State Bank of India


BSE: 500112 | NSE: SBIN | ISIN: INE062A01012 
Market Cap: [Rs.Cr.] 182,144 | Face Value: [Rs.] 10
Industry: Banks - Public Sector

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Director's Report

Directors' Report

ECONOMIC BACKDROP AND BANKING ENVIRONMENT

Global Economic Scenario

The global economic environment has broadly strengthened, and is likely to improvefurther, with much of the growth impetus emanating from advanced economies. However,global growth still remains uneven with strengthening of the US economy, subdued growth inthe Euro Area and Japan and slowdown in Emerging Markets and Developing Economies (EMDC).Although full global recovery is a distant prospect, normalisation of fiscal policies isnow on the agenda of governments across the world.

The prices of global energy items and non-fuel commodities reduced by 1% and 1.2%,respectively, due to lower demand in 2013. However, the decline in commodity pricesreflected disproportionately on consumer inflation. For the advanced countries, consumerinflation declined by 0.6% to 1.4% in 2013, while in the EMDC it exhibited downwardrigidity and declined marginally by 0.2% to 5.8%.

The policy responses of major central banks (the US, ECB and Japan) no more resemblethe coordination of the earlier years. The US Federal Reserve’s Quantitative Easingprogramme is expected to witness major unwinding before the end of 2014. However,conditions in Euro Zone and Japan may constrain the European Central Bank (ECB) and Bankof Japan to scale down monetary expansion programmes. In such a scenario, we may enterinto a new phase of asymmetric policy responses, where both ECB and Bank of Japan will beexpanding, while the US will, in part, contracting. These policy stances may heighten theuncertainty associated with global growth momentum. The impact on asset prices andcommodity prices thus will remain uncertain.

India’s Economic Scenario

India remains one of the fastest growing economies of the world. However, thecountry’s growth momentum has remained subdued for two consecutive years, reflectingweak and fragile global growth and domestic supply constraints. India’s GDP growthimproved moderately to 4.7% in FY 2013-14 against 4.5% in the previous year, and isestimated to increase further to 5.3%-5.5% in the current financial year (SBI estimates).

The forecast for below normal rainfall in current fiscal does not augur well foragricultural production. There were also unseasonal rains, accompanied by hailstorm andfrost during early part of March 2014 in various parts of the country, adversely impactingRabi crops. However, the good thing is that, led by higher crop production, agriculturalGDP including allied sector is poised to grow by 4.7% in FY 2013-14, over three timeshigher than 1.4% in the previous year. Industrial growth continues to remain sluggish dueto lackluster investment climate, stalled projects and subdued consumption demand.Persistent contraction in the mining sector, owing to regulatory and environmental hurdlesalso contributed to the overall decline in industrial activity.

However, the electricity sub-sector grew smartly by 5.9% in FY 2013-14 against 2.3% inthe previous year. It continued to generate some optimism amidst a bleak industrialscenario, but its buoyancy was clearly inadequate to counter the weakness of otherconstituent sectors. With the formation of a stable Government at the Centre with renewedfocus on reforms, economic activity across all sectors is likely to pick up pace.

Inflation, both Wholesale Price Index (WPI) and Consumer Price Index (CPI), remains amatter of concern. Both the build-up of inflation during April - November 2013 and thesubsequent fall in inflation during December - February 2013-14 was driven by food prices.During the period June - December 2013, inflation in food articles remained indouble digits, while in manufactured products it was stable at around 3% throughout theyear. In fuel and power sector, inflation rose to 8.9% in April 2014 from 8.3% in April2013. The core inflation remained below 3% during April – November 2013 butthereafter rose gradually to 3.50% by end of March 2014. However, it again declined to3.40% in April 2014.

The Indian economy is now on the threshold of a major transformation, with expectationsof policy initiatives by the newly elected Central Government.

On the external front, improvement in the current account deficit (CAD) from 4.7% ofGDP in FY 2012-13 to 1.7% for FY 2013-14 is good news. The narrowing of CAD followed alower trade deficit due to higher exports as well as moderation in imports. With a gradualrecovery in key partner economies, India’s exports began to improve in July 2013;this was also helped by rupee depreciation. During FY 2013-14, exports grew by 3.98%,while imports contracted by 8.1%. It resulted in sharp contraction in trade deficit fromUSD 190.3 bn in March 2013 to USD 138.6 bn in March 2014, primarily due to a 40% declinein gold imports. Going forward, with a likely improvement in world GDP and global trade,export growth is likely to recover in 2014-15.

Due to various measures taken by the RBI since September 2013, surge in capital inflowsled to reserve accretion. This is yet another positive development during the financialyear 2013-14. The RBI’s swap windows for banks’ mobilisation of fresh FCNR(B)deposits and overseas borrowing helped to build reserve during September - November 2013.With the revival of portfolio flows since December 2013, India’s forex reservesreached USD 314.9 billion (as on 16th May, 2014), an accretion of USD 22.9 bn over that ofa year ago. With a lower CAD and build-up of foreign exchange reserves, the downwardpressure on the currency and the volatility in the Indian rupee have subsided down. Therupee has also moved in a narrow range of Rs.60.10 to Rs.62.99 per US dollar sinceEnd-November 2013 to March 2014. In fact, during this period the rupee outstripped most ofthe other emerging market currencies.

Outlook

The Indian economy is now on the threshold of a major transformation, with expectationsof policy initiatives by the newly elected Central Government. The economy is on the roadto modest recovery with cautiously positive business sentiments, improved consumerconfidence and more controlled inflation. The sectors which were significantly impacted bythe crisis and slowdown in the economy are now showing definite signs of improvement. Thechallenge for maintaining disinflationary momentum over the medium term, however, remainson the horizon. A moderate recovery is likely to set in 2014-15 and real GDP may grow by5.3% to 5.5%.

However, data revisions for previous quarters and the consequent changes in baseeffects impart uncertainty to the growth trajectory ahead. The pace of recovery,nevertheless, is likely to be modest. It is likely to be supported by investment activitypicking up due to part resolution of stalled projects and improved business and consumerconfidence.

In an interesting development, the Indian Meteorological Department’s (IMD)forecast of below normal rains have triggered widespread discussions about India’sproduction of food grains, agriculture’s contribution to the GDP and concerns aboutfood inflation in the current fiscal. Whatever may be the course of Monsoon 2014 goingforward, fears of drought are unfounded at this point of time.

The outlook for industrial activity is positive. Industrial growth, which had beensubdued in the past two fiscal, is now likely to gather momentum with moderately strongerglobal growth, improving export competitiveness and implementation of recently approvedinvestment projects. The new Central Government’s reforms focus should also act as animpetus to growth.

In the baseline scenario, commodity prices will remain muted during 2014. In thecurrent scenario, global food and meal prices are likely to moderate. According to the USEnergy Information Administration (EIA), the Brent crude oil price is projected to averageUSD 105 and USD 101 per barrel in 2014 and 2015, respectively, thus imparting a clearsoftening bias.

Going forward, while the global commodity price scenario provides some comfort, therate of inflation may decelerate further from what has been witnessed in recent months.

In the coming years, we may see a fascinating scenario emerging in the India-Chinagrowth debate. While India is now focusing on increasing its share of manufacturing sectorto 25% by 2025, China has already embarked on a mission of significantly revamping itsservices sector. The strategy of shifting the Chinese economy towards a service-sectorbias may sooner or later impact India’s services trade balance. However, consideringChina’s growing ageing population such structural transformation would take a whileto materialise.

Banking Industry Developments

Being one of the top 10 global economies with a billion-plus population, India offers asignificant potential for the banking sector to grow. In addition, one third of thecountry’s population still remains outside the purview of formal banking offering theIndian banking industry a rare opportunity to grow and help facilitate the nation’sinclusive growth agenda.

Going forward, the country’s Rs.81 trillion (USD 1.34 trillion) banking industrymay see more participants and greater healthy competition. Two new banks have alreadyreceived licences from the RBI i.e. IDFC and Bandhan Group, which apart from providingimpetus to financial inclusion, is expected to intensify competition in the banking sectorin the medium term.

Going forward, the country’s Rs.81 trillion (USD 1.34 trillion) bankingindustry may see more participants and greater healthy competition

In addition, by postponing the implementation of Basel III capital accord by one year,RBI has given some breathing space to banks struggling with plummeting margins and lowerprofitability on account of increase in NPAs. The Reserve Bank of India’s (RBI) newnorms will further encourage banks to identify potential bad loans and take correctiveactions.

As a part of monetary transmission, base rate of major banks inched up from9.70%-10.25% in April 2013 to 10.0% -10.25% in March 2014, while deposit rates werereadjusted from 7.5%-9.00% to 8.0%-9.25% in the same period.

While aggregate deposit of All Scheduled Commercial Banks (ASCBs) grew by 14.1% in FY2013-14 against 14.2% growth in FY 2012-13, credit expanded by 13.9% against 14.1% in theprevious year.

The Reserve Bank of India’s (RBI) new norms will further encourage banks toidentify potential bad loans and take corrective actions.

FINANCIAL PERFORMANCE

Profit

Given the system wide economic slowdown, the financial performance of the Bank duringthe financial year ended 31st March, 2014, remained satisfactory. The Bank registered agood growth in Operating Profit during the fourth quarter of the year as compared toprevious quarters. The Operating Profit of the Bank for 2013-14 was higher at Rs.32,109.24crores, as compared to Rs.31,081.72 crores in 2012-13, an increase of 3.31%.

The Bank posted a Net Profit of Rs.10,891.17 crores for 2013-14, as compared toRs.14,104.98 crores in 2012-13, i.e. a decline of 22.78% on the back of higherprovisioning requirement.

Net Interest Income

Due to higher growth in the advances and investment portfolios, the gross interestincome from global operations rose from Rs.1,19,655.10 crores to Rs.1,36,350.80 croresduring the year registering a growth of 13.95%.

The Net Interest Income of the Bank correspondingly registered a growth of 11.17% fromRs.44,329.30 crores in 2012-13 to Rs.49,282.17 crores in 2013-14.

Interest income on advances in India increased from Rs.85,782.26 crores in 2012-13 toRs.97,674.91 crores in 2013-14 registering a growth of 13.86%, due to higher volumes.However, the average yield on advances in India has declined from 10.54% in 2012-13 to10.30% in 2013-14.

Income from resources deployed in treasury operations in India increased by 15.24%mainly due to higher average resources deployed. The average yield has also increased to7.65% in 2013-14 from 7.54% in 2012-13.

Total interest expenses of global operations increased from Rs.75,325.80 crores in2012-13 to Rs.87,068.63 crores in 2013-14. Interest expenses on deposits in India during2013-14 recorded an increase of 15.65% compared to the previous year. The average cost ofdeposits has increased by 6 basis points from 6.29% in 2012-13 to 6.35% in 2013-14,whereas the average level of deposits in India grew by 14.55%.

Non-Interest Income

Non-interest income increased by 15.69% to Rs.18,552.92 crores in 2013-14 as againstRs.16,036.84 crores in 2012-13. During the year, the Bank received an income of Rs.496.86crores (Rs.715.51 crores in the previous year) by way of dividends from AssociateBanks/subsidiaries and joint ventures in India and abroad.

Operating Expenses

There was an increase of 22.43% in the Staff Cost from Rs.18,380.90 crores in 2012-13to Rs.22,504.28 crores in 2013-14. The main reasons for increase were higher provision forpension liability due to revision in mortality table from 01.04.2013, impact of which wasRs.2,400.00 crores and provision for wage revision to the tune of Rs.1,814.00 crores.Other Operating Expenses registered an increase of 21.26% mainly due to increase inexpenses on rent, taxes and lighting, law charges, postage, telephones, printing andstationery, insurance and miscellaneous expenditure.

Provisions and Contingencies

Major amounts of provisions made in 2013-14 were as under:

• Rs.14,223.57 crores (net of write-back) for non-performing assets (as againstRs.11,367.79 crores in 2012-13).

• Rs.1,260.69 crores towards Standard Assets (as against Rs.749.61crores in2012-13), including the current year’s provision, the total provision held onStandard Assets amounts to Rs.6,575.43 crores.

• Rs.5,282.71 crores towards Provision for Tax in 2013-14, (as against Rs.5,845.91crores in 2012-13).

• Rs.563.25 crores provisions for depreciation on investments, excludingamortisation of premium on ‘Held to Maturity’ category (as against Rs.961.29crores write back towards depreciation on investments in 2012-13).

Reserves and Surplus

• An amount of Rs.3,339.62 crores (as against Rs.4,417.86 crores in 2012-13) hasbeen transferred to Statutory Reserves.

• An amount of Rs.216.75 crores (as against Rs.19.17 crores in 2012-13) has beentransferred to Capital Reserves.

• An amount of Rs.4,796.63 crores (as against Rs.6,453.26 crores in 2012-13) hasbeen transferred to other Reserves.

Assets

The total assets of the Bank increased by 14.43% from Rs.15,66,211.27 crores at the endof March 2013 to Rs.17,92,234.60 crores as at the end of March 2014. During the period,the loan portfolio increased by 15.70% from Rs.10,45,616.55 crores to Rs.12,09,828.72crores. Investments increased by 13.52% from Rs.3,50,877.51 crores to Rs.3,98,308.19crores as at the end of March 2014. A major portion of the investment was in the domesticmarket in government securities.

Liabilities

The Bank’s aggregate liabilities (excluding capital and reserves) rose by 14.08%from Rs.14,67,327.59 crores on 31st March, 2013 to Rs.16,73,952.35 crores on 31st March,2014. The increase in liabilities was mainly contributed by increase in deposits andborrowings. The Global deposits rose by 15.94% and stood at Rs.13,94,408.50 crores as on31st March, 2014 against Rs.12,02,739.57 crores as on 31st March 2013. The borrowingsincreased by 8.24% from Rs.1,69,182.71 crores at the end of March 2013 to Rs.1,83,130.88crores as at the end of March 2014.

I. CORE OPERATIONS

Customer Service

At SBI, we believe customers represent the foundation of our achievements acrossdecades. It is their continuing support in our vision that has helped us strengthen ourlegacy as the nation’s most successful commercial Bank. Therefore, all our strategiesand initiatives revolve around the ‘Customer’ and his/her preferences andaspirations.

Our Customer Service link, available 24 x 7 on SBI-Online, has the option ofOnline/Offline Complaint Registration. Also Online/Offline Appreciation/ Feedback portalprovides the feeling of ’Customer Delight‘, to our customers.

