BOARD OF DIRECTORS                                                                                         [Print Page]   ...
the felt needs of local European commerce and were not imposed fromoutside in an arbitrary manner to modernise Indias econ...
exchange or other negotiable private securities, keeping cash accountsand receiving deposits and issuing and circulating c...
eighteen branches including its head office, seasonal branches and subagencies, the Banks of Bombay and Madras had fifteen...
manufacturing and mining activity in the sub-continent. While the Banksof Bengal and Bombay were engaged in the financing ...
foreign exchange business and executor and trustee business for thefirst time.Imperial BankThe Imperial Bank during the th...
of banking as mere repositories of the communitys savings and lendersto creditworthy parties was soon to give way to the c...
Volume 14, Number 2 Article by Ashok Thampy , Vivek Moorthy June, 2002Banking on SBI: Interview with Dipankar Basu :Dipank...
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Board of directors

  1. 1. BOARD OF DIRECTORS [Print Page] Central Board of State Bank of India (As on 13th May 2009) Sr. No. Name of Director Sec. of SBI Act, 1955 Shri O.P. Bhatt 1. 19(a) Chairman Shri S.K. Bhattacharyya 2. 19(b) MD & CC&RO Shri R. Sridharan 3. 19(b) MD & GE(A&S) 4. Dr. Ashok Jhunjhunwala 19(c) 5. Shri Dileep C. Choksi 19(c) 6. Shri S. Venkatachalam 19(c) 7. Shri. D. Sundaram 19(c) 8. Dr. Deva Nand Balodhi 19(d) 9. Prof. Mohd. Salahuddin Ansari 19(d) 10. Dr.(Mrs.) Vasantha Bharucha 19(d) 11. Dr. Rajiv Kumar 19(d) 12. Shri Ashok Chawla 19(e) 13. Smt. Shyamala Gopinath 19(f)EVOLUTION OF SBI [Print Page] KEY POINTS › Establishment Business Major change inThe origin of the State Bank of India goes back to the first decade ofthe nineteenth century with the establishment of the Bank of Calcutta in the conditionsCalcutta on 2 June 1806. Three years later the bank received its charter Presidency Banksand was re-designed as the Bank of Bengal (2 January 1809). A unique Actinstitution, it was the first joint-stock bank of British India sponsored bythe Government of Bengal. The Bank of Bombay (15 April 1840) and the Presidency BanksBank of Madras (1 July 1843) followed the Bank of Bengal. These three of Bengalbanks remained at the apex of modern banking in India till theiramalgamation as the Imperial Bank of India on 27 January 1921. Imperial Bank First Five YearPrimarily Anglo-Indian creations, the three presidency banks came into Planexistence either as a result of the compulsions of imperial finance or by
  2. 2. the felt needs of local European commerce and were not imposed fromoutside in an arbitrary manner to modernise Indias economy. Theirevolution was, however, shaped by ideas culled from similardevelopments in Europe and England, and was influenced by changesoccurring in the structure of both the local trading environment andthose in the relations of the Indian economy to the economy of Europeand the global economic framework. Bank of Bengal H.O.EstablishmentThe establishment of the Bank of Bengal marked the advent of limitedliability, joint-stock banking in India. So was the associated innovationin banking, viz. the decision to allow the Bank of Bengal to issue notes,which would be accepted for payment of public revenues within arestricted geographical area. This right of note issue was very valuablenot only for the Bank of Bengal but also its two siblings, the Banks ofBombay and Madras. It meant an accretion to the capital of the banks,a capital on which the proprietors did not have to pay any interest. Theconcept of deposit banking was also an innovation because the practiceof accepting money for safekeeping (and in some cases, eveninvestment on behalf of the clients) by the indigenous bankers had notspread as a general habit in most parts of India. But, for a long time,and especially upto the time that the three presidency banks had a rightof note issue, bank notes and government balances made up the bulk ofthe investible resources of the banks.The three banks were governed by royal charters, which were revisedfrom time to time. Each charter provided for a share capital, four-fifth ofwhich were privately subscribed and the rest owned by the provincialgovernment. The members of the board of directors, which managedthe affairs of each bank, were mostly proprietary directors representingthe large European managing agency houses in India. The rest weregovernment nominees, invariably civil servants, one of whom waselected as the president of the board. Group Photogaph of Central Board (1921)BusinessThe business of the banks was initially confined to discounting of bills of
  3. 3. exchange or other negotiable private securities, keeping cash accountsand receiving deposits and issuing and circulating cash notes. Loanswere restricted to lakh and the period of accommodationconfined to three months only. The security for such loans was publicsecurities, commonly called Companys Paper, bullion, treasure, plate,jewels, or goods not of a perishable nature and no interest could becharged beyond a rate of twelve per cent. Loans against goods likeopium, indigo, salt woollens, cotton, cotton piece goods, mule twist andsilk goods were also granted but such finance by way of cash creditsgained momentum only from the third decade of the nineteenthcentury. All commodities, including tea, sugar and jute, which began tobe financed later, were either pledged or hypothecated to the bank.Demand promissory notes were signed by the borrower in favour of theguarantor, which was in turn endorsed to