DEPARTMENT OF MANAGEMENT OF BUSSINESS ADMINISTRATION VIGNANA BHARATHI INSTITUTE OF TECHNOLOGY (Affiliated to JNTU, HYDERABAD) This is to certify that the “STATE BANK OF INDIA” has been submitted by A.ANIL bearing the Roll No: 11P61E0001.Project Guide Head of the Department(MR.K.AJAY KUMAR) (DR.SV.RAMANA)External principal
INDEX Introduction History and Evaluation Current board of directors Objectives of SBI Scope of SBI Achievements of SBI Services Recent awards and recognitions Financial statement analysis Methods of financial statement analysis Comparative statement analysis Trend analysis Ratio analysis Findings Suggestions Conclusion
Introduction of State Bank of India:In India, SBI is one among all the biggest commercial banks. it commands one fifth loans anddeposits of each and every programmed commercial bank and also contains an enormousnetwork of about 9000 branches i.e., around 14% of all branches of bank in India. A network ofabout, numerous non-banking subsidiaries and eight banking subsidiaries are included by statebank group which offers fund management credit cards, merchant banking services, primarydealership in government securities, insurances and factoring services. The eight banking subsidiaries include: State bank of Hyderabad (SBH). State bank of Travancore (SBT). State bank of Indore (SBIR). State bank of Patiala (SBP). State bank of Bikner and Jaipur (SBBJ). State bank of India (SBI). State bank of Maharashtra (SBM). State bank of saurashtra (SBS).At present, the SBI across all the times Zones included a network of branches and around theworld it has widened its arms. By mean of its four wings such as a foreign offices division,International services division, the domestic division and the foreign department the internationalbanking group of distributes the cross-border finance solution in complete range.History and evaluation of State Bank of India:The evolution of State Bank of India can be traced back to the first decade of the 19th century. Itbegan with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806. The bank wasredesigned as the Bank of Bengal, three years later, on 2 January 1809. It was the first ever joint-stock bank of the British India, established under the sponsorship of the Government of Bengal.Subsequently, the Bank of Bombay (established on 15 April 1840) and the Bank of Madras(established on 1 July 1843) followed the Bank of Bengal. These three banks dominated themodern banking scenario in India, until when they were amalgamated to form the Imperial Bankof India, on 27 January 1921.An important turning point in the history of State Bank of India is the launch of the first FiveYear Plan of independent India, in 1951. The Plan aimed at serving the Indian economy ingeneral and the rural sector of the country, in particular. Until the Plan, the commercial banks ofthe country, including the Imperial Bank of India, confined their services to the urban sector.Moreover, they were not equipped to respond to the growing needs of the economic revivaltaking shape in the rural areas of the country. Therefore, in order to serve the economy as awhole and rural sector in particular, the All India Rural Credit Survey Committee recommendedthe formation of a state-partnered and state-sponsored bank.
The All India Rural Credit Survey Committee proposed the takeover of the Imperial Bank ofIndia, and integrating with it, the former state-owned or state-associate banks. Subsequently, anAct was passed in the Parliament of India in May 1955. As a result, the State Bank of India (SBI)was established on 1 July 1955. This resulted in making the State Bank of India more powerful,because as much as a quarter of the resources of the Indian banking system were controlleddirectly by the State. Later on, the State Bank of India (Subsidiary Banks) Act was passed in1959. The Act enabled the State Bank of India to make the eight former State-associated banksas its subsidiaries.The State Bank of India emerged as a pacesetter, with its operations carried out by the 480offices comprising branches, sub offices and three Local Head Offices, inherited from theImperial Bank. Instead of serving as mere repositories of the communitys savings and lending tocreditworthy parties, the State Bank of India catered to the needs of the customers, by bankingpurposefully. The bank served the heterogeneous financial needs of the planned economicdevelopment.State Bank of India (SBI) (NSE: SBIN, BSE: 500112, LSE: SBID) is the largest bankingand financial services company in India by revenue, assets and market capitalization. It is a state-owned corporation with its headquarters in Mumbai, Maharashtra. As of March 2012, it hadassets of US$360 billion and 14,119 branches, including 173 foreign offices in 37 countriesacross the globe. Including the branches that belong to its associate banks, SBI has 21,500branches.The bank traces its ancestry to British India, through the Imperial Bank of India, to the foundingin 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian. Bank ofMadras merged into the other two presidencies banks—Bank of Calcutta and Bank of Bombay—to form the Imperial Bank of India, which in turn became the State Bank of India.The Government of India nationalized the Imperial Bank of India in 1955, with the ReserveBank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, thegovernment took over the stake held by the Reserve Bank of India. SBI has been ranked 285th inthe Fortune Global 500 rankings of the worlds biggest corporations for the year 2012.SBI provides a range of banking products through its vast network of branches in India andoverseas, including products aimed at non-resident Indians (NRIs). The State Bank Group hasthe largest banking branch network in India. SBI has 14 local head offices situated at Chandigarh(Punjab & Haryana), Delhi, Lucknow (Uttar Pradesh), Patna (Bihar), Kolkata (West Bengal),Guwahati (North East Circle), Bhuwaneshwar (Orissa & Chattisghad)), Hyderabad (AndhraPradesh), Chennai (Tamil Nadu), Trivandrum (Kerala), Bangalore (Karnataka), Mumbai(Maharashtra), Bhopal (Madhya Pradesh) & Ahmadabad (Gujarat) and 57 Zonal Offices that arelocated at important cities throughout the country.SBI is a regional banking behemoth and is one of the largest financial institutions in the world. Ithas a market share among Indian commercial banks of about 20% in deposits and loans. TheState Bank of India is the 29th most reputed company in the world according to Forbes. Also,SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual surveyconducted by Brand Finance and The Economic Times in 2010.
