State Bank of India के निदेशक की रिपोर्ट

Mar 31, 2019

A. PERSONAL BANKING

1. Home Loans

As on 31^st March 2019, the Home Loan portfolio of your Bank was the largest in the country, with a market share of more than 34.51% amongst All Scheduled Commercial Banks (ASCB). The total Home Loan stood at Rs.4,00,377 crore, which was 20.11% of your Bank’s domestic advances.

Affordable Housing was a key driver of growth in the overall Housing sector, based on the Government’s thrust to bridge the massive Demand-Supply gap of dwelling houses in India, along with the relaxation of the CLSS (Credit Linked Subsidy Scheme) norms under Prime Minister’s Awas Yojana (PMAY), covering more beneficiaries, Government has also extended the PMAY MIG Scheme up to 31^st March 2020. As of 31^st March 2019, State Bank of India has 64.46% of its Home Loan portfolio under Affordable Housing. Your Bank was recognised by the National Housing Board (NHB) as the Best Home Loan provider in the country, under the PMAY MIG category, for FY2017-18.

During FY2019, various initiatives were taken by your Bank to give an additional boost to its Home Loan portfolio, some of which are:

- Home Loans on YONO was a significant step towards digitisation and provided the registered YONO customers with 24*7 access to Home Loan needs, such as exploring SBI Home Loan products, calculating eligibility, and getting instant Inprinciple approval. To meet the personal needs of existing Home Loan customers, Insta Home Top-Up Loan was also introduced on YONO.

-    Sanctioning of Home Loans and Home related products from non-BPR centre branches through centralised Rural Assets Credit Centres (RACCs), and Loan Processing Cells (LPCs), has brought about uniformity in processes and better quality of underwriting, resulting in pan-India growth of quality assets. The overall fresh NPA during FY2019 was below 1% of the total Home Loans portfolio.

-    In order to help and support the flood affected people of Kerala, within a month of the calamity, your Bank introduced Home Loan Schemes for Repair and Renovation within the Kerala Circle on softer terms, irrespective of category, gender, LTV ratio and risk score of the customers.

-    Your Bank introduced niche products such as ‘SBI Smart Home Top-Up’for existing Home loan customers; SBI ‘Wealth’for HNI / High-end customers; and Flexible Margin Schemes for real-estate developers.

-    Your Bank is leveraging its vast branch network and the strength of its committed staff, with the latest state-of-the-art technology to improve the Home Loan journey of the customer. Namely making it faster, more transparent and easier. Your Bank continues to work towards being the first choice Home Loan provider of customers.

2. Auto Loans

Your Bank is helping with upgrading the living standards of its customers by providing auto loans at competitive rates, and by making owning a car an affordable proposition. The auto loan products of your Bank are available in many variants to suit the requirements of various customer segments viz. - salaried, businessmen, self-employed, professionals, senior citizens, NRIs, agriculturists and existing borrowers, amongst others. Multi-channel sourcing of proposals and quick TAT has made the auto loan products highly popular. This has helped your Bank to increase its penetration in financing cars sold by various manufacturers such as Maruti, Hyundai, TATA Motors, to name a few. The Auto Loan portfolio reached a level of Rs.71,884 crore by FY2019, and the market share of Your Bank in Auto Loans rose from 34.97% in FY2018, to 35.45% in FY2019, amongst All Scheduled Commercial Banks (ASCBs). Additionally, State Bank of India plans to start financing high-value super bikes, a new and fast emerging segment.

3.    Education Loans

Education is the key prerequisite for creating human capital, as it helps in developing skilled and productive human resources. Loans provided for this purpose contribute to the development of the nation and is a growth driver for any economy. Therefore, the financing of up to Rs.10 lakh under Education Loans is considered as Priority Sector Advance. Your Bank takes pride in being the largest Education Loan provider in the country, with a market share of 30%. During FY2019, it helped more than 66,947 meritorious students to realise their dreams by providing financial assistance to the tune of Rs.6,635 crore. Out of this, 35% of the loans were extended to girl students. To broaden the scope of Education Loans, book quality business and enhance customer satisfaction, your Bank has taken following steps:

-    Shortlisted 158 top-rated, premier and reputed institutions to extend Education Loans under the Scholar Loan scheme at relaxed norms and concessional interest rates.