the bank. Lending againstshares of the banks or on the mortgage of houses, land or other realproperty was, however, forbidden.Indians were the principal borrowers against deposit of Companyspaper, while the business of discounts on private as well as salary billswas almost the exclusive monopoly of individuals Europeans and theirpartnership firms. But the main function of the three banks, as far asthe government was concerned, was to help the latter raise loans fromtime to time and also provide a degree of stability to the prices ofgovernment securities. Old Bank of BengalMajor change in the conditionsA major change in the conditions of operation of the Banks of Bengal,Bombay and Madras occurred after 1860. With the passing of the PaperCurrency Act of 1861, the right of note issue of the presidency bankswas abolished and the Government of India assumed from 1 March1862 the sole power of issuing paper currency within British India. Thetask of management and circulation of the new currency notes wasconferred on the presidency banks and the Government undertook totransfer the Treasury balances to the banks at places where the bankswould open branches. None of the three banks had till then anybranches (except the sole attempt and that too a short-lived one by theBank of Bengal at Mirzapore in 1839) although the charters had giventhem such authority. But as soon as the three presidency bands wereassured of the free use of government Treasury balances at placeswhere they would open branches, they embarked on branch expansionat a rapid pace. By 1876, the branches, agencies and sub agencies ofthe three presidency banks covered most of the major parts and manyof the inland trade centres in India. While the Bank of Bengal had
  4. 4. eighteen branches including its head office, seasonal branches and subagencies, the Banks of Bombay and Madras had fifteen each. Bank of Madras Note Dated 1861 for Rs.10Presidency Banks ActThe presidency Banks Act, which came into operation on 1 May 1876,brought the three presidency banks under a common statute withsimilar restrictions on business. The proprietary connection of theGovernment was, however, terminated, though the banks continued tohold charge of the public debt offices in the three presidency towns, andthe custody of a part of the government balances. The Act alsostipulated the creation of Reserve Treasuries at Calcutta, Bombay andMadras into which sums above the specified minimum balancespromised to the presidency banks at only their head offices were to belodged. The Government could lend to the presidency banks from suchReserve Treasuries but the latter could look upon them more as afavour than as a right. Bank of MadrasThe decision of the Government to keep the surplus balances in ReserveTreasuries outside the normal control of the presidency banks and theconnected decision not to guarantee minimum government balances atnew places where branches were to be opened effectively checked thegrowth of new branches after 1876. The pace of expansion witnessed inthe previous decade fell sharply although, in the case of the Bank ofMadras, it continued on a modest scale as the profits of that bank weremainly derived from trade dispersed among a number of port towns andinland centres of the presidency.India witnessed rapid commercialisation in the last quarter of thenineteenth century as its railway network expanded to cover all themajor regions of the country. New irrigation networks in Madras, Punjaband Sind accelerated the process of conversion of subsistence crops intocash crops, a portion of which found its way into the foreign markets.Tea and coffee plantations transformed large areas of the easternTerais, the hills of Assam and the Nilgiris into regions of estateagriculture par excellence. All these resulted in the expansion of Indiasinternational trade more than six-fold. The three presidency banks wereboth beneficiaries and promoters of this commercialisation process asthey became involved in the financing of practically every trading,
  5. 5. manufacturing and mining activity in the sub-continent. While the Banksof Bengal and Bombay were engaged in the financing of large modernmanufacturing industries, the Bank of Madras went into the financing oflarge modern manufacturing industries, the Bank of Madras went intothe financing of small-scale industries in a way which had no parallelelsewhere. But the three banks were rigorously excluded from anybusiness involving foreign exchange. Not only was such businessconsidered risky for these banks, which held government deposits, itwas also feared that these banks enjoying government patronage wouldoffer unfair competition to the exchange banks which had by thenarrived in India. This exclusion continued till the creation of the ReserveBank of India in 1935. Bank of BombayPresidency Banks of BengalThe presidency Banks of Bengal, Bombay and Madras with their 70branches were merged in 1921 to form the Imperial Bank of India. Thetriad had been transformed into a monolith and a giant among Indiancommercial banks had emerged. The new bank took on the triple role ofa commercial bank, a bankers bank and a banker to the government.But this creation was preceded by years of deliberations on the need fora State Bank of India. What eventually emerged was a half-way housecombining the functions of a commercial bank and a quasi-central bank.The establishment of the Reserve Bank of India as the central bank ofthe country in 1935 ended the quasi-central banking role of the ImperialBank. The latter ceased to be bankers to the Government of India andinstead became agent