The State Bank of India is the largest of the Big Four banks of India, along with ICICIBank, Punjab National Bank and HDFC Bank—its main competitors.Branches:The corporate center of SBI is located in Mumbai. In order to cater to different functions, thereare several other establishments in and outside Mumbai, apart from the corporate center. Thebank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at majorcities throughout India. It is recorded that SBI has about 10000 branches, well networked tocater to its customers throughout India.ATM Services:SBI provides easy access to money to its customers through more than 8500 ATMs in India. TheBank also facilitates the free transaction of money at the ATMs of State Bank Group, whichincludes the ATMs of State Bank of India as well as the Associate Banks – State Bank ofBikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also transactmoney through SBI Commercial and International Bank Ltd by using the State Bank ATM-cum-Debit (Cash Plus) card.
The eight banking subsidiaries are: State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of India (SBI) State Bank of Indore (SBIR) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT)Personal Banking: SBI Term Deposits SBI Loan for Pensioners. SBI Recurring Deposits Loan against Mortgage Of Property. SBI Housing Loan against Shares & Debentures. SBI Car Loan Rent plus Scheme. SBI Educational Loan Med-Plus Scheme.Other Services: Agriculture/Rural Banking. NRI Services. ATM Services. Demat Services. Corporate Banking. Internet Banking. Mobile Banking. International Banking. Safe Deposit Locker. RBIEFT. E-Pay. E-Rail. SBI Vishwa Yatra Foreign Travel Card. Broking Services. Gift Cheques.
Current Board of Directors:After the end of O. P. Bhatts reign as SBI chairman on 31 March 2011, the post was taken overby Pratip Chaudhuri, who is the former deputy managing director of the international division ofSBI. As of 4 August 2011, there are twelve members in the SBI board of directors,including Subir Gokarn, who is also one of the four deputy governors of the Reserve Bank ofIndia. The complete list of the Board members is: 1. Pratip Chaudhuri (Chairman) 2. Hemant G. Contractor (Managing Director) 3. Diwakar Gupta (Managing Director) 4. A Krishna Kumar (Managing Director) 5. Dileep C Choksi (Director) 6. S. Venkatachalam (Director) 7. D. Sundaram (Director) 8. Parthasarathy Iyengar (Director) 9. G. D. Nadaf (Officer Employee Director) 10. Rashpal Malhotra (Director) 11. D. K. Mittal (Director) 12. Subir V. Gokarn (Director)Objectives of State Bank of India:State Bank of India has been able to make its mark in all facets of banking operations, be ittraditional, developmental or innovative. In the medium term, the Banks corporate objectives areto continue to be the premier Bank of Madhya Pradesh with a national perspective, ensuringprogressive corporate excellence using state of the art technology.To create and maintain assets of quality so as to emerge as a healthier and stronger Bank as perparameters of international standards, while maintaining the social orientation and nationalobjectives.To emerge as an important component and strong representative of State Bank Group in its corearea of operation and carve out a well defined position within the group.To provide impeccable and progressively better customer service with total involvement of staff.SCOPE OF State Bank of India:State Bank of India (SBI) may not cut lending rates further unless the Reserve Bank of Indiaeases its stance, chairman Pratip Chaudhuri indicated in the weekend, even though financeminister P Chidambaram prodded public sector banks to lower rates for consumer loans to revivethe sagging manufacturing sector.
