What is SBI?
State Bank of India or SBI is a public sector bank and financial service statutory body. It is the largest commercial bank in India in terms of assets, profits, deposits, number of branches and employees. SBI came into existence on 1st July 1955. It has its headquarters in Mumbai, Maharashtra. The bank became the banker to all class of people through its wide expansion of business and has maximum outreach that’s why RBI put SBI in the list of Domestic systemically Important Banks or D-SIBs ( D-SIBs are bank which are too big to fail). Presently SBI is headed by Rajnish Kumar.
History of SBI
The roots of the State Bank of India lie in the 19th century when the Bank of Calcutta later renamed as Bank of Bengal established on 2 June 1806. The Bank of Bengal was one of three Presidency banks, the other two being Bank of Bombay and Bank of Madras. These three Presidency banks were incorporated as joint stock companies. They have the exclusive right to issue paper currency until 1861 when the right was taken over by the Government of India. The three Presidency banks amalgamated on 27 January 1921 and were named as Imperial Bank of India. The Imperial Bank of India remained a joint stock company without Government participation.
According to the State Bank of India Act of 1955, the Reserve Bank of India, acquired a controlling interest in the Imperial Bank of India and the Imperial Bank of India became the State Bank of India on 1st July 1955. But the Indian Government acquired the Reserve Bank of India’s stake in SBI in 2008 to remove any conflict of interest because the RBI is the country’s banking regulatory authority. In 1959, the government passed the State Bank of India (Subsidiary Banks) Act thus making the eight banks that had belonged to princely states into subsidiaries of SBI. But now all the subsidiaries have been merged with SBI.
Being one of the largest commercial and systemically important banks, SBI shares a greater responsibility and roles as compared to the other banks. The functions performed by SBI is divided into two categories- ordinary banking functions and central banking functions. These banking functions are further subdivided into many categories.
Central Banking Functions
SBI acts as an agent of RBI, where there are no branches of RBI to perform the following functions-
- Currency Maintenance – Basically RBI is responsible for the maintenance of currency. But the offices of RBI are only available in big cities. In places where RBI has no branches, it maintains its currency with SBI. The currency is withdrawn from these branches of SBI whenever required by RBI. In other words, it acts as a CURRENCY CHEST on behalf of RBI.
- Government’s bank – SBI caters to the needs of both the central as well as the state government. It collects money and makes payments on behalf of the government. It also collects the charges on behalf of government like tax collection and other payments besides granting advances and loans to the government.
- Bank’s banker by receiving deposits from and giving loans to other commercial banks. Many commercial banks have their accounts with SBI and these banks resort for help to SBI whenever they face any financial shortage.
- Acts as a clearinghouse for all commercial banks in places where RBI do not have its presence.
General Banking Functions
Since its inception, SBI is working to cover all areas including the rural ones which have remained outside the reach of the banking sector for a substantial period so that their living standard can be uplifted. Besides performing the above mentioned work SBI just like any other Public Sector Bank performs the normal banking operations which are mentioned below
- Accepts deposits from the public under current, saving, recurring and fixed deposit.
- Acts as an administrator, executor and trustee
- Issue and circulate letters of credit
- Offer remittance facilities like demand draft, telegraphic transfer etc.
- Accept, draw, discount, sell and buy bills of exchange and other negotiable instruments.
- Merchant banking facilities
- Operates Non Resident External and foreign currency accounts
- Offers community services banking by providing grants to many socially relevant research projects undertaken by various universities and institutes.
- Promotes exports through export credit
- Providing financial help to the small scale industries
SBI Vision and Mission
SBI also has some vision and mission through which it always tries to maintain a quality service and standard. Its vision
- Provide a satisfying work environment with ample opportunities for learning, self-actualization and self-development
- To be a responsible, caring and committed corporate citizens
- To attain high standards of professionalism and efficiency and core institutional values
SBI mission is to develop into a top rated, nimble footed financial and banking institute committed to provide excellent services to its customers, enhancing stakeholder’s value through care and competence.
SBI Logo and its meaning
At present the logo of SBI is a blue circle with a small cut at the bottom and is said to be inspired from Kankaria Lake (Ahmedabad) which resembles like this on Google Maps. The blue circle symbolises unity and completeness while the white one represents the common man as a vital part of the bank, despite the huge size of the bank. The logo also suggests a keyhole which is the symbol of safety, security and strength. Some also interpret the white circle is the bank’s branch and the vertical line stands for the streets and lanes of any city which leads to the bank’s branch reflecting that wherever one goes, SBI is there to serve.
SBI Non-Banking Subsidiaries
SBI not only provide banking services but also through its joint venture or non-banking subsidiaries it is trying to make its presence felt abroad and expand its dimensions in other fields. Some non-banking subsidiaries of SBI are
- SBI Capital Markets Ltd
- SBI General Insurance Company Ltd
- SBI Cards and Payment Services Pvt Ltd
- SBI Funds Management Pvt Ltd
- SBI Global Factors Ltd
Listed above are few. SIB also has some joint ventures which are mentioned below
- C-Edge technologies Ltd ( TCS and SBI)
- Nepal SBI Bank Ltd (SBI, EPFO and Agricultural Development Bank of Nepal)
- Commercial Indo Bank LLC or CCIBL (India and Russia)
- Bank SBI Botswana Ltd or BSBIBL (India and Botswana)
And Many More…