SBI State Bank of India

The origins of State Bank of India date back to 1806 when the Bank of Calcutta (later called the Bank of Bengal) was established. In 1921, the Bank of Bengal and two other Presidency banks (Bank of Madras and Bank of Bombay) were amalgamated to form the Imperial Bank of India. In 1955, the controlling interest in the Imperial Bank of India was acquired by the Reserve Bank of India and the State Bank of India (SBI) came into existence by an act of Parliament as successor to the Imperial Bank of India.

The government-controlled bank--the Indian government maintains a stake of nearly 60 percent in SBI through the central Reserve Bank of India--also operates the world's largest branch network, with more than 13,500 branch offices throughout India, staffed by nearly 220,000 employees. SBI is also present worldwide, with seven international subsidiaries in the United States, Canada, Nepal, Bhutan, Nigeria, Mauritius, and the United Kingdom.

Today, State Bank of India (SBI) has spread its arms around the world and has a network of branches spanning all time zones. SBI's International Banking Group delivers the full rangeof cross-border finance solutions through its four wings - the Domestic division, the ForeignOffices division, the Foreign Department and the International Services division.

PRODUCTS AND SERVICES OFFERED BY SBI : Personal Banking.

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NRI Services. Agriculture. International. Corporate. SME. Domestic Treasury.

Personal Banking

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Deposit schemes Personal finance Services

Agricultural/Rural

Agricultural banking Micro credit Regional rural banks

International

Trade finance Merchant banking Correspondent banking

Corporate Banking

Corporate accounts Project finance

NRI Services

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NRE rupee accounts Savings bank Current accounts Term deposits (interest paid out quarterly) Non-resident (ordinary) account NRO A/cs – rupee accounts for crediting income in India Foreign currency non-resident accounts.

Services

Internet banking

Moblie banking Atm services Demat services

Govt. Business

Public provident fund SBI e -tax

PRODUCT

Product of SBI bank is studied under the broad headings of product development, product variety, market share of the bank in specific product category and growth of the business over the years during the study period.

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PRODUCT DEVELOPMENT:

Personal and Service Banking Department of SBI at central office is involved in developing and marketing products and services for the personal segment clientele which is more sensitive and needs variety. Concern of the Bank for product development can be marked from the fact that it has created a “Product Development Group” (PDG) under this department as early as 1992. Though PDG was set up in 1992 only, the concept and the process were not new to the Bank. The long list of products launched by the Bank stands as evidence to the fact.

The product development process in the Bank (in below figure) is more or less based on the theoretical framework given by Philip Kotler. As the figure indicates, the idea for a new product is conceived from any of the following: market research, suggestions from technological developments, etc. After these ideas are given a concrete shape they are screened and their viability is tested through appraisal of their strengths and weaknesses. Then, the product is put to a pilot testing. If the outcome of the pilot test is not favorable, then steps are taken to reformulate it.

If reformulation is not possible then it is abandoned. But if the pilot testing comes out successful, regulations measures covering its operational aspect are formulated and the product is launched keeping a continuous track of the feedback and its proper evaluation.

PRODUCT DEVELOPMENT FRAMEWORK AT SBI.

MARKET RESEARCHSTAFFCOMPETITORS

IDEAS

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ENVIRONMENTTECHNOLOGY

CONCRETISING

SCREENING

VIABILITY

PILOT TESTING

PRODUCT MIX :

The product mix of SBI consists of three product lines (as shown in the following figure) such as Deposits, Loans and Advances and other subsidiary services.

PRODUCT LINE-I (Deposits)

Deposits are the main source of fund for the bank to carry on its lending operations. For the said purpose, the bank has floated different deposit schemes. Mainly there are two types of deposits---- demand deposits and term deposits.

PRODUCT LINE-II (Loans and Advances)

The SBI after providing for cash reserve as stipulated by the RBI from time to time and giving due care to maintain statutory liquidity ratio lends the money it has in most profitable manner. The various forms of advances , as given in the figure are demand loans, overdrafts, cash credit, term loan, Bills purchased and Discounted.