The Bank was the first in India to introduce a code of Fair Banking Practices in thecountry called ‘Towards Excellence’. The code reflects the Bank’scontinuing commitment to provide world-class banking services to all sections of society.Towards this purpose, SBI has laid down several policies:

• Policy on Grievance Redressal

• Compensation Policy

• Cheque Collection Policy

• Policy on Depositors’ Rights

• Policy on Security Repossession/Code of Conduct for Recovery Agents

• Policy on Multi-city Cheque

Contact Centre

SBI’s Contact Centre caters to customers through inbound calls and e-mails. It hasemerged as a strong alternate channel and is providing following customer services:

• Account Information to customers having ATM-cum-Debit Card (Balance info, lastfive transactions, among others).

• Debit Card hot-listing and Status of the debit card, ATM PIN re-generationrequest.

• Information on products and services and lead registration.

• Registration of complaints.

• Pension particulars (Basic Pension, Dearness allowances, status of lifecertificate, among others).

• Online trouble shooting for Mobile Banking, Internet Banking and Mobi-cash.

• Status of NEFT/RTGS and SBI Express Remittances.

• Contact Centre is available 24x7 through 2 toll free helpline nos. 1800 112211/1800 425 3800 and toll number 08026599990. Bank has 4 Contact Centres at Vadodara,Bangalore, Agra & Kolkata.

• This helpline provides a human interface of the Bank, thus helping in migratingthe customers from branches. It is estimated that it helps in reducing footfalls atbranches by an average of 20 customers/day per branch.

• It is handling approximately 3.50 lakhs calls/day in 12 languages includingHindi and English. Out of this, Customer Service Representatives attend approx. 80,000calls, whereas the remaining calls are served on self-service options through InteractiveVoice Response System (IVRS).

• It is also responding to e-mails received on major SBI Corporate IDs likecontactcentre@sbi.co.in, ibanking@ sbi.co.in, customercare.homeloans@sbi.co.in, feedback.mobicash@sbi.co.in

Customer Day

In keeping with our Vision Statement, SBI strives to achieve one of the higheststandards in customer service. Customers have direct access to relevant Authorities,Controllers and the Management at the apex. Two days in a month are observed as‘Customer Day’, when Branch Head & Administration Officers are available toreceive suggestions from customers and resolve their grievances.

The Bank’s mandate is to redress customer grievances within maximum three weeks ofreceipt, as against a 30-day timeline prescribed in the BCSBI Code. All ATM relatedcustomer complaints are redressed within seven days (prescribed by the RBI). The Bank hasput in place a Compensation Policy to compensate aggrieved customers financially for anyslippage in services extended.

Fraud Prevention and Monitoring

The Bank has taken several measures to strengthen the internal control mechanism toprevent frauds.

I. Business Groups

A) National Banking Group

B) Corporate Banking Group

C) Mid Corporate Group

D) International Banking Group

E) Global Market Operation

A) National Banking Group

The National Banking Group (NBG) is the largest business vertical of the Bank,anchoring 95.24% of total domestic deposits and 52.05% of total domestic advances, as on31st March, 2014. It is also the largest business vertical in terms of branch network andhuman resources.

RBU, PBBU, ReH & HD and SME business units are having business portfolios aboveRupees One Lakh crores, each.

Exhibit 1: Branch Expansion Trend

As on Rural Semi- Urban Urban Metro Total
31.03.2013 5,661 4,173 2,631 2,351 14,816
Branches added during FY 2013-14 397 230 264 177 1,068
Branches merged/closed 2 4 5 4 15
31.03.2014 6,056 4,399 2,890 2,524 15,869*

* Excluding 24 BPR/ other outfits (RACPCs, CPCs, etc.)

Exhibit 2: NBG Business Performance

Rs. (in crores)

Particulars Level YTD Growth
As on 31.03.2012 31.03.2013 31.03.2014 Absolute (%)
Segmental Deposits 9,12,848 10,47,296* 12,09,898 1,62,602 15.53
Segmental Advances (non-food) 4,29,509 4,89,216* 5,27,480 38,264 7.82

* excluding account transfer to MCG during FY 2013-14

Financial Inclusion (FI)

• The Bank has set up 45,487 Business Correspondent (BC) Customer Service Pointsthrough alliances both at the national and regional level.

• The Bank is offering various technologically enabled products through BCchannel, such as Savings Bank, flexi RD, STDR, remittance and SB-OD facilities.

• The Bank has achieved 100% coverage across 31,729 villages during FY 2013-14.The cumulative coverage totalled 52,260 villages.

• Over 11,423 BC outlets have been set up across urban/ metro centres, which caterto the requirements of migrant labourers and vendors, among others. During FY 2013-14, 226lakhs remittance transactions for Rs.9,983 crores were registered through BC channel.

• During FY 2013-14, the Bank has opened 1.50 crores small accounts withsimplified KYC, taking the overall tally to 3.53 crores accounts.

• The transactions volume through the BC Channel has grown to Rs.22,525 croresduring FY 2013-14 as against Rs.13,033 crores during FY 2012-13.

• To facilitate transactions through alternate channels, the Bank has issued 24lakhs FI Rupay ATM Debit Cards to FI customers.

• Linking of villages to branches through CSPs in a hub-and-spoke model has beenlaunched and 69,749 villages have been linked so far. A facility of depositing loanrepayments at 31,919 BC outlets has also been enabled.

• Direct Benefit Transfer (DBT) Scheme has been successfully rolled-out. The Bankhas successfully completed 27.41 lakhs transactions amounting to Rs.505 crores asSponsoring Bank in addition to handling 7.1 lakhs transactions amounting to Rs.98.61crores as Receiving Bank. Overall 1.36 crores accounts were linked with Aadhaar across thecountry.

• SBI is the sole Sponsoring Bank for DBT for LPG transactions, which areprocessed centrally for all the three Oil Marketing Companies; over 8.98 crorestransactions amounting Rs.5,393 crores were successfully processed.

• Over 4.46 lakhs SHGs are credit linked with credit deployment of Rs.5,134crores. Our market share in SHGs is 22%.

Agri Business

• The Bank retained its leadership in Agri Business by crossing Rs.1,16,081 croresunder agri-segmental advances covering over 1.13 crores customers. A total of 5.13 lakhsnew customers were brought in the Bank’s fold during FY 2013-14.

• Short-term production credit constituting KCC and Agri Gold Loan, recorded 14%Y-o-Y growth.

• Average agri loan ticket size increased to Rs.1.03 lakhs through migration ofcrop loans to revised Kisan Credit Card scheme operated through ATM enabled State BankKisan Cards.

• The number of Kisan Credit Card issued by Bank crossed 61.60 lakhs during FY2013-2014.

Flow of Credit to Agriculture

As in the past, the Bank has surpassed Agri credit flow target set by GOI during FY2013-14.

Exhibit 4: Flow of Credit to Agriculture Trend

Year Target Disbursement % Achievement
FY 2011-12 51,000 53,214 104%
FY 2012-13 60,000 63,936 106%
FY 2013-14 73,500 74,970 102%

New Products Launched

To meet the emerging needs of the farmer in tune with market dynamics, the Bank hasrolled out new loan products - ‘Multi-Purpose Agri Gold Loan’ a hassle-free andtailor-made product to tap the potential in Agri Gold Loan business for all investmentcredit needs, such as minor irrigation, horticulture and farm machinery, among others.

Special Campaigns

To create awareness among farmers and to improve coverage/penetration of theBank’s Agri products, special campaigns were launched.

• KCC Campaign: To drive growth in KCC loan portfolio through renewal andmigration of existing KCC accounts under the revised KCC scheme, a business of Rs.6,841crores was garnered under the campaign in FY 2013-14.

Swarnadhara Campaign: To promote Agri gold loans and Multi-Purpose AgriGold Loan, the campaign was re-launched quarterly and mobilised a business of Rs.4,342crores during FY 2013-14.

• Tractor Loan Carnival: To promote ‘New Tractor Loan scheme’, whichwas dovetailed to capture and regain the competitive tractor market and garnered abusiness of Rs.274 crores in FY 2013-14.

• Krishi Plus: To target the existing high-value agri borrowers (limit of Rs.3lakhs and above) with good track record for the sanction of an additional loan to capturegrowth with quality. A total of 4,148 accounts, aggregating to Rs.108.15 crores, have beensanctioned under the campaign.

Bonding with Farmers

• SBI Ka Apna Goan Scheme: During FY 2013-14, 121 new villages were adoptedunder ‘SBI Ka Apna Goan Scheme’ for overall development, taking the total numberof villages adopted to 1,393.

• Farmers Club: A total of 145 new Farmer Clubs were formed for fosteringcontinued relationship with the farming community taking the total number of Farmer Clubsto 10,670 as on 31st March, 2014.

Growth Enablers

Hub-and-Spoke Model with BC network: The Bank has established linkage with 67,489villages through 34,064 rural CSPs for scouting applications from customers residing inremote unbanked areas and bringing them into the banking fold.

Loan Origination Software (LOS): Loan Origination Software applications supporttracking and recording all processes from sourcing to sanction, documentation, control andsubsequent account opening in CBS, resulting in avoidance of repetitive work.

Personal Banking Business Unit (PBBU)

Domestic Business

Domestic Deposits have grown by Rs.1,17,100 crores (16.87%) and Advances by Rs.6,702crores (7.43%) as on 31st March, 2014. CASA Deposit has grown by 15.51% and CASA Ratio ason 31.03.2014 is 46.95%. During the year, we have taken the following steps to strengthenour Savings Bank product and to make it more competitive:

• Online Account opening facility has been popularised.

• Personal Accident Insurance was enhanced by adding two new insurance cover slabsof Rs.10 lakhs and Rs.20 lakhs.

• Medical Insurance was introduced for Savings Bank Account holders.

• Number of free multicity cheques was linked to the Average Quarterly Balance(AQB).

The above mentioned initiatives strengthened customer acquisition.

Other Highlights

• The number of Premier Banking customers has increased from 2,78,509 to 3,57,679customers during FY 2013-14. There is 27% growth in deposits in this segment.

• During the year, four exclusive HNI branches and 45 new PBBs were opened.

NRI Services

During FY 2013-14, NRI Deposits have grown by Rs.32,518 crores (42%) and reached alevel of Rs.109,958 crores as on 31.03.2014. Advances to NRIs recorded a growth of Rs.538crores (24%) during the FY 2013-14, the level reached being Rs.2,751 crores as on31.03.2014. We had also launched the special FCNB scheme to mobilise foreign currencydeposits under the RBI’s special SWAP window from 04.10.2013 to 25.11.2013 andgarnered an amount of USD 3089 million.

The Bank has been to make the most of our available services and products throughonline channels. Therefore, we recently launched the Online Account Opening facility forNRI customers.

SBI was the Principal Sponsor of Pravasi Bharatiya Divas, an annual flagship event forNRI Diaspora from all over the world, organised by the Ministry of Overseas IndianAffairs, which was held at Vigyan Bhavan, New Delhi from 7th-9th January, 2014.

To strengthen our pre-eminent position in the area of NRI Services, we have opened fivenew NRI branches in India during the current financial year, taking the number of totalNRI branches to 74. These dedicated branches have an excellent ambience, along with awell-skilled team of officials to serve NRI customers. Apart from these branches, thereare also about 100 NRI intensive branches across all Circles servicing substantial volumesof NRI business.

Corporate and Institutional Tie-Ups

The Bank now has customised Special Salary Packages for employees of Corporates,Defence, Para Military, Railways, Central Government, State Governments as well as Police,which enable a focused marketing approach.

Related Assets and Liabilities business garnered from this niche group is Rs.36,970crores in Time Deposits and Rs.29,999 crores in retail loans comprising Home Loans(Rs.14,913 crores), Auto loans (Rs.3,135 crores), Xpress Credit Loans (Rs.11,951 crores).Four hundred and sixty six new tie-ups were entered under the Corporate Salary Packageduring FY 2013-14.

Exhibit 6: Corporate & Institutional Tie-Ups

Particulars 31.03.2013 31.03.2014 Growth in FY 2013-14
Absolute %
Defence Salary Package and Para Military Salary Package accounts 22,27,930 23,79,925 1,51,995 6.82
Other Salary Package Accounts 48,51,168 51,85,098 3,33,930 6.88
Total No of Salary Package Accounts 70,79,098 75,65,023 4,85,925 6.86
CASA (Rs. in Crores) 21,262 24,735 3,473 16.33

Auto Loans

The Auto Loan portfolio has grown by 12.60% during FY 2013-14, despite negativegrowth in the passenger car market. The Bank is currently offering car finance on ’OnRoad Price‘ of the car, with longest repayment period of 7 years, no pre-paymentpenalty, no advance EMI and at competitive interest rates. A new online Car Loanapplication system was launched and rolled out pan-India to source Car Loans online.

Education Loans

SBI Education Loans has grown at 7.19% YoY (during FY 2013-14). SBI has a totalexposure of Rs.14,740 crores as on March 2014. SBI is the market leader in Education Loanswith a market share of around 24.9% among ASCB as on February 2014.

SBI Student Plus Advantage Credit Card, designed specifically for Education LoanBorrowers, was launched in collaboration with SBI Cards Ltd. to provide them with anadditional means of financing their expenditure whenever needed.

Personal Loans

The Personal Loans Portfolio, which is the second largest in the Personal BankingSegment with an outstanding of Rs.48,432 crores as on 31.03.2014, includes Personal Loans,Loan against Securities, Loan against Properties and Gold Loan. It has grown by Rs.2,244crores during FY 2013-14. Loan against Time Deposits, which is one of the major productsin Personal Loans Portfolio, grew by Rs.1,162 crores.

Real Estate, Habitat & Housing Development (ReH & HD)

During FY 2013-14, the Bank has recorded an all time high growth of Rs.20,849 crores inhome loans and maintained its position as the country’s largest home loan provider.The market share amongst All Scheduled Commercial Banks (ASCB) in home loans has improvedby 8 bps from 25.94% (as on 31.03.2013) to 26.02% (as on 31.03.2014).

Exhibit 7: Performance in Home Loans

Rs. (in crores)

Particulars FY 2011-12 FY 2012-13 FY 2013-14
Levels 1,02,739 1,19,889 1,40,738
YTD Growth 12,826 16,728 20,849
YTD Growth (%) 14.26% 16.30% 17.38%

During FY 2013-14, the Bank took several initiatives to provide an additional thrust toits Home Loan portfolio. Some of the important initiatives in this regard comprise thefollowing:

A new product named ‘SBI HER Ghar’ offering a concession of 5 bps on theprevailing Home Loan interest rates was introduced for women borrowers in December, 2013.The Scheme has been well accepted in the market and now accounts for 24% of theincremental sanction of home loans.

