there was a marked decline in investment in this decade with

savings exceeding investment.


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IT INITIATIVES: Introduction of electronic nostro account reconciliation (ELENOR) IN DEC 2000

has helped in fast and fully integrated reporting of forex transactions. It has enabled online

reporting of forex transactions from 444 forex intensive branches. State bank electronic payment

systems (STEPS) became operational in 2001. No. of computerized branches went upto 3,035

covering 80% of the bank's business. Faster, reliable, error-free transmission of Fund Transfer

messages / data and automatic bilateral key exchange. SWIFT guarantees 100% security on

transmission of message on the network. SWIFT Operating Centre at Mumbai upgraded to the

latest version of SWIFT software - Swift Alliance. SWIFT connectivity provided at 302 Forex

Intensive branches.

PBDT/PAT as a % of Total Assets

1998-1999 Decrease

The net interest margin as a percentage of the Average Total Assets (ATA) for the bank

declined from 3.02% in 1998-99 to 2.86% in 1999-00.

Drop in yield on advances and investments and a reduction in the non interest income/ ATA

during the year

1999-2000 Increase

The Operating Profits as a percentage of ATA increased marginally from 1.72% in 1998-99

to 1.74% in 1999-00. This was due to a decrease in the operating expenses /ATA from

2.93% in 1998-99 to 2.6 % in 1999-2000.

PAT as a percentage to ATA increased from 0.51% to 0.85% during the same period. This

was also due to lower provisioning on NPAs and write back of provision on depreciation of

investments.

The bank has also taken fresh exposures in infrastructure related projects mainly in the

power, ports, roads and oil and gas sectors during 1999-2000.

Deposits of SBI grew from Rs. 169042 crore in 1998-99 to Rs. 196821 crore in 1999-00

registering a growth of 16.50%.


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SBI also mobilised around U.S.$ 5.5 billion (approximately Rs. 25000 crore) by way of India

Millenium Deposits (IMD) in October/November 2000.

reduced its Net NPA level from 7.18% as on 31st March 1999 to 6.41% as on 31st March

2000. This was on account of substantial provisions and write-offs that the bank has made

over the years.

The write back of excess provision for investment depreciation (net of tax) contributed to the

extent of Rs.322.40 cr to the growth in the Net Profit of 1999-2000, as against Rs.8.51 cr in

1998-99.

2000-01

Net Profit of 2000-01 was depressed by the IMD issue expenses and VRS related expenses but

was favourably impacted by write back of excess provision for investment depreciation (net of

tax).

2001-02

The growth in profit in 2001-02 has been achieved through increases, both in Net Interest

Income and Fee Income. Profit on sale of investments in 2001-02 was Rs.351.64 crore as

against Rs.341.85 crore in 2000-01, and thus the increase under this head contributed to the

growth in profit of 2001-02 to the extent of only Rs. 9.79 crore.

Similarly, in 2001-02, the Net Profit has been depressed by provision for investment depreciation

(including amortization of premium on `Held to Maturity' category), as well as by pro-rata write

off of deferred revenue expenditure relating to VRS. Further, the appreciation in the Held for

Trading category of investments has not been recognized due to a revision in RBI guidelines in

2001-02. On a fully comparable basis, the adjusted Net Profit of 2001-02 (Rs.2,841.76 crore)

has recorded a growth of 31.53% over the adjusted Net Profit of 2000-01 (Rs.2,160.48 crore).

The gross interest income from the global operations grew from Rs.26,138.60 crore in 2000-01

to Rs.29,810.09 crore in 2001-02. The substantial growth was contributed by increase in the

interest on resources deployed in treasury operations.


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Interest expenses on deposits (excluding Resurgent India Bonds/ India Millennium Deposits) in

India during 2001-02 recorded an increase of 7.55% compared to the previous year, whereas

the average level of deposits grew by 15.87%. This resulted in a reduction in the cost of deposits

from 7.62% in 2000-01 to 7.07% in 2001-02.