-    Door-step services were extended for sourcing high-value education loan applications for studying abroad at select centres.

-    To ensure better tracking of the loan applications and faster sanctioning of loans, your Bank’s Loan Origination System was integrated with Vidya Lakshmi Portal (VLP) of the Government of India.

4.    Personal Loans

Personal Loan is amongst the most popular products of your Bank, and your Bank is a leader in this market segment. Your Bank was aggressively catering to the needs of salaried class (both government and private), pensioners and self-employed/ other customers. During FY2019, your Bank has provided Personal Loans to more than 15 lakh customers, amounting to Rs.56,873 crore, while maintaining a market share of around 30%. With a much higher rate of return on parameters such as ROA and RORWA, your Bank’s delinquency under this segment is one of the lowest in the industry. The products are delivered through multiple channels such as Branches, Internet Banking and through YONO. Utmost caution in selection of borrowers and careful due diligence has made it possible for your Bank to achieve much lower delinquencies despite aggressive portfolio growth.

Personal Loans for e-Commerce Purchases:

Your Bank provides EMI based loans to pre-selected elite customers for purchase of consumer durable goods worth up to Rs.1,00,000 from online shopping portals such as Flipkart and Amazon on a real time basis. Online e-commerce financing under tie-up with Flipkart was launched in May 2018 and with Amazon in October 2018. The portfolio is 19,974 accounts with an outstanding of Rs.19 crore as on March 2019.

SBI Debit card holders were empowered to fulfil their shopping needs on POS enabled swipe machines with an EMI facility, given to the pre-selected ones for purchasing consumer durable goods from the approved shops, mall, stores, and show rooms worth up to Rs.1 lakh. The facility was launched during the latter part of FY2019.

5.    Liability and Investment Products

The overall P-Domestic CASA Deposits of your Bank has grown from Rs.8,36,294 crore as on FY2018 to Rs.9,16,442 crore as on FY2019, registering a growth of Rs.80,148 crore (9.58% annualised). The CASA improved to 48.49% as on FY2019, compared to 48.23% as on FY2018.

6.    Corporate and Institutional Tie-ups for Salary Package

Salary Accounts of employees of Corporates, Central/State Government establishments, Defence, Para Military and, Police personnel amongst others, are opened/serviced through Key Accounts Managers (KAMs), who provide personalised service along with a bouquet of products under the Corporate Salary Package (CSP) at the customer’s door step. The total Salary Account customer base for FY2019 reached 145.93 lakh accounts, registering a growth of 22% over FY2018.

7.    Digital Personal Loan Offerings

While offering products on multiple platforms for portfolio growth with higher profit margins, we have kept in mind the ease of Banking for our Customers, and have implemented following digital products:

-    On the YONO Platform, your Bank is providing Pre-Approved Personal Loans (PAPLs) to pre-selected customers through four product lines, viz., Pre-approved Xpress Credits up to Rs.5 lakh, Pre-approved Pension loans up to Rs.2.5 lakh, Xpress Credit Insta Top-up up to Rs.3 lakh, and Pre-Approved Personal Loans (PAPLs) up to Rs.2 lakh to CSP and Non-CSP customers.

-    Xpress Credit Insta Top-up loans on INB Platform: Top-up loans up to Rs.3 lakh are being offered to preapproved Xpress Credit customers through INB platform.

-    Tatkal e-Personal Loan: Loans up to Rs.1 lakh are being offered to cater to the needs of pre-selected unserved and under- served nonsalaried customers, based on selected parameters. This product was launched in May 2018 and has a portfolio of 27,853 accounts worth Rs.122 crore as on March 2019.

-    Personal loans were extended against security of Sovereign Gold Bonds of Government of India.

8. NRI Business

As on 31^st March 2019, your Bank has around 37 lakh NRI Customers, who are being catered to by 93 dedicated NRI branches in India and a well-connected network of foreign offices. We also have correspondent banking relations with 234 global Banks and tie- ups with 55 exchange houses and six Banks (in the Middle-East) to facilitate remittances. The Indian diaspora, spread across the globe, has always reposed immense trust on us. As a result, a quarter of their deposits (within the Indian Banking system) is with us.

