Management Discussion and Analysis
ECONOMIC BACKDROP AND BANKING ENVIRONMENT
The global economy has entered 2013 with reduced downside risks, as the US fiscal cliffand a flare up of the euro area crisis being averted. With downside risks receding, it isnow worth considering the prospects for an improvement in global growth. As per the IMFforecast, global economy is forecast to grow by 3.3% in 2013 (vis-a-vis 3.2% in 2012). Thehousing sector in the US economy - the epicentre of the downturn - has made considerableprogress in repairing its balance sheet. Policy makers in the euro zone area havereconfirmed their commitment to resolution of the euro crisis by working on a common euroarea integration framework. Going forward, US economy is supposed to gain continuedtraction, even though a sustained pick-up in euro area may take a while to materialize.Growth in emerging market and developing economies is projected at 5.3% in 2013 (vis-a-vis5.1% in 2012). On the whole, an environment of progressively lower global tail risks andcontinued structural reforms in various economies will favourably impact global growthoutlook in 2013.
India's economic growth touched 5% in FY13-a decadal low. This was mainly due to theprotracted weakness in industrial activity aggravated by domestic supply bottlenecks(manufacturing sector expanded at 1% in FY13 vis-a-vis 2.7% in FY12), and slowdown in theservices sector reflecting weak external demand.
Agricultural production was impacted during the year reflecting deficiency and unevendistribution of rainfall (agricultural sector expanded at 1.9% in FY13 vis-a-vis 3.6% inFY12). It dented Kharif sowing, however, recovery of rainfall from September 2012 onwardshelped maintain soil moisture during the rabi season. The third advance estimates of cropproduction for FY13 indicate a marginal decline of 1.5% in overall food grain productionto 255.4 million tonnes from 259.3 mt in the previous year. The current stock offoodgrains 59.7 million tonnes at end-March 2013 is sufficient to meet the requirement ofthe country.
Headline inflation after progressively rising from 7.5% in Apr'12 to over 8% tillSept'12, has now declined to 4.9% in April 13, a 41 month low and within the RBI comfortzone. Core inflation has also declined to 2.8% in Apr'13, a 39 month low. The CPI -RuralUrban (CPI-RU) has eased to 9.4% in Apr'13. This was the lowest CPI inflation in 13months. Various other CPI indicators support the contention that consumer inflation mayhave peaked out. Interestingly, rural inflation is coming down at a faster rate than urbanareas indicating some deceleration in rural demand as well. Moreover, the calibratedincrease in diesel prices are not likely to continue over the entire fiscal, with thecurrent under-recovery on diesel at lower levels. This will further reducethe prospects ofan upturn in inflation over FY14.
The growth of industrial production decelerated to 1% during FY13 (vis-a-vis 2.9% inFY12). Even though, there has been a pick-up in industrial activity in March 2013,contraction in capital goods and mining sector continues to pose a downside risk.
India's current account deficit (CAD) touched a sharp 6.7% of GDP in the third quarterof FY13. The widening in CAD was in part attributed to a deceleration in India's exports(decline of 1.8% in FY13). With regards to the concerns regarding the widening currentaccount deficit, we believe soft global commodity prices, reduced volatility in Indianrupee and Government's export promotion measures will facilitate a reduction in tradedeficit and subsequently CAD over the medium term.
However, the good news is that a look at the direction of Indian exports, reveal ashifting trend with exports to Asia, Africa and Latin America during FY13 touching 65% ofour total export basket. This is indeed a development with significant import as Asia'saccelerating economic growth has been shifting the global economic and industrial centresof gravity away from the US and EU, raising the importance of Asia in world trade andboosting the prospects of South-South trade.
On the hindsight, India still remains one of the fastest growing economies in theworld, and continues to be a favoured destination for investment. The foreign investmentflows into the debt markets have increased in the recent months, with a cumulative flow of$3.1 bn during the calendar year 2013 (till May'17). Moreover, the recent decision toreduce the withholding tax on Government and INR-denominated corporate debt has boostedthe FN debt flows. On the whole, portfolio capital inflows increased to $27.5 billionduring FY13 (vis-a-vis $16.8 bn in FY12). Net FDI inflows increased to $22.9 bn in FY13(vis-a-vis $21.8 bn in FY12).
The slowdown in the economy and monetary tightening has affected banks' business in2012-13. Aggregate deposit growth of All Scheduled Commercial Banks (ASCB) grew higher by14.3% in FY13 against 13.5% growth in FY12, while growth in credit decelerated sharply to14.1% in FY13 from 17.0% in FY12.
RBI kept the key interest rates unchanged till the end of third quarter of FY13.However, to ease pressure on liquidity, RBI has cut CRR by 75 bps from 4.75% to 4.0% andslashed SLR by 100 bps to 23%. As a part of monetary transmission, deposit rate of majorbanks for more than one year maturity softened from 8.509.25% in FY'12 to 7.5-9.0% inFY'13, and base rate of major banks fell from 10.0-10.75% to 9.70-10.25% in the sameperiod. Growth deceleration impinging on corporate profitability and move to system-drivenidentification of NPAs, non-performing assets of banks increased during the year.
In a new development, RBI is likely to issue new bank licenses during FY14, which apartfrom providing an impetus to financial inclusion, is expected to intensify competition inbanking sector in medium term. Meanwhile, with the implementation of Basel III norms byMarch 2018, Indian banks will be required to raise significant capital from the market.
The other policy initiatives taken by RBI during the last fiscal, include among others(a) Banks to provide "CTS-2010" standard cheques to customers, (b) Enhancedprovisioning requirement on certain categories of non-performing advances and restructuredadvances, (c) Revised guidelines for electronic payment transactions and (d) Internationaluse of debit and credit cards.
In the Monetary Policy announced in May 2013, RBI reduced the repo rate by 25 bps.Depending upon growth inflation dynamics, RBI is expected to cut rates further during FY14to boost growth. It will provide business opportunity for banks and threat as well to dobusiness with lower margins.
A strong and resilient banking system is the foundation for sustainable economicgrowth, as banks are at the centre of the credit intermediation process between savers andinvestors. Moreover, banks provide critical services to consumers, small and medium-sizedenterprises, large corporate firms and governments who rely on them to conduct their dailybusiness. In this context, it is needless to mention that the Indian banking sector hasdemonstrated strong resilience during the global financial crisis. Such resilience hasalso been ably abetted by RBI through initiation of Basel III norms embedded withprovisions and guidelines for higher capital adequacy norms to be adopted by the banks inIndia.
During FY14, economic activity is expected to show a modest improvement over last year,with a pick-up likely in the second half of the year. Conditional upon a normal monsoon,agricultural growth could return to trend levels.
The outlook for industrial activity remains subdued, with a recovery more likely in thelater part of FY14. In this context, the National Manufacturing Policy (NMP) sets theframework for revitalization of manufacturing sector of the country. Rapid implementationof the NMP and the creation of National Manufacturing & Investment Zones can beseedbeds not only for manufacturing, but also concomitant development of the servicesector. Additionally, continued monetary accommodation by RBI will also support industrialgrowth. A declining inflation trend, as being witnessed currently will also help to propup consumption demand to a certain extent as well.
Infrastructure however, remains an area for improvement. It is imperative that wecontinue to support a meaningful public-private partnership with inclusiveness andsustainability as essential prerequisites for sustained growth rates over the next decade.
On the inflation front, we believe average level of inflation will trend downwards andmay be closer to RBI comfort level in FY14, based on the emerging trend of continued softinternational commodity prices, and provided the rupee remain stable. Such a developmentwill also reduce the worries on CAD during the course of FY14. Additionally, capitalinflows to emerging economies, including India are likely to remain buoyant in FY14reflecting benign monetary conditions in developed economies.
We also believe that fiscal consolidation will remain a priority, with Governmentclearly making its intent clear several times. It may be noted that the Government plansto trim the fiscal deficit to 3% by 2016-17.
Exports are unlikely to post significant gains in FY14, as the global economy willwitness only a gradual recovery. The import elasticity of our growth remains significantand going forward we would need to develop a new paradigm of a low-carbon economy. It isnow becoming clear that the centre of gravity of the world economy is shifting to Southand for trade, investment and finance India may have to look more and more to the South.
On the aggregate, we believe GDP to grow by about 5.5%-6% during FY14. Fasterresolution of projects currently awaiting regulatory clearances may provide the muchneeded impetus to domestic investment and reinvigorate growth prospects.
Finally, amidst growth slowdown in emerging Asian economies, fears of a"middle-income trap" are now growing rapidly. Empirical evidences (IMF, 2013)suggest that sound economic institutions, favourable demographics and trade structures canall reduce the likelihood of such a growth trap. Though India is currently poisedfavourably on demographics and trade structures, the current slowdown may just provide theright occasion for India to move from physical resource intensive growth to human resourceintensive growth. Over the medium term, India's opportunity for accelerated developmentlies in human capital formation. There are huge opportunities for expansion of servicesector provided we can accelerate our programs for skill formation. This is all the moreimportant given that services sector currently contributes to more than 60% of India'sGDP.
The fact that India has a young population also implies that Indian banks are movingtowards a right mix of assisted and self-serviced channels to provide a rich, unified andconsistent banking experience.
For example, Green Channel Counters are the latest innovation in the series for banksto serve its customers in an eco friendly atmosphere. With continued regulatory changes,Indian banks will have more of opportunities in the area of financial inclusion, ruralbanking and mobile banking in their quest for a new banking paradigm.
The Operating Profit of the Bank for 2012-13 stood at Rs 31,081.72 crores as comparedto Rs 31,573.54 crores in 2011-12 registering a marginal decline of 1.56%. The Bank hasposted a Net Profit ofRs 14,104.98 crores for 2012-13 as compared to Rs 11,707.29 croresin 2011-12 registering a growth of 20.48%.
While Net Interest Income recorded a growth of 2.40%, the Other Income increased by11.73%, Operating Expenses increased by 12.33% attributable to higher staff cost and otherexpenses.
Net Interest Income
The Net Interest Income of the Bank registered a growth of 2.40% from Rs 43,291.08crores in 2011-12 to Rs 44,331.30 crores in 2012-13. This was due to higher growth in theadvances and investment portfolios.
The gross interest income from global operations correspondingly rose from Rs1,06,521.45 crores to Rs 1,19,657.10 crores during the year registering a growth of12.33%.
Interest income on advances in India registered an increase from Rs 77,309.15 crores in2011-12 to Rs 85,782.26 crores in 2012-13 due to higher volumes. The average yield onadvances in India has declined from 11.05% in 2011-12 to 10.54% in 2012-13. Interestincome on advances at foreign offices has grown by 26.17%.
Income from resources deployed in treasury operations in India increased by 13.82%mainly due to higher average resources deployed. The average yield, which was 7.51% in2011-12, has increased to 7.54% in 2012-13.
Total interest expenses of global operations increased from Rs 63,230.37 crores in2011-12 to Rs 75,325.80 crores in 2012-13. Interest expenses on deposits in India during2012-13 recorded an increase of 20.88% compared to the previous year, whereas the averagelevel of deposits in India grew by 14.3%. The average cost of deposits has consequentlyincreased from 5.95% in 2011-12 to 6.29% in 2012-13.
Non-interest income stood at Rs 16,034.84 crores in 2012-13 as against Rs 14,351.45crores in 2011-12 registering an increase of 11.73%.
During the year, the Bank received an income of Rs 715.51 crores (Rs 767.35 crores inthe previous year) by way of dividends from Associate Banks/ subsidiaries and jointventures in India and abroad.
There was an increase of 8.29% in the Staff Cost from Rs 16,974.04 crores in 2011-12 toRs 18,380.90 crores in 2012-13. Other Operating Expenses registered an increase of 19.89%mainly due to increase in expenses on rent, taxes and lighting, advertisement &publicity, law charges, postage, telegrams & telephones, insurance and miscellaneousexpenditure.
Operating Expenses, comprising both staff cost and other operating expenses, haveregistered an increase of 12.33% over the previous year.
Provisions and Contingencies
Major amounts of provisions made in 2012-13 were as under:
Rs 961.29 crores write back from provisions for depreciation on investments,excluding amortization of premium on 'Held to Maturity' category (as against Rs 663.70crores provided towards depreciation on investments in 2011-12).
Rs 5,953.88 crores towards Provision for Tax, excluding deferred tax creation ofRs 107.97 crores (as against Rs 6,320.09 crores in 2011-12 excluding deferred tax reversalof Rs 455.93 crores).
Rs 11,367.79 crores (net of write-back) for non-performing assets (as against Rs11,545.85 crores in 2011-12).
Rs 749.61 crores towards Standard Assets (as against Rs 978.81 crores in2011-12). Including the current year's provision, the total provision held on StandardAssets amounts to Rs 5,289.58 crores.
Reserves and Surplus
An amount of Rs 4,417.86 crores (as against Rs 3,516.98 crores in 2011-12)was transferred to Statutory Reserves.
An amount of Rs 19.17 crores (as against Rs 14.38 crores in 2011-12) wastransferred to Capital Reserve Fund.
An amount of Rs 6,453.26 crores (as against Rs 5,536.50 crores in 2011-12) wastransferred to Other Reserve Funds.