The expenditure/income on Repo transactions during 2001-02 has been treated as interest

expenditure/ interest income, instead of being treated as loss/profit on sale of investments, as

was hitherto being done. Consequently, the corresponding figures of the previous year have

also been regrouped.

Operating Cash Flows

Reasons for the recent decline:

Overall a decline in operating cash flows has resulted from the economic slag that existed since

the IT boom subsided. September 11 Attacks added water the already extinguishing fire.

Lowering of interest rate by RBI also acted as an impediment the coming deposits and

advances.

Also there was low industry growth due to decline the operating expenses

Operating Expenses, comprising both staff cost and other operating expenses, have registered

a decline of 13.11%. After adjusting for VRS related expenses in both the years and for IMD

issue expenses in 2000-01, the Operating Expenses of 2001-02 have recorded a decline of

2.09% compared to 2000-01. Other Operating Expenses have also registered a decline of

10.01%. The one-time item of IMD issue expenses was charged off in 2000-01.

There was a decline of 14.29% in the staff cost from Rs.6,011.65 crore in 2000-01 to

Rs.5,152.78 crore in 2001-02. The staff cost of 2000-01 and 2001-02 included VRS expenses

amounting to Rs.853.19 crore and Rs.354.51 crore, respectively.


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NON PERFORMING ASSETS ANALYSIS

2000

Provision towards NPAs (including Rs.22.72 crore for the Banks foreign offices) was lower

at Rs.1,286.95 crore in 1999-2000 compared to Rs.1,422.67 crore in 1998-99, mainly due to

lower accretion of NPAs.

An additional provision of Rs.32.59 crore (including Rs.3.19 crore at the foreign offices) on

the standard assets in the global loan portfolio was made in terms of the RBI guidelines,

taking the total provision on standard assets including such provision held at the foreign

offices to Rs.229.32 crore.

The seven Associate Banks recorded remarkable performance during 1999-2000, as

compared to the previous year. The net profit of these banks together increased by 43%.

Deposits and advances of these banks grew by over 18% and investments by over 22%.

Almost all the Associate Banks were able to reduce their levels of NPAs.

Credit Policy: The highlights of the policy initiatives pertaining to the Banks loans to the

Commercial and Institutional, Small Scale Industries and Agriculture segments in 1999-2000

are presented below:

o The scheme for financing IT-related activities revised.

o Guidelines formulated for one-time review of chronic NPAs and their settlement

through the process of compromise.

o A scheme for financing VRS in Central PSUs designed.

NPA Management: The Banks NPA management policy lays stress, inter alia, on early

identification of problem loans, effective response to early warning signals, adherence to the

time norms for corrective action and recovery including one-time settlements. Mechanism for

follow-up of legal cases, specially those filed with Debt Recovery Tribunals, has been

streamlined. In addition to six specialized Rehabilitation and Recovery Branches at Mumbai,

New Delhi, Calcutta, Chennai, Ahmedabad and Hyderabad, two more such branches were

opened at Chandigarh and Bangalore during the year. Compromise settlements were

encouraged, especially through Settlement Advisory Committees and Lok Adalats.

2001

Net NPAs to Net Advances stood at 6.03%


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2002

Net NPAs to Net Advances stood at 5.63%

Associate Banks: The seven Associate Banks reported satisfactory growth in business

during the year. Total deposits and advances of the Associate Banks grew by 16.2% and

18.98%, respectively.

These banks together reported net profit of Rs.1,018 crore in 2001-02, which was higher

than the net profit in the previous year by 64.73%.

These banks were able to bring down their NPAs during the year. The gross NPAs as a

percentage to gross advances came down from 12.12% in 2000-01 to 9.27% in 2001-02 and

the net NPAs as a percentage to net advances declined from 7.04% in 2000-01to 4.93% in

2001-02. All Associate Banks improved their Capital Adequacy Ratios.

