A Study on Non-Performing Asset

CHAPTER IINTRODUCTION

HISTORY OF BANKINGA banker or bank is a financial institution that acts as a payment agent for customers, and borrows and lends money. In some countries such as Germany and Japan banks are the primary owners of industrial corporations while in other countries such as the United States Banks are prohibited from owning non financial companies.Banks act as payment agents by conducting current accounts for customers paying cheques drawn by customers on the bank, and collection cheques deposited to customers current accounts for customer payment via other payment methods such as telegraphic transfer. Banks borrow money by accepting funds deposited on current account, accepting term deposit and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current account, by making installment loans, and by investing in marketable debt securities and forms of lending.Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account.Banks borrow most funds borrowed from households and non-financial businesses, and lend most funds lent to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans ,and money market funds, cash management trusts and other non-bank financial institution in many cases provide an adequate substitute to banks for lending saving to.GROWTH OF BANKING IN INDIA: Banking in India back to 1786 where the first bank that was established in India. Then the nationalization of banks in 1969 liberalisation in 1991.In India, Banking sector is segregated as public sector banks, private sector banks and co-operative banks.Banks can be categorized into non-scheduled banks and scheduled banks. Scheduled banks constitute of commercial banks and co-operative banks. There are about 67,000 branches of scheduled banks spread across India. During the first phase of financial reforms, there was a nationalization of 14 major banks in 1969. This crucial step led to a shift from Class banking to Mass banking. Since then the growth of the banking industry in India has been a continuous process.As far as the present scenario is concerned the banking industry is in a transition phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking System account for more than 78 percent of total banking industry assets. On the other hand the Private Sector Banks in India is witnessing immense progress. They are leaders in Internet banking, mobile banking, phone banking, ATMs. On the other hand the Public Sector Banks are still facing the problem of unhappy employees. There has been a decrease of 20 percent in the employee strength of the private sector in the wake of the Voluntary Retirement Schemes (VRS). As far as foreign banks are concerned they are likely to succeed in India.Indus land Bank was the first private bank to be set up in India. IDBI, ING Vysya Bank, SBI Commercial and International Bank Ltd., Dhanalakshmi Bank Ltd., Karur Vysya Bank Ltd., Bank of Rajasthan Ltd etc are some Private Sector Banks. Banks from the Public Sector include Punjab National Bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad Bank. Banking industry has revolutionized the transactions and financial services system worldwide. Through the development in technology, banking services has been availed to customers at all times, even after the normal banking hours. Banking industry services is nothing but the access of most of banking related services (Verification of account details, going with transaction, etc.).

DEFINITION OF BANKING: Sec(1)(b) defines banking as accepting for the purpose of lending or investments of deposits of money from the public repayable on demand or otherwise and withdrawal by cheque , draft, order, or otherwise.

IMPORTANCE OF BANKING IN INDIA: Banking plays a very important role in economic development of a country. They touch every aspect of the modern banking. Some of the important roles played by banking for the developments of Indian economy are as follows. Banking mobilizes the small, scattered and ideal saving of the people and make available for the productive purpose i.e. they help in the process of capital formation. By offering interest banks attracts depositors and promote the habit of thrift and saving among people. Bank is a convient and economic means payment and transfer of funds i.e. cheques, DD, bankdrafts. Bank helps the movement of funds from region where they are not very useful to regions where they can be more usefully employed. Though the supply of money (bank money and credit money)bank exert a powerful influence on the interest rates in the money market. Banks helps trade and commerce. Industry and agriculture by meeting their financial needs. Bank directs flow of funds into productive channels. While lending money they discriminate in favor of essential activities and against non-essential activities. In the modern economy people who save people who undertakes investment are different hence there is a need for financial intermediaries like banks that should help the flow of funds from savers to investors.