Table 1: Key Performance Indicators
|Indicators || |
| ||2011-12 ||2012-13 ||2011-12 ||2012-13 |
|Return on Average Assets (%) ||0.88 ||0.91 ||0.89 ||0.89 |
|Return on Equity (%) ||16.05 ||15.94 ||16.49 ||15.97 |
|Expenses to Income (%) (Operating Expenses to Total Net Income) ||45.23 ||48.51 ||53.51 ||56.35 |
|Book Value per share (Rs ) ||1214.78 ||1394.79 ||1540.64 ||1769.19 |
|Basic Earnings Per Share (Rs ) ||184.31 ||210.06 ||241.55 ||266.82 |
|Diluted Earnings Per Share (Rs ) ||184.31 ||210.06 ||241.55 ||266.82 |
|Capital Adequacy Ratio (%) (Basel-I) ||12.05 ||11.22 ||11.84 ||11.07 |
|Tier 1 ||8.50 ||8.23 ||8.30 ||8.10 |
|Tier II ||3.55 ||2.99 ||3.54 ||2.97 |
|Capital Adequacy Ratio (%) (Basel-ll) ||13.86 ||12.92 ||13.68 ||12.82 |
|Tier I ||9.79 ||9.49 ||9.65 ||9.46 |
|Tier II ||4.07 ||3.43 ||4.03 ||3.36 |
|Net NPAs to Net Advances (%) ||1.82 ||2.10 ||1.81 ||2.07 |
The total assets of the Bank increased by 17.28% from Rs 13,35,519.23 crores at the endof March 2012 to Rs 15,66,261.04 crores as at the end of March 2013. During the period,the loan portfolio increased by 20.52% from Rs 8,67,578.89 crores to Rs 10,45,616.55crores. Investments increased by 12.41% from Rs 3,12,197.61 crores to Rs 3,50,927.27crores as at the end of March 2013. A major portion of the investment was in the domesticmarket in government securities.
The Bank's aggregate liabilities (excluding capital and reserves) rose by 17.24% fromRs 12,51,568.03 crores on 31st March 2012 to Rs 14,67,377.36 crores on 31st March 2013.The increase in liabilities was mainly contributed by increase in deposits and borrowings.The Global deposits stood at Rs 12,02,739.57 crores as on 31st March 2013 against Rs10,43,647.36 crores as on 31st March 2012, representing an increase of 15.24% over thelevel on 31st March 2012. The borrowings increased by 33.21% from Rs 1,27,005.57 crores atthe end of March 2012 to Rs 1,69,182.71 crores as at the end of March 2013 mainlyattributable to borrowings from RBI in India and borrowings & refinance outside India.
I CORE OPERATIONS
1.1. Customer Service
Our vision statement unambiguously spells out the centricity of the customer in theBank's business strategies and operations. A multi-tiered structure of committeesconstantly review existing services and suggest improvements. Important issues raised bythese Committees and action taken thereon, as well as analysis of the consolidated datafor customer grievances for all Circles are placed before the Customer Service Committeeof the Board every quarter, to identify common systemic and policy issues that requirerectification.
The Bank has a well defined and documented Grievance Redressal Policy which providesfor:
A dedicated Customer Care Cell
Bank's Web based Complaint Management System (CMS) has been redesigned andlaunched as a single online Grievance Lodging and Redressing System for the Bank.Customers can lodge their complaints through various channels including written complaintat branch, by calling at the toll free number of Bank's Contact Centre 1800 425 3800 /1800 11 22 11, online through Bank's website www.sbi.co.in, sending SMS message 'UNHAPPY'to number 8008 202020 etc. All complaints are lodged through CMS and are acknowledged witha unique ticket number immediately on lodging. Bank has mandated and has been able toredress a majority of the customer grievances within a maximum period of three weeks ofreceipt, as against the time limit of 30 days prescribed in the BCSBI Code. All ATMrelated complaints of Bank customers are redressed within the RBI-prescribed 7 days.
While the Bank strives to achieve the highest standards in customer service, ithas also put in place a Board approved Compensation Policy to compensate the customerfinancially in the unlikely event of any slippage in services extended. The Policy ensuresthat the aggrieved customer is compensated without having to ask for it.
Over 70% of the recommendations of the Damodaran Committee have already beenimplemented.
Suitable structure has been put in place at the Branches, Regional BusinessOffices, Local Head Offices, Administrative offices and at the Corporate Centre of theBank for handling requests and appeals under the RTI Act 2005, Consumer Forums, etc.
Customer Friendly Initiatives
During 2012-2013, in the backdrop of slowing investment/consumption/net exports,constrained food production, high inflation, distress in several industry andinfrastructure sectors-textile, chemicals, iron and steel, food processing, construction,telecom-major initiatives were taken by your Bank towards catalyzing investment &growth, to facilitate the flow of credit to critical sectors of the economy includingagriculture, infrastructure, micro, small & medium enterprises, housing, exports, andwith a view to reducing customer distress/pain points & raising levels of customersatisfaction. These initiatives include:
> Pricing concessions
Interest rates Base rate was twice reduced during the year from 10% to9.75% as on 20/9/2012, and then again to 9.70% as on 4/2/2013, the lowest amongst allbanks and so pegged, to bring relief to all borrowers, particularly SME units, home loanborrowers, who continued to enjoy the lowest home loan interest rates, and commercial realestate accounts, which were aligned with the prevailing retail housing loans in terms ofinterest rates.
Guarantee fees were absorbed by the Bank, both for exporters( ECGC fees) andfees payable by MSE units to CGTMSE for guarantee cover on collateral free loans upto Rs 1crore.
> Process innovations
Relationship management platform was strengthened across businessverticals-Accounts Management teams for corporates, premier banking services for highnetworth customers, relationship managers for SMEs (ME&SE)
The number of processing cells(RACPCs/ SMECCs), supported by loan originationsoftware, were increased and revamped, for quicker processing of loans
Touch-points with customers were expanded, through opening of branches andincreasing Customer Service Points, BC outlets in remote areas
Cluster models were introduced at all currency chest branches for efficient cashmanagement at semi-urban/rural areas
A dedicated wing was created in all processing cells to monitor NPA accounts
> Product changes
We have a great CASA franchise and savings bank accounts form thebulwark. The savings bank account is normally the first on-board facility availed by acustomer and the referral point for all future services from the Bank. To preserve andenhance the value of our savings bank offering, your Bank introduced the followinginitiatives during the year :
Minimum balance in savings account was done away with.
The penalty on non-maintenance of Average Quarterly Balance stands withdrawn.
The inter-core transfer transactions have been made free, and cash depositminimum charges were reduced from Rs 25 to Rs 10.
Introduction of Personal Accident Insurance Policy for all savings bank accountholders at a nominal rate received tremendous response.
Proactively, providing CTS-2010 compliant multi- city chequebooks benefited allour customers
Unfixed Deposits scheme applicable to term deposits of 6 months was extended toterm deposits upto one year.
A new tractor loan scheme with relaxations in eligibility, margin, security,interest & upfront fee was launched. Also a revised KCC scheme was rolled out for thebenefit of farmers. Relaxed collateral security norms for all agri loans upto Rs 1 lac wasintroduced.
SBI loan scheme for Vocational Education & Training was launched while loanamount for studies abroad was raised to Rs 30 lacs
> Technology upgrades
SBI through CMP Centre was the first Bank to use NPCI Aadhar PaymentBridge System (APBS) for transferring LPG subsidy based on Aadhar Number.
The Bank launched an Online Savings Bank Application facility and e-RD,TDR/STDRaccounts which evoked enthusiastic response from the customers. Issuance of TDR/STDRthrough ATMs have been operationalised.
Centralised printing and mailing of current account/OD/Cash credit statements,housing loan interest certificates, deposit accounts' certificates to enhance customerconvenience, were initiated during the year
The Bank issued a series of new plastic cards for the convenience of theirtarget groups, e.g State Bank Business debit card for corporate customers in twovariants-Pride & Premium, Insta Deposit cards enabling traders & service providersto quickly deposit cash, State Bank Virtual Card for retail customers
State Bank MobiCash Easy, a mobile wallet, was introduced during the year
E-challan cum return for collection of Employees Provident fund, throughbranches and corporate internet, commenced during the year.
I.2. BUSINESS GROUPS
A. GLOBAL MARKETS OPERATIONS
Global Markets Unit manages the Bank's rupee liquidity, compliance with reserverequirements and investment portfolio of the Bank besides offering a wide range of foreignexchange and hedging products to the customers. It also offers portfolio managementservices to large retirement funds. It constantly endeavors to keep liquidity at theoptimum level while maximizing the returns.
During the year the Reserve Bank of India reduced Cash Reserve Ratio by 0.75% andStatutory Liquidity Ratio by 1%. The Bank therefore had ample liquidity during the year.This offered the Bank opportunities to invest in short term money market instruments likeCommercial Papers (CPs) and Certificate of Deposits (CDs). Bank invested over Rs 75,000Crores in CDs and CPs at an average spread of 65 to 75 basis points (BPs) over applicableyield on Treasury Bills, thereby earning additional interest income.
The yield on Government securities declined during the year responding to the Repo ratecuts of 100 BPs by the RBI and moderation in inflation. Yield on the benchmark 10 yearCentral Government securities declined from 8.63% in April 2012 to 7.99% by 31stMarch 2013.
This reduction in yield offered opportunities for churning the SLR portfolio of theBank.
We booked more than Rs 200 Crores from active management of the portfolio. Despite afall of 64 BPs in yield on Government Securities, the return on SLR portfolio was onlymarginally lower by 5 basis points, because of dynamic rebalancing of the portfolio.
As the yields were in a declining trend, the Bank decided to increase duration of theportfolio. The Bank purchased long dated Securities of over Rs 35,000 Crores of Centraland State Governments. The Bank also invested in high yielding corporate bonds aggregatingto more than Rs 10,000 Crores during the year. The gross corpus of funds under themanagement of Global Markets was close to Rs 4 lac Crores as on 31st March2013.
Equities witnessed a turnaround this year led by improved economic situation in theUSA, reduced stress in Eurozone, pro-reform measures of the Indian Government as well asrate cuts by the RBI. While the Bank remains invested in multiple strategic positions,Global Markets increased proprietary trading in Nifty stocks. The Bank also used Mutualfund schemes for liquidity management and higher returns. The Bank made a profit of aboutRs 600 Crores from Equity and Mutual Funds.
The Bank continued to explore opportunities in the area of private equity and venturecapital fund investments. During the year, investments of Rs 100 Crores were made indifferent venture capital funds. Bank also partially exited from one of the private equityinvestments during FY13 resulting in a profit in excess of Rs 50 Crores at an IRR of morethan 45.25%. Due to favorable valuations and market conditions, Bank also exited fromanother strategic investment resulting in a profit of Rs 65 Crores. The Bank alsoparticipated in the primary market and disinvestment programme of the Government of Indiathrough Offer For Sale (OFS) route by investing about Rs 1,300 Crores.
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. Given the large presence across the country, the Bank provides a worldclass technology platform to seamlessly process currency flows between its customersthrough branches and the dealing room. This is part of our continuous endeavour to provideenhanced services to our customers. The Treasury Marketing outfits complement this byengaging with customers to provide them with inputs about markets and suggest products tosuit their requirements. The Bank earned income of over Rs 1600 Crores from covering thecustomer flows in foreign exchange, hedging, gold, and proprietary trading, registering anincrease of 18%. Global Markets also manages FCNR(B) corpus of the Bank and provides fundsfor Export Finance in Foreign Currency and FCNR(B) loans.
The Bank was also ranked number one in the "Best for FX options" and"Best for FX Products and Services" categories and number two in the "Bestfor FX Research & Market Coverage" category in the same poll. These help us toconsistently improve our service to our esteemed customers.
The Bank provides portfolio management services to an array of retirement funds in thecountry consistently giving better returns. The Portfolio Management Services section,with an AUM of over Rs 2,38,000 Crores, has consistently outperformed private sector peersin generating returns for the EPFO funds. Last year, the bank was adjudged the best fundmanager for EPFO.
B. CORPORATE BANKING GROUP
The Bank's Corporate Banking Group consists of three Strategic Business Units viz.Corporate Accounts Group, Transaction Banking Unit and Project Finance & Leasing SBU.
B.1. Corporate Accounts Group (CAG)
CAG is the dedicated SBU for handling the large credit portfolio of the Bank. The SBUhas Offices in 6 regional centers viz. Mumbai, Delhi, Chennai, Kolkata, Hyderabad andAhmedabad headed by General Managers. The business model of CAG is centered around theRelationship Management concept and each client is mapped to a Relationship Manager whospear-heads a cross-functional Client Service Team. The Relationship strategy is anchoredon delivering integrated and comprehensive solutions to the clients, including structuredproducts, within a strict Turn-Around-Time. The principal objective of the strategy is tomake SBI the first choice of the top corporates thereby deepening the wallet-share andimproving the Return on Capital Employed. A sustained Account Planning exercise withrigorous review by senior management sets the pace for the Relationship Management in CAG.
Table 2: Business Performance of CAG
(Rs in cr)
|Facility ||Mar-12 ||Mar-13 ||YoY Growth |
|Fund Based (O/s) ||125286 ||175831 ||40% |
|Non Fund Based (Vol) ||337486 ||409477 ||21% |
While the Fund Based outstandings of CAG constitute 16% of total credit portfolio ofthe Bank, CAG also handles about 59% of the domestic forex business of the Bank. Duringthe year, CAG handled several high value deals for clients such as Essar Oil, HDFC,Hindalco Industries, Essar Steel, Power Grid Corporation, DVC, JSW Energy etc.
