GLOBALIZATION AND SBI

Globalization and SBI

Table of Contents

History1

External & internal factor analysis2

External factor analysis2

Internal Factor Analysis3

Strengths3

Weaknesses4

Opportunities4

Threats4

Globalization influence on SBI5

Technology and SBI7

Evaluation of SBI9

Recommendation11

References13

Globalization and State Bank of India

History

In India, today's banking is the result of the slow pace but gradual growth. In the nineteenth century, roots of today's modern commercial banking are found. First bank was incorporated in 1770 by Alexander and Company of Calcutta but closed in 1832. It is also notable that these banks were partnership firms with unlimited liability (Gomez, 2010, pp. 177).

In Companies Act of 1840, the concept of limited liability bank was introduces for the first time in India. From 1840 and onwards, a bank either operates under unlimited liability or has to obtain a special license from state to operate. During that time, Bank of Bengal, Bank of Bombay and Bank of Madras were started and were called Presidency Banks. These banks were authorised to issue notes under specific limits. During 1863-65, number of small banks and financial organizations formed but failed to sustain their presence (Gomez, 2010, pp. 177).

The famous development in banking history of India was the merger of three Presidency Banks into the Imperial Bank of India in 1921 in accordance of Imperial Bank of India Act 1920. It is notable that the bank was practically given all types of commercial banking functions except issuing of note and dealings in foreign exchange (Gomez, 2010, pp. 178). In 1934, Reserve Bank of India Act was passed and in 1935 Reserve Bank of India begins its operation as Central Bank to the state, with rights to issue notes. Imperial Bank of India also continued its business as an agent to Central Bank in areas, where Reserve Bank was not present. Reserve Bank of India was also authorised to embark on foreign exchange business (Gomez, 2010, pp. 178).

In 1955, State Bank of India Act was passed, and Imperial Bank of India was renamed as State Bank of India (SBI). To take over 8 state associated banks, State Bank of India (Subsidiary Banks) Act was passed on 1959 (Gomez, 2011, pp. 186).

SBI is currently operating in more than 20 countries worldwide (SBI, 2013).

External & internal factor analysis

External factor analysis

There are some forces which cannot be fully controlled by business. These forces may be government policy, new technology, socio cultural values etc. Awareness of the external environment is important, to identify the factors which are critical for an organization. For external analysis PEST analysis is used to identify political, economic, social and technological factors that can influence the business (Friend & Zehle, 2004, pp. 31).

Below is the external factors analysis for SBI:

Political - policies of government have a great effect over financial institution. As it was observed that in previous policies, there are a lot of threats for the banking sector. Previously deposit rate with RBI or government securities was 50% of bank's saving. For new entrants, to create more competition 1:4 license policies were abolished (Lal & Tahilyani, 2011, ...