Your Bank has launched the following products/services in FY2019 for the benefit of its NRI clientele:

-    SBI Tax Savings Scheme for NRIs (NRO Deposits) was introduced in which customers can avail Tax benefits under section 80C of Income Tax Act, 1961 (minimum tenor of deposit is 5 years and tax-relief is available up to Rs.1,50,000 per Financial Year).

-    Missed call and SMS Banking facilities were launched for NRIs, in which customers can get their latest balance and mini statements of their accounts via SMS, just by giving a missed call on a predefined number. This is especially useful for customers who are not using Internet Banking facilities. Customers can also block or restrict ATM card usage through this functionality.

-    NRIs can now plan and secure retirement with the National Pension System (NPS) scheme. The product is now available to all SBI NRI customers. They can open and maintain NPS account through their Internet Banking portal as well.

-    SBI Wealth, the wealth management initiative of your Bank, which offers a platform to create, preserve and grow wealth, is now available to NRI clientele from Gulf Cooperation Council Countries.

9. Wealth Management Business

Your Bank’s Wealth Management Services are now made available at 44 Centres with 121 Wealth Hubs, four e-Wealth Centres and a Global e-Wealth Centre by adding 31 new Centres and 45 new Wealth-Hubs during the year. The Wealth-Hubs are managed by a team of dedicated Relationship Managers and Investment Counsellors who have in-depth knowledge on products and markets, along with Senior Internal Officials for operational roles.

For greater connect and visibility, your Bank re-branded the Wealth Management Business as ‘SBI Wealth’, which was earlier known as ‘SBI EXCLUSiF’.

An open Investment Platform, with a state-of-the-art technology and right selling approach based on Risk Profiling, provides the best possible experience to the Bank’s clients by offering exclusivity in its services and benefits.

Your Bank added a new e-Wealth Centre at Kolkata during the year. The e-Wealth Centres, with extended banking hours, are equipped with transaction execution facilities over voice and video calls. With an endeavour to provide a best in class holistic experience to clients, your Bank has launched a new version of ‘SBI Wealth Mobile App’enabling investment transactions.

During the year, your Bank posted Relationship Managers (NRI Wealth) at Abu Dhabi, Bahrain and Dubai. NRIs residing in Bahrain, Kuwait, Qatar, Sultanate of Oman and UAE are eligible to be on-boarded as Wealth Clients. They have an option to access Wealth Management Services either through e-Wealth Centres or Wealth Hubs during their visit to India. Your Bank has also opened a state-of-the-art Global e-Wealth Centre at Kochi for extending services to NRIs.

Your Bank has conducted Signature Investment Conclaves addressed by experts from the Financial Industry and Markets on prevalent market conditions and investment opportunities. These Conclaves were well attended by existing and prospective SBI Wealth Clients.

To commemorate the 3^rd Anniversary of SBI Wealth, the Bank conducted a Signature Client Engagement Program at Mumbai to build a deeper and valued relationship with Wealth Clients. It released the 2^nd edition of the Financial Planning reference publication during the launch of its 100th Wealth Hub at Coimbatore.

Your Bank’s Wealth Management Business has shown an exponential growth in terms of client acquisition and Assets Under Management during the financial year. The number of Clients increased from 24,168 in March 2018 to 55,502 in March 2019 and AUM reached Rs.30,270 crore against Rs.14,284 crore during the period.

B. ANYTIME CHANNELS

As on	ATMs	Kiosks	ADWMs	Total
31st March 2016	42,733	1,231	5,760	49,724
31st March 2017	42,222	986	6,980	50,188
31st March 2018*	51,616	#	7,925	59,541
31st March 2019*	50,757	#	7,658	58,415

# Kiosks are scrapped and not in use * Merged

1.    ATMs/ ADWMs

Your Bank has one of the largest ATM networks in the world with 58,415 ATMs including Automated Deposit and Withdrawal Machines (ADWMs) as on 31^st March 2019. To provide 24x7 cash deposit and withdrawal facilities, it has installed 7,658 ADWMs and CDMs.