―Let‘s see. There is already a response and if there is evidence that lowering of rates lead toincrease in business, then only we will lower rates. But already our base rate is the lowest. That(lowering of rates) will depend on what signal RBI gives,‖ Chaudhuri told FE.SBI recently lowered lending and deposit rates by 25 basis points but the move was notreplicated by other public sector banks.Most banks have not fully responded to the RBI‘s 50 bps rate cut in April, and that has kept banklending rates high even though credit growth has slowed in tandem with a decline in theeconomic growth to a nine-year low of 6.5% in 2011-12.Chaudhuri refrained from forecasting whether the RBI would lower rates this fiscal.The SBI chief refrained from forecasting a rate cut by RBI now that economic growth was beingforecast to fall below 6% by private analysts and as inflation has inched down to below 7% inJuly.The slowdown in the economy has taken a toll on the asset quality of banks, including SBI,whose net non-performing assets rose to 2.22% at the end of June from 1.61% a year ago. ButChaudhuri said the bank was aiming to bring it down in the next two quarters.―Of course, we will bring it (NPA) down in second and third quarters. It is difficult to give anumber. It depends on a number of factors that is outside the purview of the bank,‖ he said,adding that NPAs have gone up because some companies have not got clearance or land for theirprojects. ―But it (NPA ratio) will look better in coming quarters,‖ he said.The global scenario looks gloomier and that will calibrate SBI‘s expansion plans. ―Overseasexpansion makes sense if you can mobilize deposits. Without deposits, if you just have to lend,then it does not make much sense. Secondly, we are now present in almost all geographies,‖Chaudhuri said.SBI was willing to expand where Indian companies increase their toehold. ―We will go whereverIndian companies go. When Adani buys a port in Australia or the Tata‘s go for a JLR (JaguarLand Rover) acquisition that is where we can go, because we can collateralize the Indian asset.We will like to follow the Indian companies. All these regions (Latin America, Africa and Asia)are on the radar but not in a big way,‖ Chaudhuri said.He ruled out overseas acquisitions, especially in Europe, saying such a move will only depletethe bank‘s capital without ensuring high returns.―We have to pay a huge premium over the book (value) and that is capital depleting. The RoE(return on equity) in these businesses is not as high as in India. In India, my RoE is 17-18%.Why should I go there if RoE is lower? In European businesses, RoE is 5-6%.‖
Achievements of SBI:The State Bank of India has won the prestigious Asian Banker Achievement Award for being thestrongest bank in Asia Pacific region, instituted by the Qatar Financial Centre Authority and theAsian Banker magazine.The award is in recognition to SBI‘s combination of financial performance and key businessimprovements, making it the region‘s strongest bank with strong and steady income growth ratesof 29 per cent, 14 per cent and 28 per cent for the past three years, the magazine said in theaward citation.Already the largest bank in a the second fastest growing large economy, the state-owned lenderhas attracted customers and talent from the private sector and other state-owned banks, as well asmarket share in deposits and loans, the citation added.The award looks at the long-term performance of banks by assessing them over a three-yearperiod, and plays an important role in cultivating a culture of excellence among leaders andsenior management in the banking industry in Asia and the Gulf Region.The SBI has also won the Asian Banker transaction banking award: Winner of achievementaward for trade finance in India. In the past two years, SBI became the largest bank by marketcapitalization.As a key development project, the bank has launched a new core banking system and multiple ITreinvigoration project, while speeding up a programme to integrate subsidiary banks, allimprovements which help make SBI the strongest bank in the region and the one to watch for theyears to come.―We are happy to have received these awards which are a testimony to our untiring efforts overthe past few years. The contribution of the international business to our balance sheet issubstantial and we have set ourselves the target of increasing this to 25 per cent in three years. Ican say that we aspire to be amongst the top five banks in Asia quite soon,‖ chairman OmPrakash Bhatt reacting to the award.