INDIAN BANKING SYSTEM The Indian banking system can be broadly classified into nationalized, private banks and specialized banking institution, the RESERVE BANK OF INDIA acts as a centralized body monitoring any discrepancies and shortcoming in the system. Since the nationalization of bank in 1969 the public sector banks like THE SBI BANK have acquired a place of prominence and has since then seen tremendous progress. The need to become highly CUSTOMER FOCUSSED has forced the slow moving public sector banks to adopt a fast track approach, the varieties of products and services through e-banking has increased the scope of our banking system.The conservative banking practices allowed Indian. Banks to be insulted partially from the Asian currency crisis. Indian banks are now quoting all higher valuation when compared to banks in other Asian countries (Via, Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non-performing assets (NPAs) and payments defaults. The SBI are growing its revenue through the efficient branch networks mainly focused on the retail segments like car finance, housing loans, track finance etc.The Indian banking has finally worked up to face the competitive dynamics of the new Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ INFORMATION TECHNOLOGY SOLUTION are perceived to be FUTURISTICS and PROACTIVE players capable of meeting the multifarious requirement of the large customers base.Now the private banks have been fast on the uptake and are reorienting their strategies using E-BANKING as a medium, the E-BANKING has emerged as the new a challenging frontier of marketing with the conventional physical world being just as applicable like in any other marketing medium. The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamics entity. This transformation has been largely brought about by the large close of liberalization and economic reforms that allowed banks to expose new business opportunities rather then generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advance. Indian nationalized banks (i.e. Government owned) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization.ESSENTIAL CHARACTERISTICS OF BANK: The essential characteristics of a bank are: Acceptance of deposits from the public on fixed, current or savings bank account Allowing of withdrawal of such deposits by cheques, drafts, orders or otherwise. Utilization of deposits in hand for the purpose of lending or investments. Performance of other activities called subsidiary , in addition to the principal activities.About SubjectFINANCE:MEANING OF FINANCE:Finance is defined as the provision of money at the time when it is required. Every Enterprise, whether big, medium or small, needs finance to carry on its operation achieve its targets finances is some indispensable today that it is rightly said that it is the life blood of an enterprise.DEFINITION OF FINANCE: According to OXFORD DICTIONARY finance may be defined as: The management of money. Monetary support for an organisation. FINANCIAL MANAGEMENT:According to Phillip hates: FM is concerned with the managerial decisions that results in acquisition and finance of long term and credit for the firm as such it deals with solution that require selection of specific assets selection of liabilities as well as problems of size and growth of enterprise. The analysis of these decisions is based on the expected inflow and outflow of funds and their effect upon management function.Financial management is that part of management which is concerned mainly with raising funds in the most economic and suitable manner, using these funds as profitable as possible, planning future operations and controlling current performance and future development through financial accountancy , cost accountancy , budgeting ,statistics and other means. Financial Management provides the best guide for the future resources allocation of firm. It provides relatively uniform yardstick for judging most of the enterprises operations and projects.

OBJECTIVES OF FINANCIAL MANAGEMENT: Profit maximisation:Profit earning is the main aim of every economic activity. A business being an economic institution must earn profit to cover its cost and provide funds for growth. No business can survive without earning profit. Profit is a measure of efficiency of a business enterprise .Profit also serves as an protection against risk which cannot be ensured. Thus, profit maximisation is considered as the main objective of the business. Wealth maximisation:Wealth maximisation is the appropriate objective of an enterprise.Financial theory asserts that wealth maximisation is a single substitute for a stockholders utility. When the firm maximises the stockholders wealth, the individual stockholders can use this wealth to maximise his individual utility. It means that by maximising stockholders wealth the firm is operating consistently towards maximising stockholders utility.

IMPORTANCE OF FINANCIAL MANAGEMENT: It is necessary for the smooth running of an Enterprise. Financial management provides complete coordination between various functional areas such as purchase, stores, production, marketing, etc. Financial management helps the top management to evaluate the profitability of operational activities of the organisation. Financial management is important to all level of management for decisions. Financial management helps to determine the financial soundness of a firm.

ABOUT TOPICDUE AND OVERDUE :Any amount becomes due on the fixed time of payment. It becomes overdue if it is not paid on that due date .In the same manner in customer banker relationship any amount due to the bank under any credit facility, if not paid by the due date fixed by the bank becomes overdue.