Nearly, 36% of the financial transactions of your Bank are routed through ATMs/ ADWMs. With a market share of 28.73% (as per RBI Data) in ATM network in India, it transacts 50.81% of the country’s total ATM transactions. On an average, over 1.40 crore transactions per day are routed through your Bank’s ATM network.

Under the Green initiative and cleanliness drive, your Bank has discontinued printing of transaction slips for 43 types of unsuccessful transactions. It has installed solar panels on around 2,400 ATM sites.

Your Bank has set up over 2,200 e-Corners across the country where customers can avail the entire gamut of services through ATMs, ADWMs, SWAYAMs, Check deposit Kiosk, and online banking kiosk.

To ensure safety of ATMs and customers’, coverage under electronic surveillance is being enhanced. Your Bank has covered approximately 13,000 ATMs under e-surveillance as on 31^st March 2019, while the next 15,000 ATM sites are slated to commence shortly.

2.    SWAYAMs: Barcode based Passbook Printing Kiosks

Your Bank installed around 3,200 SWAYAMs (Barcode based Passbook Printing Kiosks) during FY2019, making the total number of SWAYAMs deployed cross 17,400 units. Using these kiosks, customers can print their own passbooks using barcode technology. Your Bank has also deployed “Through the Wall” SWAYAMs, offering extended working hours for printing. More than 3.45 crore transactions are recorded at these kiosks per month.

3.    Green Channel Counter (GCC)

GCC installed at all retail branches extend services such as cash withdrawal, cash deposit, funds transfer within State Bank of India, balance enquiry, and Mini Statement. On an average 8.20 lakh transactions are being routed through GCC per day.

4.    Green Remit Card (GRC)

GRC, especially useful for migrant depositors, is a card through which one can remit money using GCC/CDMs/ ADWMs in a specified account of State Bank of India. As a daily average, over 1.50 lakh transactions are being routed through GRC.

5.    Banking on Mobile

YONO Lite - Your Bank’s Mobile Banking App for retail customers, YONO Lite, as it is now known offers Intra and Inter Bank funds transfer (NEFT/RTGS/IMPS/ UPI amongst others.), opening of fixed deposits, e-MOD Accounts and add / manage beneficiaries etc. Additional value-added services such as Aadhaar Linking, Voice Assisted Banking, e-statement subscription/download, Stop / Revoke cheque instructions, and facility to submit Form 15G/ 15H online for TDS exemption and a host of other features are also available.

SBI Anywhere Corporate - Your Bank’s Mobile Banking App for proprietorship firms allows businesses to transfer funds across Banks, open and operate fixed deposit accounts, payment to EPFO, view account statements, schedule transactions, and Recharge/bill payment amongst others. Furthermore, it facilitates large Corporate firms with multiple users and allows business houses to operate accounts, transfer funds through NEFT/ RTGS, make bill payments/supplier payments, authorise e-cheques /e-STDR, open and operate fixed deposit accounts amongst others. With above 141 Lakh registered users, the Mobile Banking channel has processed transactions amounting to Rs.2,74,029 crore.

6. SBI Pay (BHIM)

Your Bank’s Unified Payments Interface based App is an interoperable offering, which provides the convenience of transferring funds across different Bank accounts using - Virtual Payment Address (VPA), Bank Account Number + IFSC and scanning a QR Code. Over 553 lakh users have registered and are availing UPI services, resulting in more than 129 crore transactions, amounting to more than Rs.2.96 lakh crore, processed through the SBI UPI channel during FY2019. Additionally, users have the convenience of making bill payments, travel bookings and ordering food through BHIM SBI Pay making it an all-in-one UPI App. A facility to help donation for a variety of noble causes such as - Clean Ganga Fund and various Chief Minister’s Relief Funds, has also been enabled on the app.

Large multinational corporations have implemented digital payments bandwagon to help achieve a Less Cash India. State Bank of India has partnered with Google India to offer UPI services to the users of their App - Google Pay under the UPI Multi-Bank Integration Model. Consequently, over 312 lakh Google Pay users have linked their Bank accounts with their @OKSBI handle till 31^st, March 2019.