Select branches at major centres have been authorised for execution of home loandocuments to enhance the level of customer convenience and satisfaction.

The maximum permissible moratorium period under a different scenario has been revisedand a higher moratorium period of up to 48 months has been permitted for integratedtownship and Mega projects.

Small & Medium Enterprise (SME) Business Unit

Innovation and New Products: We have developed risk-mitigated products for SMEs,such as SBI Asset Backed Loan, SBI Fleet Finance Scheme and POS Linked Current Accountwith Overdraft Scheme, which are launched in FY 2013-14. We are incorporatingsector-specific Scoring Models in the new products and schemes to screen the borrowers atan initial stage to facilitate faster processing.

Relationship Banking: Under a single-window approach, the Bank is offeringRelationship Banking to SME Entrepreneurs. The strength of Relationship Managers (MediumEnterprises) was augmented to 597 as on 31.03.2014 and mapped to ME units with creditlimits of Rs.1.00 crores and above across the country. The advances portfolio underRelationship banking as on 31.03.2014 is Rs.1,37,180 crores.

Specialised SME Branches: To provide specialised services to SME Entrepreneurs, 579branches with a predominant portfolio of SME advances are branded as ‘SMEBranches’.

The objective is to identify these branches with a common nomenclature and develop themas centres of excellence for SME loan delivery.

Credit Flow to Micro and Small Enterprises (CGTMSE): The Bank is extendingcollateral-free lending up to Rs.1 crores to MSE sector under guarantee of CGTMSE.

Exhibit 9: Performance in CGTMSE

(Rs. in crores)

Particulars As on 31.03.2013 As on 31.03.2014 Growth (% Increase)
Outstandings (% to total SME advances) 7,263 9,740 2,477 (34.10%)
No of customers (in lakhs) 1.71 2.09 0.38 (22.22%)

Loan Origination Software (LOS) for SME: The LOS for SME Business Unit has beenconceived to capture the pre-sanction process of advance portfolio, thereby ensuringquality and uniform standards of credit dispensation and finally ensuring a robust recordand information retrieval system. The LOS system helps in handling a large volume ofapplications, eliminates repetitive work and improves the record and retrieval system.

As on 31.01.2014 one of the schemes of the SME BU i.e. ‘SME Smart Score for loansup to Rs.25 lakhs’ under LOS was soft launched across all Circles by the GITC,Belapur.

Supply Chain Finance

Leveraging its state-of-the-art technology, SBI is focusing on further strengtheningits relationship with the Corporate World by financing their Supply Chain partners.

The Bank has tied up with 70 industry majors across all industry verticals, such asAuto, Oil, Steel, Power, Fertilizer, FMCG and Textile under e-DFS.

Exhibit 10: Performance in Electronic

Dealer Finance Scheme

(Rs. in crores)

Particulars As on 31.03.2013 As on 31.03.2014 Growth (% Increase)
Limits Sanctioned 6,532 9,487 2,955 (45.24%)
Outstandings 4,785 7,533 2,748 (57.42%)

Exhibit 11: Performance in Electronic

Vendor Finance Scheme

(Rs. in crores)

Particulars As on 31.03.2013 As on 31.03.2014 Growth (% Increase)
Limits Sanctioned 2,960 3,865 905 (30.57%)
Outstandings 1,164 1,742 578 (49.66%)

SME Insta Deposit Cards: There are 1,516 CDMs installed at various locations acrossthe country, as on 31st March, 2014. The Bank has issued 2,16,847 SME Insta Deposit Cardsand 1,33,576 Business Debit Cards to SME customers.

Cash Pick up Facility: The cash pickup facility of collecting cash atcustomers’ doorsteps was introduced for SME customers in August 2011. The growth inusage of this facility has been as under:

Exhibit 12: Performance in Cash Pickup Facility

(Rs. in crores)

Particulars As on 31.03.2013 As on 31.03.2014 Growth (% Increase)
No. of customers availing the facility 486 656 170 (35%)
Amount of cash pick-up 2,246.75 4,860.55 2,613.80

SME Power Current Account: As on 31.03.2014, the number of Power Accounts stands at28,215, constituting a deposit base of Rs.3,032.44 crores, as against Rs.2,741 crores in26,160 accounts as on 31.03.2013.

Unfixed Deposits: The popularity of Unfixed Deposits, launched during November2011, received good response from a large section of SME and Corporate Client base. Thedeposit under the scheme grew to a level of Rs.42,159 crores as on 31.03.2014.

Government Business

The Bank handles government transactions (receipts, payments, pensions, among others)as an agent of the RBI on behalf of the Government and various state governments throughits authorised branches. During FY 2013-14, the Bank was able to retain itsposition as the market leader in this business segment, with a market share of around 58%in terms of handling government payments and receipts.

The Bank earned commission from Government transactions of Rs.16.59 billion andRs.17.80 billion during FY 2013-14 and FY 2012-13, respectively.

The decline in government commission during FY 2013-14 by 6.70% over FY 2012-13,despite a growth of 10.92% in Government turnover is due to:

• Migration of Government Receipts on e-mode (which earn Rs.12/- per transactionas against Rs.50/- for physical transaction).

• Higher rates of commission were applicable during Q1 FY 2012-13.

The Bank is facilitating the Government of India’s e-governance initiatives bylaunching multiple e-products, such as e-Auction, e-Freight, Rail Shakti, Fee collectionfor Passport and various examinations, Imprest Cards, Central Plan Scheme MonitoringSystem, SAAKSHAR Bharat, among others . Many other e-products are expected to be launchedduring FY 2014-15.

Marketing and Cross Selling

SBI is Corporate Distributor of SBI Life, SBI Cards, SBI Cap Securities Ltd. and SBIMF,along with four other major AMC tie-up partners, such as UTI MF, Tata MF, FranklinTempleton MF & L&T MF, through our branches.

The Bank’s cross selling income has increased to Rs.282 crores as on 31.03.2014from with YTD growth of 14%, as compared to Rs.274 crores as on 31.03.2013. SBI Life lifeinsurance policy has covered 51% of the Bank’s home loan borrowers and 50% ofeducation loan borrowers during FY 2013-14. A new Health – Personal AccidentInsurance product, launched by State Bank General Insurance, sold 1.44 crores Policies andSBI General has issued 44,000 health insurance policies during the year. State Bank Card& Payment Services Private Ltd. has issued a total of 25,000 credit cards and we haveopened 1,20,000 Demat and Trading accounts through our subsidiary SBICAP Security Ltd.during FY 2013-14.

B) Corporate Accounts Group (CAG)

CAG is the dedicated SBU for handling the ‘large credit’ portfolio of theBank. The SBU has 7 Offices in 6 regional centers viz. Mumbai, Delhi, Chennai, Kolkata,Hyderabad and Ahmedabad headed by General Managers. The business model of CAG is centeredaround the Relationship Management concept and each client is mapped to a RelationshipManager who spearheads a cross-functional Client Service Team. The Relationship strategyis anchored on delivering integrated and comprehensive solutions to the clients, includingstructured products, within a strict Turn-Around-Time. The principal objective of thestrategy is to make SBI the first choice of the top corporates thereby increasing thewallet-share and improving the Return on Capital Employed. A sustained Account Planningexercise with rigorous review of the account by senior management sets the pace for theRelationship Management in CAG.

Exhibit 13: Business Performance of CAG

(Rs. in crores)

Facility FY 2012-13 FY 2013-14 Growth (YoY)
Fund Based (O/s) 175,831 242,718 38%
Non Fund Based (Vol) 409,477 466,598 14%

While the Fund Based outstandings of CAG constitutes 20% of total credit portfolio ofthe Bank, CAG also handles about 61% of the domestic forex business of the Bank. Duringthe year, CAG handled several high value deals eg. Power Grid Corporation, DVC, TataSteel, Hindalco Industries, etc.

In addition to rupee loans, many clients of CAG borrow significantly in foreigncurrency. During the year, substantial business was generated not only from Oil PSUs, butalso from clients in the private sector.

Around 44% of CAG’s exposure is to Infrastructure sector of which 85% is tocorporates with ratings of Investment Grade and above, and the risk profile of sectoralmovement is well balanced.

In the backdrop of the robust growth of CAG-Mumbai, a second Office in BKC, Mumbai wasopened during September -13, and it is proposed to open another office in Delhi shortly soas to ensure that the high standards of asset quality and service delivery are maintained.

Transaction Banking Unit (TBU)

TBU, with special focus on Cash Management Products, Trade Finance and Supply Chain(Dealer / Vendor) Finance, which started working in full-fledged manner during the year2009-10, has expanded its activity during the last four years.

Cash Management Product (CMP): The Bank provides Cash Management Services "SBIF.A.S.T."- (Funds Available in Shortest Time) to Corporate customers through 1450branches at 757 centers spread over the country by means of a technology driven platform.The Bank’s entire network of over 15,500 branches is also offered to LargeCorporates, Non-Banking Finance Companies and Insurance Companies for their CashManagement needs through certain ‘Premium Products’ such as Powerjyoti –Pre-upload. The whole spectrum of Cash Management services encompassing LiquidityManagement, Cheque and Cash collections, Doorstep Banking for Cash and Cheque pickup,collections for Public Issues (IPO/Bonds), e-Collections, Post dated Cheques management,Mandate based debits and Payment services comprising Dividend Warrants, Multi CityCheques, Inter Office Instruments and e-payment are offered.

CMP Centre is the "Sole Refund Banker" for Central Board for Direct Taxes(CBDT). CMP Centre has brought about integration of payment Systems of Controller Generalof Defence Accounts, Civil Ministries under UMEA and some State Governments with the CoreBanking Infrastructure of the Bank by providing Centralised e-Payment Solution enablingthe Government Departments to achieve their objectives under National e-Governance Project(NeGP).

Trade Finance: As on 31.03.2014, LC/BG business and income under CAG recorded a YoYgrowth of 14% and 30% respectively despite the general economic slowdown, a resultdelivered on the back of the superior services provided.

e-Trade SBI

SBI has established an excellent technology and operation infrastructure for its TradeFinance business. e-Trade SBI, a web-based portal, which was launched by our Bank in March2011, has been undergoing constant improvement to enhance customer comfort and provide themeans to customers to access trade finance services with speed and efficiency by enablingthem to lodge Letters of Credit, Bank Guarantees and Bills Collection/negotiationrequirements online from any corner of the world. As on 31.03.2014, 1748 Corporates areregistered under e-Trade SBI and more than 15000 transactions per month are taking placethrough e-Trade platform.

e-VFS (Electronic Vendor Financing Scheme) & e-DFS (Electronic Dealer FinancingScheme)

Leveraging our Bank’s state-of-the art technology, our relationship with theCorporate World has been further strengthened by financing their Supply Chain Partnersthrough the above two products which are fully automated, secured and robust. They aredesigned to ensure efficient management of working capital cycle, sustained growth andprofitablility of business partners. As on 31.03.2014, 95 industry Majors (IMs) with morethan 900 vendors and 3,000 dealers across the country have been migrated to the electronicfacility under the e-VFS/e-DFS platform

Financial Institutions Business Unit (FIBU):

FIBU, a dedicated vertical created for capturing potential business opportunities fromfinancial institutions viz. Banks, Mutual Funds, Insurance Cos., Brokerage firms andNBFCs.

Capital Market Branch (CMB), Mumbai under FIBU, a specialised branch catering toCapital Market business and Brokers was given the award of being one of the ‘TopPerformers in BSE in Primary Market segment’ by Bombay Stock Exchange for the thirdconsecutive year. CMB has also acted as ‘Bankers to Issue/Refund Banker’ andmobilised over Rs.18,000 crores in FY 2014.

Project Finance & Leasing SBU (PFSBU)

Exhibit 14: Business Performance (Rs. in crores)
2012-13 2013-14
Project Cost 1,66,299 1,23,601
Project Debt 88,033 84,667
Sanctioned Amt. 24,119 16,408
Syndication Amt 33,454 13,438

PFSBU deals with the approval and arrangement of funds for large projects ininfrastructure sectors like power, telecom, roads, ports, airports, as also othernon-infrastructure projects in sectors like metals, cements, oil & gas, among others,with certain threshold on minimum project cost. PFSBU also provides support to otherverticals for vetting their large ticket term loan proposals. In order to strengthen thepolicy/ regulatory framework for financing infrastructure, inputs are also provided tovarious ministries of Govt. of India, Planning Commission, RBI etc. in respect oflenders’ views on new policies, Model Concession Agreements, issues being faced ininfrastructure financing, etc.

Business Performance of PFSBU: As on 31.03.2014, the portfolio of infrastructureprojects under implementation and control with PFSBU involves Power projects withaggregate capacity of 49,335 MW; Telecom Projects serving 250 million subscribers; Roadprojects covering 5,565 kms; new Ports to handle 45 MTPA multi- purpose cargo and 1.2million TeU of container capacity; Metro Project in Hyderabad besides a host of projectsin steel, cement, Urban Infra, etc. During the year, a total (FB+NFB) of Rs.9,691 crores(Rs.12,884 crores in FY13) were disbursed to these projects.

From the perspective of environment sustainability, the Bank has also been layingemphasis on the renewable sector in power generation and loans aggregating Rs.1,253 Crores(FB Limit) have been sanctioned to 10 projects in wind/solar sectors with total capacityof 624 MW.

Exhibit 15: Significant deals during FY 2013-14

Projects Details
Aircel Limited (Including Aircel Cellular Ltd, Dishnet Wireless Ltd. and Aircel Smart Money Ltd.) To provide telephony services in 2G, 3G and Broadband services across country.
Petronet LNG Ltd Phase III – Dahej (Promoted by ONGC, BPCL, GAIL and IOCL) Expansion of 5 MMTPA from existing 10 MMTPA facilities.
JSW Steel Ltd Expansion of 1.5 MTPA integrated steel plant from existing 3 MTPA ISP at Dolvi, Maharashtra.
Tata Teleservices To provide telephony services in 2G, 3G and data services on both GSM and CDMA technology across country.
Orient Cements Greenfield 3 MTPA cement project (Promoter CK Birla group) at Gulbarga, Karnataka

C) Mid Corporate Group

The Bank’s Mid Corporate Group (MCG) operates through its 14 regional officesacross Ahmedabad, Bangalore, Chandigarh, Chennai (2), Hyderabad, Indore, Kolkata (2),Mumbai (2), New Delhi (2) and Pune, and has 62 branches as on 31st March, 2014.