HISTORY OF NPAThe concept of NPA is introduced by RBI to reflect a banks actual financial health in its balance sheet and as per the recommendations made by the committee on Financial System (Chairman shri M.Narasimham). The provisioning should be made on the basis of the classification of assets into different catogories.Before 31-03-2001, the concept of PAST DUE was in practice to consider any asset as Non Performing Asset. An amount is considered as past due , when it remains outstanding for 30 days beyond the due date. An asset becomes non-performing when it ceases to generate income for the bank. A non performing asset was defined as credit in respect of which interest and / or instalment of principal has remained past due for a specific period of time. The specific period was reduced in a phased manner as under:Year ended March,31 Specific period1993 4 quarters1994 3 quarters1995 2 quarters

NPA CLASSIFICATIONWith effect from 31-03-2001, With a view to moving towards international best practices and to ensure greater transparency, 90 days overdue norms for identification of NPAs have been made applicable from the year ended March 31, 2004. As such, with effect from March 31,2004, a non performing asset shall be a loan or an advance where:1. Interest and/ or installment of principal remain overdue for a period of more than 90 days in respect of a term loan,2. The account remains out of order as indicated at paragraph 2.2 below , in respect of an Overdraft/Cash Credit (OD/CC),3. The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,4. The installment of principal or interest thereon remains overdue for two crop seasons for short duration crops,5. The installment of principal or interest thereon remains overdue for one crop season for long duration crops,6. The amount of liquidity facility remains outstanding for more than 90 days , in respect of a securitisation transaction undertaken in terms of guidelines on securitisation dated February 1,2006.7. In respect of derivatives transactions , the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment. 8. An account should be treated as out of order if the outstanding balance remains continuously in excess of the sanctioned limit / drawing power. In case where the outstanding balance in the principal operating account is less than the sanctioned limit / drawing power, but there are no credits continuously for 90 days or credits are not enough to cover the interest debited during the same period , these accounts should be treated as .out of order.Regular and ad-hoc credit limits need to be reviewed / regularised not later than three months from the due date / date of ad-hoc sanction. In case of constraints such as non availability of financial statements and other data from the borrowers , the branch should furnish evidence to show that renewal / review of credit limits is already on and would be completed soon. In any case, delay beyond six months is not considered desirable as a general discipline. Hence, an account where the regular / ad-hoc credit limits have not been reviewed or have not been renewed within 180 days from the due date/date of ad-hoc sanction will be treated as NPA, which period will be reduced to 90 days with effect from March 31,2004.

Banks should ensure that drawings in the working capital accounts are covered by the adequacy of current assets, since current assets are first appropriated in times of distress.Considering the practical difficulties of large borrowers, stock statements relied upon by the banks for determining drawing power should not be older than three months. The outstanding in the account based on drawing power calculated from stock statements older than three months would be deemed as irregular. A working capital borrowal account will become NPA if such irregular drawings are permitted in the account for a continous period of 90days (with effect from March 31,2004).If the government guaranteed advances become NPA, the interest on such advances should not be taken to income account unless the interest has been realised.Advances against term deposits ,NSCs eligible for surrender , IVPs ,KVPs and Life policies need not be treated as NPAs although interest thereon may not have been paid for more than 90 days provided adequate margin is available in the accounts .The investments are also subject to the prudential norms on income recognition. Banks should not book income on accrual basis in respect of any security irrespective of the category in which it is included , where the interest / principal is in arrears for more than 90 days.The system of identification of NPA should be ongoing basis. Banks should also make provision for NPAs at the end of each calendar quarter i.e. as at the end of March /June /September/December, so that the income and expenditure account for the respective quarters as well as the P&L account and balance for the year end reflects the provision made for NPAs.Interest realised on NPAs may be taken to income account provided the credits in the accounts towards interest are not out of fresh/additional credit facilities sanctioned to the borrower concerned.In the absence of a clear agreement between the bank and the borrower for the purpose of appropriation of recoveries in NPAs (i.e. towards principal or interest due ), banks should adopt an accounting principal and exercise the right of appropriation of recoveries in a uniform and consistent manner.On an account turning NPA, banks should reverse the interest already charged and not collected by debiting Profit and Loss account , and stop further application of interest .However, banks may continue to record such accrued interest in memorandum account in their books. For the purpose of computing Gross Advances, interest recorded in the Memorandum account should not be taken in account.The treatment of an asset as NPA should be based on the record of recovery .Banks should not treat an advance as NPA merely due to existence of some deficiency which are of temporary in nature such as non availability of adequate drawing power , balance outstanding exceeding the limit ,non-submission of stock statements and the non renewal of the limits on the due date ,etc. where there is a threat of loss ,or the recoverability of the advances is in doubt, the asset should be treated as NPA .In respect of a borrower having more than one facility with bank ,all the facilities granted by the bank will have to be treated as NPA and not the particular facility or part thereof which has become irregular . However , in respect of consortium advances or financing under multiple banking arrangements ,each bank may classify the borrowal accounts according to its own record of recovery and other aspects having a bearing on the recoverability of the advances. Banks cant classify all the a/Cs of a group (i.e. common management by one or more directors /partners having common in different firms) as NPA on ground of any one facility being NPA. The classification of NPA is borrower wise and not group wise.Asset classification of accounts under consortium should be based on the record of recovery of the individual member banks and other aspects having a bearing on the recoverability of the advances. Where the remittances by the borrower under consortium lending arrangements are pooled with one bank and / or where the bank receiving remittances is not parting with share of other member banks , the account will be treated as not serviced in the books of other member banks , and therefore, be treated as NPA. The banks participating in the consortium should ,therefore ,arrange to get there share of recovery transferred from the lead bank or get an express consent from the lead bank for the transfer of their share of recovery ,to ensure proper asset classification in their respective books.