The average Capital Adequacy Ratio for all Associate Banks improved from 12.30% in 2000-

01 to 12.97% in 2001-02.

The Bank's NPA management has assumed critical importance and is receiving focussed

attention at all levels. At the corporate level, a Task Force comprising top executives

monitors all NPAs above Rs.5 crore. At Local Head Office level, the Circle Management

Committee monitors all NPAs above Rs.1 crore. The NPA management policy lays stress,

inter alia, on early identification of problem loans, effective response to early warning signals,

appropriate recovery strategy including one-time settlement. Other measures taken by the

Bank include upgradation of appraisal skills of the officers dealing in credit through special

training programmes and an effective credit audit mechanism, which throws warning signals

for taking action to prevent performing assets turning into non-performing ones. For close

monitoring of cases with Debt Recovery Tribunals (DRT), the Bank has nominated nodal

officers in the DRT cells in the LHOs. The Bank has nine specialized Rehabilitation and

Recovery branches to focus on BIFR cases and large value accounts especially in doubtful

and loss categories. As a part of cleansing its balance sheet, the Bank has written off NPA

accounts with high level of provision and the outstandings are held in Advances under

Collection Account for further follow up.

The technology initiatives would result in a) improved productivity, b) greatly reduced time-to-

management in MIS, c) better risk management, d) efficient tracking of NPAs, e) better

regulatory compliance, f) swifter reaction to market changes and customer needs and g)

reduction in transaction costs The initiative would make the Bank more customer-centric and

provide it the ability to extend services like a) any-where, any-time and any-channel banking,


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b) single view across channels, c) customer relationship management and d) flexibility and

swiftness in product design and delivery apart from improving efficiency in customer service.


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NEWS

SBI projects Rs 20,000 crore credit expansion

Triggered by the sudden upsurge in credit offtake to the tune of over Rs 12,000 crore in the H1

of 2002-03, State Bank of India's (SBI) has projected a Rs 20,000 crore credit expansion for the

bank in the 2002-03. The last 2 months of the H1 have made all the difference as there has

been an improved sentiment in all the sectors, while addressing an analysts' meet immediately

after the finalisation of the half yearly results.

SBI slashes PLR, MTLR, STAR by 25 bps

The State Bank of India (SBI) on 31 October 2002 took the lead to offer cheaper credit to

industry. It decided to slash its prime lending rate (PLR), medium-term lending rate (MTLR) and

short-term advance rate (STAR), each by 25 basis points (bps) across the board. Other banks

are expected to join the bandwagon soon. SBI has reduced its PLR to 10.75%, from the current

level of 11%. The MTLR has been reduced to 11.25%, while the STAR was reduced to 10.25%.

The new rates will be effective from 1 November 2002. SBI has also reduced the maximum

spread on its advances to 2.50% from 3.50% over PLR. The decision to slash lending rates was

very much on the expected lines after the reductions of key rates by the Reserve Bank of India

(RBI) in its review of the monetary and credit policy for the H2 of 2002-03. The RBI reduced the

Bank Rate, cash reserve ratio (CRR) and the repos-rate by 25 bps each. RBI governor, Bimal

Jalan, had urged banks to review their lending rates as the reductions in the Bank Rateseemingly did not have any impact on credit flow. There is a sizeable gap between the present

level of the Bank Rate and the average lending rates of banks. Adding that no useful purpose is

likely to be served by a further reduction in the Bank Rate in the near future. Taking a cue from

the policy announcement, most banks have already cut their deposit rates. Banks have also

announced a likely review of their lending rates. The reduction of deposits rate paved the way

for a reduction in lending rates.