MCG customers in Eastern India now have easier access to senior officials. This hasalso resulted in improved credit delivery, with a greater thrust on attracting goodquality new business.

Two new MCG branches were opened during FY 2013-14 at Ludhiana (the second branch ofthe city) and Vijayawada, in order to fully tap the business potential at these centres.This increases the number of Mid Corporate branches from 60 to 62.

The Group continues to assist our customers in India to expand their activities andprovides them support for acquiring assets/companies overseas, including by way of loansto overseas subsidiaries/JVs (backed by Letters of Comfort or Stand-by Letters of Credit).Over the years, the Group has helped many such acquisitions by Indian companies in USA,Europe, Australia and Africa, among others.

D) International Banking Group

The Bank’s international banking network spans across 190 offices in 36 countries.

Exhibit 17: Business performance of Foreign Offices

(In USD Million)

31.03.2013 31.03.2014 YoY Growth YoY Increase in (%)
Net Assets 42,146.10 45,192.98 3,046.87 7.23
Net Customer Credit 31,148.54 35,772.57 4,624.04 14.85
Deposits 13,374.41 14,758.33 1,383.93 10.35
Operating profit 660.35 676.41 16.05 2.43

Overseas expansion

The number of foreign offices increased from 186 as on 31st March, 2013 to 190 as on31st March, 2014 spread across 36 countries. The offices include 52 branches, 8Representative Offices, 110 offices of the 7 foreign banking subsidiaries and 20 otheroffices. During FY 2013-14, we have forayed into two new countries – in Botswana byestablishing a subsidiary and in South Korea by opening a representative office.

Exhibit 18: Break-up of foreign offices

(No.)

FY 2012-13 New offices opened during the year FY 2013-14
Branches /Sales Office / Other Offices* 68 1 (1 closed)* 68
Subsidiaries (Figures included in offices) (6) (1) (7)
Offices 107 3 110
Representative Offices 7 1 8
Associates /Managed exchange Cos/Investments 4 0 4
Total 186 4 190

* Maamigili sub-office in Maldives was upgraded to a Branch and Jackson Heights branchin the USA was closed.

STATE BANK OF INDIA INTERNATIONAL BANKING GROUP

INTERNATIONAL BANKING NETWORK OF 190 OFFICES IN 36 COUNTRIES

NORTH AMERICA
Branches/Other offices
Bahamas (1)
USA (3)
EUROPE
Subsidiaries
California (10) Branches/Other offices
Canada (7) Belgium (1)
France (1)
Rep Office Germany (2)
Washington UK (11)
Subsidiaries
Russia (1) AFRICA
Branches/Other offices
Rep Office South Africa(8)
Italy
Turkey
Subsidiaries/Investment
Mauritius (15)
Nigeria (1)
Botswana (1)
Rep Office
Angola
Egypt
EAST AND SOUTH ASIA
Branches/Other offices
Bangladesh (8)
China (2)
Hong Kong (2)
Japan (2)
Maldives (3)
Sri Lanka (6)
Singapore (7)
Subsidiaries/Associates
Indonesia (14)
Nepal (62)
Bhutan (1)
Rep Office
Philippines
South Korea
AUSTRALIA
Branches/Other offices
Australia (1)
MIDDLE EAST
Branches/Other offices
Bahrain (4)
Israel (1)
Oman (1)
Qatar (1)
Saudi Arabia (1)
UAE (2)
Rep Office
Iran
Managed Exchange Cos
Oman
Qatar

Treasury Management

The Bank’s foreign offices maintained comfortable liquidity position during thefiscal, despite volatile market conditions. In April 2013, we successfully priced a USD 1billion Bond issue, which is a 144A/Regulation S offering and will mature in April 2018.

In September 2013, SBI undertook a Bond Buy Back programme under which Bank bought backUSD 147 million worth of April 2018 bonds.

Our foreign offices introduced a leverage product for NRIs in November 2013 to increaseForeign Currency NonResident Bank (FCNRB) deposits under the Special Swap window scheme ofRBI. An amount of USD 2.518 billion was disbursed to NRIs at Foreign Offices under thisscheme.

Remittance

Inward remittances grew from Rs.69,812 crores in FY 2012-13 to Rs.86,817 crores in FY2013-14 (24%). Tie-ups with 30 exchange companies and six banks in the Middle-EastCountries for routing remittances through our Bank have substantially contributed toincreased inward remittances.

Domestic Operations

Merchant Banking

The Bank retained its premier position as Mandated Lead Arranger and Book Runner forsyndicated loans in Asia Pacific (ex-Japan) for the eighth consecutive calendar yearending December 2013 and sustained its lead position in January-March 2014 period too.

During 2013-14, we acted as the Mandated Lead Arranger in 18 deals aggregating USD11.926 billion for several leading Indian corporates like Tata Steel Canada Capital Ltd.,IOCL, HPCL, OIL, ONGC Videsh, REC, ONGC Mangalore Petrochemical Ltd., Reliance Industries,HDFC Ltd., IDFC Ltd. and Yes Bank.

Exhibit 19: Syndicated Loan Deals

No. of Deals Amount (in USD bn)
FY 2012-13 17 6.292
FY 2013-14 18 11.926

Apart from this, we extended 23 foreign currency facilities aggregating USD 4.611billion to Indian corporates on a bilateral basis. We also acquired 5 loans amounting toUSD 120.00 million through the secondary market.

The Bank earned a fee income of USD 79.70 million from foreign currency term loansconcluded during FY 2013-14 through syndication/ bilateral deals.

Global Link Services (GLS)

Global Link Services (GLS), a specialised outfit, caters to centralised processing ofExport Bills collection, Cheque collection and online inward remittance transactions.

During FY 2013-14, GLS (on behalf of domestic branches) handled 75,177 export bills and58,248 foreign currency cheque collections aggregating USD 13.20 billion. In addition, ithandled 78,49,396 online inward remittance transactions amounting to USD 6.10 billionreceived globally.

During FY 2013-14, the Bank launched a new online instant remittance product ‘SriLanka to India – SBI Flash’ for remittances from Sri Lanka to India. GLS hasalso developed a platform for cross border remittances from Gulf to Bangladesh/ Nepal/ SriLanka.

Correspondent relations

The Bank maintains correspondent banking arrangement with 385 reputed InternationalBanks across 113 countries in order to extend seamless services to varied clients. Alongwith the correspondent banks, we also have more than 1,725 Relationship ManagementApplication (RMA) arrangements with Society for Worldwide Interbank FinancialTelecommunication (SWIFT), facilitating speedier flow of financial messages.

E) Global Markets Operations

Global Markets Group performs the treasury functions of the Bank, ensuring safety,liquidity and yield, besides maintaining statutory reserve requirements. The corpus undermanagement of Global Markets increased by around 20% Y-o-Y to Rs.4,70,000 crores. Further,Global Markets Group provides foreign exchange services and hedging instruments for riskmanagement to customers. It also offers portfolio management services to many retirementfunds.

The FY 2013-14 started on a positive note with RBI cutting the repo rate by 25 bps to7.25% in May 2013. The 10 year benchmark yield fell from 8.01% in April 2013 to 7.09% inMay 2013. However, conditions deteriorated for Indian financial markets after FederalReserve’s announcement of its intention to taper QE purchases which led to a sharpdepreciation of the rupee.

The Reserve Bank of India (RBI) announced unprecedented measures like capping Repoborrowing to 0.5% of NDTL and increasing MSF rate by 200 bps to 10.25% which led to asudden surge in bond yields to 9.48%. Conditions improved from October 2013 onwards withRBI gradually reversing many of the tightening measures and injecting liquidity into thefinancial system through term repos. As RBI remained focused on inflation control,benchmark yields closed the year at elevated levels.

During FY 2013-14, the Bank made record profit of Rs.1,846 crores from sale ofinvestments as against Rs.180 crores in FY 2012-13. Moreover, in the area of cashmanagement, we have consistently outperformed peer banks in CRR maintenance by about 270basis points, resulting in interest cost savings of over Rs.100 crores.

Equity markets witnessed a rally from September on improvement in macroeconomicparameters like stable exchange rate and current account deficit buoying FII inflows.During FY 2013-14, the Bank’s active equity portfolio (excluding Non PerformingInvestments) yielded a cash flow return of 22.73% against a Nifty return of 17.12%. If wereckon the dividend income, the return improves further to 25.56%. During the year, theBank participated in select Equity MFs, IPOs, Offers for Sale and FPOs.

The Bank continued to explore opportunities in the area of private equity and venturecapital fund investments. During FY 2013-14, investments of Rs.345 crores were made indifferent venture capital and private equity funds.

Global Markets provides foreign exchange solutions to the customers in all currenciesfor managing their currency flows and hedging risks through options, swaps, forwards andbullion services. As part of its continuous endeavour to provide enhanced services to itscustomers, the Bank has also introduced digital signatures for its corporate customers.The Bank also leverages a world class technology platform to seamlessly process currencyflows between its customers through branches and the dealing room.

The treasury marketing outfits complement this by engaging with customers to providethem with inputs about markets and suggesting products to suit their requirements. TheBank earned an income of over Rs.1,470 crores (from domestic operations) bycovering the customer flows in foreign exchange, hedging, gold, and proprietary trading.

Global Markets also manages FCNR(B) corpus of the Bank and provides funds for ExportFinance in Foreign Currency and FCNR(B) loans in foreign currencies for the customers inIndia.

The Bank provides portfolio management services to an array of retirement funds in thecountry consistently giving superlative returns. The Portfolio Management Servicessection, with an AUM of over Rs.2,79,000 crores has consistently outperformed privatesector peers in generating returns for the Employees Provident Fund Organisation (EPFO)funds. For the last three years, your Bank has been consistently adjudged as the best fundmanager for EPFO.

The Bank was ranked the ‘Best Local FX Bank in India’ in Asiamoney’s25th anniversary Poll of Polls for its consistently stellar performances inAsiamoney’s annual polls.

I.2 New Businesses

A dedicated department develops and launches initiatives in emerging business areas,including tech-based products. Some key initiatives are:

Debit Card

State Bank Group (SBG) continues to lead Debit Card issuance in the country with over150 million Debit Cards as on 31st March, 2014 and over 40% market share.

Spending by debit cardholders of the SBG across ‘Point of Sale’ and‘e-Commerce’ transactions crossed Rs.22,407 crores in FY 2013-14. We haveintroduced some significant offers like the ‘3-Swipe Campaign’ duringAugust-September, 2013 and ‘Shop Big and Gain Big’ campaign in collaborationwith SBI Card (subsidiary), in October-November, 2013.

Prepaid Card

• The Bank’s product range includes the following Prepaid Cards to cater tovarious payment needs of its customers: Foreign Travel Card: The Foreign TravelCard, now a chip based EMV compliant Card, is available in 8 currencies, US Dollar (USD),Great Britain Pound (GBP), Euro, Canadian Dollar (CAD), Australian Dollar (AUD), JapaneseYen (JPY), Saudi Riyal (SAR) and Singapore Dollar (SGD), providing safety, security andconvenience to overseas travellers. We have also introduced corporate variants of StateBank Foreign Travel Card (SBFTC) to cater to the needs of corporate employees travellingoverseas. Sales stood at USD 83.34 million in FY 2013-14.

• eZ- Pay Card: The eZ- Pay Cards are aligned with most of the social schemesof the State and Central Governmentsinadditiontosalarypaymentsbycorporate entities, thusbenefitting millions of households. Sales stood at Rs.829.19 crores in FY 2013-14.

• Gift Card: Gift Cards are a preferred option for consumers to gift the‘Freedom of Choice’ to their loved ones. Customers can purchase Gift Cardsonline. Sales stood at Rs.128.73 crores in FY 2013-14.

• State Bank Achiever Card: Rolled out in November 2013. This is a re-loadableCorporate incentive Card with a validity of 10-years for disbursement of incentives/awards.

• Smart Payout Card: We launched the Smart Payout Card, a reloadable Card, on27th April, 2013, for blue collar workers and contract labourers, among others. This Cardcan also be issued as an ‘Add-on Card’ to our savings Bank account holders.Sales stood at Rs.15.19 crores in FY 2013-14.

Merchant Acquiring Business (MAB)

The MAB division aims to activate more than 150 million SBG Debit Cards on POSterminals, increase visibility and create a comprehensive electronic infrastructure in thecountry. We are already the largest player among Public Sector Banks with around 1,35,853terminals (as on 31st March, 2014) in the market. We are also the 4th largest Acquirer inIndia and have entered into corporate tie-ups with many prominent players, including topeducational institutions and hospitals as we continue to tap the huge potential availablein the market. During the year the Bank has also launched Mobile POS on a pilot basis andwill be rolling it out on a pan-India basis in the next few months. Mobile Banking Service

The Bank is the market leader with a market share of 57% in transaction volume and 17%share in terms of value.

During 2013-14, financial transactions worth Rs.3,763 crores were executed through theMobile Banking Service, resulting in an income of Rs.6.43 crores.

Green Channel Counter (GCC)

The Bank has launched the GCC facility in all retail branches (14,981 branches) toenhance convenience to the customers and save on cost and time per transaction. More than360,000 transactions are taking place on a daily basis through these counters.

Self Service Kiosk (SSK)

The Bank has 1,352 SSKs as on 31st March, 2014 enabling more than 55,000 transactionsdaily.

Green Remit Card (GRC)

The Bank introduced GRC, a remittance card, on 2nd January, 2012 for facilitating largenumber of non-home cash deposit transactions at our branches. A cardholder can swipe thecard at GCC or at Cash Deposit Machines (CDM) and remit money to the beneficiary whoseaccount number is mapped to the card. Once the transaction is completed, both the remitterand beneficiary get a confirmation through SMS. The Bank has issued more than 48,00,000cards resulting into 1,81,00,000 transactions as on 31st March, 2014.

State Bank Aggregator Service (SBIePay)

The Bank has launched ‘SBIePay’, a payment aggregator service, whichfacilitates e-Commerce/ m-Commerce transactions among merchants, customers and variousfinancial institutions for all kinds of e-Commerce payments. The Bank’s Chairman, SmtArundhati Bhattacharya, launched the service at Corporate Centre, Mumbai on 13th March,2014. The new service will go a long way in providing our customers with online paymentfacilities.

I.3 NPA Management

A depressed macro-economic environment in FY 2013-14 led to increased loan defaultswith deterioration in asset quality of Indian banks. Slippages have occurred across allsectors and today, resolution of NPAs is the single largest challenge before all banks.