ASSET CLASSIFICATION Banks should classify their assets into Performing Assets. Performing assets are standard assets where as Non Performing assets are broadly further classified into Sub standard Assets, Doubtful Assets and loss assets. Further Doubtful assets are also classified into three category namely D1, D2, D3 assets.Standard assets are one which does not disclose any problems and which does not carry more than normal risk attached to the business. Such an asset should not be an NPA because here all the installments as well as interest are regularly paid.With effect from March 31,2005 an asset would be classified as sub-standard if it remained NPA for a period less than or equal to 12months. In such cases, the current net worth of the borrowers/guarantees or the current market value of the security charged is not enough to ensure recovery of the dues to the banks in full. In other words, such assets will have well defined credit weakness that jeopardise the liquidation of the debt and are characterised by the distinct possibility that the banks will sustain some loss, if deficiencies are not corrected. An asset where the terms of the loan agreement regarding interest and principal have been re-negotiated or rescheduled after commencement of production, should be classified as sub-standard and should remain in such category for at least 12months of satisfactory performance under the re-negotiated or rescheduled terms. In other words, the classification of an asset should not be upgraded merely as a result of rescheduling, unless there is satisfactory compliance of this condition.With effect from ms=arch 31,2005, an asset is required to be classified as doubtful, if it has remained NPA for more than 12months.For Tier I banks, the 12months period of classification of a substandard asset in doubtful category is effective from April 1,2009. As in the case of sub-standard assets, rescheduling does not entitle the bank to upgrade the quality of an advance automatically. A loan classified as doubtful has all the weaknesses inherent as that classified as sub-standard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, condition and a values, highly questionable and improbable. An NPA need not go through the various stages of classification in case of serious credit impairment and such assets should be straightway classified as a doubtful /loss asset as appropriate. Erosion in the value of security can be reckoned as significant when the realisable value of the security is less than 50percent of the value assessed by the bank or accepted by RBI at the time of last inspection, as the case may be straightway classified under doubtful category and provisioning should be made as applicable to doubtful assets.A loss asset is one where loss has been identified by the bank or oriental or external auditors or by the co-operation Department or by the Reserve Bank of India inspection but the amount has not been written off, wholly or partly. In other words, such an asset is considered un-collectible and of such little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery value. If the realisable value of the security, as assessed by the bank/approved valuers/RBI is less than 10percent of the outstanding in the borrowal accounts, the existence of security should be ignored and the assets should be straightway classified as loss asset. It may be either written off after obtaining necessary permission from the competent authority as per the co-operative Societies Act/Rules, or fully provided for by the bank.Broadly speaking, classification of assets into above categories should be done taking into account the degree of well defined credit weaknesses and extent of dependence on collateral security for realisation of dues. In respect of accounts where there are potential threats to recovery on account of erosion in the value of security and existence of other factors such as, frauds committed by borrowers, it will not be prudent for the banks to classify them first as sub-standard and then as doubtful after expiry of 12manths from the date the account has become NPA. Such accounts should be straight away classified as doubtful asset or loss asset, as appropriate, irrespective of the period for which it has remained as NPA.When the amounts due to a bank (present value of principal and interest receivable as per restructured loans terms) are fully covered by the value of security, duly charged in its favour in respect of those dues, the banks dues are considered to be fully secured. While assessing the realisable value of security, primary as well as collateral securities would be reckoned, provided such securities are tangible securities and are not in intangible form like guarantee etc., of the promoter / others. However, for this purpose the bank guarantees, State Government Guarantees will be treated on par with tangible security.PROVISIONS FOR STANDARD ASSETSFor urban coop banks the general provisioning requirement for all types of Standard advances shall be 0.40percent. However, direct advances to agricultural and SME sectors which are standard assets, would attract a uniform provisioning requirement of 0.25per cent of the funded outstanding on a portfolio basis.Further, with effect from Dec 8, 2009, all UCBs (Both Tier-I & Tier-II)are required to make a provision of 1.00percent in respect of advances to commercial Real Estate Sector classified as Standard assets.For commercial banks direct advances to agriculture and small and micro enterprises(SMEs) sectors at 0.25 percent; advances to Commercial Real Estates (CRE) sector at 1.00 percent; all other loans and advances not included in (a) (b) and (c) above at 0.40 percentThe provisions on standard assets should not be reckoned for arriving at net NPAs. The provisions towards Standard Assets need not be netted from gross advances but shown separately as contingent Provisions against Standard assets under other Liabilities and Provision others in Schedule 5 of the balance sheet.