SBI reports 34% increase in net profit

Increase in interest and non-interest income helped State Bank of India (SBI) report a 34%

increase in net profit to Rs 835.20 crore for the quarter ended 30 September, 2002. Net interest

income rose to Rs 2,409.99 crore from Rs 2,297.04 crore. Janki Ballabh, Chairman, SBI, said

that the bank's performance was in line with its business plan. The bank would be able to better

the performance in the next quarter as some of the other income would get reflected in the


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results by then. It is expected to get Rs 350 crore from the National Housing Bank and Rs 120

crore from the Syndicate Bank. Total income was at Rs 8,992.39 crore (Rs 8,445.08 crore), this

is inclusive of other income which increased to Rs 1,132.83 crore ( Rs 884.30 crore) and interest

earned which rose to Rs 7,859.56 crore (Rs 7,560.78 crore). According to Ballabh, the bank

would be able to achieve the 16% growth in advances. The housing segment is expected to

surpass the Rs 4500 crore target. Interest expended was at Rs 5,449.57 crore (Rs 5,263.74

crore). Total expenditure was at Rs 7,263.83 crore (Rs 7,023.98 crore) For the half-year ended

September 2002, the net profit stood at Rs 1,598.40 crore as compared to Rs 1,202.04 crore in

the corresponding period in the previous year.

SBI, BoB reduced their deposit rates

The State Bank of India (SBI) and Bank of Baroda (BoB) have been the first to respond to the

central bank's rate cut. SBI and BoB have reduced their deposit rates by 50 basis points and 25

basis points respectively. The cuts will be effective from 1 November.

SBI, ICICI Bank among top 100 Asian banks: Study

The State Bank of India (SBI) and ICICI Bank are the only 2 banks from India that figure among

the top 100 banks in Asia in 2001, according to a study. While SBI with assets estimated at $

68.9 billion is rated 26th among such banks, ICICI Bank is ranked 90th with $ 21.54 billion in

assets during the period, says the Asian Banker Journal. However, 27 other Indian banks

figured in the list of top 300 banks in Asia in 2001, though many of them are ranked over 200 inthe group.


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Notes to Accounts & Auditor's Qualifications

Mar 1998

NOTES ON ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 1998.

1. In respect of foreign transactions and their year end translation, the Bank is consistently

following FEDAI/RBI guidelines, which are mandatory, instead of the Accounting Standard 11 of

the Institute of Chartered Accountants of India.

2. Since employees of the Bank can encash unavailed leave during the period of service, the

Accounting Standard 15 issued by the Institute of Chartered Accountants of India does not apply

to that extent, and the expenses on employees likely to avail encashment of accumulated leave,

if any, at the time of retirement are accounted for on payment basis.

3. The Capital Adequacy Ratio of Bank is 14.58% as at 31st March, 1998 (12.17% for 31st

March, 1997). The ratio has been arrived at on the basis of guidelines/directives issued by the

RBI.

4. Net NPAs to Net Advances as at 31st March, 1998 is 6.07%. (7.30% for 31st March, 1997).

5. During 1993-94, the Bank issued to the public unsecured, redeemable, subordinated floatinginterest rate bonds (SBI Bonds) of the face value of Rs.1,000/- each for cash at par for an

aggregate amount of Rs.1000,00,00 thousand to augment its Tier II capital. The face value of

Bonds outstanding as at 31st March, 1998 is Rs.987,35,02 thousand (Rs.992,06,12 thousand

for 31st March, 1997).

6. (a) The Bank has marked to market 100% of its investments in approved securities as at 31st

March, 1998 (70.9% as at 31st March, 1997), as against minimum of 60% prescribed by RBI.

Consequential depreciation has been absorbed in the year-end excess provisions fordepreciation in investments. (b) The excess provision for depreciation in investment held by the

Bank as at the end of the financial year 1996-97 over the requirement for the same as at 31st

March, 1998 amounting to Rs.964,12,71 thousand has been taken to the profit & Loss Account

as a credit item under the head "Expenditure-Provisions & Contingencies" and appropriated to


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Capital Reserve Account to the extent of Rs.119,06,96 thousand net of taxes (Rs.337,44,45

thousand) and statutory reserves (Rs.507,61,30 thousand).