Stressed Assets Management Group (SAMG) is a dedicated and specialised vertical, headedby a Deputy Managing Director, created specially to efficiently resolve high value NPAs.Today SAMG has 16 SAMG branches and 43 SARBs across the country. Currently, SAMG covers23.79% and 54.33% of the Bank’s Non Performing Assets (NPAs) and Advances underCollection Account (AUCA) respectively. The recovery efforts of SAMG are supplemented byefforts put in by front-line operating staff at our 15,869 branches across the country.Besides, Account Tracking & Monitoring (AT & M) Centres have been operationalisedin all Circles to contact retail Special Mention Accounts (SMAs) and NPAs. BusinessCorrespondents, Business Facilitators and Self Help Groups are also involved in recoveryof Agricultural NPAs.

The sale of final assets to ARCs has resulted in reduction of NPAs by Rs.3,590 croresand AUCA reversal of Rs.1,092 crores. different strategies were adopted for achievingoptimum sales level and price.

SAMG resorts to various strategies to resolve stressed assets. Some of these areenumerated below:

• Restructuring of both Standard assets and NPAs, either though the corporate debtrestructuring mechanism or through a bilateral arrangement.

• Recovery through auction of assets using the Securitisation and Reconstructionof Financial Assets and Enforcement of Security Interest (SARFAESI) route.

• Filing suits in Debt Recovery Tribunals and other Courts for recovery of dues.

• Identifying and engaging with strategic investors for takeover of stressedassets.

• Sale of NPAs to Asset Reconstruction Companies.

• Entering into One-Time Settlements with borrowers.

• Using Resolution Agents to take possession of properties mortgaged to the Bankand arranging for their auction.

• Using the e-auction platform to reach out to as many prospective bidders aspossible.

• Considering Debt Asset swaps in some cases.

• Engaging investigation agencies to trace out unencumbered promoter and guarantorassets and obtaining attachment before judgements over these properties.

• Identifying Companies and promoters as Wilful Defaulters and arranging fordisplay of their names on the websites of Credit Information Companies such as CIBIL.These names are also reported to the RBI.

• Publishing photographs of defaulters in newspapers where warranted.

• Persuading Large Corporate borrowers under stress to sell non-core assets,dilute their shareholding and bring in strategic investors thus reducing debt andimproving viability.

Asset Quality Improvement measures for P-Segment

• The Special One Time Settlement (OTS) scheme for the National Lok Adalat/BankAdalat to settle NPA accounts has been used diligently.

• SMSes are being sent to borrowers: (i) Seven days before EMI due date, (ii) Oneday before EMI due date, and (iii) After EMI due date.

• The scope of Bank’s Contact Centre at Baroda and telecalling centre at SBICards/GE, Gurgaon has been expanded to encompass soft recovery follow-ups of all P-SegmentLoans.

• A tie-up has been made with Shriram Automall India Limited (SAMIL) to assistoperating functionaries in seizure and auction of vehicles.

• Use of Loan Origination Software (LOS) has been made mandatory for Auto Loansand Personal Loans (except Loan against Time Deposits, P-Segment Gold Loans and EducationLoans) and its integration with the Risk Scoring Model (RSM) and CIBIL check to take careof many process related risks.

Asset Quality Improvement measures for Agriculture loans

• As far as agriculture loans were concerned, various One-Time Settlement Scheme(OTS) schemes like ‘OTS Scheme for Tractor Loan’, ‘OTS Scheme for ATL’were rolled out for quick resolution of hardcore NPAs in Agri term loans. These schemesresulted in a recovery of Rs.378 crores during FY 2013-14.

• Campaigns launched: ‘KCC (Zero NPA) Campaign’ was launched todrive renewal of overdue KCCs with the objective of arresting NPAs accretion andreduction. Over 16.57 lakhs KCCs in the likely stressed category were renewed. Kitna BakiHai campaign was launched during December 2013 to drive daily monitoring of KCC renewalposition through SMS based reporting to reach KBN (Kuchi Baki Nahi).

• Green Power represents an innovative scheme to improve loan recovery cultureamong farmers by rewarding the villages with solar street lights under corporate socialresponsibility.

Asset Quality Improvement measures for Corporate accounts

• The asset quality of CAG remained well under control with the gross NPAs at0.99% of total advances. About 87% of CAG’s portfolio is investment grade with 40%carrying the highest rating from the external rating agencies.

• Mid corporate segment has been more severely affected by the economic downturn,leading to deterioration in asset quality. The Non Performing Assets (NPAs) of MCG haveincreased from Rs.18,443 crores in March 2013 to Rs.32,715 crores in March 2014. To tacklethis issue, the Group has strengthened the processes of appraisal/sanction, follow-up andsupervision. Every effort is made to improve the asset quality through regular engagementwith promoters of weak/ stressed accounts.

The Bank has formed various committees headed by Chairman/ Managing Directors/ DeputyManaging Directors/ Chief General Managers/ General Managers/ Deputy General Managers toperiodically review stressed assets and suggest resolution strategies.

SAMG has brought in substantial recoveries in high value NPAs and some decades-old duesduring FY 2013-14 due to its specialised attention and concerted efforts. Despite a harshenvironment last year, we achieved a deceleration in NPA accretion due to SAMG’srelentless efforts along with the support of SAMBs/ SARBs/ SARCs.

This was particularly evident during Q4 of FY 2013-14 when Gross and Net NPApercentages were brought down by 78 basis points and 67 basis points respectively from thepeak levels of 5.73% and 3.24% witnessed during the year. More details are furnishedbelow:

Exhibit 22: NPA Management Performance Rs. (in crores)
FY 2011-12 FY 2012-13 FY 2013-14
Gross NPAs at the end of the year 39,676 51,189 61,605
Gross NPA% 4.44 4.75 4.95
Net NPA% 1.82 2.10 2.57
Fresh Slippages 24,712 31,993 41,516
Cash Recoveries/ Upgradations 9,618 14,885 17,924
Write Offs 744 5,594 13,176
Recoveries in Written Off Accounts 962 1,066 1,543

The SAMG and other recovery outfits of the Bank are fully geared to meet the assetquality challenges of FY 2014-15 when near-term pressure is expected to continue. We arein the process of establishing an Early Warning System to identify incipient sickness andstress in loan accounts so that we can take in advance corrective action, including timelyrestructuring in deserving cases. This would prevent slippages and maintain good assetquality.

II. SUPPORT AND CONTROL OPERATIONS

II. 1 Information Technology

Core Banking Project

CBS environment has been benchmarked to support one billion accounts, over 250 milliontransactions in a day, and delivering a throughput of over 17,000 transactions per second.Biometric authentication as a second-factor authentication has been implemented inbranches for all CBS users. The process for the systematic and proactive riskidentification, assessment, measurement, monitoring and mitigation of various risks in theIT vertical has been initiated.

Alternate Channels

Exhibit 23: Alternate Channels Growth

(Numbers)

As on ATMs Kiosks Cash Deposit Machines (CDMs) Total
31.03.2013 25,247 1,230 698 27,175
31.03.2014 40,768 1,231 1,516 43,515

ATM

State Bank of India, along with its Associate Banks has one of the largest ATM networksin the world with more than 51,491 ATMs including Kiosks and Cash Deposit Machines as on31.03.2014. SBI has issued more than 17.04 crores Cards. The ATM Base 24 Switch hasrecently been upgraded to handle close to 50,000 ATMs.

The objective is to strengthen ATM facilities across every nook and corner of this vastcountry and enhance customer convenience. During 2013-14, SBI has installed 16,340 ATMs, arecord in India’s banking history for such a massive ATM rollout. The total number ofATMs (standalone) now stands at 43,515 as on 31.03.2014.

With 26% of market share in India’s ATM population, SBI’s ATM networktransacts 38% of the country’s total ATM transactions. On an average, over 70.00lakhs transactions per day are routed through our ATM network. Our ATM network is one ofthe busiest in the country with average hit rate of more than 200 transactions per day perATM. SBI has a Debit Card base (standalone) of 13.74 crores.

More than 1000+ ATMs have been enabled as Talking ATMs for Visually Impaired Customersduring FY 2013-14, which took the total Talking ATM strength to 4,000+ as on 31stMarch, 2014.

Cash Deposit Machines (CDM): SBI is aggressive in rolling out CDMs for cash depositby customers at these machines by using their ATM-cum-Debit card. As on 31.03.2014, thenumber of CDMs installed was 1,516. These CDMs are available to the customer 24 x 7 fortheir convenience.

INB & e-Commerce

Internet Banking

Internet Banking service is available through the Bank’s website"https://www.onlinesbi.com". The Bank’s internet banking solution is acomprehensive product for both retail and corporate users.

The Bank’s Net Banking Platform ‘onlinesbi.com’ provides secured andhassle-free on-line banking services to its retail and corporate customers, including PSUsand Government Agencies:

• This cost-effective channel has enabled 63.77 crores transactions during FY2013-14, achieving 52% growth over the previous year.

• Our robust Retail Internet Banking platform has also been optimised for visuallyimpaired customers.

• The Corporate Internet Banking is well suited to Small, Medium and LargeCorporates in establishing traction with Government Treasury and Accounts Departments too.

During FY 2013-14, the Bank has established itself as a major player in the e-Commercespace:

• Through over 15,000 direct merchant tie-ups, through State Bank Collect orthrough private aggregators, the Bank has facilitated more than 42 crores e-Commercetransactions during the year.

• On-line collection of Taxes/ Fee/ EMD towards e-Trading/ e-Auction is beingfacilitated through the new Multi-Option Payment System (MOPS) interfaced with portals ofPSUs, Corporations and Govt. Departments.

SBI was awarded seven out of nine awards in the IBA Banking Technology Awards:

The Best Technology Bank of the Year

Best Internet Bank

Best use of Mobile Technology

Best use of Technology in Financial Inclusion

Best Customer Management Initiative

Best use of Technology in Training and E-learning

Best use of Technology in Business Intelligence

IT - Foreign Offices

153 Foreign Offices of the Bank in 26 countries use the Finacle Core Banking solutionalong with a host of add on/surround applications to meet all the regulatory requirementsbesides providing high class customer experience.

Enterprise Data Warehouse

'Customer One View' is a solution for a 360 degree view of holdings with the Bank,including that of our Associates and Subsidiaries, namely, SBI Life, SBI Cards, SBI MutualFunds made available to the Relationship Managers to enable them to offer better customerservice. Also, a large number of predictive and analytic reports are regularly beinggenerated by the DWH to aid business planning.

Networking

The Bank has implemented a secured, robust WAN architecture network connectingbranches/offices and ATMs of State Bank Group through Leased lines and VSAT’s. TheBank is in the process of migrating to Multi Protocol Label Switching (MPLS) architecturefor improved network performance.

Corporate Web and Mail Services

Internal Social Media "SBI Aspirations" social software is designed to meetthe needs of business and empowers bank’s employees to be more innovative andproductive, where creative ideas can be exchanged that can foster increase in businessgrowth. Bank has made available its presence on External Social Media sites like Facebook,Twitter and YouTube for listening to and engaging with generation Y customers and generalpublic.

II. 2 Risk Management and Internal Controls

Risk governance structure at SBI

An independent Risk Governance Structure, in line with international best practices,has been put in place, in the context of separation of duties and ensuring independence ofRisk Measurement, Monitoring and Control functions. This framework visualises empowermentof Business Units at the operating level, with technology being the key driver, enablingidentification and management of risk at the place of origination.

The Bank has in place a Country Risk Management Policy in tune with RBI guidelines. Thepolicy outlines a robust risk management model with prescriptions for Country, Bank,Product and Counterparty exposure limits. Both Country-wise and Bank-wise exposure limitsare monitored and reviewed on a regular basis. The exposure ceilings and classificationsare moderated in line with the dynamics of their risk profiles. Corrective steps areinitiated periodically to safeguard the Bank’s interests.

Credit Risk

Credit Risk is defined as the possibility of losses associated with the diminution inthe credit quality of borrowers or counterparties from outright default or from reductionin portfolio value. Credit Risk emanates from a bank’s dealings with an individual,non-corporate, corporate, Bank, financial institution or sovereign.

Mitigation measures

• The Bank has strong credit appraisal and risk assessment practices in place foridentification, measurement, monitoring and control of the credit risk exposures. The Bankuses various internal Credit Risk Assessment Models for assessing credit risk underdifferent exposure segments. Internal ratings of the Bank are subject to comprehensiverating validation framework.

• Credit Risk Management Department (CRMD) studies 37 industries, includingsectors, such as Telecom, Power, Coal, Aviation, NBFC, Textile, Iron and Steel anddisseminates the reports to operating staff for informed decision-making. Specific studieson Companies/ Groups as required are also conducted.

• RBI has allowed the Bank to participate in the parallel run process forFoundation Internal Ratings Based (FIRB) under the Advanced Approaches for CreditRisk.

• The CRM project for migration to FIRB is being implemented by the Bank withguidance from an external Consultant appointed for the purpose.

• The governance structure has been made more robust for effective implementationof the FIRB and new policies related to the same have been approved by the Risk ManagementCommittee of the Board (RMCB).

• Models for estimation of Probability of Default (PD), Loss Given Default (LGD)and Exposure at Default (EAD) have been developed.

• Bank regularly conducts Stress Test on its Credit portfolio and Stress Scenariosare regularly updated in line with RBI guidelines, Industry best practices and changes inmacro economic variables.

• Credit Risk Management Committee (CRMC) and Risk Management Committee of Board(RMCB) meetings were held regularly.

Market Risk

Market Risk is the possibility of loss a Bank may suffer on account of changes invalues of its trading portfolio, due to change in market variables, such as exchangerates, interest rates and equity price, among others.

Mitigation measures

• The Bank’s market risk management consists of identification andmeasurement of risks, control measures, monitoring and reporting systems.

• The Bank has Board approved policies pertaining to the said risks for Trading inForeign Exchange, Derivatives, Interest Rate Securities, Equities and Mutual Fund. Marketrisks are controlled through various risk limits, such as Net Overnight Open Position,Modified Duration, Stop Loss, Management Action Trigger, Cut Loss Trigger, Concentrationand Exposure Limits, among others as mentioned in the respective policies.

• Currently, market risk capital is computed under the Standardised MeasurementMethod (SMM). The Bank has submitted its Letter of Intent to the Reserve Bank of India tomigrate to the Internal Models Approach (IMA) under the Advanced Approaches for marketrisk.

• IMA is a Value at Risk (VaR) based tool for monitoring of the Bank’strading portfolio. The VaR methodology is supplemented by conducting quarterly stresstests of the trading portfolio.