PRODUCT LINE-III (Miscellaneous Business)

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PRODUCT LAUNCH

REGULATIONS

FEEDBACK AND EVALUATION

ABONDON

REFORMULATE FAILURE

In addition to main services of accepting deposit and advancing loans to commercial banks also render a number of other services. Such other services rendered by the bank are grouped under Miscellaneous Business. The figure shows the types of other services rendered by the Bank. These are Government business, Remittances, Bills transaction, gift cheques, letter of credit, Bank guarantees safe custody/deposits/locker facility etc.

PRODUCT MIX OF SBI

PRODUCT MIX

PRODUCT LINE-1(DEPOSITS)

PRODUCT LINE-2(LOANS &

ADVANCES)

PRODUCT LINE-3(SUBSIDIARY

SERVICES)

DEMAND DEPOSITS

TERM DEPOSITS

CURRENT A\C

SAVING A\C

BILLS COLLECTION

GOVT BUSINESS

LETTER OF CREDIT

BANK GUARANTEE

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PRICE

In Indian commercial banks prices of different products are fixed either by RBI/IBA or by the respective banks. Prior to deregulation, banks were operating in an administered price regime. RBI, with the powers vested with it through banking regulation act, 1949, determines the rates of interest on deposits and loans and advances. The charges on subsidiary services are fixed by the IBA which are being implemented under uniform schedule of charges.

The banks are given freedom to stipulate the rate schedule in respect of the services which are not included in the uniform schedule. But since 1991, with the onset of financial sector reforms and

DEMAND LOANS

OVERDRAFT CASH CREDIT

TERM LOANS

BILLS DISCOUNTED

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consequent various measures of deregulation the banks were allowed to fix interest rates on major portion of deposits and advances on their own, making pricing of the products a challenging job for the banks. Thus pricing mechanism which was of little relevance in can administered price regime has assumed more importance from the marketing point of view. Therefore in the present study an attempt has been to know the price structure of the various products, fluctuation in price during the period of study and pricing mechanism.

DOMESTIC TERM DEPOSITS

The revised interest rates on Domestic Term Deposits effective from the 30th June 2008 are furnished as under: 

Existing Interest Rates Revised Interest Rates (W.e.f.30th June 2008)

Duration 

Interest Rate

(% p.a.)

Duration 

Interest Rate

(% p.a.)15 days to 45 days 4.75 15 days to 45 days 4.7546 days to 90 days 5.25 46 days to 90 days 5.2591 days to 180 days 7.00 91 days to 180 days 7.00

181 days to less than 1 year

7.50 181 days to less than 1 year

8.00

2 year to less than 3 years

8.75 2 year to less than 3 years

5 years and up to 10 years

9.00 5 years and up to 10 years

9.00

SERVICE CHARGE

SERVICE CHARGES AND FEES W.E.F 11.2.2008

Sr. No.

Item

(Uniform to all Branches)

Core/Non-Core Banking Branches Regular Branches including PBBs, irrespective of Location (w.e.f 11th Feb. 2008)

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1. Issue of MICR cheque-SB

Rs 2.00 per cheque leaf and 25 leaves free in a year ( Other than Multi city cheque Book)

2. Issue of non-MICR cheque- SB

Rs 2.00 per cheque leaf and 25 leaves free in a year( Other than Multi city cheque Book)

3. Issue of MICR cheque- CA

Rs 2.00 per cheque leaf other conditions to remain

4. Issue of non MICR cheque- CA

Rs 2.00 per cheque leaf other conditions to remain

Prior to deregulation the service charges were as per the rate ixed by IBA .This was done with an intention to have a uniform rate for a similar type of service rendered by all public sector Bank and also to avoid cut throat competition among them. But this rate were hardly related to the cost of service to particular bank and move particularly to a specific activity .This rate which 30-40% higher then earlier rates were outcome of an importance decision taken by the bank in the letter part of their 1997 .The policy of charging lower rate at the rural area was abolish on the ground that the said concession was in many cases availed by an industry and did not really benefited the clientele to any great extent.