SERVICES:State bank of India offers a wide range of services in the Personal Banking Segment which areindexed here. Click on each of them to access the details. · ONLINE TRADING · ATM SERVICES · GIFT CHEQUES · INTERNET BANKING · FOREIGN INWARD REMITTANCE · LOCKER · CARDSONLINE TRADING:State Bank of India (SBI) now introduces you to a State-Of-Art broking predominantly to caterto every broking need and offers a truly world class experience of online investing –anyplace,anytime. Buying and selling of shares is now just a click away.Our value proposition is based on Unmatched Expertise, State-Of-Art Technology AndOperational Ease that will redefine the way India trades. With us you have the power ofresearch expertise to aid you in making the right decisions, operational ease allowing you toseamlessly execute your transactions, timely advice that helps you pick the right opportunitiesand a customized trading experience to suit your needs and demands. So go ahead and enjoyyour fast, easy and hassle-free trading experience with the India‘s largest bank.State Bank of India in alliance with SBICap Securities Limited and Motilal Oswal SecuritiesLimited now offers you an online trading account which will let you trade from the comfort ofyour home or office either through the internet. This service provides you with a 3-in1 accountwhich is an integrated platform of savings bank a/c, demat a/c and an online trading a/c to giveyou a convenient and paper free trading experience under one roof.
FINANCIAL STATEMENT ANALYSIS The significance of financial statements lies not in their preparation and presentation, but in theiranalysis and interpretation. This involves a study of relationship among various financial factorsand an ability to judge their meaning and significance. The financial analysis must understandthe plans and policies of management, determine relationship among financial figures and makeinterpretations in simple unbiased way.Types of analysis:The process of analysis may be classified based on the nature of information used and on thebasis of ‗methodology‘ of operations. 1. On the basis of Nature of Information used: a. External Analysis b. Internal Analysis 2. On the basis of methodology of operations: a. Horizontal analysis b. Vertical analysisMETHODS OF FINANCIAL STATEMENT ANALYSIS:The following methods of analysis are generally used:1. Comparative statement2. Trend analysis3. Common size statements4. Funds flow analysis5. Ratio analysis
COMPARATIVE STATEMENT ANALYSIS: Comparative financial analysis refers to comparison of financial statements pertaing to twodifferent periods by putting them side by side and finding out the changes in absolute andrelative changes.Points be noted.1. The financial date that is to be compared should be properly defined. A particulars account head must have the same connotation for all the periods of comparison.2. It is preferable to present financial information in ‗vertical‘ or ‗statement‘ form.3. The comparative financial statement must reveal changes in both ‗absolute ‗ and ‗relative‘ measures.
Trend Analysis:Trend analysis calculates the percentage change for one account over a period of time of twoyears or more.Calculation notes: 1. 20X0 is the earlier year so the amount in the 20X0 column is subtracted from the amount in the 20X1 column. 2. The percent change is the increase or decrease divided by the earlier amount (20X0 in this example) times 100. Written as a formula, the percent change is: If the earliest year is zero or negative, the percent calculated will not be meaningful. N/M isused in the above table for not meaningful. Most percents are rounded to one decimal place unless more are meaningful. A small absolute dollar item may have a large percentage change and be consideredmisleading.Trend percentages:To calculate the change over a longer period of time—for example, to develop a sales trend—follow the steps below: 1. Select the base year. 2. For each line item, divide the amount in each nonbase year by the amount in the base year and multiply by 100. 3. In the following example, 20W7 is the base year, so its percentages (see bottom half of the following table) are all 100.0. The percentages in the other years were calculated by dividing each amount in a particular year by the corresponding amount in the base year and multiply by 100
Ratio Analysis:Financial ratio analysis is a fascinating topic to study because it can teach us so much aboutaccounts and businesses. When we use ratio analysis we can work out how profitable a businessis, we can tell if it has enough money to pay its bills and we can even tell whether itsshareholders should be happy!Ratio analysis can also help us to check whether a business is doing better this year than it waslast year; and it can tell us if our business is doing better or worse than other businesses doingand selling the same things.In addition to ratio analysis being part of an accounting and business studies syllabus, it is a veryuseful thing to know anyway!The overall layout of this section is as follows: We will begin by asking the question, What dowe want ratio analysis to tell us? Then, what will we try to do with it? This is the most importantquestion, funnily enough! The answer to that question then means we need to make a list of all ofthe ratios we might use: we will list them and give the formula for each of them.Ratio AnalysisIt‘s a tool which enables the banker or lender to arrive at the following factors : Liquidity position Profitability Solvency Financial Stability Quality of the Management Safety & Security of the loans & advances to be or already been providedHow a Ratio is expressed As Percentage - such as 25% or 50% . For example if net profit is Rs.25,000/- and the sales is Rs.1,00,000/- then the net profit can be said to be 25% of the sales.