• The MRM project for migration to IMA is being implemented by the Bank withguidance from an external Consultant appointed for the purpose.

• SBI’s Market Risk is monitored and reviewed by the Market Risk ManagementCommittee (MRMC) and the Risk Management Committee of the Board (RMCB) which meetregularly.

Operational Risk

Operational Risk is the risk of loss resulting from inadequate or failed internalprocesses, people and systems or from external events.

Mitigation measures

• The main objectives of the Bank’s Operational Risk Management are tocontinuously review systems and control mechanisms, create awareness of operational riskthroughout the Bank, assign risk ownership, align risk management activities with businessstrategy and ensure compliance with regulatory requirements, which are the key elements ofthe Bank’s Operational Risk Management Policy.

• Important policies, manuals and framework documents in line with RBI guidelineson Operational Risk Management Framework (ORMF) for migration to Advanced MeasurementApproach (AMA) are in place.

• The Bank has already submitted its Letter of Intent (LOI) to migrate to theAdvanced Measurement Approach (AMA) under the Advanced Approaches for Operational risk.

• The ORM project for migration to AMA is being implemented by the Bank withguidance from external Consultant appointed for the purpose.

• The Bank-level Operational Risk Management Committee (ORMC) reviews theoperational risk profile of the Bank periodically and recommends suitable controls/mitigations for managing operational risk in the Bank. Risk Management Committees atOperational unit and Business unit level are in place.

Group Risk

Group Risk Management aims to put in place standardised risk management processes inGroup entities. Group Risk Management Committee, a committee of executives, has beenconstituted under the chairmanship of the DMD and CCRO to oversee the management of riskfunctions across the Group entities.

Mitigation measures

• A quarterly analysis of risk-based parameters for Credit Risk, Market Risk,Operational Risk and Liquidity Risk, among others, is presented to Group Risk ManagementCommittee/Risk Management Committee of the Board.

• Exposure limits for Large Borrower Exposure and Capital Market Exposure as perRBI have been adopted for the Group. In addition, limits for Unsecured Exposures, RealEstate and Intra-Group Exposures have been set by the Bank.

• A voluntary annual disclosure on Group Risk is part of the Bank’s publishedDisclosures.

• The Group Internal Capital Adequacy Assessment Process (Group ICAAP) documentincludes an assessment of identified risks by Group entities, internal controls andmitigation measures, and capital assessment, under normal and stressed conditions. AllGroup entities, including Non-banking entities, carry out the ICAAP exercise and a GroupICAAP Policy is in place to ensure uniformity.

• To overhaul the Group Risk Management and adopt global best practices, the Bankhas embarked upon a Group Risk Management Project recently.

Enterprise Risk

Enterprise Risk Management aims to put in place a comprehensive framework to managevarious risks. It encompasses Global best practices like Risk Appetite, Risk Aggregationand Risk-based Performance Management System.

Mitigation measures

• For assessment of Pillar I risks and Pillar 2 risks, such as Liquidity Risk,Interest Rate Risk, Credit Concentration Risk, as well as adequacy of Capital and overallRisk Management practices under normal and stressed conditions, the Bank has comprehensiveInternal Capital Adequacy Assessment Process (ICAAP) in place.

• As part of the Bank’s Risk Management Project to transform its role into aStrategic function, aligned with Business Objectives, Bank has initiated the EnterpriseRisk Management (ERM) module.

Information Security risk

Information Security risk seeks to establish stringent information security structureto prevent data loss and threats.

Mitigation measures

• The Bank has implemented a robust IT policy and Information System Securitypolicy, which are in line with international best practices. These policies are reviewedperiodically and suitably strengthened to address emerging threats.

• Regular security drills and employee awareness programmes are conducted toensure security and increase awareness. Business Continuity Management Systems (BCMS) havebeen implemented at the Bank’s Global IT Centre, Belapur. SBI is a forerunner insetting up of an in-house Security Operations Centre (SOC) for 24 x 7 x 365 monitoring ofvarious attacks and threats on its IT infrastructure, which was made operational recently.

• Disaster Recovery Drills are conducted regularly as part of the implementationof the Business Continuity Management System (BCMS). The Business Continuity Exercise forthe IT Systems during the financial year was held on 19th January, 2014. Critical ITSystems of the Bank are compliant with the International BCMS Standard – ISO22301:2012.

Internal Controls

The Bank has in-built internal control systems with well-defined responsibilities ateach level. It conducts internal audit through its Inspection & Management AuditDepartment. Audit Committee of the Board (ACB) exercises supervision and control over thefunctioning of the I & MA Department. The inspection system plays an important andcritical role in identification, control and management of risks through the internalaudit function, which is regarded as one of the most important components of CorporateGovernance. The Bank carries out mainly two streams of audits – Risk Focused InternalAudit (RFIA) and Management Audit, covering different facets of Internal Auditrequirement. The Bank’s accounting units are subjected to RFIA. The Bank’sManagement Audit covers administrative offices and examines policies and procedures,besides quality of execution thereof.

Besides, the department conducts Credit Audit, Information Systems Audit (CentralisedIT establishments & Branches), Home Office Audit (audit of foreign offices) andExpenditure Audit (at administrative offices) and oversee policy and implementation ofConcurrent Audit (domestic and foreign offices) and Circle Audit. To verify the level ofrectification of irregularities by branches, audit of compliance at select branches isalso undertaken. During the period 01.04.2013 to 31.03.2014, 9,230 domestic branches/BPRentities were audited under the Risk Focused Internal Audit.

Risk Focused Internal Audit

I&MA Dept undertakes a critical review of the entire operations of audited unitsthrough RFIA an adjunct to Risk Based Supervision as per RBI directives. The domesticbranches have been broadly segregated into three groups (Group I, II & III) on thebasis of business profile and risk exposures. While audit of Group I branches isadministrated by the Central Audit Unit (CAU), audit of branches in Group II and IIIcategory and Business Process Re-engineering (BPR) entities are conducted by 13 ZonalInspection Offices, each of which is headed by a General Manager.

Management Audit

With the introduction of RFIA, Management Audit has been reoriented to focus on theeffectiveness of risk management in the processes and the procedures followed in the Bank.Management Audit encompasses Corporate Centre establishments / Circle Local Head Offices /Apex Training Institutions, Associate Banks and Regional Rural Banks (RRB) sponsored bythe Bank. To enhance the effectiveness of Management Audit, periodicity has been reducedfrom the existing once in three years to two years.

Credit Audit

Credit Audit aims at achieving continuous improvement in the quality of CommercialCredit portfolio of the Bank through critically examining individual large commercialloans with exposures of Rs.10 crores and above annually. The Credit Audit System alsoprovides feedback to the business unit by way of warning signals about the quality ofadvance portfolio in the unit and suggests remedial measures. Credit Audit also carriesout a review (Loan Review Mechanism) of all the pre-sanction and sanction process of allindividual advances above Rs.5 crores within 6 months of sanction / enhancement / renewal.During the period from 01.04.2013 to 31.03.2014, 8,623 accounts were subjected to on-siteCredit Audit.

Information System Audit

All Branches are being subjected to Information System (IS) Audit to assess the ITrelated risks as part of RFIA of the branch. IS Audit of centralised IT establishments iscarried out by a team of qualified officials. During the period from 01.04.2013 to31.03.2014, IS audits of 49 centralised IT establishments were completed.

Foreign Offices Audit

During the period from 01.04.2013 to 31.03.2014, Home Office Audit was carried out atfive branches, Management Audit at 05 Representative offices / Country Head Offices and 1Subsidiaries / Joint Ventures.

Concurrent Audit System

Concurrent Audit System is essentially a control process, integral to the establishmentof sound internal accounting functions, effective controls and overseeing of operations ona continuous basis. Concurrent Audit System is reviewed on an on-going basis in accordancewith RBI directives, so as to cover the Bank’s Advances and other risk exposures asprescribed by the regulatory authority. I&MA department prescribes the processes,guidelines and formats for the conduct of concurrent audit at branches and BPR entities.During the year, Concurrent Audit System has been revamped, along with the introduction ofa web-based solution.

Circle Audit

Circle Audit, which is a delegated audit, covers low-risk areas, and is conductedbetween two RFIAs. This enables auditee unit to be better prepared for the RFIA. Duringthe period from 01.04.2013 to 31.03.2014, 9,069 units were audited by the Circle AuditDepartment.

II. 3 Vigilance

The essential function of the Bank’s Vigilance Administration is not only to checkagainst non-compliance of rules and regulations by initiating suitable disciplinary actionagainst serious transgressions, but also to devise and implement various preventivemeasures by reviewing the systems and processes to ensure higher effectiveness and leastvulnerability.

The concept of vigilance as an investigative process and an exercise for punitiveaction has over time evolved to that of ‘Vigilance for Corporate Growth’, theemphasis getting shifted from punitive vigilance to ‘Preventive and ProactiveVigilance’ through an active participation of all concerned. Some of the Bank’simportant preventive measures comprise the following:

• Preventive Vigilance Committee (PVC) Meetings are being held at the branches andthe BPR outfits at quarterly intervals.

• Under Whistle Blower Scheme, our staff members are expected to adviseappropriate authorities about irregular and unethical practices, if any, being indulged inby colleagues and even seniors.

• Suo moto investigations are conducted at fraud/ complaint prone branches. Theprimary aim of such investigations is to find out non-adherence to the systems andprocedures by the branch, which may lead to perpetration of fraud in future. Suitablecorrective measures are initiated to stop irregular practices, if any, brought out in thereport.

As on 31.03.2014, 1,024 cases of officers were taken up for examination under thevigilance category, compared to 1,160 cases during the previous financial year.

II. 4 Human Resources

The Bank has become an employer of choice in India and one of the mostemployee-friendly organisations today. HR audits and mammoth HR exercises now formcritical strategies in change management to facilitate employee communication and developa leadership pool by careful succession planning.

HR awards and accolades

• Golden Peacock Award for HR excellence.

• World HRD Congress Award for Organisation with innovative HR Practices.

• World HRD Congress Award for innovation in Recruitment.

Talent management is considered as an equally important facet of an organisation’seffectiveness. Accordingly, our Bank has been making a constant endeavour to improve thefunctioning of HR as a strategic business partner.

The Bank has a total permanent staff strength of 2,22,033 on 31st March, 2014.

Out of this, 79,755 (35.92%) are officers, 1,01,648 (45.78%) are clerical staff and theremaining 40,630 (18.30%) are sub-staff.

Exhibit 25: Movement of Staff

Officers Assistants Subordinate staff Total
As on 31.3.2013 80,796 1,09,686 37,814 2,28,296
Less: Retirements / Attrition 3,861 8,388 2,035 14,284
Add /Less (-):Due to promotion of clerical staff to officers grade 1,426 (+) 1,426 (-) - -
Add: New Addition 1,394 1,776 4,851 8,021
As on 31.03.2014 79,755 1,01,648 40,630 2,22,033

Women Employees in the Total Workforce:

At present, the strength of women employees in the total workforce of the Bank is45,132 which constitutes more than 20% of the total staff strength. The composition ofwomen employees in different cadre is as under:

Improvement in Employee Productivity

The large-scale recruitment of Gen-next employees in the Officers as well as in theAssistant grade over the last 3/4 years has not only brought about a far reachingattitudinal change among staff in their customer interface and services across thebranches, it has also become a catalyst in enhancing/improving the productivity andefficiency of the employees, there by resulting in increasing growth in business andprofitability for the Bank. The business per employee (BPE) has increased during theperiod from 2010-11 to 2013-14 as per data furnished below. In this connection, the profitper employee (PPE) has also increased from Rs.3.85 lakhs in 2010-11 to Rs.6.45 lakhs in2012-13. However, the PPE has declined to Rs.4.85 lakhs in 2013-14 primarily due to higherprovisioning, increase in overheads and staff cost during the year. Further, various costcontrol measures / practices have been reiterated for adoption/compliance at all levels toimprove the Bank’s profitability.

Industrial Relations

Regular consultative meetings were held with the Associations/Unions as part of theconstructive dialogue for understanding and addressing grievances of various categories ofemployees. These consultations are done both at Corporate Centre as also at Circles.Various issues raised by the Federations were examined on merits and necessary action wastaken for its resolution.

Status of Women at workplace:

The existing policy of the Bank providing for protection against Sexual Harassment ofwomen at workplace and for the prevention and redressal of complaints of sexual harassmentand for matters connected therewith or incidental thereto was revised / upgraded toincorporate the requirements as per the Act passed in Parliament. The Bank has a zerotolerance towards sexual harassment at workplaces and has put in place appropriatemechanism to ensure that women work with dignity and without fear.

Exhibit 29: Complaints of Sexual Harassment of Women filed & disposed off during FY2013-14

Total No. of cases filed Total No. cases disposed off
30 20

Other Initiatives

• The Bank has improved staff perquisites like provision of sabbatical leave forwomen and single men (with children and/or aged parents) employees

• The Bank has made a comprehensive review of promotion policies to take care ofcontemporary as well as future requirements. This will enable us to meet our successionplanning needs by ensuring adequate exposure of officials to various aspects of Banking.These initiatives have motivated employees and improved their productivity, besidesresulting in a healthy employer-employee relationship.

Exhibit 30: Reservation in employment

Category Total SC ST PWD
Officers 79,755 13,890 5,645 573
(17.41%) (7.07%) (0.71%)
Assistants 1,01,648 17,286 8,755 1,801
(17.00%) (8.61%) (1.77%)
Sub-staff 40,630 11,568 2,843 236
(28.47%) (7.00%) (0.58%)
Total 2,22,033 42,744 17,243 2,610
(19.25%) (7.76%) (1.17%)

The Bank provides reservation to Scheduled Castes, Scheduled Tribes & Persons withDisabilities (PWDs) as per Government of India (GOI) directives. Liaison Officers havebeen designated at all Local Head Offices of the Bank and the Corporate Centre at Mumbaiin order to deal with issues relating to reservation policy and effectively redress thegrievances of the SC/ST employees.

II. 5 Strategic Training Unit (STU)

Our training system functions under the overall supervision and guidance of STU and thetraining apparatus at present consists of 5 Apex training institutes and 47 LearningCentres. The sixth ATI, named the State Bank Institute of Management, is being set up atRajarhat, New Town, Kolkata.

Principles that drive learning activities

• All employees undergo at least one institutional training during a year.

• Training programmes are aligned with current corporate priorities of theBusiness Units.

• A culture of self-learning is inculcated in every employee.

• Activepromotionofonlinelearningincludesmandatoryrole-based lessons supported byRewards and Recognitions.