SBIePay - Your Bank’s Payment Aggregator

SBIePay, started in March 2014, is the first and only Bank based Payment Aggregator in India. In its essence, SBIePay is a platform for merchants to acquire a Bank agnostic large customer base and provides a bouquet of online payment options to the merchant’s online customers. During last year, SBIePay has witnessed exceptional growth, as a result of an increase in the number of merchants on-boarded, which rose from 125 in FY2018 to 225 in FY2019. Moreover, your Bank has added four new channels to the bouquet of online payment offerings - NEFT, Prepaid Card, UPI, and SBIePay-POS and have made direct integration with INB of other Banks such as HDFC, ICICI, Bank of Baroda, amongst others. This has resulted in a 115% YoY growth in number of transactions. The value of the transactions settled has jumped from Rs.24,487 crore in FY2018, to Rs.38,207 crore in FY2019, leading to an increase in the commission/revenue earned by your Bank. SBIePay has achieved a revenue of Rs.49.68 crore during FY2019, a growth of 54% over FY2018.

7. Digital Banking

The digital payments landscape in India is evolving rapidly and State Bank of India is playing an effective role in building momentum for transforming India through digitalisation of the economy. In sync with the Government of India to create a less-cash economy, your Bank has expanded its digital footprint across the length and breadth of the country.

YONO: YONO, our flagship customer-facing digital Bank caters to various banking, financial services, lifestyle requirements and delivers world class customer experience through distinctive omni-channel and seamless customer journeys. It is also an employee facing platform that enables end-to-end digitisation of regular banking services.

With YONO our customers today can:

- Open an account digitally and do all banking transactions on a mobile app or website.

-    Get advice on and purchase a host of non-banking financial services products such as mutual funds, life and general insurance, credit cards, among others.

-    Get the widest variety and lowest prices on beyond banking products, across 89 merchant partners and 21 categories on the platform.

-    At the same time, our employees can provide the same services to our customers when they need assisted services. Besides, processes that take up close to 60% of branch activities have been digitised with a view to streamline processes, deliver superior in-branch customer experience and free up capacity for value creating activities.

YONO Impact achieved:

A year since launch, YONO has already generated significant value for the Bank in terms of business growth, new customer on-boarding and customer engagement

YONO has achieved 2 crore downloads and approximately 73.49 lakh registrations till date. Over 10 lakh users login daily.

Significant momentum on new customer on-boarding achieved with approximately 25,000 digital accounts opened per day, which was over 75% of all eligible accounts being opened by the Bank with 30-40% higher balances than regular accounts.

YONO is the fastest growing major channel for personal loans. It has crossed over Rs.300 crore of monthly disbursements through a completely paper-less process.

The non-banking financial services product suite, that is, insurance mutual funds, amongst others are achieving alltime highs.

The market place has also been very successful in getting us engagement from our customers. 25% of customers who log in on a monthly basis do so to access the marketplace. For these customers, 45% of the time spent on the app is on the marketplace.

On end-to-end digitisation, we have drastically reduced the TAT for account opening from over 50 minutes to less than 10 minutes and are in process of eliminating the back-office for few key transactions.

Various other intangible benefits were achieved through YONO, for example simplified CKYC process, elimination of paper-based application forms, automated customer validations, amongst others.

Awards won by YONO :

-    “CSI IT Innovation & Excellence Awards 2018” - Best BFSI for Implementation of Digital Trasnformation ( Dec 2018)

-    “ABP News BFSI Award 2018” -Best Bank in Technology Orientation ( November 2018).

-    “Mobile Banking Initiative of the Year - India” at the Asian Banking and Finance Retail Banking Awards, Singapore (July 2018).

-    Indian Express Award 2018 -Enterprise Mobility Category (June 2018).

-    ET BFSI Innovation Awards (September 2018).

Performance Highlights of YONO as on 31^st Mar 2019 :

-    2 crore + application downloads

-    73.49 lakh Registrations

-    App rating on Android is at 3.7 and 2.8 on iOS

-    10 lakh+ daily logins

-    98.31+ lakh Fund Transfers C13,413.64 crore ) executed

-    2.40+ lakh Fixed Deposits opened

-    13.84+ lakh Bill payments done

-    27.50 lakh+ Digital Savings accounts

-    Rs.3,800 crore worth disbursals of Digital paperless Pre-Approved Personal Loans to 3.14+ lakh customers, having delinquency rate of less than 0.01 %.