of the Reserve Bank for the transaction ofgovernment business at centres at which the central bank was notestablished. But it continued to maintain currency chests and small coindepots and operate the remittance facilities scheme for other banks andthe public on terms stipulated by the Reserve Bank. It also acted as abankers bank by holding their surplus cash and granting them advancesagainst authorised securities. The management of the bank clearinghouses also continued with it at many places where the Reserve Bankdid not have offices. The bank was also the biggest tenderer at theTreasury bill auctions conducted by the Reserve Bank on behalf of theGovernment.The establishment of the Reserve Bank simultaneously saw importantamendments being made to the constitution of the Imperial Bankconverting it into a purely commercial bank. The earlier restrictions onits business were removed and the bank was permitted to undertake
  6. 6. foreign exchange business and executor and trustee business for thefirst time.Imperial BankThe Imperial Bank during the three and a half decades of its existencerecorded an impressive growth in terms of offices, reserves, deposits,investments and advances, the increases in some cases amounting tomore than six-fold. The financial status and security inherited from itsforerunners no doubt provided a firm and durable platform. But the loftytraditions of banking which the Imperial Bank consistently maintainedand the high standard of integrity it observed in its operations inspiredconfidence in its depositors that no other bank in India could perhapsthen equal. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vitalplace in the countrys economic life. Stamp of Imperial Bank of IndiaWhen India attained freedom, the Imperial Bank had a capital base(including reserves) of Rs.11.85 crores, deposits and advances ofRs.275.14 crores and Rs.72.94 crores respectively and a network of 172branches and more than 200 sub offices extending all over the country.First Five Year PlanIn 1951, when the First Five Year Plan was launched, the developmentof rural India was given the highest priority. The commercial banks ofthe country including the Imperial Bank of India had till then confinedtheir operations to the urban sector and were not equipped to respondto the emergent needs of economic regeneration of the rural areas. Inorder, therefore, to serve the economy in general and the rural sector inparticular, the All India Rural Credit Survey Committee recommendedthe creation of a state-partnered and state-sponsored bank by takingover the Imperial Bank of India, and integrating with it, the formerstate-owned or state-associate banks. An act was accordingly passed inParliament in May 1955 and the State Bank of India was constituted on1 July 1955. More than a quarter of the resources of the Indian bankingsystem thus passed under the direct control of the State. Later, theState Bank of India (Subsidiary Banks) Act was passed in 1959,enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates).The State Bank of India was thus born with a new sense of socialpurpose aided by the 480 offices comprising branches, sub offices andthree Local Head Offices inherited from the Imperial Bank. The concept
  7. 7. of banking as mere repositories of the communitys savings and lendersto creditworthy parties was soon to give way to the concept ofpurposeful banking subserving the growing and diversified financialneeds of planned economic development. The State Bank of India wasdestined to act as the pacesetter in this respect and lead the Indianbanking system into the exciting field of national development. Home | Sitemap | FAQs | Right to Information Act 2005 | Disclaimer This site best viewed on resolution 800 x 600 © 2008 Copyright State
  8. 8. Volume 14, Number 2 Article by Ashok Thampy , Vivek Moorthy June, 2002Banking on SBI: Interview with Dipankar Basu :Dipankar Basu joined the ?big daddy? of banking, State Bank of India (SBI) in 1956 and spenthis entire professional career with SBI, serving as Chairman of the bank between 1993 and 1995.Basu spoke to Ashok Thampy and Vivek Moorthy of IIMB on ?how the animal has changed itscharacteristics?, tracing the development of SBI from its pre-Independence avatar as the ImperialBank of India, its period of lone splendour from 1955 till the other banks were nationalised in1969, and the way it has risen to the challenges of the opening of the economy in the last decade.In the first 10-15 years, SBI worked as an instrument for government policy ? rural andagricultural credit, opening of branches in un-serviced areas, taking banking to the small-scaleindustries and financing small entrepreneurs. Later on came the social programmes like IRDPand the Prime Minister?s Rozgar Yojana, the politically designed instruments. While the bankdid reduce the ?spatial gap? in banking it lagged behind, Basu agrees, in asset creation andproviding ?other services? to customers. However, in the last 10 years, SBI has taken on the newentrants and become a strong player in the market, playing by the market-driven rules of thegame. Basu claims that SBI has always anticipated the move towards ?universal banking?, andhe spearheaded the bank?s entry into the investment banking and mutual fund businesses ? SBICapital Markets and SBI Mutual Fund.A member of the government?s Disinvestment Commission between 1996 and 1999, Basu spokeabout the privatisation process and the initiatives taken by the government, and other trends inbanking such as the increasing use of technology in retail banking and the convergence in thefinancial sector.