In an environment of depreciating Rupee, several CAG clients prefer to borrow inforeign currency. Significant International business is thus originated from CAG clientslike PSU Oil Majors and groups such as Tata, Reliance, Essar, Adani, JSW, etc. In thehighly competitive area of Acquisition Funding also, CAG has registered a strong presencethrough deals such as Hinduja's acquisition of Houton International Inc, USA and B CJindal group's acquisition of Exxon Mobil's global BOPP business.
The Asset quality of CAG remained well under control with the Gross NPAs at 0.57% oftotal advances. About 87% of CAG's portfolio is investment grade with 40% carrying thehighest rating from the External Credit Rating Agencies.
In the backdrop of the robust growth of CAG, it is proposed to open additional Officesin major centres beginning with Mumbai and Delhi. All CAG Offices are now headed byGeneral Managers in line with the rising business profile of the Group and to facilitateinteraction at senior level with due regard to the high profile of the CAG clients.Keeping in view the critical importance of the delivery platform, the incumbency of theChief Operating Officer has also been upgraded to the level of Dy. General Manager in allCAG units.
B.2. Transaction Banking Unit (TBU)
TBU oversees Cash Management Products, Trade Finance and Supply Chain (Dealer / Vendor)Finance and has expanded its activity during the last three years.
Cash Management Product (CMP)
collection services in the Bank are now offered through 1219 authorized brancheslocated at 722 Centres. Besides usual cheque and cash collections, Doorstep Banking forcash / cheque pickup and collections for Public Issues (IPO/Bonds), are being handled byCMP. Payment services comprising Dividend Warrants, Multi City Cheques, IOIs and e-paymentare extended through all branches. CMP Centre has integrated the State Government PaymentsSystems with the Core Banking Solution of the Bank providing Centralized Payment Solutionsto the State Governments in their ambitious National e-Governance Project (NeGP). SBI wasthe first Bank to use NPCI Aadhar Payment Bridge System (APBS) for transferring LPGsubsidy based on Aadhar Numbers.
e-Trade SBI, a web-based portal, to enhance customer comfort and provideeasy access to trade finance services, by enabling customers to lodge Letters of Credit,Bank Guarantees and Bills Collection/ negotiation requirements online from any corner ofthe world has been well received, with 1326 Corporates registered under e-Trade SBI as on31.03.2013 and more than 11000 transactions per month through e-Trade platform.
e-VFS ( Electronic Vendor Financing Scheme) & e-DFS ( Electronic DealerFinancing Scheme) are fully automated and secured products, designed to ensureefficient management of working capital cycle of the corporates and sustained growth andprofitability of business partners.
Financial Institutions Business Unit (FIBU), a dedicated vertical createdfor capturing potential business opportunities from financial institutions, has been ableto bring on board 15 Insurance Companies, 26 Mutual Fund Companies, 45 NBFCs and 15 Banks.
B.3. Project Finance & Leasing SBU (PFSBU)
PFSBU deals with the approval and arrangement of funds for large projects ininfrastructure sectors like power, telecom, roads, ports, airports, other urbaninfrastructure as also other non-infrastructure projects in sectors like metals, cementetc., with certain threshold on minmum project cost.
Table 3 : Business Performance of PFSBU
(Rs in cr.)
| ||2011-12 ||2012-13 |
|Project Cost ||109293 ||166299 |
|Project Debt ||84858 ||88033 |
|Sanctioned Amount ||24976 ||24119 |
|Syndication Amount ||18160 ||33454 |
As on 31.03.2013, t he portfolio of infrastructure projects under implementation withPFSBU involves Power projects with aggregate capacity of 52,862 MW; Telecom Projectsserving 303 million subscribers; Road projects covering 5,386 kms; new Ports to handle 40MTPA multi-purpose cargo and 1.2 million TEU of container capacity; Metro project inHyderabad besides a host of projects in steel, cement, Urban Infra, CRE etc. During theyear, a total (FB + NFB) of Rs 12,884 crores (Rs 15,410 crores in FY 12) were disbursed tothese projects.
Table 4: Major deals during 2012-13:
|Project ||Details |
|Tata Steel Odisha ||Integrated Steel Plant of 6 mio TPA capacity. |
|ONGC Petro-additions ||Greenfield Petro-Chemical Plant of 1100 KTPA of ethylene and 400 KTPA of propylene. |
|Jindal Power ||Setting up Thermal Power Plant of 1200 MW capacity. |
|Videocon Industries ||Term loan refinance and SBLC for Mozambique Oil operations. The deal won the Business World Magna best structured deal of the year award. |
The Bank has constituted a panel of 21 eminent Consultants who are former CEOs/Directors of leading PSUs with domain expertise in various important sectors. The expertpanel has significantly enhanced the capability of PFSBU in evaluating the techno-economicfeasibility of projects in critical sectors like Power, Oil Refining, Metals, Fertilizers,Telecom etc.
C. MID CORPORATE GROUP
Mid Corporate Group (MCG), through its 13 regional offices at Ahmedabad, Bangalore,Chandigarh, Chennai (2), Hyderabad, Indore, Kolkata, Mumbai (2), New Delhi (2) and Pune,has 60 branches as on 31.03.2013. During the year, the advances grew from Rs 1,70,442crores to Rs 2,04,853 crores.
Looking to the expansion and growth in business, both in number and volumes, anadditional Chief General Manager (CGM) was posted in October 2012 at the Mid CorporateGroup, Corporate Centre. The distribution of work between the 2 CGMs is based ongeographical lines, with one looking after Northern and Southern regions and the otherEastern and Western regions -assisting the DMD & Group Executive in handling theincreased number of MCROs/MCG branches and the growing complexities of business.Similarly, an additional General Manager has been posted at Delhi, Mumbai and ChennaiRegional Offices during 2012-13, with clear allocation of MCG branches and attendantresponsibilities. The doubling of General Managers at these centres has provided customerswith greater access to senior officials, and has also resulted in improved credit delivery- with greater thrust on attracting good quality new business. During the year, theincumbency of 16 Mid Corporate branches was upgraded from Assistant General Manager (AGM)to Deputy General Manger (DGM). With these branches now being headed by DGMs, instead ofAGMs earlier, the customers would have more effective resolution of their credit and otherrelated problems.
Account Management Team (AMT) Model, with manageable number of accounts in each team,has been implemented at all branches (214 AMTs), for better credit delivery and focusedattention to individual accounts. In the AMT set-up, both pre and post-sanctionformalities are handled by the same team - consisting of Relationship Manager, CreditAnalyst and Service Officer, which helps in having a holistic view of the requirements ofcustomers as also the underlying risks.
The MCG held several conclaves, essentially as brainstorming sessions with the keyfunctionaries to understand and analyse the trends of business. The frank and detailedexchange of views between the top executives and the operating officials on the ground, inthese conclaves, were extremely useful in planning business growth and asset management.
As a result of a concerted drive for selecting good quality assets by making pricingand other terms more attractive for top rated customers, the total percentage of assetsabove investment grade grew from 64.26% as on March 2012 to 68.31% as on March 2013.
The Group also assisted companies in India to acquire assets / companies overseas andprovides support for such expansion plans, including by way of external loans to overseassubsidiaries/JVs (backed by LoCs) through the International Banking Group. Over the years,the Group has helped many such acquisitions by Indian companies in USA, Europe, Australia,Africa, etc.
Simultaneously, a conscious attempt was made to improve the asset quality throughintense engagement with promoters of weak/stressed accounts. Consequently, the NonPerforming Assets (NPAs) of MCG declined from Rs 19,777 crores as on December 2012 to Rs18,443 crores as on March 2013, and NPAs as a percentage of total advances were not onlycontained but also significantly brought down in the last quarter of 2012-13.
The Mid Corporates have been more severely affected by the down-turn in economy -leading to deterioration in asset quality. The processes of appraisal/sanction, follow-upand supervision were, therefore, significantly beefed up. An additional position ofGeneral Manager (Restructuring) has also been created in the Group at Corporate Centre, inview of the recent increase in restructuring cases - both CDR and non-CDR. With theseadditions, the DMD has greater support from senior officials to look after customerrelationships.
D. NATIONAL BANKING GROUP
Table 5 : NBG Business Performance
(Rs In cr.)
|As on ||31.3.2011 ||31.03.2012 ||31.03.2013 || |
| ||Level ||Level ||Level ||Absolute ||(%) |
|Segmental Deposits ||7,91,836 ||9,12,848* ||10,48,136 ||1,35,288 ||14.82 |
|Segmental Advances (non-food) ||3,75,037 ||4,29,509* ||4,96,394 ||66,885 ||15.57 |
(* This figure is excluding accounts transferred to MCG during FY 2012-13)
In terms of Business volumes, Branch Network, and Human Resources, the National BankingGroup (NBG) is the largest Business Vertical of the Bank. The Group has five strategicBusiness Units, comprising of Rural Banking (RBU), Personal Banking (PBBU), Real EstateHabitat & Housing Development (RE, H & HD), Small & Medium Enterprises(SMEBU), and Government Business (GBU). National Banking Group's share in the totalbusiness of the Bank as on 31st March 2013 is 95.05% in total domesticDeposits, and 56.70% in total domestic Advances.
National Banking group, as on 31st March 2013, comprised of 14,733 branchesout of 14,816 total domestic branches, which are controlled by 14 Local Head Offices.
With a view to enhance customer experiences at our branches, we have air-conditionedall our branches, and improved ambience of our branches. With the recruitment of a largenumber of Assistants, Branch expansion programme also got an impetus, and during the yearwe increased our Branch count by 719.
Table 6: Branch Expansion
| ||Rural ||Semi-Urban ||Urban ||Metro ||Total |
|31.03.12 ||5382 ||3995 ||2502 ||2218 ||14097 |
|Branches added during FY 2012-13 ||304 ||170 ||122 ||123 ||719 |
|31.03.13 ||5686 ||4165 ||2624 ||2341 ||14816 |
New branches were opened with very good ambience, air-conditioning, digital displayfacilities and with adequate staffing.
To improve operational efficiencies , we have added 2 more Networks, 7 moreAdministrative Offices and 81 Regional Business Offices during the FY 2012-13.
ATM Network: State Bank of India has the largest ATM network in the country, whichwe have expanded further during the year, to provide better ATM facilities to thecustomers. We have also improved upon uptime of ATMs.
Table 7: ATM Network
| ||No. of ATMs ||ATM Availability uptime ||No. of transactions at ATMs (in lacs) |
|31.03.12 ||22141 ||95.15% ||23811 |
|31.03.13 ||27175 ||96.42% ||29324 |
To further improve upon customer satisfaction and to minimize their hardship duringbunched holidays, we have been suo-moto offering increased working hours/ additionalworking days.
D.1 RURAL BUSINESS UNIT
Bank has set up 38,480 BC Customer Service Points, through alliances both atnational and regional level.
SBI is offering various technological-enabled products, through BusinessCorrespondents (BC) channel, such as, Savings Bank, RD, STDR, remittances&ODfaciliti'es.
Opened 2.03 crores small accounts with simplified KYC.
Bank has covered 12,931 Fl villages (population >2000) and 7,600 FIP villages(population <2000).
Transactions volume through BC Channel has grown 2.4 times during FY12-13 at Rs13,033 crores over FY 1112.
Direct Benefit Transfer (DBT) Scheme successfully rolled out. SBI has Leadresponsibility in 28 out of 121 DBT pilot districts. SBI has successfully completed 1.31lac transactions amounting to Rs 8.77 crores as Sponsoring Bank, in addition to handling0.41 lac transactions amounting to Rs 7.08 crores as Receiving Bank.
Around 99% households covered & 9.85 lac accounts linked with Aadhaar in 43pilot districts.
Under Urban Financial Inclusion, 5,629 BC outlets have been set up inUrban/Metro centres to cater to the requirements of migrant labourers, vendors, etc. 157lac remittance transactions for Rs 6,962 crores were registered during FY 13.
5.45 lac SHGs were credit linked with credit deployment of Rs 5,600 crores. Ourmarket share in SHGs is 23%.
Multiple IT enabled channels for Financial Inclusion include:
Kiosk Banking - The Bank's own technology initiative, operated at internetenabled PC (Kiosk) with bio-metric validation at 20,178 CSPs, covering 83 lac customerenrolments, has been rolled out in 31 states and 479 districts.
SBI Tiny Card - About 14 lac customers have been enrolled during FY13(cumulative more than 76 lac customers).
Mobile Rural Banking - Bank's own technology on mobile platform introduced. Thistechnology works on even very inexpensive mobile handsets.
Cell Phone Messaging Channel-This cost effective model, working on low-costsimple mobile phones and well secured through PIN / signature based security has beenrolled out in 12 states across 50 districts and covered 2,025 CSP outlets.
Table 8: Business Performance of Agri-Advances
Rs in cr.
|Particulars || |
| ||31.03.2012 ||31.03.2013 |
|Number of farmers covered ||99,80,156 ||1,11,69,524 |
|Agri Priority Advances ||1,07,256 ||1,24,834 |
|Direct Agri Advances ||86,281 ||1,08,584 |
|Direct Agriculture Advances (%of ANBC) Benchmark 13.5% ||12.99% ||14.24% |
Direct Agri Advances crossed Rs 1,00,000 crores, the only Bank to have crossed thislandmark, covering more than 1,11,00,000 farmers and surpassed the Benchmark of 13.5% ofANBC. The Bank has also achieved an all time high growth of Rs 21,408 cr under Agrisegmental advances during FY'13. YOY growth works out to 25%.
