The document summarizes how State Bank of India (SBI) has transformed into a successful public sector bank through organizational restructuring, strong corporate governance, leadership development, internal controls, product innovation, and human resource management. It details how SBI adapted its structure over time to focus on customer segments and established strategic business units. SBI practices independent corporate governance through its board of directors and committees. It also plans for leadership succession and evaluates decisions through committee processes. SBI maintains strong internal controls and innovates new products to meet customer needs. Finally, it invests in the training and development of its large pool of professional human resources.

1. Transforming Public Sector Banks
State Bank Of India
A Success Story
Presented By:
M S Verma, Former Chairman State Bank of India

2. 2
HISTORICAL PERSPECTIVE
• Banks nationalised in 1969
• By early 1990s accounted for 90% of
country‟s banking business
• By 1992 had over 60,000 branch offices
• Highly regulated and protected
environment
• Failed to measure up to international
benchmarks of strength and efficiency

3. 3
HISTORICAL PERSPECTIVE
• Financial sector reforms initiated in 1991
• Public Sector Banks („PSBs‟) post losses
for the first time as a group in the first year
of reforms
• State Bank of India („SBI‟) and its 7
subsidiaries continued to post profits
• By 1995-‟96 several other PSBs also
improved their profitability
• Wide variations in competitive efficiency of
PSBs persists even today

4. 4
WHAT DIFFERENTIATES SBI?
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

5. 5
STATE BANK GROUP
• State Bank Group – a financial
conglomerate of:
 SBI – Over 9,000 Branches
One of the world‟s largest branch networks
 7 Associate Banks – Over 4,000
Branches
 Banking Subsidiaries
1 in India
2 wholly-owned (outside India)
2 joint ventures (outside India)
 7 Non-Banking Subsidiaries

6. 6
ORGANISATION STRUCTURE
• Adapting with time
 First Restructuring (1971)
market segmentation
Annual performance budgeting
 Second Restructuring (1980)
modular structure
controlling offices nearer to operating units
for better control
 Comprehensive Review of Structure
Processes & Roles (1994 – 95)
strategic business units
business groups
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

7. 7
ORGANISATION STRUCTURE
Business Group Strategic Business Units
1 Corporate Banking
Group
Corporate Accounts Group Project
Finance Group & Leasing Group
2 National Banking
Group
Each of the Local Head Offices
constitutes a separate SBU.
Branches in LHO grouped under two
networks:-
a. Development & Personal Banking
(Retail Banking)
b. Commercial Banking (Corporate
Banking)
3 International Banking Foreign Offices(an SBU) , Global
Merchant Banking, Global Link Office
4 Associates &
Subsidiaries
Associate Banks, Subsidiaries of SBI
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

8. 8
ORGANISATION STRUCTURE
•Investment
Banking
•Funds
Management
•Primary
Dealership
•Factoring
•Credit Cards
•Insurance
•Credit Bureau
State Bank of India
Corporate Centre
Corporate Banking
Group
International Banking
Group
Development &
Personal Banking
Network
Commercial
Network
Mid-sized
corporates,
large SSIs
& Agri.
SSIs/
Agriculture
/Small
business
Government
Business
Personal
customers
High net-
worth
Individuals
Corporate
Accounts
Group
Dedicated
focus on
Top
Corporates
Project
Finance SBU
Focus on
Infrastructre,
Telecom,
Transport &
Hydrocarbon
financing
Leasing
SBU
Focus on
Infrastructre
& Capital
intensive
projects
National Banking
Group
Associates &
Subsidiaries
7 Associate
Banks
100% owned
banking
subsidiary
Non-Banking
Subsidiaries &
Affiliates
Local Head
Offices
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources
Customer Focused Organisation Structure

9. 9
CORPORATE GOVERNANCE
• SBI practiced corporate governance even
before it became the „buzz‟ word
• SBI is unique in that it has both
 Central Board
 Local Board for each Circle
• Independent directors from different walks
of life – industrialists, academicians,
professionals
• The Board is the highest policy making
body in the bank
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