With the improved technical capability it is high time for the bank to collect information to build a quality data base and be cost conscious.Further, the price and quality should go hand in hand as the customers expect the increase in prices should accompany the improvement in quality

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PLACE

Here attempt has been made to study the branch network of the SBI and to ascertain bank’s effort in developing place element of marketing mix.The bank has the distinction of having largest network of branches among all the banks in the world. So no bank in India matches its network of branches. In orissa it is also the leader with 470 branches, alone accounting for 35

In the post-nationalization period there was a concerted effort by all banks to expand geographically to take banking products to-banked and under-banked areas and turn class banking into mass banking. But, for SBI, as it is government sponsored and government partnered, the above concept was not new. That is why the pace of growth of branches for SBI was not as fast as that of ASCBs in the post-nationalisation period.

BRANCH EXPANSION OF SBI SINCE ITS INCEPTION

Period Branches added during

the period

Annual additions

Total branches

1955 - - 4971955-69 1176 84 16731969-1990 6749 321 84221990-98 503 63 89251998-2008 1075 107 10000

The Bank Has a good number of its branches spread over the country.The bank is the leader in branch network all over India.In the pursuit of reaching to masses the bank ended up with large number of branches but the advancement in IT increased the capacity of bank handling business and it opened the eyes of the banks to bring change in branch expansion policy and thus bank adopted a cautious approach in branch expansion leading to a drastic change in number of branches.

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PROMOTION

SBI has been giving advertisements and publicity to its products and services whenever there is need for it. Particularly, when a new product was launched, the bank goes for it in large scale. The various ways in which the bank does it are advertisements through press, holdings, pamphlets, posters road shows, souvenir, press conferences, radio, TV, personal selling etc.

DEPOSIT MOBILIZATION EFFORTS

Besides money spent ion advertising and publicity, the study of the efforts the bank has put into mobilize deposits is of quite significance at this stage. The bank has formulated various measures based on specific strategies to mobilize deposit. They are as follows:

1. Staff involvement: It is realized that involvement of all employees is sine-qua-non for the business growth. So, not only the branch managers but also all employees should be involved in the process.

2. Periodical meetings: To rejuvenate the spirit of the staff and keep them involved, branch managers should convene a staff meeting periodically. They should disclose the profit and business budget settled for the branch.

3. Allocation of budget: There should be informal allocation of budget of deposits to each member of staff as agreed by them and this should be reviewed in every monthly meeting and recognition should be recorded for excellent performance under the signature of branch manager, if possible, under signature of controller(AGM/DGM)

4. Target group: Target groups like executives/ employees of large corporate, pensioners, railways central and state govt. departments, defense staff of large institutions, should be identified.

5. valued customers: A shortlist of valued customers/depositors of the branch should be prepared to keep track of their business. All new schemes/changes in interest rates should be communicated to them individually.

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6. Campaigns: Deposit mobilization campaigns should be organized by the branches. The periodicity and the manner should be decided depending upon the local requirements. Customers specific meet such as: NRI meet retired employees meet etc. should be held by the branches on different dates.

EXPENSES INCURRED ON ADVERTISING AND PUBLICITY

YEAREXPENSES ON

ADVERTISING AND PUBLICITY

AS A PERCENTAGE OF NET PROFIT

1990-91 7.2 6.73

1991-92 8.9 5.09

1992-93 5.49 2.59

1993-94 12.67 4.61

1994-95 9.33 1.30

1995-96 13.87 1.67

1996-97 11.87 0.88

1998-99 15.02 0.80

2006-07 26.23 .3.21

Source: Annual Report of SBI

PERSONNEL

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People are living, thinking and feeling beings that constitute the internal, social human sub-system of an orgnaisation. It requires planned and systematic approach for procuring, developing, and managing workforce in order to achieve organizational objectives in an effective manner. Thus internal marketing where the employee is the point of concentration assumes so much of importance. Emphasis given to this aspect of marketing by SBI is studied here, under the following heads, such as recruitment, training, experience promotion and staff welfare.

RECRUITMENT:To select personnel of right aptitude the bank takes help of the

“Institute of Banking Personnel”. A series of sophisticated selection techniques like written aptitude tests, group discussions and interviews are conducted to select right type of personnel for jobs at various levels.

TRAININGSpecial attention to the development of human resources

through training has been one of the core competencies of the bank. It has clear cut HRD mission an training philosophy. They are as follows:

TRAINING PHILOSOPHY

“Training in the State Bank is a proactive, planned and continuos process as an integral part of organisation development. It seeks to impart knowledge, improve skills and reorient attitudes for individual growth and organizational effectiveness.”