Bank has opened the largest number- 111 RSETIs for empowering rural youth totake up self-employment.
Credit Flow to Agriculture
The Bank has disbursed loans aggregating Rs 63,936 crores in FY'13 surpassing theannual GOI target of Rs 60,000 crores and 11.89 lakh new famers were brought into thebank's fold during the year.
New Products launched:
The revised Kisan Credit Card scheme provides for comprehensive short termcredit limit, assessed for 5 years with 10% step up every year, with inbuilt postharvest/household/consumption requirement, maintenance expenses of farm assets, CropInsurance, Personal Accidental Insurance Scheme (PAIS), asset insurance and investmentcredit. In addition, loan account is operated through multi-delivery channels (PoS andATMs)using the State Bank Kisan Cards.
The new Tractor Loan Scheme was rolled out to cater to emerging needs withrelaxations in eligibility norms, margin, security, coupled with competitive interestrates and EMI mode of repayment.
Special campaigns were launched to accelerate agribusiness growth:
'Swarna Dhara Campaigns' for agri-gold loans was continued, with quarterly competitionsand garnered Rs 14,345 crores business.
'Tractor Carnival' launched from 1st Sep' 12 to regain the market share,resulted in a business growth of Rs 328 crores (8083 tractor loans).
Corporate and Partnership Tie-ups: Bank has entered into 14 new corporatetie-ups for driving growth , major being PepsiCo (KCC), Rallis India (KCC), ITC Ltd (KCC)and National Bulk Handling Corporation (Warehousing receipt financing).
Special interest concessions: Special interest concessions ranging from 1.5% to3.5% were extended to promote loan growth in high value agriculture activities likehorticulture, minor irrigation, seed processing, warehousing, rural godowns, fishery,dairy, poultry, dealers in agri inputs, farm machinery etc.
Relaxed collateral security norms upto Rs 1.00 lac for all agri loans and Rs3.00 lac for loans with recovery tie up arrangements have been leveraged to improvequality Agri-Business.
Bonding with Farmers:
During the year 209 new villages were adopted under "SBI Ka Apna Gaon Scheme"for overall development taking the total to 1,272. 373 new Farmer Clubs were formed forfostering continued relationship with the farming community taking the total to 10,648.
Regional Rural Banks:
Table 9: Overview of Regional Rural Banks
| || |
Level as on
| ||31.03.2012 ||31.03.2013 |
|No. of RRBs ||18 ||15 |
|States covered ||16 ||15 |
|Districts covered ||129 ||138 |
|Branches ||3180 ||3380 |
|Deposits (Rs in crores) ||29491 ||33379 |
|Advances ( Rs in crores) ||17833 ||20681 |
|CD Ratio ||60.47 ||61.95 |
|Profit after tax ( Rs in crores) ||320 ||386 |
As on 31.03.2013, SBI has 15 sponsored RRBs, which operate in 138 districts of 15states and have a network of 3380 branches. During FY2012-13, four RRBs viz.,Sharda GraminBank, Rewa Sidhi Gramin Bank, Nainital Almora Kshetriya Gramin Bank & RushikulyaGramin Bank, sponsored by other Commercial Banks,
have amalgamated with SBI sponsored RRBs and three RRBs sponsored by the Bank viz;Parvatiya Gramin Bank, Samastipur Kshetriya Gramin Bank &Vidisha Bhopal KshetriyaGramin Bank have amalgamated with RRBs, sponsored by other Banks. All the RRBs areoperating on Core Banking platform and are leveraging technology in electronic bankingservices such as
NEFT, RTGS, ATM linked KCC and ATM, to provide better customer service. The RRBs areendeavouring to increase the size and business volumes by implementingfinancial inclusion.
Rural Self Employment Training Institutes (RSETIs)
Table 10: Performance of RSETIs
(Rs in cr.)
|Particulars ||31.03.2012 ||31.03.2013 |
|Number of RSETIs ||106 ||111 |
|States/ UT covered ||19 ||24 |
|Persons trained ||1,11,049 ||1,43,190 |
|Persons settled ||45,285 ||56,630 |
RSETIs offer free, unique and intensive short term residential self employment trainingprogrammes with free food and accommodation, designed specially to empower rural youth.Bank has set up 111 RSETIs as on 31.03.2013 across the country. The SBI- RSETIs inaggregate conducted 5371 training programmes, trained 1,43,190 candidates and 56,630trainees are settled under self employment/wage employment.
Under Prime Minister's Programme for the welfare of Minorities andimplementation of Sachar Committee recommendations, against GOI stipulated target of 15%of the total priority sector lending (PSL) to Minority Communities, the Bank has achieveda level of 16.77% of the total PSL as on 31.03.2013.
169 Financial Literacy Centres (FLCs) were set up with the main objective ofcreating financial awareness, importance of savings, and advantage of savings with banks,other facilities provided by banks and benefits of borrowing from Banks
The Bank has extended advances to the tune of Rs 77,019 crores as on 31.03.2013to the weaker sections, which is 10.14% of ANBC against the Benchmark of 10% set byReserve Bank of India.
The Bank has opened 172 new branches in under-banked/unbanked areas in MinorityCommunity Districts ( MCDs) taking the total number of such branches to 3,438 as on31.03.2013.
D. 2 Personal Banking Business Unit
Table 11: Domestic Business performance of PBBU
(Rs in cr)
|Particulars ||31.03.2012 ||31.03.2013 ||YTD Growth (%) |
|Deposits ||5,99,313 ||6,94,033 ||15.80 |
|Advances (Retail excluding Housing Loans) ||79,688 ||90,227 ||13.23 |
|CASA ||2,82,047 ||3,29,699 ||16.89 |
Domestic Deposits have grown by Rs 94,720 crores with a growth of 15.8% and Advances byRs 10,539 crores with a growth rate of 13.23% as on 31 March 2013. CASA Deposit has grownby 16.89% and CASA Ratio as on 31.03.2013 is 47.5%.
Table 12: Growth in Savings Bank Accounts
| ||31.03.2012 ||31.03.2013 |
|No. of New Savings Bank Accounts opened ||227 lacs ||286.60 lacs |
Other highlights include:
Western Union transactions are being offered at all the branches and havecontributed Rs 8.11 crores to other income up to 31st March, 2013. During theyear the Bank also commenced Money Gram transactions.
Our Bank has been designated as the point of Presence (POP) for conductingbusiness under the New Pension System (NPS), an initiative of the Government of India, and3879 branches across all Circles have been registered for conducting business under theNew Pension System. Our Bank has also developed a Corporate Model and has registered 08Corporates including State Bank of India. Bank is also registered as an Aggregator forpromotion of registrations under NPS Lite which is a variant of NPS.
Our Bank is Self-Certified Syndicate Member for ASBA (Application Supported byBlocked Amount), as per SEBI guidelines, which is being offered through all our branchesin India.
SBI has enabled 3000 ATMs across the country for Visually Challenged Persons tocarry out ATM transaction through voice guidance. These ATMs can be accessed by visuallychallenged custmomers of all banks.
During the year 2012-13, NRI Deposits have grown by Rs 13,922 crores (22%)and reached a level of Rs 77,185 crores as on 31.03.2013. Advances to NRIs recorded agrowth of Rs 442 crores (25%) during the financial year 2012-13, the level reached beingRs 2,240 crores as on 31.03.2013. NRIs have invested in the schemes of SBIMF and SBI Lifeto the tune of Rs 696 crores during the year.
SBI was the principal sponsor of Pravasi Bharatiya Divas, a flagship event forNRI Diaspora from all over the world, organized by the Ministry of Overseas IndianAffairs, which was held in Kochi (Kerala) from 7th- 9thJanuary 2013.
To achieve the status of the preferred NRI Bank, we have opened 16 new NRIBranches in India during the current financial year, taking the number of NRI branches to69. These branches have an excellent ambience along with dedicated team of officials toserve NRI customers.
SBI has started offering FCNR (B) deposits in 4 additional currencies viz. SwissFranc (CHF), New Zealand Dollar (NZD), Swedish Krona (SEK) and Danish Krone (DKK) sinceSeptember 2012.
Table 13: Corporate & Institutional Tie-Ups:
|Particulars ||31.03.2012 ||31.03.2013 || |
Growth during FY 2012-13
| || || ||Absolute ||% |
|Defence Salary Package and Para Military Salary Package accounts ||19,21,107 ||22,27,930 ||3,06,823 ||15.97 |
|Other Salary Package Accounts ||42,54,397 ||48,51,168 ||5,96,771 ||14.03 |
|Total No of Salary Package Accounts ||61,75,504 ||70,79,098 ||9,03,594 ||14.63 |
|CASA (in Rs crores) ||16,221 ||21,262 ||5,041 ||31.08 |
The various Salary packages together have resulted in taking the total salary accountCustomer base to 70.79 lacs, i.e. a growth of 9.03 lac new accounts during the period01.04.2012 to 31.03.2013. CASA in these accounts has gone up from Rs 16,221 crores to Rs21,262 crores during this period. The incremental CASA of Rs 5,041 crores represents 11.58% of the incremental Personal Banking CASA of the Bank.
SBI Auto Loans maintains its retail market leadership in car loan financing. The AutoLoan portfolio has grown by 35.48% during FY 201213 in spite of near flat growth ofpassenger car market. The Bank has emerged as a clear market leader in Auto Loans with amarket share of 22.25% amongst ASCB as on Mar'2013.
The Bank is currently offering car finance on "On Road Price" of the car,with the longest repayment period of 7 years, no pre-payment penalty, no advance EMI andat competitive interest rates. A new product "SBI Combo Loan Scheme" has beenlaunched during the year for financing a car and a two-wheeler together (combined limit).
SBI has taken up various joint promotional activities with major car manufacturers likeMaruti, Hyundai, Tata Motors, Ford, Mahindra & Mahindra, Toyota, and Mercedes duringthe financial year 2012-13.
SBI Education Loans has grown by 9.43% during FY 2012-13. SBI has a total exposure ofRs 13,751 crores as on Mar 2013.
SBI Loan Scheme for Vocational Education and Training was launched in July 2012 andloans upto Rs 1 lac are given under this scheme.
Maximum Loan Amount for Studies Abroad has also been increased to Rs 30 lac from theprevious limit of Rs 20 lac.
In order to provide financial assistance to more students opting for higher education,the SBI Scholar Loan scheme has been extended to 114 institutes . The maximum loan amountunder this scheme has also been enhanced to Rs 30 lac.
The Personal Loans Portfolio, which is the second largest in the Personal BankingSegment, has grown by Rs 2,860 crores during FY 2012-13. It includes Loan againstSecurities, Loans against Properties, Gold Loan, etc. Of these, Xpress Credit and Loanagainst Time Deposits are two major products and have grown by Rs 1,002 crores and Rs1,217 crores during FY 2012-13 respectively. The most notable growth has been in Gold Loanportfolio ofRs 480 crores (96.94%) during FY 2012-13.In order to further increase ourmarket share in the 'Loan against Deposit' Scheme, we have reduced our rate of interestfrom 0.75% above the TD rate to 0.50% above the TD Rate, which is one of the lowest in theindustry.
The Delivery Systems for loan products have been under constant focus. Retail AssetsCentralized Processing Centres (RACPCs) have been opened up across the country, based onthe volume, geographical spread and product focus to ensure uniformity in processing ofall Retail loan proposals. This ensures smooth delivery to the customer and with thesupport of Loan Originating Software (LOS) that currently takes care of Credit- relatedrisks, will enable customers, in future, the facility to track their application online.As on 31.03.2013, there were 60 RACPCs and 70 Retail Assets and Small & MediumEnterprises City Credit Centres (RASMECCs).
Some of the steps taken to reduce NPAs are:
Risk Scoring Models have been developed for all P-Segment Loans on the basis ofstatistical models for objective assessment. Recently, the Auto Loan scoring model hasbeen made tighter and more emphasis is now being given to Net Income of an individual.(For eg: The minimum income criterion for Auto Loans has been raised from Rs 1 lac to Rs2.5 lac p.a.).
Loan Origination Software (LOS) usage (100% usage at RACPCs), and itsintegration with the Risk Scoring Model (RSM) and CIBIL check to take care of many processrelated risks.
In view of the rising NPAs in Education Loans, PAN card of the student andco-borrower/guarantor has been made mandatory for all Education Loans. For existingEducation Loans, a one-time exercise is planned to obtain the PAN card numbers.Instructions have been issued to all operating units to send Notices to borrower,co-borrowers and guarantors in case of default in Education Loans.
Immediate action under SARFAESI, including seizure of cars for eligible cases.
Instructions are in place for granting no further Retail Loans (except EducationLoans) to the employees of those companies whose accounts are classified as NPAs.