PROVISION FOR SUB STANDARD ASSETSFor urban coop banks a general provision of 10 percent on total outstanding should be made without making any allowance for ECGC guarantee cover and securities available. The unsecured exposures which are identified as substandard would attract additional provision of 10percent, i.e., a total of 25 percent on the outstanding balance. However, in view of certain safeguards such as escrow accounts available in respect of infrastructure lending, infrastructure loan accounts which are classified as sub-standard will attract a provisioning of 20percent instead of the aforesaid prescription of 25 percent.PROVISION FOR DOUBTFULL ASSETSFor coop banks Provision should be for 100 percent of the extent to which the advance is not covered by the realisable value of the security to which the bank has a valid recourse should be made and the realisable value is estimated on a realistic basis. For secured portions 20%,30% and 100% for D1,D2,D3 category respectively. (D1 = doubtful upto 1 year,D2 = doubtful 1 to 3 years, and D3 = doubtful more than 3 years).For commercial banks 100 percent of the extent to which the advance is not covered by the realisable value of the security to which the bank has a valid recourse and the realisable value is estimated on a realistic basis. For secured portions 25%,40% and 100% for D1,D2,D3 category respectively. (D1= doubtfull up to 1 year, D2 = doubtful 1 to 3 years, and D3 = doubtful more than 3 years).PROVISIONS FOR LOSS ASSETSLoss assets should be written off. If loss assets are permitted to remain in the books for any reason, 100 percent of the outstanding should be provided for.EXTRA PROVISIONThe regulatory norms for provisioning represent the minimum requirement. A bank may voluntarily make specific provisions for advances at rates which are higher than the rates prescribed under existing regulations, to provide for estimated actual loss in collectible amount, provided such higher rates are approved by the Board of Directors and consistently adopted from year to year. Such additional provisions are not to be considered as floating provisions. The additional provisions for NPAs, like the minimum regulatory provision on NPAs, may be netted off from gross NPAs to arrive at the net NPAs.The banks board of directors should lay down approved policy regarding the level to which the floating provisions can be created. The bank should hold floating provisions for advances and investment separately and the guidelines prescribed will be applicable to floating provisions held for both advances & investments portfolios. Floating provisions cannot be reversed by credit to the profit and loss account. They can only be utilised for making specific provisions in extraordinary circumstances. Until such utilisation, these provisions can be netted off from gross NPAs to arrive at disclosure of net NPAs. Alternativly, they can be treated as part of Tier-II capital within the overall ceiling of 1.25% of total risk weighted assets.