7. Reconciliation/adjustment of various Inter-Office Accounts is at different stages. The impact

of reconciliation on the accounts, if any, is not ascertainable at this stage.

Signed on : 18th June, 1998.

State Bank of India Mar 1999

NOTES TO ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 1999.

1. In respect of Foreign Exchange transactions and their year end translation, the Bank is

consistently following FEDAI/RBI guidelines, which are mandatory, instead of the Accounting

Standard 11 of the Institute of Chartered Accountants of India.



to that extent, and the expenses on employees likely to avail encashment of accumulated leave,

if any, at the time of retirement are accounted for on payment basis.

3. The Capital Adequacy Ratio of the Bank is 12.51% as at 31st March, 1999 (14.58% for 31st

March 1998). The ratio, arrived at on the basis of guidelines/directives issued by the RBI,comprises :

31st March 1999 31st March 1998

Tier I Capital 9.36% 10.69%

Tire II Capital 3.15% 3.89%

4. Net NPAs to Net Advances as at 31st March 1999 is 7.18% (6.07% for 31st March 1998).

5. Break-up of the item "Provisions and Contingencies" included under the head "Expenditure "of Profit and Loss Account :

(Rs.in Thousand) (Rs.in Thousand)

1998-99 1997-98

a) Provision towards Income Tax 383,00,00 1001,00,00

b) Provision towards other taxes 139,75,00 126,85,00


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c) Amount of provision made towards NPAs 1422,67,63 1151,42,38

d) Prudential Provisions against total

Standard Assets (Loans and Advances)

In India, over and above the

RBI guidelines 14,00,00 149,00,00

e) Provision for salary revision 315,31,00 100,00,00

f) Depreciation in the value of 13,09,46 964,12,71

Investment in India (Credit) (Credit)

g) Depreciation in the value of

Investment in Foreign Office 28,37,07 13,55,00

h) Others 133,34,37 66,06,73

Total 2423,35,61 1643,76,40

6. During 1993-94, the Bank issued to the public unsecured, redeemable, subordinated floating

interest rate bonds (SBI Bonds) of the face value of Rs.1000/- each for cash at par for an

aggregate amount of Rs.1000,00,00 thousand to augment its Tier II capital. The face value of

Bonds outstanding as at 31st March 1999 is Rs.984,07,17 thousand (Rs.987,35,02 thousand for

31st March 1998).

7. ADDITIONAL DISCLOSURES IN TERMS OF RBI GUIDELINES :

1998-99 1997-98Interest Income as a percentage to Working Funds 8.60% 8.86%

Non-Interest Income as a percentage to Working Funds 1.48% 1.57%

Operating Profit as a percentage to Working Funds 1.55% 1.96%

Return on Assets 0.46% 1.04%

Business (Deposits and Advances) per employee

(Rs.in Thousand) 9364 7544

Profit per employee (Rs.in Thousand) 43 77

8. (a) The Bank has marked to market to market 100% of its investments in approved securities

as at 31st March, 1999 (100% as at 31st March 1998), as against a minimum of 70% prescribed

by RBI.

(b) As per the guidelines of RBI :


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(i) The Balance of Rs.119,06,96 thousand held in Capital Reserve Account, representing

the net excess provision towards depreciation on investments for the year ended 31st

March 1998 stands transferred to "Investment Fluctuation Reserve Account".

(ii) The excess provision for depreciation in investments held by the Bank as at the end

of the financial year 1997-98 over the requirement for the same as at 31st march 1999

amounting to Rs.13,09,46 thousand has been taken to the Profit & Loss Account as a

credit item under the head "Expenditure Provisions & Contingencies" and appropriated to

Investment Fluctuation Reserve Account to the extent of Rs.6,80,92 thousand net of

taxes (Rs.4,58,31 thousand) and Statutory Reserves (Rs.1,70,23, thousand).