• Under its Reward and Recognition Scheme, the Bank also actively encourages itsemployees to pursue various study courses offered by external institutes.

Highlights of achievements

• Trained more than 2,34,763 participants during 2013-14 covering 60% of Officialsand 68% of award staff.

• Hosted 366 lessons, covering operationally relevant topics, in e-learningportal.

• Uploaded 219 short duration e-capsules (of 15 minutes each) for fasterdissemination of knowledge among employees, especially frontline staff.

• Mobile nuggets (short study materials on mobile handsets) made available onpilot basis.

• Arranged video lectures on industry specific inputs for senior executives.

• Training for staff by hospitality industry.

• Trained all employees about gender sensitivity at workplace.

II. 6 Official Language

Staff members are being continuously trained in Hindi language to work in Hindi oncomputers for the purpose of Official Language implementation.

The Bank has made the content of corporate and internet sites available bilingually.Various staff manuals have been provided in Hindi on HRMS portal of the Bank. For theconvenience of the customers, the material on SME portal of the Bank has been provided inHindi. Providing information on different products and services in Hindi through LCDsinstalled in the branches has increased their popularity. The ATM hits in Hindi is rapidlyincreasing too.

The In-House Hindi magazine ‘PRAYAS’ of our Bank has been accredited with agrand achievement this year, on the occasion of Hindi Day, on 14th September, 2013.

PRAYAS

PRAYAS’ was awarded as the best in-house magazine in ‘B’ region. TheBank was felicitated with the First prize at Vigyan Bhavan, New Delhi by the Hon.President of India. ‘Prayas’ also bagged Second Prize in RBI’s In-HouseHindi magazine competition and the Bank was conferred the Second Prize in the ‘IndianLanguage Publication category’ competition by the Association of BusinessCommunicators of India (ABCI).

II. 7. Corporate Social Responsibility (CSR)

Our CSR activity touches the lives of millions of poor and needy across the length andbreadth of the country. The Bank has a comprehensive Corporate Social Responsibility (CSR)Policy, approved by the Executive Committee of the Central Board in August 2011 andearmarks 1% of the previous year’s net profit as CSR spend budget for the year.

Focus areas of our CSR activities are:

• Supporting education.

• Supporting healthcare.

• Assistance to poor & underprivileged.

• Environment protection.

• Entrepreneur development programme.

• Assistance during natural calamities like floods/droughts etc.

Supporting Education:

• To support school education and provide relief from heat to millions of schoolchildren specially the under privileged children, Bank has provided 1,40,000 electric fansto 14,000 schools across the country during 2013-14.

• Infrastructure support by way of furniture, computers and other educationalaccessories and donation of large number of school buses/vans to the physically/ visuallychallenged children and children belonging to economically weaker section of society.

Supporting Healthcare:

• Bank donated 210 medical vans/ambulances with an expenditure of Rs.18.38 croresduring the year.

• Medical equipment have been provided at 90 centres worth Rs.8.87 crores.

• Bank installed more than 30,000 water purifiers in schools ensuring clean &safe drinking water for millions of school going children.

Assistance during natural calamities:

During the current fiscal the Bank has donated Rs.6.00 crores to the ChiefMinister’s Relief Fund of three states.

Green Banking:

• Bank has adopted energy efficient measures.

• SBI is the largest deployer of solar ATMs.

• Bank has installed windmills in three states for its own energy needs.

• Paperless Banking is promoted and implemented across the country.

• Gives project loans at concessionary rate of interest to encourage reduction ofgreen house gases by adopting efficient manufacturing practices.

Research & Development Fund

The Bank makes an annual contribution of GBP 100,000 towards a Chair set up by the Bankjointly with RBI at the Asia Research Centre at London School of Economics. Our R&DFund donations amounted to Rs.1.03 crores during 2013-14.

SBI Children’s Welfare Fund

The Bank constituted SBI Children’s Welfare Fund as a Trust in 1983 which extendsgrants to institutions engaged in the welfare of underprivileged children like orphans,destitute, mentally/physically challenged, etc. The Corpus of the Fund is made up ofcontributions by staff members and matching contribution provided by the Bank. During theFY 2013-14, 12 projects were assisted with Rs.34.70 lakhs.

CSR awards and accolades

• The year FY 2013-14 witnessed the highest number of awards for the Bank in CSRachievements.

• Conferred Asia’s Best CSR Practice Award, 2013 by CMO Asia in Singapore.

• Won an award for ‘Best CSR Practices’ at Asian BFSI Awards 2013 inDubai.

Other prominent awards conferred

• IPE BFSI Award 2013 for Best CSR Practices.

• India’s Most Ethical Companies Awards 2013 for Ethical Company in Banking.

• Asia Green Future Leadership Award 2013 for ‘Best Green ServiceInnovation’.

• My FM Stars of the Industry Award for excellence in Banking (PSU) 2013.

• News Ink Legend PSU Shining Award 2013.

• ABP News BFSI 2013 for Best CSR Practices Award.

• ABP News Global CSR Excellence & Leadership Award for Organisations withbest CSR Practices.

• Blue Dart – Global CSR Excellence & Leadership Award for Best use ofCSR Practices in Banking and Financial Sector.

• Global CSR Excellence & Leadership Award 2013.

III. ASSOCIATES AND SUBSIDIARIES

The State Bank Group, with a network of 21,977 branches (including 6,108 branches offive Associate Banks) dominates India’s banking industry. In addition to banking, theGroup, through its various subsidiaries, provides a whole range of financial services,including Life Insurance, Merchant Banking, Mutual Funds, Credit Card, Factoring, Securitytrading, Pension Fund Management, Custodial Services, General Insurance (Non LifeInsurance) and Primary Dealership in the Money Market.

Associate Banks

The five Associate Banks of SBI had a Market share of 5.48% in deposits and 5.88% inadvances as on last Friday of March 2014.

Exhibit 31: Performance Highlights of Associate Banks (Overall)

Rs. (in crores)

As on 31.03.2014 As on 31.03.2013 Change (%)
Total Assets 5,18,255 5,04,556 2.72
Aggregate Deposits 4,33,091 4,17,657 3.70
Total Advances 3,63,402 3,40,321 6.78
Operating Profit 8,368 8,803 -4.94
Net Profit 2,777 3,678 -24.50
Credit Deposit Ratio 83.91% 81.48% 243bps
Capital Adequacy Ratio 11.20% 11.85% -65bps
Gross NPA 18,211 11,589 57.14
Net NPA 10,719 6,143 74.48
Return on equity 9.77% 14.33% -456bps

SBI Capital Markets Limited (SBICAP)

SBICAP is India’s leading investment bank, offering financial advisory services tovaried client base across three product groups – Infrastructure, Non-Infrastructureand Capital Markets (equity and Debt). These services include Project Advisory, LoanSyndication, Mergers and Acquisitions (M&A), Private Equity and RestructuringAdvisory.

SBICAP (standalone basis), posted a PBT of Rs.388.70 crores during FY 2013-14 comparedto Rs.418.39 crores during FY2012-13 and a PAT of Rs.265.28 crores in FY2013-14 comparedto Rs.296.00 crores in FY2012-13.

SBICAP with its 5 subsidiaries, posted a PBT of Rs.389.91 crores during FY 2013-14compared to Rs.444.37 crores during FY 2012-13 and PAT of Rs.262.63 crores duringFY2013-14 compared to Rs.313.96 crores in FY 2012-13.

SBI Capital Markets Ltd. has decided to invest in equity of its subsidiary (SBICAPSecurities Ltd.) to the tune of Rs.50 crores in two tranches (25 crores each). The firsttranche has been invested on 4th May, 2012 and second tranche was invested on 30thOctober, 2013.

SBICAP Industry Rankings Ranked No. 1 Global Mandated Lead Arranger in Project FinanceLoans by Dealogic

Ranked No. 1 Global Project Finance Bookrunner by Thomson-Reuters

Ranked No. 1 in the number of issues handled for the public issue of debt in FY 2013 byPrime

SBICAP Securities Limited (SSL)

SSL (wholly owned subsidiary of SBI Capital Markets Ltd.) offers equity brokingservices to retail and institutional clients both in cash as well as in futures andoptions segments. It also is engaged in sales and distribution of mutual funds and otherfinancial products. SSL has 100+ branches and offers Demat, e-broking, e-IPO and e-MFservices to both retail and institutional clients. SSL currently has more than 4.35 lakhscustomers in their books. The Company registered gross revenue of Rs.79.03 crores duringFY2013-14 compared to Rs.69.60 crores in FY2012-13. The Company has posted a net loss ofRs.8.19 crores during FY2013-14 compared to a net profit of Rs.2.42 crores during theFY2012-13. The loss was mainly on account of subdued capital markets and significantinvestments made in capacity building and technology for future growth.

SBICAPS Ventures Limited (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Ltd. SVL has posted a loss ofRs.0.35 crores in FY 2013-14 as against a net profit of Rs.0.35 crores during FY 2012-13.SBICAP (UK) Limited (SUL) SUL (wholly owned subsidiary of SBI Capital Markets Ltd.) hasbooked total revenue of Rs.3.61 crores and a loss of Rs.0.56 crores in FY2013-14 comparedto Rs.17.26 crores and net profit of Rs.10.76 crores during FY2012-13, due to globalrecessionary scenario.

SUL is positioning itself as a relationship outfit for SBI Capital Markets in UK andEurope. Strong relationships are being built with FIIs, Financial Institutions, Law Firmsand Accounting Firms, among others to market SBICAP business products.

SBICAP Singapore Co. Ltd (SSGL)

SSGL (wholly owned subsidiary of SBI Capital Markets Ltd.) commenced business fromDecember 2012, earned a gross income of Rs.1.34 crores and a net loss of Rs.2.93 croresduring FY 2013-14 as against Nil gross income and net loss of Rs.3.09 crores during FY2012-13.

SBICAP Trustee Co. Ltd. (STCL)

STCL (wholly owned subsidiary of SBI Capital Markets Ltd.) commenced security trusteebusiness from August 1st, 2008, earned a gross income of Rs.20.74 crores and a net profitof Rs.8.81 crores during FY 2013-14 as against Rs.14.96 crores and a net profit of Rs.7.52crores during FY 2012-13. SBI DFHI Ltd. (SBI DFHI) SBI DFHI Ltd. is one of the largeststandalone Primary Dealers (PD) with a pan India presence. As a Primary Dealer it ismandated to support the book building process in Primary Auctions and provide depth andliquidity to secondary markets in G-Sec. Besides Government securities, it also deals inmoney market instruments and non G-Sec debt instruments, among others. As a PD, itsbusiness activities are stipulated/ regulated by RBI.

SBI Group holds 72.17% share in the Company. In FY 2013-14, the Company’sProfit before Depreciation and Tax was Rs.104.37 crores in FY 2013-14 as against Rs.99.45crores in FY 2012-13. However, a 165 % increase in depreciation on stock in FY 2013-14over previous year resulted in a net profit of Rs.60.70 crores in FY 2013-14 compared toRs.80.29 crores in FY 2012-13.

Market share of SBI DFHI was 3.79 % among all market participants and 21.28% amongstandalone PDs as on March 2014.

SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

• SBICPSL, the standalone credit card issuing company in India, is a joint venturebetween State Bank of India and GE Capital Corporation, wherein SBI holds 60% stake.SBICPSL is the 3rd largest in the industry in terms of Cards in force (15% market share)with a base of 28.6 lakhs as at 31.03.2014 as compared to 13% market share with a base of25.2 lakhs as at 31.03.2013. The Company has 11% market share in terms of retail spends inFY 2013-14, showing substantial improvement from 9% in FY 2012-13.The Company’snet profit has increased by 115% to Rs.293 crores in FY 2013-14 from Rs.136 crores in FY2012-13. Primarily driven by asset based revenue growth, increased premium cardpenetration and better portfolio management. It has achieved a 44% growth in total spendsto Rs.16,259 crores in FY 2013-14.

• It launched a new co-brand with ‘AIR INDIA’ which is amongst the mostattractive aviation co-brand card in the country.

• It has also launched a new co-brand with ‘Bharatiya Mahila Bank’ namedBMB Card. This card offers exclusive previews to the best deals, reward points anddiscounts across travel and shopping.

• SBI Cards has been awarded with Readers Digest Award for ‘Most TrustedCredit Card Brand’ in June 2013.

Award for social media

It received CMO Asia Award for ‘Best Use of Social Media in Marketing’ andMaster Card award for ‘Best Use of Social Media’.

• SBI Life Insurance Company Limited (SBILIFE)

• SBILIFE is a Joint Venture between State Bank of India and BNP Paribas Cardif inwhich SBI holds 74% stake.

• SBILIFE has a unique multi-distribution model comprising Bancassurance, RetailAgency, Alternate, Group Corporate and Online Channels for distribution of insuranceproducts.

• SBILIFE continues to be the leader in private sector in terms of New BusinessPremium in FY 2013-14.

• SBILIFE has recorded an increase in individual new business premium AnnualPremium Equivalent (APE) by 17.7% to Rs.2,811 crores during FY 2013-14.

The Company recorded a 19% (Y-o-Y) increase in PAT to Rs.740 crores in FY 2013-14.

Assets under Management recorded a Y-o-Y growth of 12.7% to reach Rs.58,480 crores ason 31.03. 2014.

Leveraging wider reach achieved through its 762 branch network, SBI Life hassystematically brought large rural areas under insurance. The Company has sold 23.4% oftotal policies in this segment in FY 2013-14. A total of 79,463 lives covered by SBILIFEare from the underprivileged social sector. The Company has been substantially exceedingthe minimum social and rural regulatory norms.

Among many CSR initiatives undertaken during the financial year, the Company extendededucational support towards under privileged children across the country, partnering withits CSR partner ‘Smile Foundation’. SBI Life’s corporate ethos is aboutgiving back to the society with the objective of making a difference in the lives of theneedy.

Leveraging wider reach achieved through its 762 branch network, SBI Life hassystematically brought large rural areas under insurance. The Company has sold 23.4% oftotal policies in this segment in FY 2013-14. A total of 79,463 lives covered by SBILIFEare from the underprivileged social sector.