CHAPTER IIRESEARCH DESIGN

Title of the studyA Study on Analysis of NON PERFORMING ASSET at SBI Bank.Statement of Problem:- This particular topic has been selected to analyse the NPA level of SBI Bank and their impact on the performance of the Bank. In India commercial Bank plays a major role in satisfying the short demand of the customer. An in depth analysis of the study revealed that due to of credit policy, classification of the asset customer attitude circumstances, ever changing government, economic situation has posed problem to the banking sector regarding NPAs. Hence the attempt to study and analyse causes for the NPA in the Bank and the role of the management in handling N.P.As and the impact on the bank performance is important.

Purpose of the study:- The Problem of NPA is not a matter of concern for the banks and financial institution alone. It is a matter of grave concern for the entire public as credit is the catalyst in the economic Growth of the country and any bottleneck in the smooth flow of credit is bound to create adverse repercussions in the economy. The purpose of this project is to analyse how NPA affect the performance of a bank and the extent to which SBI bank has been successful in controlling its NPA level.

Objectives of Study:- To study the role of NPA in Banking Sector. To study the NPA expansion of SBI To understand the extent to which SBI Bank has been successful in cutting down its NPA To know the performance of the NPA in the SBI, in the last 3 years in recovering of NPA To give suggestions which would help them in controlling their level of NPA NPAs affect on the profits and relationship with the performance Measures to be taken to manage NPA

Scope of the study:- The study covers management of Non Performing Asset with respect to SBI Bank, Bangalore, and the study covers information given by the banks staff and vice president of special loans management groups department and obtained from the other records of the bank.The scope of the study is restricted to SBI only. The study covers the performance on NPA for last 3years i.e. 2009 to 2012. Research Methodology:- It is a study, which is primarily directed to know about project financing. The information has been collected from relevant data from the organisation.

Sources of data collection :Primary data :`Data was collected from Bank manager and loan section people and managing staff.Secondary data : Data was collected from bank balance sheet, Profit and loss account and income statements. The data was also collected from internet, Bank annual report and magazines and Publications.Limitations of the study :Despite all possible efforts to undertake to make the analysis more comprehensive and scientific, a study of the present kind is bound to have certain limitations, Researcher humbly submits at this stage the present day is an Empirical work, presented in a descriptive manner. Since the objectives of the study may well be realised by this kind of analysis, no attempt has been made to provide comprehensive conceptual analysis.The Following are some of the limitations of the study:-1. This study is limited to income recognition and asset classification statement provided by, SBI Bank.2. The study is conducted only on the basis of the data provided by the Bank. Conclusions are drawn on the basis of limited data available.3. The study was conducted for 2009 10, 2010 11, 2011 12 only.4. Only few models are used in analysing the data.5. Ambiguity details were detected and put aside.6. Time constrain7. The Study is confined only to SBI. CHAPTER IIICOMPANY PROFILEYEAR OF ESTABLISHMENT OF BRANCH: 30.7.1992 (30th July 1992)STATE BANK OF INDIA BRANCHES:State bank of India branches span the country with a vast network to reach out to as many customers as possible making full contribution to the status of Indias largest bank for SBI. Each SBI branch is provided an identification code that is unique to each branch. The SBI bank branches are categorized according to the banking services they provide.These include SBI: Core banking branch Domestic Forex branch Internet banking and Personal banking (Real Time Gross Settlement) Branches.State Bank of India being the largest bank provides specialized banking services in accordance with the special requirement of a particular community or area. The SBI branch type there by depends on the special banking services it aims to provide. These include: Agricultural business and development branches Commercial retail branches Corporate accounts and mid corporate group branches Main branches Industrial finance branches NRI banking branch Overseas branches Personal banking branch Rehabilitation and recovery branch SSI and SIB branch Services branches

MISSION STATEMENT: To retain the banks position as the premise India financial services Group with world class standards and significant global business commitment to excellence in customer, shareholder and employee satisfaction and to play a leading role in the expanding and diversifying financial services sector while continuing emphasis on its development banking role.

VISION STATEMENT: Premier India financial services group with global perspective, world class standing of the efficiency and profession and core institution values Retain its position in the country as a pioneer in developing countries. Maximize shareholder value through high sustained earnings per share. An institution with a culture of mutual care and commitment a satisfying and exciting. Work environment and continuous learning opportunity.