9. Reconciliation/adjustment of various Inter-Office Accounts is at different stages. The Bank is

taking effective steps in reconciling the outstanding entries. The impact of reconciliation though

not quantifiable, in the opinion of the management, may not be material.

10. Previous year's figures have been regrouped, wherever necessary, to conform to current

year's classification.

Signed on : 24th June, 1999.

NOTE TO ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2001.

1. In respect of Foreign Exchange transactions and their year-end translation, the Bank is

consistent following FEDAI/RBI guidelines, which are mandatory, instead of the Accounting

Standard 11 of the Institute of Chartered Accountants of India.



to that extent, and the expenses on encashment of accumulated leave by employees at the time

of retirement are accounted for on payment basis. During the year, the Bank, pursuant to theVoluntary Retirement Scheme for eligible employees made a payment in respect of encashment

of leave salary amounting to Rs.203.63 crore. In terms of the accounting policy consistently

followed by the Bank, the entire amount has been charged to the Profit and Loss Account of the

current year (accounting on payment basis) including an amount of Rs.123.19 crore being

encashment of leave salary related to prior periods, as determined by an actuarial valuation.


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3. The Capital Adequacy Ratio of the Bank is 12.79% as at 31st March 2001 (11.49% as at 31st

March 2000).

4. Net NPAs to Net Advances as at 31st March 2001 is 6.03% (6.41% as at 31st March 2000).

5. Break up of the item "Provisions and Contingencies" included under the head "Expenditure" in

the Profit and Loss Account :

(Rs. in Crore)

2000-2001 1999-2000

a) Provision for Income Tax 971.00 978.50

b) Provision for other Taxes 0.36 161.48

c) Amount of provision made against NPAs 1,432.53 1,286.95

d) General provision on Standard Assets in

the global loan portfolio 37.95 32.58

e) Provision for salary revision -- 121.00

f) Depreciation in the value of 140.19 524.22

Investments in India (Credit) (Credit)

g) Depreciation in the value of 24.00 14.15

Investments in Foreign Offices (Credit)h) Others 36.88 108.81

Total 2,362.53 2,150.95

6. (a) During 1993-94, the Bank issued to the public unsecured, redeemable, subordinated

floating interest rate bonds (SBI Bonds) of the face value of Rs.1,000/- each for cash at par for

an aggregate amount of Rs.1000.00 crore to augment its Tier II capital. The face value of Bonds

outstanding as at 31st March 2001 is Rs.975.73 crore (Rs.979.47 crore as at 31st March 2000).

The Bank has exercised the call option on these Bonds and the same will be redeemed as on30th June 2001. As per RBI gm deletes, the amount of these Bonds has not been reckoned for

calculating the Bank's Capital Adequacy Ratio as on 31st March 2001.

(b) During 1999-2000, the Bank issued by way of private placement, unsecured, subordinated

bonds of the face value of Rs.1,00,000 each for cash at par at a fixed rate of 10.80% p.a.,

payable semi-annually, for an aggregate amount of Rs.935.87 crore to augment its Tier II


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capital. The Bonds ere redeemable at par at the end of 63 months from the date of allotment.

The face value of Bonds outstanding as at 31st March 2001 is Rs.935.87 crore (Rs.935.87 crore

as at 31st March 2000).

(c) During 2000-2001, the Bank issued by way of structured private placement, unsecured,

subordinated bonds of the face value of Rs.10,00,000/- each for cash at par for an aggregate

amount of Rs.2500.00 crore as under:

(i) Rs.824.80 crore at a fixed rate of 11.55% pa. payable annually, and redeemable at

par at the end of 63 months from the date of allotment,

(ii) Rs.1675.20 crore at a fixed rate of 11.90% p.a. payable annually, and redeemable at

par at the end of 87 months from the date of allotment. The face value of the above

Bonds outstanding as at 31st March 2001 is Rs.2500.00 crore.

7. Additional disclosures as per RBI guidelines with effect from the year ended 31st March 2001:

(a) Investments in Shares,

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