-    89 merchant partners live on the B2C Market Place platform across 21 categories, witnessing approximately 1,37,000 transactions (around Rs.60 crore Gross Merchandise Volume), 1.66 crore merchant clicks, and approximately 54,115 IRCTC ticket bookings.

-    Mutual Funds Gross Sales worth Rs.8,324.79 lakh

-    General insurance policies worth Rs.981.46 lakh (No: 3,19,936)

-    Life Insurance Policies value Rs.1,315.47 lakh (renewal) and Rs.550.93 lakh (New) achieved on the YONO platform.

-    2.16+ lakh SBI Credit Cards linked;

5.79 lakh card payments worth Rs.678 crore done; 1.93 lakh new Card leads generated.

-    Online lead generation and issuance of In-principle approval and sanction of Retail Loans for Home Loan (existing customers), approximately 45,475 leads generated, out of which around 9,356 in-principle approval generated (around Rs.1,402 crore).

-    Innovative product ‘YONO Cash’

- Cardless, paperless withdrawals at ‘YONO cash Points’(ATM) launched Pan India. The innovative YONO Cash feature provides cardless, fast, convenient, and safe cash withdrawal facility at nearly 19,601 ATMs across the country. The enhanced journey to include the scope of paperless/cardless cash withdrawal at POS terminals, branches, and BC channel under YONO Cash is under development.

Debit Cards: State Bank of India has focused on shifting the usage of Debit Cards by customers from ATMs (for cash withdrawals) to PoS terminals/e-Commerce websites. Highest one day spends at PoS/e-Commerce was achieved with ~Rs.1,000 crore on Dhanteras.

Additionally, your Bank has launched various innovations and functionalities around Debit Cards such as Contactless Debit Cards, Bharat QR, Samsung Pay, Visa Checkout, and Personalised Image Debit Card “My Card”. Moreover, it has tied up with various institutions such as Mumbai Metro, Chennai Metro, College of Engineering - Pune, IOCL, and others for launching co-branded Debit Cards/ Combo Cards.

These initiatives made State Bank of India a market leader in terms of share in Debit Card spends, which is at a high of 29.89% as on 31^st March, 2019. With approximately 29.67 crore actively used Debit Cards as on 31^st March, 2019, State Bank of India continues to lead in Debit Card issuance in the country.

State Bank Foreign Travel Cards (FTC):

The State Bank Foreign Travel Card (SBFTC), is a chip based EMV compliant card and is issued on VISA and MasterCard schemes providing safety, security, and convenience to overseas travellers. On VISA it is available as single currency card in 8 currencies - US Dollar, British Pound Sterling, Euro, Canadian Dollar, Australian Dollar, Japanese Yen, Saudi Arab Riyal, and Singapore Dollar. On MasterCard it is available as Multicurrency Card in 7 currencies - US Dollar, British Pound Sterling, Euro, Canadian Dollar, Australian Dollar, Singapore Dollar, and UAE Dirham. Your Bank has also introduced corporate variants of SBFTC to cater to varying needs of corporate customers. Additionally, your Bank is aggressively promoting tie-ups with FFMCs (Full Fledged Money Changers).

FASTags: Your Bank has issued more than six lakh SBI FASTags to customers. Consequently, Toll transactions through SBI FASTags have crossed a mark of 216 lakh with a total transaction amount of over Rs.395 crore as on 31^st March, 2019. State Bank of India has put onboard, State Road Transport Corporations in Uttar Pradesh, Punjab, Uttarakhand, Odisha, Tamil Nadu, Karnataka, and West Bengal for FASTag services.

Metro and Transit Projects: Your Bank has implemented a first- of-its-kind end to end ticketing solution for the Noida Metro Project using the National Common Mobility Card (NCMC) specifications based RuPay Prepaid Card. State Bank of India has also been awarded the Hyderabad and Nagpur metro project for implementation of Open Loop Automatic Fare Collection System based on the NCMC card specifications, the work of which is under way.