D.3 Real Estate, Habitat & Housing Development (RE, H&HD)
State Bank of India, the 'Most Preferred Home Loan Provider' with the largest Home Loanportfolio in the Banking Sector and market share of over 26% amongst All ScheduledCommercial Banks (ASCBs) :
Table 14: Performance in Home Loans
( Rs in cr.)
|Particulars ||March, 2012 ||March, 2013 |
|Levels ||1,02,739 ||1,19,467 |
|YTD Growth ||12,826 ||16,728 |
|YTD Growth (%) ||14.41 ||16.30 |
During FY 2012-13, several initiatives were taken by the Bank to give an additionalthrust to its Home Loan portfolio. Some of the important initiatives in this regard are asunder:-
The 'Maximum Repayment Period' permissible under NRI Home Loans Scheme has beenincreased from 25 years to 30 Years to align the same with the 'Maximum Repayment Period'under domestic Home Loans Scheme, imparting it with greater flexibility.
The ceiling on financing Home Interiors/Furnishings, as part of the projectcost, has been revised upwards from Rs 3 lac to Rs 6 lac subject to the amount expendedtowards Home Interiors/Furnishings being restricted to 10% of the Project Cost and theMaximum Loan Amount adhering to the stipulated Loan to Value (LTV) Ratio.
Home Loan Interest Rates were reduced substantially w.e.f. 7thAugust,2012 by reducing the spread over the Base Rate. With subsequent downward revisions in theBase Rate itself, the effective Interest Rate on Home Loans ultimately stood reduced to9.95% p.a. for loans upto Rs 30 lac and 10.10% p.a. for Home Loans above Rs 30 lac as on 4thFebruary,2013 rendering them very competitive and the lowest in the market.
The premium of 0.25% p.a. applicable on Interest Rates under Commercial RealEstate (CRE) Home Loans has been waived to align the same with the prevailing InterestRates on normal Home Loans.
With a view to extend the benefit of lower rates of interest (both Fixed andFloating Interest) to our existing Home Loan customers paying relatively higher interestrates, an option to switch-over their loans to the current lower interest rates was madeavailable on payment of a fee of 0.56% of the outstanding w.e.f. 21stSeptember, 2012.
A Special Takeover Campaign was launched from 1stSeptember, 2012,assuring prospective customers, of a fixed Processing Fee of Rs 1000/- on Home LoanTakeovers, irrespective of the loan amount. The Campaign was extended till 31stMarch,2013 and provided our Bank with a competitive edge in the overall pricing of our Home Loanproducts.
Term Assurance (Loan Protection) Cover (optional) is available to our Home Loancustomers from SBI Life Insurance Company Ltd through RiNnRaksha /Smart Shield/SaralShield. The Bank provides additional loan for payment of the premium of the above policieson the same terms as those applicable to the underlying Home Loans.
D.4 SME BUSINESS UNIT (SMEBU)
During the financial year 2012-13, the advances under SME Business Unit has registeredyear on year growth of 12.45%. The advances figures of SME Business Unit as on 31..03.2013are as under.
Table 15: Business Performance in SME
(Rs in Cr.)
|Particulars ||31.03.2012 ||31.03.2013 ||Growth (% increase) |
|Advances ||1,63,745 ||1,84,128 ||20,383 |
| || || ||(12.45) |
|No of accounts (in lakhs) ||12.84 ||12.97 ||0.13 |
Under single window approach, the Bank is offering Relationship Banking to SMEEntrepreneurs. The strength of Relationship Managers (Medium Enterprises) was augmented to566 as on 31.03.2013 and mapped to ME units with credit limits Rs 1.00 crores and aboveacross the country. The advances portfolio under Relationship banking as on 31.03.2013 isRs 1,03,619 crores. For units having credit limits between Rs 10.00 lacs to Rs 1.00crores, Relationship Managers (SE) have been posted to improve credit flow to Micro andSmall Enterprises.
SME Credit City Centres (SMECCC):
SMECCCs, rolled out during 2004-05 as a part of BPR initiative, are centralized loanprocessing centres for sanction of SME loans upto credit limit of Rs 1 crore. At present78 SMECCCs and 58 RASMECCs across the country are functional. To further revamp thestructure and process of SMECCCs to enable consolidation of the Bank's position in the SMEuniverse in the country a major exercise has been initiated in association with renownedconsulting group. The revamped process will be in place by September 2013.
Specialized SME Branches :
To provide specialized services to SME Entrepreneurs, 400 branches having predominantshare of SME advances in their portfolio are being branded as "SME BRANCH" todefine the identity of these branches with a common nomenclature and to develop thesebranches as centres of excellence for SME loan delivery.
Credit Flow to Micro and Small Enterprises under CGTMSE:
Bank is extending collateral free lending up to Rs 1.00 crores to MSE sector underguarantee of CGTMSE. Additionally, to provide relief to these units Bank has decided toabsorb the guarantee charges payable to CGTMSE. The outstanding under the guarantee schemeof CGTMSE is as under:
Table 16: Performance in CGTMSE
(Rs in cr.)
|Particulars ||As on 31.03.2012 ||As on 31.03.2013 ||Growth (% Increase) |
|Outstandings ||3,716 ||7,236 ||3,520 |
|(% to total SME advances) ||(2.27) ||(3.92) ||(94.7) |
|No of customers (in lakhs) ||1.13 ||1.72 ||0.59 |
| || || ||(52.2) |
Bank is providing consultancy support to SMEs for catalyzing Technology Upgradation inSME clusters with the objective of making the clusters more competitive through increasein productivity and quality and reduction in costs. Since inception of the initiative 1600units have benefitted in 28 clusters. Presently, three projects, Steel StructuralFabrication & Boiler Component (Trichy), Fabrication Engineering (Jamshedpur andNagpur) are going on.
Entrepreneurship Development programme :
Bank has formulated a scheme for conduct of EDPs on an ongoing basis, in associationwith reputed national level EDP training institutes. To begin with, 4 centres wereidentified for conduct of EDPs on pilot basis during the year, viz. Ahmedabad (inassociation with EDI), Hyderabad (in association with NI-MSME), New Delhi (in associationwith NIESBUD) and Bhubaneswar (in association with SBI-RSETI, Jharsuguda). The targetgroups for the EDPs were mainly final year students of engineering / management collegesand educated youth. The total number of participants was 120. It is proposed to have EDPprogrammes on regular basis in all the Circles across the country during FY 2013-14.
Supply Chain Finance:
Leveraging its state-of-art technology, SBI is focusing on further strengthening itsrelationship with the Corporate World by financing their Supply Chain partners. Towardsthis SBI introduced Channel Financing Products with the following features:
> Web based platform, fully integrated worth Corporate Enterprise Resource PlanningSoftware
> Real time online transfer of funds
> Automated settlement of funds
> Customized MIS
> Centralized hassle free processing
All the product offerings under Channel finance are designed to ensure efficientmanagement of working capital cycle and sustained growth and profitability of businesspartners and the entire Supply chain is taken care under the scheme, which is fullyautomated, secured and robust. The products offered under channel financing are ElectronicDealer Financing Scheme (e-DFS) and Electronic Vendor Finance scheme (e-VFS). UnderSupply Chain Finance bank has tied up with 65 Industry majors with across all IndustryVerticals like Auto, Oil, steel, Power, fertilizer, FMCG and Textile.
Table 17: Performance in Supply Chain Finance
(Rs in cr.)
|Particulars ||As on 31.03.2012 ||As on 31.03.2013 ||Growth (% Increase) |
|Outstandings ||2,190 ||4,781 ||2,591 |
| || || ||(118.3) |
|No of customers ||813 ||1766 ||953 |
| || || ||(117.2) |
The Bank has introduced cash deposit machines to facilitate deposit of cash into theiraccount by customers themselves by swiping their SBI ATM cum Debit card. To enable SMEcustomers also to deposit cash into their CA/CC account through CDMs, State Bank SME InstaDeposit Card was launched during the year. With Insta Deposit Card, SME customers liketraders & service providers are able to quickly deposit their cash into their accountswithout waiting in the queue. As on March 31, 2013, the Bank had issued 1,66,477 instadeposit cards to SME customers, showing the growing popularity of the facility. The numberof CDMs installed was 665. Similarly, the cash pickup facility of collecting cash atcustomers doorsteps was introduced for SME customers in August 2011 Marketing campaignswere launched during the year to popularize the scheme among SME customers. The growth inusage of this facility has been as under:
Table18: Cash Pick up Facility
(Rs in cr.)
|Particulars ||As on 31.03.2012 ||As on 31.03.2013 ||Growth (% Increase) |
|No of customers availing the facility ||88 ||484 ||396 |
| || || ||(450) |
|Amount of cash pick-up ||153.20 ||2,246.75 ||2,093.55 |
| || || ||(1348) |
D.5 GOVERNMENT BANKING UNIT
Table 19: Performance in Government Business
| ||Turnover (in cr.) ||Commission (in cr.) ||Market Share(%) |
|2011-12 ||2536900 ||2008.23 ||58.50 |
|2012-13 ||2862053 ||1778.20 ||58.12 |
While the Bank retained its leadership in Government Business ,there was a minordip in Agency Commission due to downward revision in rates by RBI with effect from 1stJuly, 2012. The adverse impact on Agency Commission was contained by marketing of variousproducts, customized to suit the requirements of the Government.
The Bank brought more State Governments and taxes under the ambit of CyberTreasury and paid special attention to opening Public Provident Fund Accounts and PensionAccounts.
E- Governance Projects of Central and State Governments which are bringing aparadigm shift in the way Government business is conducted are being leveraged forcustomers convenience bringing about more efficiencies of processes.
2.83 Lakhs new Pension Accounts were opened, bringing the tally to 34.74 LakhsPension Accounts being serviced efficiently through 14 Centralized Pension ProcessingCells set up in various parts of the country. Pension details are being sent to thepensioners on their mobile numbers. Besides this, pensioners can lodge their complaintsonline, on our website, or seek clarifications at our contact Centre.
The Bank is ushering in the era of hassle free fee collection on behalf ofvarious Departments, Union Ministries and state Governments. An income of Rs 41 crores wasgenerated from this product during the current financial year.
The Bank is actively participating in the "SAAKSHAR BHARAT" Mission ofthe Union Government and has opened 1,23,343 accounts for dispensation of funds upto GramPanchayat level in 22 states across the country. The Bank has also sponsored the SAAKSHARBHARAT celebrations at Red Fort, Delhi and Lucknow, the Capital city of Uttar Pradesh.
State Bank of India is the exclusive Banker to the Ministry of External Affairs(MEA) and is collecting the Passport Fees from Passport Sewa Kendra (PSK) in the country.
Bank is proud to be associated with Central Government Projects like Governmente-Payment Gateway (GePG). By integrating with GePG portal, the Bank is now enabled to makeelectronic payments to employees/ vendors of Central Government across the country.
Products like "Rail Shakti","E-Auction"and "ImprestCards" have been very well received by Railway Authorities and are expected to gainmomentum during FY 13-14.
The Bank has since been authorized to collect RTI fee online which will behelpful in generating substantial revenue as Agency Commission.
Operation of Foreign Offices
The asset level of foreign branches rose by 18%, from USD 35.826 bn in March 2012 toUSD 42.146 bn in March 2013. During FY'13, net customer credit grew by 17% from USD 26.681bn to USD 31.148 bn, customer deposits grew by 11%, from USD 12.075 bn to USD 13.374 bn.Net profit rose by 10% to USD 435.64 mn.
Table 20: Business Performance of Foreign Offices
(IN USD MIO)
| ||Mar-12 ||Mar-13 ||Growth ||YOY increase in % |
|Net Assets ||35826.46 ||42146.10 ||6319.65 ||17.64 |
|Net Customer Credit ||26681.23 ||31148.53 ||4467.31 ||16.74 |
|Net profit ||395.63 ||435.62 ||39.99 ||10.11 |
The number of foreign offices increased from 173 as on 31st March 2012 to 186 as on31st March 2013 spread across 34 countries. The offices comprised of 51 branches, 7Representative Offices, 107 offices of the six foreign banking subsidiaries and 21 otheroffices.
Table 21: Break -Up of Foreign Offices
| ||FY-12 ||New Offices opened during ||FY-13 |
|Branches/SO/Other Offices ||58 ||10 ||68 |
|Subsidiaries/JV (6) || || || |
|Offices ||103 ||4 ||107 |
|Rep Offices* ||8 ||-1 ||7 |
|Associates/ Managed Exchange Cos/Investments ||4 ||0 ||4 |
|Total ||173 ||13 ||186 |
*Tianjin Representative office was Upgraded to full fledged Branch
Bank's Foreign Offices maintained comfortable liquidity position during the fiscal,despite volatile market conditions. In July 2012, Bank successfully priced a USD 1.25 BnBond issue, 144A/ Reg S transaction maturing in August 2017. Bank received overwhelmingresponse across investor classes for the Bond, despite very difficult market conditions.Bilateral loans of different maturities worth USD 540 Mn were also raised during thefiscal. At Singapore, where the Bank has 7 branches and 24 ATMS, including ATMs at ChangiAirport terminals 1, 2 & 3, retail deposits saw a 21% growth year-on-year. Our UKoperations also scaled up its retail presence to achieve a retail deposit growth of 41% inthe fiscal.
Inward remittances grew from Rs 61,457 crores in FY'12 to Rs 69,812 crores in FY'13,clocking a growth of 14%. The Bank had a tie-up with 27 exchange companies and five banksin Middle-East countries for routing remittances through SBI. During the year, newremittance product 'SBI Express Remit-Canada' was launched exclusively for Canadian Dollarremittances. An Outward remittance product 'RemXout' was launched for SBI Internet Bankingcustomers.