As Proportion - The above figures may be expressed in terms of the relationship between net profits to sales as 1: 4. As Pure Number /Times - The same can also be expressed in an alternatively way such as the sale is 4 times of the net profit or profit is 1/4th of the sales.
Ratio Analysis of state bank of IndiaProfitability Ratios:Gross Profit Ratio = (Gross Profit/Net sales) × 100 2011 = (94803.91 / 106521.45) × 100 = 88.99 2012 = (63822.19 / 81394.36) × 100 = 78.41Net Profit Ratio = (Net Profit/Sales) × 100 2011 = (8264.52/ 81394.36) × 100 = 10.15 2012 = (11707.29 / 106521.45) × 100 = 10.99Operating Ratio = (Operating Expenses/Net Sales) x 100 2011 = (29713.36 / 81394.36) x 100 = 36.50 2012 = (27342.72 / 106521.45) x 100 = 25.66Liquidity Ratios: Current Ratio = (Current Assets/Current Liabilities) 2011 = (423238.9 / 1053501.77) = 0.401% 2012 = (414827.33/ 1170652.93)
= 0.354% Quick Ratio = (Quick Assets ∕ Current Liabilities) Quick Assets = Current Assets – Closing StockCapital Structure Ratio: Debit Equity Ratio = (Debt / Equity) Equity = Equity share capital + Preference share capital + Reserves 2011 = 635.00 + 0 + 64351.04 = 64986.04 2012 = 651.04 + 0 + 83280.16 = 83951.2 2011 = (1053501.77 / 64986.04) = 1.62% 2012 = (1170652.93 / 83951.2) =13.94%Proprietary Ratio To = (Equity / Total Assets)Total Assets 2011 = (64986.04 / 1223736.20) = 0.05% 2012 = (83951.2 / 1335519.24) = 0.06%Proprietary Ratio To = (Fixed Assets / Equity)Fixed Assets
2011 = (800497.3 / 64986.04) = 12.31% 2012 = (920691.41 / 83951.02) = 10.96%Current Assets To = (Current Assets / Equity)Proprietary Ratio 2011 = (423238.9 / 64986.04) = 6.51% 2012 = (414827.33 / 83951.2) = 4.94%Turnover Ratios:Working Capital = Cost of Goods Sold / Working CapitalTurnover RatioWorking Capital = Current Assets – Current Liabilities 2011 = 423238.9 – 1053501.77 = -630262.87 = 17572.17/ (-630262.87) = -0.027% 2012 = 414827.33 – 1170652.93 = -755825.6 = 42717.54/ (-755825.6)
FINDINGS: o The Gross Profit of the company has been decreased when compared with the base year and normal year. Ratio value for the year 2012 is 78.41 and for the year 2011 is88.99 o The Net Profit ratio has been increased from 10.15 to 10.99 from 2011 and 2012. o The value of Operating Profit ratio is decreased 36.50 to 25.66 in the 2011 to 2012. o The Current ratio of the company has been decreased from 0.401% to .0.354% in the year2011 to 2012. o The Quick ratio of the company has been decreased from 0.517 to .506 in the year2011 to 2012. o The Debt Equity ratio has been increased from 1.62% to 1.94% in the year2011 to 2012. o Proprietary ratio to Total Assets is 0.05% in 2011, where as in 2012 it is 0.06% o Proprietary ratio to Fixed Assets is 12.31% 2011, where as in 2012 it is 10.96%. o Proprietary ratio to Current Assets is decreased 6.51%in the year 2011 &4.94% in the year of 2012. o Networking Capital Turnover ratio has been increased -0.027% in the year 2011 & 0.056% year of 2012. o Fixed Assets Turnover ratio has been increased 0.10% in the year 2011 & 0.11% year of 2012.
Suggestions: If the Current Ratio is decreased as per that current assets is low. If it is increased the current ratio is increased. Gross Profit is present is 94 if bank will decrease expenses then it will increase more. Net Profit is increased 10.99(2012) from 10.15(2011). If expenses are reduced then net profit will be decreased. Operating Ratio is decreased in 2012(25.66). If we decrease operating expenses then operating ratio will be increased. Debt Equity Ratio is increased in 2012. Bank will reduce debt then debt equity ratio is decreased. Fixed Assets Turnover Ratio is increased in 2012. If you increase Fixed Assets then Fixed Assets Turn over Ratio is decreased. Conclusion: State Bank of India is presently doing well. Increasing the services every year. But still, if some operating Expenses will be reduced then it will become strong. And more over it would be better if it provides more services to the public like, credit loans, home loans, less interest rates and more online services will be provided to customers.