Smart City: Your Bank has a dedicated team to capture the payment eco-system in the 100 identified Smart-Cities in India. The plan is to foray into the transit solution/ integrated ticketing solution for ‘One City One Card’, which is a payment initiative for the Smart Cities.

Cash@PoS: To reach out and facilitate maximum number of people looking for convenient cash withdrawal, State Bank of India, provides facilities of cash through ‘Cash@POS’initiative. Debit card holders of State Bank of India and all other Banks can withdraw cash from PoS machines installed by your Bank across various merchant locations. As per the RBI guidelines customer can withdraw Rs.1000 in Tier I and Tier II cities whereas Rs.2000 can be withdrawn in Tier 3 to Tier 6 cities per day per card. Presently, your Bank is not charging any fee. State Bank of India has a total of 5.75 lakh PoS machines of which 4.78 lakh PoS machines are enabled to dispense cash to the customers of your Bank and the Banks who have enabled this facility for their customers.

Merchant Acquisition: The digital payments landscape in India is evolving at a rapid rate and your Bank is playing an effective role in building momentum for transforming India through digitalisation of the economy. In sync with the focus of the Government of India to create a less-cash economy, your Bank has expanded digital payment acceptance infrastructure across the length and breadth of the country. During the year, your Bank introduced a multi option payment acceptance device named MOPAD facilitating payments via cards, Bharat QR, UPI, and SBI Buddy (e-wallet) on a PoS terminal. In addition, your Bank continued to expand digital footprint across the country and deployed 5.75 lakh PoS terminals, 4.19 lakh Bharat QR code and on-boarded 6.31 lakh merchants on BHIM-Aadhaar-SBI. In total, the number of merchant payment acceptance touch points crossed 27.91 lakh as on 31^st March 2019. Your Bank has acquired nearly 54 crore transactions during FY2019 with 24% increase on Y-o-Y basis. In addition to offering basic acquiring services, your Bank is also providing other services such as:

-    NFC acceptance on PoS terminals

-    DCC-Dynamic Currency Conversion

-    EMI

-    Cash@POS

-    Acceptance of AMEX, DINERS, DFS, JCB, and UPI

Your Bank continued the efforts to onboard merchants from premium segments like OMCs, retail chains, life style stores, and holiday resorts apart from consolidating the existing business. Your Bank has tied up with major Corporates and with Government departments to migrate their operations from cash to digital mode. This involve customisation and integration of its systems with those of corporate and Government departments to ensure seamless flow of digital transactions. Some of the notable integrations are with Indian Railways, SOUTHCO (Odisha), APDCL (Assam Power Distribution Co. Limited), Goa - GBSS project (Government of GOA), Cyber Treasury (Govt of Madhya Pradesh), IGR (Inspector General of Registrar) Pune, Noida, and Nagpur Metro. Your Bank has also initiated the development of acceptance infrastructure for NCMC (National Common Mobility Card) on our PoS terminals to push the government initiative of ‘One Nation One Card’.

State Bank of India has transferred merchant acquiring business to its subsidiary SBI Payment Services Private Limited (SBIPSPL) and has subsequently inducted Hitachi Payment Services Private Limited, a domain player as a JV Partner with minority shareholding. This will enable SBIPSPL to offer innovative technology driven products in digital payment acceptance system, which will boost Digital India Initiative and offer improved merchant experience.

8. Customer Value Enhancement

Your Bank is the Corporate Agent of SBI Life Insurance Co. Limited and SBI General Insurance Co. Limited and has Distribution Agreement with SBI Mutual Fund, SBI Cards & Payment Services Private Limited and SBI Cap Securities Limited for distributing their products. Your Bank also distributes mutual fund products of UTI Mutual Fund, Tata Mutual Fund, Franklin Templeton Mutual Fund, L&T Mutual Fund, ICICI Mutual Fund, and HDFC Mutual Fund. In addition, all branches are authorised for opening pension accounts under National Pension System.

Performance Highlights: (Commission on Cross Selling)

ACTUALS
J Vs	YTD March 2018 YTD March 2019
Â	(Rs.in crore)	(Rs.in crore)
SBI LIFE	714.75	951.90
SBI MF	560.51	503.00
SBI GENERAL	212.57	270.86
SBI CARDS	135.83	190.69
SSL	5.14	6.70
NPS	2.44	4.11
TOTAL	1631.24	1927.26

INITIATIVES AND SUCCESSES

SBI LIFE

-    Digital sale has gone up from 22% to 92% in FY2019.