E-2. Domestic Operations Merchant Banking
The Bank retained its premier position as Mandated Lead Arranger and Book Runner forsyndicated loans in Asia Pacific (excluding Japan but including Australia) for the sixthconsecutive calendar year, in FY'13.
During FY-13, Bank acted as the Mandated Lead Arranger in 17 deals aggregating USD6.442 Bn for several leading Indian corporates like IOCL, REC, NPCL, MRPL, RelianceIndustries and Vedanta Resources Plc.
Table 22: Syndicated Loan Deals
| ||No of Deals ||Amount (in USD bn) |
|FY-12 ||14 ||4.76 |
|FY-13 ||17 ||6.29 |
Apart from this, foreign currency term loans aggregating USD 3.68 bn were extended toIndian corporates on a bilateral basis. Further, 10 loans amounting to USD 229.04 mn wereacquired through secondary market.
Fee income of USD 89.88 mn was earned from foreign currency term loans concluded duringthe year through syndication / bilateral deals.
Global Link Services (GLS)
Global Link Services (GLS), a specialized outfit, caters to centralized processing ofExport Bills collection, Cheque collection and online inward remittance transactions.
During the financial year 2012-13, GLS (on behalf of domestic branches) handled 104,262export bills and 74,566 foreign currency cheque collections aggregating USD 15.27 bn. Inaddition, it handled 7,047,064 online inward remittance transactions amounting to USD 6.45bn received from all over the world in 39 currencies
The Bank maintains correspondent banking arrangement with 429 reputed InternationalBanks to extend seamless services to varied clients. These correspondent Banks are locatedin 118 countries. The Bank also has 1,765 Relationship Management Application (RMA)arrangements with SWIFT, facilitating speedier flow of financial messages.
Country Risk and Bank Exposures
The Bank has in place a Country Risk Management Policy in tune with RBI guidelines. Thepolicy outlines robust risk management model with prescriptions for Country, Bank, Productand Counter party exposure limits. Both Country-wise and Bank-wise exposure limits aremonitored and reviewed on a regular basis. The exposure ceilings and classifications aremoderated in line with the dynamics of their risk profiles. Periodical corrective stepsare initiated to safeguard the Bank's interests.
I.3. CORPORATE STRATEGY AND NEW BUSINESSES
Emerging business areas, including tech-based products, are developed and launched by adedicated department headed by a Dy. Managing Director. Progress on some oftheir keyinitiatives is detailed hereunder:
> Debit Cards:
Debit Card spends of State Bank Group crossed Rs 15,000 crores for FY 2012-13 whichconstitutes over 20% of total Debit Card spends in the industry. The Bank has beenactively promoting Debit Card usage at Point of Sale/for e-Commerce. For the festiveseason from 16-Oct-2012 to 15-Nov-2012, the Bank ran a promotional Campaign called"Cracker of an Offer" where the Bank along with its subsidiary, SBI Card, tiedup with a number of merchant partners to offer attractive discounts for State Bank Debitand Credit Card usage at their outlets/websites. With a view to increasing Debit Cardactivation, the Bank also ran special promotional offers for its Debit Cardholders withleading merchants of different merchant categories in the industry in coordination withSBI Card.
The Bank launched "State Bank Business Debit Card" for its corporatecustomers in two variants "Pride" and "Premium" on the occasion ofBank's Day 2012. Till 31-March-2013, more than 86,000 Business Debit Cards have beenissued. This product is being launched in Associate Banks shortly.
> Prepaid Cards:
Bank's range of products include popular Rupee Prepaid Cards like Gift Card, GeneralPurpose Prepaid Card like eZ-Pay Card and Foreign Travel Card catering to various paymentneeds of the customers.
> Foreign Travel Card:
Foreign Travel Card, now a CHIP based EMV Compliant Card, is available in eightcurrencies, US Dollar (USD), Great Britain Pound (GBP), Euro, Canadian Dollar (CAD),Australian Dollar (AUD), Japanese Yan (JPY), Saudi Riyal (SAR) and Singapore Dollar (SGD),providing safety, security and convenience to overseas travellers. Corporate variants ofSBFTC have been introduced to cater to the needs of Corporates. Sales for FY 2012-13 wereto the tune of to USD 66.92 million.
> eZ-Pay Cards
eZ-Pay Cards are aligned with most of the social schemes of State and CentralGovernments in addition to salary payments by Corporate entities, thus reaching millionsof households. Sales for FY 2012-13 were to the tune of to INR 931.92 crores. Co-brandedPrepaid Cards for various Zones of Indian Railways and Federation of Freight Forwarders'Association in Indian (FFFAI) were rolled out during FY 2012-13.
> Gift Cards
Gift Cards remain the preferred option to customers to gift the 'freedom of choice' totheir loved ones. Customers can create Gift Cards online. Sales registered during FY2012-13 was INR 77.44 crores. State Bank Achiever Card, a re-loadable corporate incentiveCard with a validity of 10 years for disbursement of incentives/awards was rolled outduring March-2013.
> Green Channel Counter (GCC)
The 'Green Channel Counter' facility is made available in 7052 branches. On an average,the daily transactions routed through GCC are more than 1,00,000.
> Self Service Kiosk (SSK)
As on 31.03.2013, SSKs have been installed in 965 branches. On an average, SSKs arerecording more than 30,000 transactions on a daily basis.
> Green Remit Card (GRC)
GRC, a remittance card, was introduced on 02.01.2012 mainly to take care of the largenumber of non-home cash deposit transactions at our branches. A cardholder can swipe thecard at Green Channel Counter or in Cash Deposit Machines and remit money to thebeneficiary whose account number is mapped to the card. Once the transaction is complete,both the remitter and beneficiary get confirmation through SMS on their mobile phone. TheBank has issued 6,23,623 cards resulting into 8,08,830 cash deposit transactions as on31.03.2013.
> Mobile Banking & Wallet
Presently, the Bank has a market share of around 65% in the transaction volume and over36% in the transaction value . During the FY, financial transactions to the tune of Rs1933 Crores were done through the service resulting in a total income of Rs 4.67 crores.As on February 2013 SBI is the market leader in terms of registered user base and numberof transactions. Efforts are in place to maintain the leadership position in this space.
The Bank has launched a full KYC mobile wallet under the brand name "State BankMobiCash". A variant of the same "State Bank MobiCash Easy", a wallet whichdoes not require completion of KYC formalities was launched in Mumbai, Delhi andChandigarh on the 31st December, 2012. So far, around 14,500 wallets have beenissued.
> Merchant Acquiring Business (MAB)
In order to create a comprehensive electronic infrastructure in the country, activateour more than 136 million debit cards on POS terminals, increase visibility and to tap thehuge potential available in the market, Merchant Acquiring business is being conducted bythe bank. With around 70000 terminals in the market, Bank is already the largest playeramongst the Public Sector Banks and 4th largest Acquirer in India. Bank hasalready entered into Corporate tie-ups with many prominent players including topeducational institutions and hospitals.
> Private Equity
The Bank's foray into the Private Equity space began in 2009 with a Joint Venture withthe Macquarie Group of Australia. The Fund raised US $ 1.2 billion, making it one of thelargest India focussed Private Equity Funds. The Fund has made 8 investments in sectorssuch as Airports, Telecom, Roads, Renewable and Thermal Energy. The Fund made investmentsto the extent of 90% of the Capital Committed.
The Joint Venture with State General Reserve Fund of the Sultanate of Oman, named theOman India Joint Investment Fund, a US $ 100 million Fund has made three investments of Rs202 crores, in sectors such as defense electronics and industrial explosives. With this,the Fund has made investments to the extent of 40% of the Capital Committed.
The Bank signed a preliminary non-binding MoU with Russian Sovereign Wealth Fund-Russian Direct Investment Fund (RDIF) for setting up US $ 2 billion Private Equity Fund toinvest / facilitate investments into bilateral co-operation projects, bilateral traderelated projects or companies, privatization or globalization opportunities, projectsparticularly with India-Russia context.
I.4. NPA MANAGEMENT
Credit Policy and Procedures
This year was characterized by sharp increase in non-performing assets in the firstthree quarters of the year, which abated only in the fourth quarter. While a major reasonfor such high NPA generation could be the overall slowdown in economic growth and othermacro economic factors, it has also brought to attention the need for arranging our creditpolicy and practices to achieve the following objectives:
a. To analyse and address the reasons for relatively higher NPAs in comparison to theother banks,
b. Reasons for our relatively low share in better performing business segments.
The Credit Policy and Procedure Committee of the Bank, headed by Chairman, comprises ofall heads of business groups/verticals like CFO, IBG, NBG, MCG, CAG and also Treasury. Theforum of CPPC was activated and 17 meetings were held during the year and 72 policychanges were approved.
Details of the Credit Committees' Structure are as below:
At Corporate Centre:
a) Executive Committee of Central Board (ECCB)
b) Corporate Centre Credit Committee (CCCC)
c) Whole Banking Credit Committee (WBCC-I) International Division Credit Committee(IDCC)
d) Whole Banking Credit Committee (WBCC-II) International Division Credit Committee(IDCC-II)
At Local Head Office/Mid Corporate Group
a) Circle Credit Committee (CCC-I)/Mid Corporate Credit Committee(MCCC)
b) Circle Credit Committee(CCC-ll)
c) Zonal Credit Committee (ZCC)/SME Credit Committee (Branch level Credit Committee inMCG)
d) Regional Credit Committee (RCC)
In order to downstream the credit sanction process, a Regional Credit Committee (RCC)at each Regional Office was created with discretionary powers of Rs 5 crores fund basedand Rs 2.5 crores non-fund based for Corporates.
SAMG has also put in place a new Credit Committee.
The above structure has the benefit of being able to respond to the businessopportunities in a quick manner and at the same time having adequate control andoversight. All the above Committees have periodic and regular meetings whenever there wereenough proposals to be considered. The collective decision making process has been foundto be effective in better risk assessment and quality decision making.
The analysis revealed the spreads in non-fund business in the Bank are much lowercompared to the fund based even after adjusting for cost of capital. Accordingly, the Bankhas decided to link the pricing for all non-fund based business to External Credit Ratingsand also improve the security cover for these exposures. Simultaneously, the pricing fortop rated companies' viz. AAA, AA, A was made more aggressive in order to get highershare. The first half of the financial year was slack. The results of these strategieswere noticeable in the second half and there was a robust growth of Rs 46,491 crores inadvances from the last quarter and more than 80% of this came from companies ratedinvestment grade.
The Bank has also fine tuned its policy for Corporates, which allows the Bank torefinance their high cost loans with other Banks. Corporate loan has twin advantage as itis extended for long term working capital requirements of the corporate and requires onlya minimum Fixed Assets Coverage Ratio (FACR) of 1.25. It has proved to be quite popularwith our constituents. Similarly, from time to time, the pricing and terms of variousother loans like Home Loans, etc. have been adjusted to generate high growth with goodquality.
The product of electronic platform for financing to dealers of reputed companies e-DFSwas made strong and pricing was also made very attractive, which has led to phenomenalgrowth in the portfolio of e-DFS.
The Bank also continued with its policy of 100% ECGC cover for all export orientedunits and premium thereof was borne by the Bank. During the year ECGC based on theirunderstanding of global slowdown and default by several overseas buyers, made the rulesstricter for packing and post shipment credit. Accordingly, Bank's credit policy alsoenvisages that packing credit can be sanctioned only when there are satisfactory creditreports available on the overseas buyers on a recent date and verification of BuyersSpecific Approval list maintained by ECGC.
Similarly, credit scoring model for car loans was modified to make it more effectivewithout significantly diluting credit standards. Further, the minimum threshold creditrating for takeover of advance has also been enhanced to SB6 and with External Rating ofminimum BBB.
External rating: The Bank has to allocate capital on assets depending on the basisof credit rating. As per current regulations, credit rating is necessary / mandatory forall accounts of advances of Rs 5 crores and above. Out of 55,130 eligible accounts, 31,702have already been rated. We are continuing our endeavours to encourage the remainingeligible accounts to obtain the required external credit rating.
In order to impart transparency and impartiality to the pricing process for all workingcapital advances, the pricing has been linked to external rating and the current matrixis:
Table 23: Pricing of Loans
|External Rating ||WCDL ||Cash Credit |
|AAA / AA ||Base Rate ||Base Rate + 25 bps |
|A ||Base Rate + 25 bps ||Base Rate + 50 bps |
|BBB ||Base Rate + 0.65 bps ||Base Rate + 0.90 bps |
With the pricing for loans being non-discriminatory, executive time is not required tobe given for deciding on pricing for individual companies. Similarly, in other businessareas like Home Loans, Education Loans, Car Loans, etc. the pricing was madenon-discriminatory and uniform for similar categories.
STRESSED ASSETS MANAGEMENT GROUP
In the wake of the Global crisis of 2008 and the headwinds before the Indian economytoday, asset quality of Indian Banks, including SBI, has been under pressure. Slippageshave continued unabated and resolution of NPAs today poses a major challenge to Banks.
With a view to address this issue, we have, during 2004, set up the Stressed AssetsManagement Group (SAMG). SAMG is headed by a Deputy Managing Director supported by a teamof 2 Chief General Managersand other senior officials. SAMG has been set up as a dedicatedand specialised vertical to efficiently resolve high value NPAs which are transferred tothe Group by other Strategic Business Units.