VALUES: Excellence in customer service Profit orientation. Belonging and commitment to the bank. Fairness in all dealing and relation. Risk taking and innovation.New business undertaking by SBI: Due to completion from the private banks and in order to serve the customers needs as well for the development of the economy state Banks of India has been entered into the new market.Recently SBI has started two new services providing area they are:1. SBI LIFE INSUR INSURANCE2. SBI MUTHAL FUNDS 3. SBI MEDICAL INSURANCE.GOAL AND OBJECTIVES:State Banks of India (SBI) is government-owned and is the largest banks in India it has its own goal and objectives: It traces its ancestry bank to the banks to Calcutta, which was established in 1806; this makes SBI the oldest commercial banks in the Indian subcontinent. SBI aims at providing regular services to its customer. It aims at managing the nations largest ATM network. SBI aims at providing various domestic, international and NRI products and services, through its vast network in India and overseas for the sake of customer satisfaction.In recent years the banks has focused on three priorities:1. Reducing its huge staff through Golden handshake schemes know as the voluntary Retirement scheme, which saw many of its best and brightest defect to the private sector. 2. Computerizing its operations.3. Trying to change the attitude of its largely rude staff through a program aptly named parivartan or change.

SBI BRANCHES: State Bank of India has 131 foreign offices in 32 countries across the globe. SBI has about 21,000 ATMs; and SBI group (including associate banks) has about 45,000 ATMs. SBI has 26,500 branches, including branches that belong to its associate banks. SBI includes 99345 officers in our country.SYMBOL AND SLOGAN: The symbol of the State Bank of India is a circle and not key hole and a small man at centre of the circle. A circle depicts perfection and the common man being the centre of the banks business. SLOGANS: With you all the way Pure banking nothing else The banker to every Indian

Trustees SBI Mutual Fund Trustee Company Private Limited (the Trustee), through its Board of Directors discharge its obligations as Trustee of the SBI Mutual Fund. The Board of Directors of SBI Mutual Fund Trustee Company Private Limited are as under:

Shri T.L. Palani Kumar Independent Shri C.M. Dixit Independent

Ms. Sandra Martyres Associate Ms. Bharati Rao Associate

Current Board of DirectorsAfter the end of O. P. Bhatt's reign as SBI Chairman on 31st March, 2011, the post was taken over by Pratip Chaudhuri, who is the former Deputy Managing Director of the International Division of SBI. As on 4th August, 2011, there are twelve members in the SBI Board of Directors, including Subir Gokarn, who is also one of the four Deputy Governors of the Reserve Bank of India. The complete list of the Board members are:1. Pratip Chaudhuri (Chairman)2. Hemant G. Contractor (Managing Director)3. Diwakar Gupta (Managing Director)4. A Krishna Kumar (Managing Director)5. Dileep C Choksi (Director)6. S. Venkatachalam (Director)7. D. Sundaram (Director)8. Parthasarathy Iyengar (Director)9. G. D. Nadaf (Officer Employee Director)10. Rashpal Malhotra (Director)11. D. K. Mittal (Director)12. Subir V. Gokarn (Director)Associate banks: There are seven other associate banks that fall under SBI. They all use the and quot; State Bank of India and quot; name followed by the regional headquarters name. State Bank of Bikaner and Jaipur State Bank of Hyderabad State Bank of Indore State banks of Mysore State Bank of Patiala State bank of Travancore

The Main branch of SBI at MumbaiForeign offices: State Banks of India is present in 32 countries, where it has 84 offices serving the international needs of the banks foreign customers, and in some cases conducts retail operations. The focus of these offices is India-related business. SBI has branches in these countries: Australia Bahrain Bangladesh Belgium Canada Dubai France Germany Hong Kong Japan Israel The Israeli branch of the State Bank of India located in Ramat Gan.PRODUCTS: Private Banking Asset management Pension Mortgages Credit Cards State Bank of India- Financial and Strategic analysis review:Summary:State bank of India (SBI) is a large financial services group operating in the banking industry. The bank is engaged in providing trading services, international banking and traditional banking and treasury operations. The Reserve bank of India holds more than half of SBIs equity capital. SBI has a network of over 10,000 branches. In addition, the seven associate banks of SBI have more than 4900 branches. SBI along with its subsidiaries is engaged in providing a wide range of financial services including Life Insurance, Merchant banking, Mutual funds, credit card and factoring, security trading and primary dealership in the money market.