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As on 31st March 1998, the bank has 2.37 lac employees and to provide them with proper attitudinal orientation there are 53 staff training centres (STC’s) spread over the country out of which 3 are in Orrisa, one each at Bhubaneshwar, Gopalpur and Rourkela. Besides, it has two apex level colleges one each at Hyderabad and Gurgoan and 2 institutes: State Bank Institute of Information and Communication Management (SBIICM) State Bank Institute of Rural Development (SBIRD), both at Hyderabad. Through this network of STCs staff colleges and institutes the bank provides in-house training facility to its employees.

The bank has various tailor made programmes of training for its officers, clerks, subordinate staffs. Its officers both probationary officers and trainee officers at the beginning of their career go through various programmes like induction programmes, intermediate programmes and foundation level programmes. The objectives of such programmes are as follows:

To create an understanding of the economic environment of the country and the role of banking sector in the process of planning and development.

To help the trainees understand basic marketing concepts, marketing of banks services and the position of the customer in the business conducted by the bank and to create a customer orientation.

Familiarising with the basics of banking law and practice, bank’s accounting system, systems and procedures, internal housekeeping,

Familiarising with the various Acts, Regulations, relevant to banking operations and the contents of Bank’s Book of Instructions.

To help develop a service-oriented approach in dealing with the customers and in marketing the bank’s products and services with suitable emphasis on productivity.

EXPERIENCE:

Exposure on a job improves the efficiency of the employee in terms of speed and quality, but the marginal contribution the efficiency decreases with the increase of experience on a job. After certain span of experience efficiency reaches a point of stagnation. Keeping this in view, the Banks takes up the task of ‘job enlargement’ through

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exposure to variety of jobs and ‘job enrichment’ through assigning higher responsibilities to its employees.

PROMOTION:

The bank provides promotional opportunities to all its staff to the officers. Both experiences and merit have been the criteria for all promotions. The various promotional opportunities available to its different categories of employees are as follows:

Subordinate Staff Basing on branch level seniority, its subordinate staffs are

promoted to Senior Messenger, Duftry etc. under in cadre promotion. To get promotion to the higher cadre such as Record Keepers, Cashiers etc. they face on the basis of vacancy of post. To seat in such examination candidates who have passed Xth standard are eligible after five years of service and those who are non-matriculates are eligible after 8 years of service.

Clerical StaffFor clerks under in-cadre promotions to Tellers, Assistant Head

Cashier, Deputy Head Cashier, Head Assistants etc. Branch seniority is taken into account subject to existing vacancy. For promotion to higher cadre, i.e. supervising cadre, there are two channels. First one is general channel where candidates for promotion are identified. Such identified candidates are to get through written test and interviews to quantify for the higher posts. The second channel is trainee officers. Those who have passed CAIIB part-I and have service of over 4 years as on 1st January are eligible to sit in all India level competitive test conducted for the said purpose.

Supervising Staff

There are various grades in the supervising cadre as follows:-

Grades DesignationJunior Management Grade Scale-I (JMGS) Assistant ManagerMiddle Management Grade Scale II (MMGS-II)

Deputy Manager

Middle Management Grade Scale III (MMGS-III)

Manager

Senior Management Grade Scale IV (SMGS-IV)

Chief Manager

Senior Management Grade Scale V (SMGS- Assistant General Manager

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V)Senior Management Grade Scale VI (SMGS-VI)

Deputy General Manager

Senior Management Grade Scale VII (SMGS-VII)

General Manager

Above the position of general manager the other positions in order positions in order of rank and file are Chief General Manager, Deputy Managing Director and Chairman who is the head of the organizations.

STAFF TRAINING COLLEGE

THE PEOPLE

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Sophisticated technologies no doubt, inject life and strength to bank efficiency but the instrumentality of sophisticated technologies start turning sour if the human resources are not managed in a right fashion.  We can't deny the fact that if foreign banks are performing fantastically; it is not only due to the sophisticated information technologies they use but the result of a fair synchronization of new information technologies and a team of personally committed employees.  Thus we accept the fact that generation of efficiency is substantially influenced by the quality of human resources. Even efficiency essentially is supported by

 HRD MISSION“HRD in the State Bank of India is continuous process movement

and direction to enable every individual as a member of an effective team and the state bank community to realize and activate his potential so as to contribute to the achievement of bank’s goal and derive satisfaction there from”

To achieve this mission SBI has been consistently carrying out training programme with 53 staff training centers spread all over India. Also SBI greatly stress on proper promotion of their employees after certain span of experience and efficiency. With all this efforts SBI is increasing its efficiency supported by ethical dimension, humanity and humanism.