10. 10
CORPORATE GOVERNANCE
• Contributions from these directors have
been manifold:
 Executive Committee of the Central
Board – weekly meetings
 Audit Committee – supervision of total
audit function of the bank – external &
internal
 Asset-liability management Committee
 Shareholders/investors grievance
Committee – redressal of complaints
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

11. 11
CORPORATE GOVERNANCE
• Specific tenure for independent directors
• Information flow to the directors
 Periodic reviews on micro & macro
functioning of the bank benchmarked
against the entire banking sector
 Open discussions with the top
management
• Bring in the outside-in perspective
 Guiding the management in identifying
opportunities for the bank
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

12. 12
CORPORATE LEADERSHIP
• Planning for the future
 Clearly documented and transparent
management process
 Process for early identification of
leaders and succession planning is
followed at top-management levels
• Selection system involves outside
specialists thereby reducing any
influences/ biases
• Constant monitoring of performance at all
levels for improving effectiveness
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

13. 13
CORPORATE LEADERSHIP
• Decisions evaluated through committee
process
• Clear division in functions
 Chairman as the Chairman of the Board
of Directors spearheads policy-making
 Group Executives entrusted with
operational responsibility for the SBUs
attached to them
 Policy planning functions with Staff
functionaries at the Apex level
 Similar structure in Circles
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

14. 14
INTERNAL CONTROLS
• Time tested systems and procedures
• SBI does not compromise with the
procedures as laid down by regulators and
its own internal systems
 Indeed, SBI has been seen by the
market as the face of the regulator
• Comprehensive Management Information
and Decision Support Systems
• Constant reviews of these systems to keep
pace with the dynamics of the market
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

15. 15
INTERNAL CONTROLS
• New systems evolved on an-on-going
basis to suit changing environment
 Credit process – streamlining of the
sanction process through greater
delegation of sanctioning powers,
delayering of the credit assessment
process
 Committee form of decision making
• Systems Audit periodically undertaken to
assess deficiency
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

16. 16
PRODUCT INNOVATION
• Leveraging customer base to focus on
Cross Selling
• Segmental focus
 Focus on mid-corporate, trade, housing,
consumer finance, agriculture
• Leaders in launching new products
• Innovative forms of credit – Self-Help
Group, Kissan (Farmer‟s) Credit Card
• Project Uptech - providing expertise and
technical support to the borrowing
customers in their activities
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

17. 17
HUMAN RESOURCES
• Committed professional cadre
• Best pool of human resources
 SBI has been the source for talent for
many of the foreign and private sector
Banks
• Employee productivity - Performance
Management System
• Transparency in personnel matter
 Appellate / review authority
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

18. 18
HUMAN RESOURCES
• Excellent in-house training infrastructure –
reputed to be the best in India and one of the
best in Asia
 Training system synchronised with the
corporate objectives
 Training delivery – practical oriented
programmes, on-the-job trainings, job related
 Proper selection of trainers / trainees
 Hands-on training by deputing to the Branches
 Training colleges/centres in each Circle
 Training from the time of entry till the time for
retirement for all staff
 Research wing
 Systematic evaluation of the impact of training
Organisationstructure
State Bank of India
CorporateGovernance
CorporateLeadership
InternalControls
ProductInnovation
HumanResources

19. 19
AREAS OF CONCERN
• Government ownership acts as a
constraint in raising fresh capital
• Perception as one of the brightest “family
silvers” often results in political intervention
delaying decisions relating to critical
strategic and policy changes
• Absence of market related compensation
structure for employees
• Inability to offer performance based
compensation and rewards
• Inability to attract and retain best-in-class
talent

20. 20
CONCLUSION
• Notwithstanding its public sector nature SBI has shown
consistently strong performance, demonstrating:
 Being in the public sector in itself need not really be a
handicap to success
 It is not only possible but essential to retain a commercial
culture and competitive efficiency while attending to
social and developmental objectives
 Quality of governance is independent of ownership
 Ownership, and management roles and concerns can be
kept separate and as long as they are kept so,
performance is better
 Long term strategy and a clear vision about market
positioning is essential
 Ability to provide leadership from within is important
 Development of human resource is critical

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