Today, SAMG has 15 branches across the country of which 2, one at Ernakulam and anotherat Mumbai (second branch) were opened during the year. The Bank also holds licenses foropening branches in three other Centres. Arrangements are on hand to open one of these inCoimbatore. The branches are staffed with officials with expertise in resolution ofstressed assets, duly supported by Law officers.
As on date, 24.35% and 58.14% of the Bank's NPAs and AUCA reside within SAMG. WhileSAMG is primarily responsible for resolution of NPAs in the Corporate segment, StressedAssets Recovery Branches (SARBs) and Stressed Assets Recovery Cells (SARCs) have been setup within the National Banking Group to tackle retail NPAs. The recovery efforts ofSARBs/SARCs are supplemented by efforts put in by ground level operating staff at our14,816 branches across the country. Besides, Account Tracking & Monitoring (AT@M)Centres have been operationalised in all Circles to contact SMAs and NPAs in the retailsegment. Business Correspondents, Business Facilitators and Self Help Group are alsoinvolved in recovery of Agricultural NPAs.
SAMG employs multi-pronged strategies to resolve stressed assets including, inter alia,
Restructuring of both Standard assets and NPAs, either though the CDR mechanismor through a bilateral arrangement
Recovery through auction of assets using the SARFAESI route
Filing suits in Debt Recovery Tribunals and other Courts for recovery of ourdues
Identifying strategic investors and engaging with them 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
Debt Asset swaps have been considered in some cases
Engaging investigation agencies to trace out unencumbered assets of promotersand guarantors 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 Reserve Bank of India.
Publishing photographs of defaulters in newspapers where warranted.
The focussed and specialised attention that SAMG has been able to bring to the task hasresulted in substantial recoveries in high value NPAs during the year. Besides, theconcerted efforts of SAMG have resulted in recoveries of dues to the Bank this year, someof which are decades old.
The skills of officials posted in SAMG and other recovery units are constantly upgradedand honed by:
Regular training programmes tailor made to the requirements of SAMG organized bythe Bank's Apex Training Institutes
Arranging for Guest Lectures by acknowledged experts in the field (For e.g. ShriR. C. Kohli, an experienced banker and author of "Practical Approach to RecoveryManagement in Banks and Financial Institutions and Securitisation Act" has addressedour officials on several occasions)
Regular conclaves are held where matters of topical relevance are discussed.Individual accounts are also reviewed and strategies decided to expedite recoveries inthese accounts. Feedback from operating functionaries is regularly elicited on how theGroup can further optimize operations.
Top Management of the Bank, including the Chairman, regularly review all highvalue accounts and suggest ways and means to resolve these NPAs.
The Bank took an important initiative during the year to facilitate expeditious creditdecisions, such as approving OTSs, fixing reserve prices for auction of seized properties,etc., within SAMG. Till recently, all matters requiring sanctions/approvals were routedthrough Credit Committees of other Business Groups. A Stressed Assets Management CreditCommittee (SAMCC) has now been set up with the sole objective of considering proposals ofSAMG for sanction or approval. This dedicated Credit Committee is a valuable resource forSAMG as credit decisions are taken immediately and communicated at once to operatingfunctionaries resulting in swifter recoveries. During the year, the Bank had alsoannounced a scheme where nominal incentives were paid to officials instrumental inrecovering amounts written off over 5 years ago, which yielded significant results and theBank was able to recover more than Rs 1000 crores during this year from written offaccounts.
Notwithstanding the harsh and challenging environment we have seen in the year gone by,the determined and focussed efforts of the SAMG and SAMBs/SARBs/SARCs has contributed to adeceleration in NPA accretion. This was particularly evident during Q4 of 2012-13 whenGross and Net NPA percentages were brought down to 4.75% and 2.10% respectively from thepeak levels of 5.30% and 2.59% witnessed during the year. In fact, Q4 also saw a reductionin gross NPAs by Rs 2, 269 crores in absolute terms. More details are furnished below:
Table 24: Break -up of NPA
(Rs In cr. )
|NPA ||FY 11-12 ||Q3 FY13 ||FY 12-13 |
|Gross NPAs ||39,676 ||53,458 ||51,189 |
|Gross NPA% ||4.44 ||5.30 ||4.75 |
|Net NPA% ||1.82 ||2.59 ||2.10 |
|Fresh Slippages ||24,712 ||26,126 ||31,993 |
|Cash Recoveries/ Upgradations ||9,618 ||9,167 ||14,885 |
|Write Offs ||744 ||3,176 ||5,594 |
|Recoveries in Written Off Accounts ||962 ||673 ||1,066 |
While asset quality is expected to be under pressure during FY 13-14 also, the SAMG andother recovery outfits of the Bank are fully geared up to meet the challenges of thefuture.
II SUPPORT & CONTROL OPERATIONS
II.1. INFORMATION TECHNOLOGY
> CORE BANKING PROJECT
The CBS environment is benchmarked to establish the capability to support one billionaccounts, over 250 million transactions in a day, and delivering a throughput of over17,000 transactions per second.
Several new features were rolled out in CBS during the year for making the system moreuser-friendly. Two new ATM cards on 'RUPAY' platform. Password protected statements in PDFformat of Savings Bank, Current Account, Cash Credit accounts are now being sent to thee-mail addresses of customers. Functionalities for issuance of TDR/ STDR through ATM,online capture of 16-digit Census Code have been developed in CBS. Biometricauthentication as a second-factor authentication method is being implemented in branchesfor all CBS users.
The process for the systematic and proactive risk identification, assessment,measurement, monitoring and mitigation of various risks in the IT vertical has beeninitiated. Disaster Recovery Drills are conducted regularly as part of the implementationof the Business Continuity Management System (BCMS). The first comprehensive IntegratedBusiness Continuity Exercise (IBCE) during the current financial year was tested on 8th& 9th December 2012 and the second on 17th & 18thFebruary 2013.
SBI has issued more than 11.00 crores Cards out of which around 8.54 crores Cards aretransacting regularly on the ATMs. The State Bank Group's ATM operations run from twoSwitches. The BASE24 Switch has recently been upgraded and it can now handle close to50,000 ATMs. The ATM footprint is being enlarged substantially through Brown Label ATMswhich are being rolled out as totally outsourced initiative under the guidance of Ministryof Finance. A wide variety of ATMs and various types of cards have been deployed. 581 newCash Deposit Machines have been installed to facilitate customers to deposit the cash.
> 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 following major newfeatures have been added during current financial year 2012-13:
Personal Internet Banking:
IPO(Debt) ASBA facility, Multi-lingual image based keyboard for profile password, VoiceOTP for J&K customers for doing Internet Banking transactions etc.
Corporate Internet Banking:
Rakhsha IRCTC - Ticket Booking by Paramilitary Forces, Central Plan Scheme MonitoringSystem (CPSMS) facility , EPF payments by Corporate customers, Second Factorauthentication through Hardware token for login by corporate customers, Merchantpre-approved transactions for corporate, Foreign Currency Loan Application
> IT - FOREIGN OFFICES
145 Foreign Offices of the Bank in 25 countries use the Finacle suite of applicationsthat include Finacle Core, Finacle Treasury and Finacle Internet Banking Applications. 134ATMs and 2 Kiosks have been installed at Foreign Centres and 7.63 lakh Debit Cards havebeen issued. Around 1.43 lakh users have been registered for Internet Banking.
> ENTERPRISE DATA WAREHOUSE DEPARTMENT
Data Marts relating to the various areas like Risk Management, Customer Analytics,Assets and Liability Management etc. have been designed. Dashboards have been developedand deployed for use by the executives for decision making. Campaign Management Tool hasbeen implemented and campaigns through emails/ SMS have been launched by the variousBusiness Units targeting customers under various segments. "Customer One view"(COV) has been developed for Corporate Account Group, Mid Corporate Group and Small andMedium Enterprise Accounts for better monitoring. Data Mining and Analytics are beingperformed in the areas of business development, Control, Performance and Profitability.
The Bank has implemented a secured, robust WAN architecture network connectingbranches/ offices and ATMs of State Bank Group through leased lines, VSATs and CDMAtechnology. While leased lines and VSATs have been procured for primary links forconnectivity, ISDN lines or VSATs have been provided as backup. The bandwidth of primaryVSATs has been upgraded from 32 Kbps to 64 Kbps at all locations. The Bank is in theprocess of upgrading leased lines at all locations with bandwidth of 64 Kbps to 128 Kbps.
II.2. RISK MANAGEMENT & INTERNAL CONTROLS
> Risk Management Structure in SBI:
The Risk Governance structure in place in the Bank is as under:
Table 25: Risk Governance structure in the Bank
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 visualizes empowermentof Business Units at the operating level, with technology being the key driver, enablingidentification and management of risk at the place of origination.
As envisaged in the Risk Governance Structure, Credit Risk , Market Risk, OperationalRisk, Group Risk and Enterprise Risk Management Departments alongwith Basel Implementationand Information Security Departments are placed under Chief General Manager (RiskManagement) under the control of Deputy Managing Director and Chief Credit & RiskOfficer to ensure Integrated Risk Management for various Risks
Credit Risk Management:
The Bank has strong credit appraisal and risk assessment practices in place.The Bank uses various internal Credit Risk Assessment Models for assessing credit riskunder different exposure segments. Internal ratings of the bank are subject tocomprehensive rating validation framework.
The department tracked 36 industries during FY 2012-13 including sectors such asTelecom, Power, Coal, Aviation, NBFC, Textile Sector, Iron and Steel and disseminated thesame to operating staff for informed decision making. Specific studies on Companies/Groups as directed by the Bank's Board were also conducted.
The Bankhasfiled Letter of Intentwith RBI for migration to Internal RatingsBased (IRB) Approach for Credit Risk. For this purpose, new policies and governancestructure related to credit risk management have been approved by the Risk ManagementCommittee of the Board (RMCB). The governance structure has also been made more robust foreffective implementation of the IRB.
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 Industry best practices and changes in Macro economicvariables.
Five meetings of Credit Risk management Committee (CRMC) and six meetings ofRiskManagement committee of Board (RMCB) were conducted during the year to review various riskpolicies, industry guidance and exposure norms.
Market Risk Management:
Market Risk is the possibility of loss a Bank may suffer on account ofchanges in values of its trading portfolio due to change in market variables such asexchange rates, interest rates, equity price, etc. The Market Risk management process atthe Bank consists of identification, and measurement 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, Concentration& Exposure Limits etc mentioned in the respective policies.
Presently, market risk capital is computed under Standardized Measurement Method(SMM). The Bank has decided to migrate to advanced approaches under Basel-II for marketrisk i.e. Internal Models Approach (IMA) and submitted its Letter of Intent to the ReserveBank of India. The IMA is a Value at Risk (VaR) based tool for monitoring of Bank'strading portfolio. The VaR methodology is supplemented by conducting stress testing of thetrading portfolio at quarterly intervals. The Bank is currently conducting parallel run ofSMM and IMA methodologies.
The Market Risk at the Bank is monitored and reviewed by the Market RiskManagement Committee (MRMC) and the Risk Management Committee of the Board (RMCB) whichmeet at least once at quarterly intervals.
Operational Risk Management:
Operational Risk is the risk of loss resulting from inadequate or failedinternal processes, people and systems or from external events.
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 Operational Risk Management Policy of the Bank.
Important policies, manuals and framework documents in line with RBI guidelineson Operational Risk Management Framework (ORMF) and Operational Risk Measurement System(ORMS) for migration to Advanced Measurement Approach (AMA) are in place.
The Bank has already submitted its Letter of Intent (LOI) to RBI for migrationto Advanced Measurement Approach (AMA).
The Bank-level Operational Risk Management Committee (ORMC), an executivecommittee, reviews the operational risk profile of the Bank at quarterly intervals andrecommends suitable controls/ mitigations for managing operational risk in the Bank. TheRisk Management Committees at all the 14 Circles, Business and Support Groups (NBG, IBG,CBG, MCG, GMU & IT) are also in place.
Committee of Executives on High Value Frauds (CEHVF), headed by the Chairman,has been set up during the current year to periodically monitor and control high valuefrauds (Rs.1 crores & above) and alsofor mitigation of the same.
Other executive level Committees viz. Overall Product Committee (OPC) andOutsourcing Vetting Committee (OVC) are also in place.
Group Risk Management:
Group Risk Management aims to put in place standardised risk managementprocesses in Group entities
The Group Internal Capital Adequacy Assessment Process (Group ICAAP) assessesrelevant risks and mitigation measures for capital assessment, including under stressedconditions. A Group ICAAP Policy to ensure uniformity in ICAAP exercises of Group entitiesis in place.
A quarterly analysis of risk-based parameters for Credit Risk, Market Risk,Operational Risk, Concentration Risk, Liquidity Risk and Contagion Risk is presented toGroup Risk Management Committee/ Risk Management Committee of the Board.
Exposure limits for Large Borrower Exposure and Capital Market Exposure as perRBI have been adopted for the Group. Also, limits for Unsecured Exposures, Real Estate andIntra-Group Exposures have been set by the Bank.
In order to overhaul the Group Risk Management and adopt global best practices,the Bank has embarked upon a Group Risk Management Project recently.
RBI Guidelines on Basel III Capital Regulations have been implemented fromApril 1, 2013. Bank has put in place appropriate mechanism to comply with theseguidelines.