Global Markets Direct, the leading business information provider, presents an in-depth business, strategic and financial analysis of State Bank of India. The report provides a comprehensive insight into the company, including business structure and operations, executive biographies and key competitors. The hallmark of the report is the detailed strategic analysis and Global Markets Directs views on the companyScope:-The companys strengths and weaknesses and areas of development or decline are analyzed. Financial, strategic and operation factors are considered.-The opportunities open to the company are considered and its growth potential assessed competitive or technological threats are highlighted. -The report contains critical company information-business structure and operations, the company history, major products and services, key competitors, key employees and executive biographies, different locations and important subsidiaries.-It provides detailed financial ratios for the past five years as well as interim ratios for the last four quarters.-Financial ratios include profitability, margins and returns, liquidity and leverage, financial position and efficiency ratios.PRODUCTS AND SERVICES:1. PERSONAL BANKING: SBI Term deposits SBI loan for pensioners SBI Recurring Deposits Loan Against Mortgage of Property SBI Housing loan, Loan Against Share and Debentures SBI Car Loan Rent Plus Scheme SBI Educational loan Medi -Plus Scheme2. NRI services 3. Agriculture/ Rural Banking4. International Banking 5. Corporate Banking6. Domestic Treasury7. Services8. Interest Rates9. Safe Deposit Lockers10. Other services: ATM Services Demat services Internet Banking Mobile banking SME RBIEFT E-Pay E- Rail SBI Vishwa yatra foreign Travel Card Broking Services Gift Cheques

New products and services: Apart from restructuring, SBI launched several innovation, value-added products and services to project a customer friendly image. It launched a special service for corporate customers called telebanking and remote login to support transactional requests. SCHEMES:Now new schemes introduced by State Bank of India are: Equity Scheme Debt Scheme Balanced Scheme Exchange Traded Scheme. WORK FORCE STRENGTH:SBI Branch strength: Main Branch strength:SBI through the central Reserve Bank of India-also operates the worlds largest network, with more than 13,500 branch offices throughout India, staffed by nearly 2,20,000 employees.Principal Competitors: ICICI Bank Vijaya bank Bank of Baroda Canara Bank Punjab National Bank Bank of India Union Bank of India Central Bank of India HDFC Bank Oriental Bank of CommerceSOCIAL RESPONSIBILITY:SBI branch:1. SBI provides loan to weaker sections.2. It provides Home Loan, vehicle Loan, personal Loan, and Educational Loan.State Bank of India: SBI has taken an initiative to encourage commercial workers to save their earning. This project was implemented in sonagachi, one of Asias largest red light areas, where residents were encouraged to open a saving bank (SBI) account. While this can be called a social service, it also reflects a sharp business sense.

Awards

At SBI Funds Management, we devote considerable resources to gain, maintain and sustain our profitable insights into market movements. The trust reposed on us by millions of investors is a genuine tribute to our expertise in Fund Management and dedication to our singular focus. And this has resulted in various awards and accolades for us from the fund industry, motivating us to do better. Some of the awards won by us are listed below. 2011 Readers Digest Awards 2011 For Trusted Brand in Fund Management CategoryICRA MutualFund Awards 2011 For Magnum Income Fund - Floating Rate Plan - Long Term Plan 2010 ICRA MutualFund Awards 2010 For Magnum Global Fund 2009 ICRA Mutual Funds Awards 2009 For Magnum Tax Gain Scheme 1993The Lipper India Fund Awards 2009 For Various Schemes 2008 Outlook Money NDTV Profit Awards 2008 The Lipper India Fund Awards 2008 For Magnum Balanced Fund Dividend ICRA MutualFund Awards 2008 For Various Schemes 2007 Outlook Money NDTV Profit Awards 2007 CNBC Awaaz Consumer Awards 2007 The Lipper India Fund Awards 2007 For Various Schemes ICRAMutual Funds Awards 2007 For Various Schemes CNBC TV18 - CRISIL Mutual Fund of the Year Award 2007 For Various Schemes

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