Awards bestowed on SBILIFE in FY 2013-14

Awards the Best Life Insurance Provider 2013 (Runner Up) by Outlook Money

Most Trusted Private Life Insurance Brand 2013 by The Economic Times, Brand Equity andNielsen Survey

Global Performance Excellence Award 2013 by Asia Pacific Quality Organisation. DigitalInclusion Skoch Awards 2013 – Enabling partners to collect premium through ElectronicFund Transfer – Cash & Direct Debit

Communication Excellence Award 2013 at 4th CMO Asia Awards

SBI Life recognised amongst Top-50 Great Places to work

Awards at the World HRD Congress - Dream Company to Work for 2014 in Private Insurance,Dream Employer of the Year-2014 – Ranked 4th and Employer Branding Award 2014’for Talent Management

Training Provider of the Year by Asia’s Training & Development ExcellenceAwards 2013

SBILIFE introduced several new products during FY 2013-14, in line with IRDAguidelines, to cater to diverse financial needs of a family. These products include: PureProtection Plans – Smart Shield and Saral Shield; Online Product – eShield;Guaranteed Income Plans – Smart Wealth Builder and Flexi Smart Plus; Money Back Plan- Smart Money Back Gold; Retirement Plans – Retire Smart and Saral Pension; ChildPlan – Smart Scholar; Variable Plans – CapAssure Gold, Flexi Smart Plus.

SBI Funds Management (P) Ltd. (SBIFMPL)

SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 6th largest Fund Housein terms of average ‘Assets Under Management’ and is a leading player in themarket with over 5 million investors.

• SBIFMPL posted a net profit of Rs.155.57 crores during FY 2013-14compared to Rs.85.68 crores in FY 2012-13. The Company mobilised over Rs.8000 crores indebt funds. SBIFMPL opened 51 new branches beyond top 15 cities across 23 states and oneUnion Territory, first by any Mutual Fund House in India, which takes Mutual Fund assetclass to pan-India investors.

• The average Assets Under Management (AUM) as on 31.03. 2014 stood at Rs.65,499crores with market share of 7.24% as against Rs.54,905 crores with market share of 6.72%as on 31.03.13, registering YoY average AUM growth of 19.20%.

SBI Global Factors Ltd. (SBIGFL)

SBIGFL is a leading provider of factoring services for domestic and internationaltrade. Factoring is a globally accepted mechanism for conversion of sales receivables intocash.

The Company’s services are especially suitable for MSME clients for freeing upresources locked in book debts. By virtue of its membership of Factors Chain International(FCI), it is able to ameliorate credit risk from export receivables under the 2 factormodel. Notwithstanding challenges in growing top line and improving asset quality in theprevailing economic slowdown, registering an operating profit of Rs.53 crores during FY2013-14.

The Company is adequately capitalised with AAA/ A1+ ratings from reputed ratingagencies for its borrowing programmes.

SBI Pension Funds Pvt. Ltd. (SBIPF)

SBIPF is one of the three Pension Fund Managers (PFM) appointed by Pension FundRegulatory & Development Authority (PFRDA) for management of Pension Funds under theNational Pension System (NPS) for Central Government (except Armed Forces) and StateGovernment employees. SBIPF(wholly owned subsidiary of the State Bank Group, commenced itsoperations from April 2008.

• SBIPF’s total Assets Under Management as on 31.03.2014 stood at Rs.18,624crores (YoY growth of 58 %). The Company maintained lead position amongst Pension FundManagers (8) in terms of AUM in both Government and Private sectors. Overall AUM marketshare in Private sector was 73%, while in the Government sector it was 36%.

• SBIPF has maintained lead in 6 asset categories in terms of returns sinceinception.

Awards bestowed on SBIPF in FY 2013-14

Adjudged ‘Pension Fund of the Year – 2013’ (second time in a row)

Conferred ‘Corporate Leadership Award (Pension category) for 2013’ and‘Financial Inclusion’ by the SKOCH Foundation in partnership with the Governmentof India

SBI General Insurance Company Ltd. (SBIGIC)

SBIGIC is a joint venture between State Bank of India and IAG Australia in which SBIholds 74% stake.

• SBIGIC’s strong focus is on disciplined pricing, fair and transparentclaims management practices.

• The cornerstone of the Company’s growth aspiration will be focussed on thebanca channel whilst selectively developing alternate channels and products that meetbusiness objectives.

• SBIGIC will be completed its fourth year of full operations during FY 2013-14andexpected to achieve breakeven during FY 2015-16.

• Gross Direct Written Premium stood at Rs.1,191.87 crores in FY 2013-14.

• The Company recorded a net loss of Rs.98.39 crores in FY 2013-14 comparedto a net loss of Rs.145.16 crores in FY 2012-13.

• The Company increased its market share to 1.53% in FY 2013-14 from 1.12%in FY 2012-13 and premium grew by 54% over FY 2012-13. The market share and premium growthrate is the highest in the industry.

• 2nd highest share in industry fire premium (among private insurers) and 3rdhighest share in industry PA premium (among PSU and private insurers).

• ICRAassignsclaimpayingabilityratingofiAAA,indicating highest claims payingability and a fundamentally strong position.

Awards bestowed on SBIGIC in FY 2013-14

Awarded Technology Maturity General Insurance Award for FY 2013 organised by Fintelekt,a media group focused on banking and insurance.

Runners up in Data Quality Asia Pacific Award 2013 during Data Congress held atMelbourne, Australia in March 2014 conducted by The International Association forInformation and Data Quality (IAIDQ), a professional society of experts interested inpromoting information and data quality.

SBIGIC has 2nd highest share in industry fire premium (among private insurers) and 3rdhighest share in industry PA premium (among PSU and private insurers).

SBI SG Global Securities Services Pvt Ltd. (SBISG)

• SBISG, a joint venture between State Bank of India and Societe Generale, was setup to offer high quality custody and fund administration services to complete the bouquetof financial services on offer by a financial conglomerate. SBISG commenced commercialoperations in Custody in May 2010 and Fund Accounting Services in September 2010.

• The Company has been achieving operating profits from FY 2011-12, though it hasyet to wipe out its setting up losses. Registered a Profit Before Tax of Rs.35.81 lakhs inFY 2013-14.

• The Assets Under Custody as on 31.04.2014 rose to Rs.1,15,701 crores compared toRs.51,629 crores on 31.04. 2013.

• The Assets Under Administration stood at Rs.62,901 crores as on 31.04.2014compared to Rs.52,639 crores as on 31.04. 2013.

Information of Subsidiaries and Joint Ventures Domestic Banking Subsidiaries

Exhibit 32: The performance highlights of the Associate Banks as on 31.03.2014 areas under:

(Rs. in crores)

S. No Name of the Bank SBI Share of ownership Total Assets Agg. Deposits Total Advances Op. Profit Net Profit CD Ratio CAR % Gross NPAs% Net NPA % Return on Equity %
Amt. %
1 State Bank of Bikaner & Jaipur 676.12 75.07 90,877 72,953 65,333 1,695 732 89.56 11.55 4.18 2.76 12.85
2 State Bank of Hyderabad 367.55 100.00 1,44,012 1,20,859 98,885 2,691 1,019 81.82 12.00 5.89 3.12 9.36
3 State Bank of Mysore 628.63 90.00 73,976 61,087 50,891 1,164 274 83.31 11.08 5.54 3.29 5.57
4 State Bank of Patiala 907.10 100.00 1,04,105 89,485 77,811 1,448 448 86.95 10.38 4.83 3.17 4.95
5 State Bank of Travancore 505.85 78.90 1,05,285 88,707 70,482 1,370 304 79.46 10.79 4.35 2.78 8.82

Exhibit 33:

Non Banking Subsidiaries

(Rs. in crores)

S. No Name of the Subsidiary Company Ownership (State Bank interest) / Crores % of Ownership Net Profit (Losses) for the FY 2013-14
1 SBI Capital Markets Ltd. (Consolidated) 58.03 100 262.63
2 SBI DFHI Ltd. 139.15 63.78 60.70
3 SBI Payment Services Pvt. Ltd. 2.00 100 0.33
4 SBI Mutual Fund Trustee Company Pvt Ltd. 0.10 100 1.65
5 SBI Global Factors Ltd. 137.79 86.18 -56.70
6 SBI Pension Funds Pvt. Ltd. 18.00 60 2.59

Exhibit 34:

Joint Ventures

(Rs. in crores)

S. No Name of the Subsidiary Company Ownership (State Bank interest) / Crores % of Ownership Net Profit (Losses) for the FY 2013-14
1 SBI Funds Management Pvt. Ltd. 31.50 63 155.77
2 SBI Funds Management (International) Pvt. Ltd.(USD) USD 50000 63 (0.46)
3 SBI Cards & Payment Services Pvt. Ltd. 471.00 60 293.10
4 SBI Life Insurance Company Ltd. 740.00 74 740.10
5 SBI-SG Global Securities Services Pvt. Ltd. 52.00 65 0.21
6 SBI General Insurance Company Ltd. 129.50 74 (98.39)
7 C-Edge Technologies Ltd. 4.90 49 163.80
8 GE Capital Business Process Mgt. Services Pvt. Ltd. 10.80 40 24.10
9 Macquarie SBI Infrastructure Mgt. Pte. Ltd. 2.25 45 USD 68,09,865
10 Macquarie SBI Infrastructure Trustee Ltd. - # LOSS USD42,884
11 SBI Macquarie Infrastructure Mgt. Pvt. Ltd. 18.57 45 7.84
12 SBI Macquarie Infrastructure Trustee Pvt. Ltd. 0.025 45 0.02
13 Oman India Joint Investment Fund-Mgt. Co Pvt. Ltd. 2.30 50 2.72
14 Oman India Joint Investment Fund-Trustee Co Pvt. Ltd. 0.01 50 0.00

# 100% Subsidiary of Macquarie SBI Infrastructure Mgt. Pte Ltd

RESPONSIBILITY STATEMENT

The Board of Directors hereby states:

i. that in the preparation of the annual accounts, the applicable accounting standardshave been followed along with proper explanation relating to material departures;

ii. that they have selected such accounting policies and applied them consistently andmade judgements and estimates as are reasonable and prudent, so as to give a true and fairview of the state of affairs of the Bank as on the 31st March, 2014, and of the profit andloss of the Bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Banking Regulation Act, 1949and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventingand detecting frauds and other irregularities; and

iv. that they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

During the year, Sarvashri Diwakar Gupta, Managing Director and Shri Pratip Chaudhuri,Chairman, retired on attaining superannuation on 31st July & 30th September 2013,respectively.

Shri Tribhuwan Nath Chaturvedi was nominated as Director under section 19(d) byGovernment of India w.e.f. 29th August, 2013. Smt. Arundhati Bhattacharya wasappointed as Managing Director under section 19(b) w.e.f. 2nd August, 2013 and thereafter,Chairman under section 19(a) w.e.f. 7th October 2013. Shri P. Pradeep Kumar was appointedas Managing Director under section 19 (b) w.e.f. 27.12.2013 on the Board.

The Directors place on record their appreciation of the contributions made by therespective outgoing Directors, namely, Shri Diwakar Gupta and Shri Pratip Chaudhuri to thedeliberations of the Board. The Directors welcome the new Directors Shri Tribhuwan NathChaturvedi, Smt. Arundhati Bhattacharya and Shri P. Pradeep Kumar on the Board.

The Directors also express their gratitude for the guidance and co-operation receivedfrom the Government of India, RBI, SEBI, IRDA and other government and regulatoryagencies.

The Directors also thank all the valued clients, shareholders, banks and financialinstitutions, stock exchanges, rating agencies and other stakeholders for their patronageand support, and take this opportunity to express their appreciation of the dedicated andcommitted team of employees of the Bank.

For and on behalf of the
Central Board of Directors
Date: 23rd May, 2014 Chairman
   

Peer Comparison

Company Market Cap
(Rs. in Cr.)
P/E (TTM)
(x)
P/BV (TTM)
(x)
EV/EBIDTA
(x)
ROE
(%)
ROCE
(%)
D/E
(x)
St Bk of India 182,144.42 16.66 1.54 15.19 10.0 0.0 0.00
Bank of Baroda 37,625.14 7.88 1.05 15.42 13.4 0.0 0.00
Punjab Natl.Bank 34,626.56 9.97 0.96 14.98 10.0 0.0 0.00
Canara Bank 18,431.95 7.51 0.76 12.25 10.4 0.0 0.00
Bank of India 17,649.30 6.86 0.67 15.52 11.2 0.0 0.00
IDBI Bank 14,339.28 13.11 0.65 12.91 5.4 0.0 0.00
Union Bank (I) 12,067.09 7.36 0.71 13.17 10.4 0.0 0.00
UCO Bank 10,086.22 6.63 0.95 15.18 16.8 0.0 0.00
Central Bank 9,507.10 0.00 0.77 14.96 0.0 0.0 0.00
Syndicate Bank 8,978.34 5.15 0.82 15.00 16.7 0.0 0.00
I O B 8,659.79 18.59 0.60 13.25 4.5 0.0 0.00
Oriental Bank 8,323.84 7.62 0.65 12.42 9.2 0.0 0.00
Indian Bank 6,907.67 6.59 0.60 13.00 10.3 0.0 0.00
Allahabad Bank 6,608.84 7.58 0.60 12.78 10.9 0.0 0.00
Corporation Bank 5,923.38 10.91 0.59 13.55 5.7 0.0 0.00

Futures & Options Quote

 
Expiry Date
2454.25 =0.00  (0.0%)
Instrument: FUTSTK
Expiry Date: 28 Aug 2014
Open Price: 2,480.00
Average Price: 2,473.79
No. of Contracts Traded: 3,403,125
Open Interest: 4,569,250
Underlying: SBIN
Market Lot: 125
Previous Close: 2,454.25
Day’s High | Low: 2,498.00 | 2,450.70
Turnover (Cr.): 841.86
Open Int. Change: 0.00 (0.0% )
View detailed F& O quotes >>

Key Information

Key Executives:

Arundhati Bhattacharya , Chairman  

A Krishna Kumar , Managing Director  

S Venkatachalam , Director  

D Sundaram , Director  


Company Head Office / Quarters:
State Bank Bhavan 14th Floor,
Madame Cama Road Nariman Point,
Mumbai,
Maharashtra-400021
Phone : 91-22-22883888/22022678
Fax : 91-22-22855348
E-mail : gm.snb@sbi.co.in
Web :
http://www.sbi.co.in
http://www.statebankofindia.com
Registrars:
Datamatics Financial Services
Plot No B-5 MIDC
Part B Cross Lane
Marol Andheri(E)
Mumbai-400093

Fund Holding

 
Scheme Name No. of Shares
HDFC Equity Fund - (G) 5,232,388
HDFC Top 200 Fund (G) 3,855,450
HDFC Tax Saver Fund (G) 1,377,140

Calendar

Aug-2014
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28 29 30 31 01 02 03
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