State Bank of India
is an Indian multinational, Public Sector banking and Financial Services
company. It is a government owned corporation with its headquarters in Mumbai,
Maharashtra.
As of December 2013, it had assets of US$388 billion and 17,000 branches,
including 190 foreign offices, making it the largest banking and financial
services company in India by assets.
State Bank of India is
one of the Big Four banks of India, along with Bank of Baroda, Punjab National Bank and ICICI Bank.
The bank traces its
ancestry to British India, through the Imperial Bank of India, to the founding, in
1806, of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two "presidency banks" in
British India, Bank of Calcutta and Bank of Bombay, to form the Imperial Bank of India, which in turn became
the State Bank of India. Government of India owned the Imperial Bank of India in 1955, with Reserve Bank of India (India's Central Bank) taking a 60% stake, and renamed it the
State Bank of India. In 2008, the government took over the stake held by the
Reserve Bank of India.
State Bank of India is a
regional banking behemoth and has 20% market share in deposits and loans among
Indian commercial banks.
HISTORY
The roots of the State
Bank of India lie in the first decade of the 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of
Bengal was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks
were incorporated as joint stock companies and were the result of royal charters. These three banks received the exclusive right
to issue paper currency till 1861 when, with the Paper Currency Act, the right
was taken over by the Government of India. The Presidency banks amalgamated on
27 January 1921, and the re-organised banking entity took as its name Imperial Bank of India. The Imperial Bank of
India remained a joint stock company but without Government participation.
Bank of
Bengal H.O.
Pursuant to the
provisions of the State Bank of India Act of 1955, the Reserve Bank of India, which is India's central bank, acquired a controlling interest in the
Imperial Bank of India. On 1 July 1955, the Imperial Bank of India became the
State Bank of India. In 2008, the Government of India acquired the Reserve Bank of India's stake in SBI so as to
remove any conflict of interest because the RBI is the country's banking
regulatory authority.
Imperial
Bank of India
In 1959, the government
passed the State Bank of India (Subsidiary Banks) Act. This made SBI
subsidiaries of eight that had belonged to princely states prior to their nationalization and operational take-over
between September 1959 and October 1960, which made eight state banks
associates of SBI. This acquisition was in tune with the first Five Year Plan,
which prioritised the development of rural India. The government integrated
these banks into the State Bank of India system to expand its rural outreach.
In 1963 SBI merged State Bank of Jaipur (est. 1943) and State Bank of Bikaner
(est.1944).
SBI has acquired local
banks in rescues. The first was the Bank of Bihar (est. 1911), which SBI
acquired in 1969, together with its 28 branches. The next year SBI acquired
National Bank of Lahore (est. 1942), which had 24 branches. Five years later,
in 1975, SBI acquired Krishnaram Baldeo Bank, which had been established in
1916 in Gwalior State, under the patronage of Maharaja Madho Rao Scindia.
The bank had been the Dukan Pichadi, a small moneylender,
owned by the Maharaja. The new bank's first manager was Jall N. Broacha, a
Parsi. In 1985, SBI acquired the Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as its
affiliate, the State Bank of
Travancore,
already had an extensive network in Kerala.
There has been a proposal
to merge all the associate banks into SBI to create a "mega bank" and
streamline the group's operations.
The first step towards
unification occurred on 13 August 2008 when State Bank of
Saurashtra merged with SBI, reducing
the number of associate state banks from seven to six. Then on 19 June 2009 the
SBI board approved the absorption of State Bank of Indore. SBI holds 98.3% in
State Bank of Indore. (Individuals who held the shares prior to its takeover by
the government hold the balance of 1.7%.)
The acquisition of State
Bank of Indore added 470 branches to SBI's existing network of branches. Also,
following the acquisition, SBI's total assets will inch very close to the ₹10
trillion marks (10 billion long scale). The total assets of SBI and the State Bank of Indore stood at ₹9,981,190 million as of
March 2009. The process of merging of State Bank of Indore was completed by
April 2010, and the SBI Indore branches started functioning as SBI branches on
26 August 2010.
On October 7, 2013, Arundhati Bhattacharya became the first
woman to be appointed Chairperson of the bank.
