STATE BANK OF INDIA (SBI)

State Bank of India (SBI) 

State Bank of India (SBI) 

India, like other developing countries, has had a late start in central banking, which evolved under the influence of both international banking practices as well as the necessities of the rising economy of the country. State Bank of India (SBI) is the oldest and biggest bank of India.

The Primary Internal and External Influences on State Bank Of India

State Bank of India plans to consolidate its smaller associate banks, but those plans have been postponed. The company first acquired the State Bank of Saurashtra in Gujarat (the smallest of the associates), but additional mergers stalled in 2009 when workers opposed to any bank closures protested the merger and went on strike. The mergers resumed the following year, when Bank of India absorbed the State Bank of Indore. In 2012 State Bank of India once again shelved plans to merge its remaining affiliated banks. Those affiliates include  State Bank of Hyderabad, State Bank of Bikaner and Jaipur, State Bank of Patiala, State Bank of Travancore and State Bank of Mysore. Together the banks have a combined network of about 4,700 branches.

The headquarters of SBI is in Mumbai and operates throughout India. It also has an extensive international presence targeting non-resident Indian customers. Locations are in the North America, Africa, Asia, Australia, Middle East, and Europe (Toussaint 2009, 48-50). SBI receives about 4% of its revenues from foreign operations. As part of State Bank of India's effort to become more consumer-oriented, it brought its entire branch network online and established a mobile banking network. As India's largest lender, SBI also has been writing more retail and housing loans. However, this focus on loans has hurt the bank as it has been caught with increasing nonperforming assets (the plague of lenders everywhere). SBI made substantially higher provisions for loan losses in 2011 and into 2012. The company worked to thin out nonperforming loans and followed stringent lending standards and by 2012 SBI's net interest was up by more than 37%.

Geographic and capabilities growth is at the heart of State Bank of India's strategy. The company is focused on expanding its product offerings through strategic tie ups. The bank has made deals with other companies to offer insurance, pension funds, custodial services, advisory services, point of ale merchant acquisition, private equity, and more. The bank also is looking to add more customers by tapping India's vast rural areas. It is expanding its rural business with agricultural initiatives and has a goal of covering some 100,000 villages. Another area of focus is more urban. State Bank of India is looking to expand its banking capabilities to serve India's growing corporate market through financial planning, venture capital, and pension funds management. (Reserve Bank of India 2010, 93)

SBI continues to expand in India, as well as internationally. It is specifically looking to open new branches and expand business operations in Singapore, Indonesia, and the Netherlands. SBI entered the Middle East in 2011 with the opening of a branch in Jeddah, Saudi Arabia. The branch focuses on business lending, project finance, auto and personal loans, and trade finance. In 2012 SIB opened a branch in ...