THE PROCESS

It is the flow of activities of banks to follow RBI guidelines.  There has to be adherence to certain rules and principles in the banking operations.  The activities have been segregated into various

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departments accordingly. Banks have got standardized procedures got typical transactions. In fact not only all the branches of a single-bank, but all the banks have some standardization in them. This is because of the rules they are subject to.  Besides this, each of the banks has its standard forms, documentations etc.  Standardization saves a lot of time behind individual transaction.

STANDARD TIME FOR FOLLOWING PROCESSING

Sr. No.

Name of the activity Standard time (in minutes)

1 Cash receipt SB and current account

4

2 Cash payment SB and current account

8

3 Issue of cheque book 84 Opening of saving account 165 Issue of demand draft 126 Payment of draft 8

THE PHYSICAL EVIDENCE

The physical evidences include signage, reports, punch lines, other tangibles, employee's dress code etc. 

Signage:

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Bank has its logo by which a person can identify the bank. Thus such signages are significant for creating visualization and corporate identity. SBI logo helps even the common people of remote areas to identify their bank.

Tangibles: 

SBI give pens, writing pads to the internal customers.  Even the passbooks, chequebooks, etc. are provided easily to the customers.

Punch lines:

Punch lines or the corporate statement depict the philosophy and attitude of the bank.  The influential punch lines of SBI is ‘ PURE BANKING AND NOTHING ELSE ’ which highlights the transparency and trust that SBI wants to develop with its customers.

STAFF WELFARE

The bank has various schemes for the welfare of its staff. These are subsidized canteens, recreational facilities, dispensaries and free beds in hospitals, educational scholarships to the meritorious children of employees, reservation of school seats, holiday homes, consumer co-operative stores, employees’ mutual welfare schemes etc. Besides the above, bank also provides its employees the facility of various deposits and advances on better terms and conditions the interest allowed to staff on saving bank deposits is one percent higher than interest allowed to general public.

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Under staff co-operative housing schemes loans are granted to the extent of Rs.15,000 (subordinate staff) to Rs.50,000(supervising staff).These loans are free of interest and recovered in 20 years. Under individual housing schemes, loan amounting to Rs.2lacs, Rs3lacs, and Rs.5lacs are granted to subordinate staff, clerical staff and supervising staff respectively. These loans are granted without any margin. The principle amount is recovered in 180 EMIs and interest accrued in subsequent 60 EMIs.

The analysis of internal marketing aspect of the bank revels that it has proper plans and programs to develop its work force. Its training system looks mature with it provision of training needs assessment, network of training centers and programs designed to suit the requirement of the bank by creating an able work force. Banks concern for development of the human resources through exposure to various responsibilities and recognisation of their abilities through various promotional facilities is clearly discernible. Above all, various welfare measures adopted by the bank will go a long way in creating an able workforce willing to give its best

CUSTOMER SERVICE

As stated earlier internal marketing is essential in creating a loyalty in customer towards the organisation and its effectiveness can be measured through the satisfaction derived by the customer out of the services rendered by the bank. Thus, here an attempt has been made to study bank’s endeavor to render effective customer services.The bank has implemented 122 out of 176 different recommendations of Talwars Committee and out of 97 recommendations of Goiporia Committee the bank has implemented 72 and remaining 25 are in the process of implementation/examination. The bank is aware of the ever increasing expectation of customers, concern of government and RBI and tries to implement different customer services proactively, not in letter but also in spirit.

To gauge the extent to which the service rendered by the bank has been appreciated by the customers, the bank has devised different tools like customer’s day, customer meet, customer relation programs,

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customer service committee meeting, customer calls, customer councils etc. These give the bank an opportunity to interact with the customer to identify its area of short comings and improve there on.