India is one of the first few countries to implement the Basel-III guidelineswhile USA and EU Block, are not yet on board.
Enterprise Risk Management:
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 Risk Management Project being undertaken by the Bank to transformits role into a Strategic function aligned with Business Objectives, Bank has initiatedEnterprise Risk Management (ERM) framework.
Global best practices like Risk Appetite, Risk Aggregation and Risk basedPerformance Management System including Economic Capital and Risk Adjusted Return onCapital (RAROC) will also be covered within the ERM project recently taken up.
Bank has implemented a robust IT policy and Information SystemSecuritypolicy which are in line with the international best practices. These policies arereviewed periodically and suitably strengthened in order to address emerging threats.
Regular security drills and employee awareness programs are conducted to ensuresecurity and increase awareness among staff. Business Continuity Management Systems (BCMS)has been implemented at Global IT centre, Belapur. Bank is also among the forerunners inthe process of implementing the new RBI guidelines for the Banking Sector in this area.
> 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 Audit requirement.All accounting units of the Bank* are subjected to RFIA. Management Audit coversadministrative offices and examines policies and procedures besides quality of executionthereof.
Besides the above, the department conducts Credit Audit, Information Systems Audit(Centralised IT Establishments & Branches), Home Office Audit (audit of foreignoffices) and Expenditure Audit (at administrative offices) and oversee policy andimplementation of Concurrent Audit (domestic & foreign offices) and Circle Audit. Toverify the level of rectification of irregularities by branches, audit of compliance atselect branches is also undertaken. During the period 01.04.2012 to 31.03.2013 - 8895domestic branches / BPR entities were audited under Risk Focussed Internal Audit.
Risk Focussed Internal Audit:
l&MA Dept undertakes a critical review of the entire working of auditee unitsthrough RFIA an adjunct to risk based supervision as per RBI directives. All domesticbranches have been segregated into three groups (Group I, II & III) on the basis ofbusiness profile and risk exposures. While audit of Group I branches is administrated byCentral Audit Unit (CAU), audit of branches in Group II & III category and BusinessProcess Re-engineering (BPR) entities are conducted by thirteen Zonal Inspection Offices,each of which is headed by a General Manager. During the period 01.04.2012 to 31.03.2013 -8895 domestic branches / BPR entities were audited under Risk Focused Internal 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 universe comprises of Corporate Centre establishments / Circle Local HeadOffices / Apex Training Institutions, Associate Banks and Regional Rural Banks sponsoredby the Bank (RRB).
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 Crs and above annually. Credit Audit System also providesfeedback to the business unit by way of warning signals about the quality of advanceportfolio in the unit and suggests remedial measures. Credit Audit also carries out areview (Loan Review Mechanism) of all the pre-sanction and sanction process of allindividual advances above Rs 5 Crs within 6 months of sanction / enhancement / renewal.During the period 01.04.2012 to 31.03.2013 - 7329 accounts have been subjected to CreditAudit on-site.
Information System Audit:
All the Branches are being subjected to Information System (IS) Audit to assess the ITrelated risks as part of RFIA of the branch. Is Audit of centralized IT establishments iscarried out by a team qualified officials. During the period from 01.04.2012 to31.03.2013, IS audits of 13 centralised IT establishments were completed.
Foreign Offices Audit:
During the period from 01.04.2012 to 31.03.2013, Home Office Audit was carried at 49branches, Management Audit at 11 Representative offices / Country Head Offices & 4Subsidiaries / 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 oncontinuous basis. Concurrent Audit System is reviewed on an on-going basis as per the RBIdirectives so as to cover Bank's Advances and other risk exposures as prescribed by RBI.I&MA department prescribes the processes, guidelines and formats for the conduct ofconcurrent audit at branches and BPR entities.
Circle Audit which is a delegated audit covers low risk areas and is conducted betweentwo RFIAs. This enables auditee unit to be better prepared better for the RFIA.
The essential function of Vigilance Administration in the Bank is not only to checkagainst non-compliance of rules & regulations by initiating suitable disciplinaryaction for serious transgressions, but also to devise and implement various measures ofpreventive vigilance by reviewing the systems & processes to ensure a highereffectiveness and the least vulnerability. The concept of Vigilance as an investigativeprocess and an exercise for punitive action has over time evolved to that of"Vigilance for Corporate Growth", the emphasis getting shifted from punitivevigilance to "Preventive and Proactive Vigilance" through an activeparticipation of all concerned.
(i) Preventive Vigilance Committee (PVC) Meetings being held at the branches and theBPR outfits and (ii) Under Whistle Blower Scheme*, our staff members are expected toadvise appropriate authorities about irregular and unethical practices, if any, beingindulged in by colleagues and even seniors.
The number of vigilance cases brought to conclusion during the year 2012-13 is 1508, ascompared to 1117 during 2011-12.
Fraud Prevention & Monitoring
Monitoring of transactions is done with a view to submit critical reports toFinancial Intelligence Unit - India, as mandated vide Prevention of Money laundering Act,2002.
Bank is observing 1st August every year as "KYC Compliance andFraud Prevention Day" to maintain appropriate awareness across the Bank as also tocreate proper understanding of KYC issues among the members of Public.
Bank has taken several measures with a view to strengthening internal controlmechanism to prevent frauds.
Human Resources are a very important part because of the people intensive nature of thebanking industry.
Table 26: Staff Strength
| ||Officers ||Assistants ||Subordinate staff ||Total |
|As on 31.3.2012 ||80,404 ||95,715 ||39,362 ||2,15,481 |
|Less: || || || || |
|Retirements/Attrition ||3,059 ||4,107 ||2,412 ||9,578 |
|Add / Less (-) due to promotion of clerical staff to officers grade ||2,604 (+) ||2,604 (-) ||- ||- |
|Add: || || || || |
|New Addition ||847 ||20,682 ||864 ||22,393 |
|As on 31.3.2013 ||80,796 ||1,09,686 ||37,814 ||2,28,296 |
In order to take full advantage of the expansion of the branch network and also tomitigate staff shortage, particularly at our rural and semi-urban branches, the Bank added20,682 new Assistants. More than 30 lakhs candidates appeared for the test and the Bankchose the best and the brightest candidates. Many of the new assistants are holding goodacademic qualification including professional qualifications of computer engineering, MBA,etc. Apart from lowering the average age, the young recruits have brought a fresh attitudeto the work. We welcome the new entrants and believe that they will ensure a strong futurefor the Bank.
The Bank also advertised for recruitment of 1500 Probationary Officers and anunprecedented 17 lakhs candidates applied for the same. This only shows that the Bank isnow the employer of choice of the young and educated population of the country.
Improvement in employee productivity:
The large-scale recruitment of Gen-next employees in the officers as well as in theassistant grade have not only brought a far reaching attitudinal change among staff intheir customer interface and services across the branches, it has also become a catalystin enhancing / improving the productivity and efficiency of the employees, therebyresulting in increasing growth in business and profitability for the Bank. Consequently,both business per employee and also profit per employee went up significantly during theyear.
Table 27: Staff Productivity
The addition of new manpower in the Assistant category during the year happened only inJanuary-March 2013 quarter and these employees are now inducted for full scale work in thebank after initial training and are ready to contribute towards further growth inbusiness.
Improvement in work culture: The Management initiated administrative action againstfrivolous agitations by certain categories of officers. State Bank officers are on thebest terms and conditions among all the banks in the public sector. It is ironic thatstill some categories of officers chose to conduct agitation only in SBI to the exclusionof other banks. The Bank is a caring and considerate employer. Therefore, in our view,there is no case for disruptive agitation exclusively in SBI, when issues are to bedecided at the industry level. Consequent upon the above administrative action, thedemonstrations within the Bank premises have stopped.
Periodic consultative meetings were held with the Officers Associations / Staff Unionsand the SC-ST Staff Welfare Association as part of the constructive dialogue forunderstanding and addressing grievances of various categories of employees. Theseconsultations are done both at Corporate Centre as also at Circles.
Table 28: Reservation in employment
|Category ||Total ||SC ||ST ||PWD |
|Officers ||80,796 ||13,824 ||5,215 ||485 |
| || ||( 17.11% ) ||(6.45% ) ||(0.60% ) |
|Assistants ||1,09,686 ||18,226 ||8,745 ||1,724 |
| || ||(16.62% ) ||(7.97%) ||(1.57% ) |
|Sub-staff ||37,814 ||11,500 ||2,804 ||193 |
| || ||(30.41%) ||(7.42%) ||( 0.51% ) |
|Total ||2,28,296 ||43,550 ||16,764 ||2,402 |
| || ||(19.08%) ||(7.34%) ||(1.05% ) |
Bank provides reservation to SC, ST, & Persons with disabilities (PWDs) as per GOIdirectives. In order to deal with issues relating to reservation policy and effectivelyredress the grievances of the SC/ST employees, Liaison Officers have been designated atall Local Head Offices of the Bank as also at the Corporate Centre at Mumbai.
Several perquisites like leased accommodation, provision of mobile phones, GroupInsurance etc. were significantly improved for all categories of staff during the year,which besides, being a great motivational factor in improving the employee productivity,were indicative of a healthy employer-employee relationship.
During the year, Inter-Circle Tournaments were also successfully arranged in the fieldof Hockey, Volleyball and Basketball at Bhopal, Chennai and Hyderabad respectively withthe active participation by the employees representing all the 14 Circles.
II.5. Strategic Training Unit (STU)
The Bank's training apparatus comprises of the following:
Apex Training Institutions (ATI): State Bank Staff College - Hyderabad, State BankAcademy - Gurgaon, State Bank Foundation Institute (Chetana) - Indore, State BankInstitute of Rural Development -Hyderabad, State Bank Institute of Information andCommunication Management - Hyderabad State Bank Learning Centres: 47 Learning Centresspread across 19 states of the country.
Further, the Bank has acquired 10 acres of land in the prime institutional area atRajarhat New Town, Kolkata from WBHIDCO (West Bengal Housing Infrastructure DevelopmentCorporation Limited) at a cost of Rs 58 crores. The land is located close to the KolkataAirport. Efforts are under way to construct a state of the art full scale residential apextraining institute. This would help correct regional imbalances as participants fromeastern and north eastern region would not have to travel long distance for undergoingtraining.
In order to raise the standards of training and also to familiarize the Bank officialsin the new and sophisticated techniques of financial management like mergers, acquisitionsoverseas and also in-depth analysis of financial statements, the Bank has taken the helpof outside experts, who along with our senior retired officials, are conducting advancedtraining courses for officials handling credit and faculty members, for impartingsophisticated learning. The aspiration is that our faculty at the training instituteshould progressively be able to customize these programs and conduct the in-housetraining.
Recognising the need for more advanced training and particularly in areas of strategicmanagement, which may not be completely provided by the Bank's in-house trainingapparatus, the Bank deputed its senior executives for training in short duration ExecutiveDevelopment Programmes to reputed institutes both in India and overseas.
Table 29: Senior Excutives Trained Overseas
| ||Overseas training ||Training Institutes in India |
|MDs / DMDs ||18 ||-- |
|CGMs ||37 ||-- |
|GMs ||29 ||62 |
|DGMs ||9 ||228 |
|Total ||93 ||290 |
In fact, the senior officials were given an opportunity of selecting both the trainingas also the university / institute they wanted to attend. The Institutions/ universitieswhere officials were deputed include reputed names like Harvard, Stanford, Wharpon Schoolof Management Studies, Indian Institute of Management etc. The Policy of the Bank is thatevery single employee in every grade must attend at least one training programme everyyear. 1.76 lakhs employees have been given institutional training during the year,covering 90% of the Officers and 60% of the Assistants.
Several articles have been published by our Research officers/faculty members ininternal and reputed external journals such as Bancon compendium, Indian Banker, FinancialPlanning Journal etc.
Our efforts to inculcate a self learning culture in the Bank through an e-Learningportal which has over 280 lessons currently, has yielded good results and more than 70000employees are using the portal while 94% have registered. State Bank Training ManagementSystem (SBTMS), a comprehensive database system in place, enables viewing of trainingcalendars of any ATI/SBLC, programme timetable, individual training history, traineefeedback and self nomination on line. Knowledge Helpline, has been established to answer,knowledge related queries.
II.6. OFFICIAL LANGUAGE
Various efforts were made during theyear for improving and increasing Official Languageimplementation at various levels in the Bank. After providing for the facility to work inHindi on the Core Banking Solution (CBS), Standard Encoding Unicode facility was uploadedon all the computers of branches and offices of the Bank. Training on the usage of Hindiin Unicode has been given to majority of staff members during the year and thus the usageof Hindi on computers has now become much easier for staff members in the Bank. Forencouraging the staff members to use Hindi in their day to day work, various FunctionalHindi Training Programmes were also conducted for officers and employees during the periodunder review.
The work of bilingualisation of the Bank's corporate and internet banking websites isin progress. Different information and procedural manuals in HRMS related to staff membershave been provided in bilingual, i.e. in Hindi and English and thus the use of HRMS hasbecome much easier for all the employees especially for the subordinate staff members. Theservice desk queries asked in Hindi are being replied in Hindi only. Similarly, nowinformation at the Call Centers of the Bank is being provided in Hindi. This year thetotal number of ATM hits in Hindi was 66674049 as compared to 52063356 hits last year,thus recording an impressive increase of 28.04% which shows the rising interest of ourcustomers in the usage of Hindi in alternative channels