The bank has a special customer complaint handling machinery. Bank recognizes the effect that a complaining customer is better than a non complaining dissatisfied customer as he has atleast not broken his relations with the bank and left the ball in bank’s court, therefore, the bank gives quick redressal to customers grievances the prime importance. Bank maintains a transparent glass window box as a complaint-cum-suggestion box under the responsibility of the Branch Manager.

Knowing fully well the customer friendliness has been perceived much lower in the banks in comparison to its service audit to study the status of implementation of Goiparia Committee recommendations at its various branches.

Nomination: To avoid difficulties at the time of repayment of the balance in the account of the deceased person, nomination facility is provided. Existing accounts without survivorship clause are persuaded to get such nomination.

Updating of Pass Book: Pass Books received by the bank are updated and customers are educated to get it done regularly.

Changes in Interest Rates: New term deposits are accepted with new interest rates issued by RBI, subject to confirmation on receipt of official communication.

Issue of cheque books at of cost savings bank account holders.

Automatic renewal of term deposits for a similar period at the then prevailing interest rate in absence of any instruction of the customer.

Payment of drafts upto Rs.10,000 at any of the branch other than the one which it is drawn at centers(other than the four metros) where the bank has more number of branches.

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Business hours to suit the banking needs of the customer of the locality which the bank serves.

Working hours of the bank staff to start at metropolitan urban centers to start of business hours.

Provision of a separate inquiry ‘may I help you counter’ at branches with staff strength of 30 or more. At other branches, the functions of the counter must attached to some other counter, depending upon the load. This counter is to be located, invariably, at the branch entrance.

Facility for exchange of mutilated soiled currency notes.

Customer Days:

The bank observes customers day on 15th of every month. Branch manager, manager of division is available at the branch between 3pm and 5pm on that day. DGM and AGM are also available on this day. Customers and user public may call on any executive/officer of the bank with or without appointment.

However, based on the discussions in the meeting of standard committee of customer services (banking division), the bank identified five areas of customer service for focus attention at branches. They are:

Immediate credit of outstation cheques upto Rs. 5,000.

Automatic payment of interest on delayed collection of outstation cheques.

Provision for single window service for issue of drafts/bankers cheque etc. to avoid delay.

Display of notice regarding availability of nomination facility.

Updating and prompt delivery of savings bank pass book.

To sum up, the bank has taken various steps to boost its customer service and stay ahead of others in the field. Its an option of most of the recommendations of Talwar and Goiporia Committee on customer service, introduction of tools to gauge the effectiveness of various customer service programmers, importance given to quick redressal of customer grievances and

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self imposed code of fair banking practices etc., stand as evidence to its endeavour to render effective customer service.

CONCLUSION

The State Bank of India, the country’s oldest Bank and a premier in terms of balance sheet size, number of branches, market capitalization and profits is today going through a momentous phase of Change and Transformation. The bank is entering into many new businesses with strategic tie ups – Pension Funds, General Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale Merchant Acquisition, Advisory Services, structured products etc – each one of these initiatives having a huge potential for growth.

Today, the Bank is the largest provider of infrastructure debt and the largest arranger of external commercial borrowings in the country. It is the only Indian bank to feature in the Fortune 500 list.The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience. With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked, today it offers the largest banking network to the Indian customer. Throughout all this change, the Bank is also attempting to change old mindsets, attitudes and take all employees together on this exciting road to Transformation. In a recently concluded mass internal communication programme termed ‘Parivartan’ the Bank rolled out over 3300 two day workshops across the country and covered over

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130,000 employees in a period of 100 days using about 400 Trainers, to drive home the message of Change and inclusiveness.

  The CNN IBN, Network 18 recognized this momentous transformation journey, the State Bank of India is undertaking, and has awarded the prestigious Indian of the Year – Business, to its Chairman, Mr. O. P. Bhatt in January 2008

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INDEX

SR NO.

TOPICS PAGE NO.

1. INTRODUCTION 02. SBI BRIEF HISTORY 13. MARKETING MIX 2

Product 2-5 Price 6-7 Place 8 Promotion 9-10

4. PERSONNEL 11 Training 12 Promotion 13 Experience 14 Staff welfare 15

5. CUSTOMER SERVICE 16-186. CONCLUSION 19

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