-    Number of Specified Person for Life insurance has increased to 54,317 as on March 19 as against 46,180 in March 18 (Increase of 17.6%)

SBI MF

-    SBI has become India’s No.1 Bank distributor in terms of AUM (more than Rs.72,000 crore).

-    SBI continues to be the market leader in terms of Live SIP numbers (more than 22 lakh) and SIP Book Value as on March 19.

SBI GENERAL

-    Number of Specified Person for General Insurance has increased to 22,034 as on March 19 as against 20,646 in March 18 (Increase of 6.72%)

SBI CARD

-    No of cards issued through Banca Channel crossed 15 lakh in FY2019.

-    Cards sourced from Banca Channel has increased from 45% in FY2018 to 55% of total cards issued by SBI Card in FY2019.

SSL/NPS

-    Bank continues to maintain its dominance in mobilising maximum number of NPS accounts this year as well.

-    Bank was qualified as Top Performing Point of Presence (POP) under various campaigns observed by PFRDA.

-    Bank has shown a significant growth in income earned by sourcing Demat accounts and by opening NPS accounts.

9. Internet Banking and e-Commerce

State Bank of India continues to grow and lead the digital banking space propelled by the enhanced outreach of ‘Onlinesbi’across all customer segments. The channel has expanded its footprint with over 129.23 lakh new user additions during the first nine months showing a marked increase over the last year’s reach (see Table).

With introduction of new features and several add-ons provided in ‘Onlinesbi’to enhance customer comfort and experience, the platform handled transaction volume exceeding 162 crore with transaction value of nearly 127.78 lakh crore, recording a quantum jump over the last year (see Table). This reflects on the growing customer confidence on our offerings and deliverables.

Key Performance Indicators	2017-18	2018-19
New User Registration (Rs.in lakh)	94.63	129.23
Transaction Volume (Rs.in crore)	156.56	162.06
Transaction Value (Rs.in crore)	95,07,340	127,77,976

Key Enablers:

-    Green Password has been launched during the year to enhance customers’ease in joining our digital platform with a hassle-free self-registration process. This is set to expand the INB coverage among existing and new customers.

-    Launch of Virtual Account Number (VAN), a customised collection tool for big corporates with its unique alphanumeric code that masks the account details of the corporates from the remitter, is another big milestone reached during the year.

-    Facility for the non-INB customers to update their email ID in CBS records by accessing the option ‘Register / Update your E-Mail ID’under the tab ‘Useful Links’.

-    One of the key enablers provided to customers is the facility, which enables them to reply to transaction alerts received through SMS and email for instant reporting of unauthorised transactions.

-    Mobile registration was made mandatory to facilitate receipt of SMS alerts by customers.

-    Online download of Form 16 A is now made available through OnlineSBI.

C. SMALL AND MEDIUM ENTERPRISES

Your Bank is pioneer and market leader in SME financing. With over ten lakh customers, the SME portfolio of Rs.2,88,583 crore, as on 31^st March 2019 accounts for nearly 12.58% of your Bank’s total advances. State Bank of India has always held SMEs as an important segment, considering the role being played by them in the Indian economy in terms of their contribution to manufacturing output, exports and employment generation. Being committed to providing Simple and Innovative Financial Solutions, your Bank’s approach in driving SME growth rests on the following three pillars:

a)    Customer Convenience,

b)    Risk Mitigation,

c)    Technology based digital offerings and process improvements

1. Customer Convenience

With a view to build and sustain the momentum for transforming India, your Bank has created the highest units of touch points in terms of branches and other modes. With a view to enhance ease of business for the Small and Medium Enterprises, State Bank of India modified its existing delivery model of Small and Medium Enterprises Centre (SMEC) and created Asset Management Teams (AMTs) to maintain end to end relationship with the customers for micro loans up to Rs.50 lakh. The SMECs have also been strengthened in terms of manpower, which has resulted in improvement in the service.

2. Digital offerings:

Your Bank is leveraging technology in every aspect of the value proposition from sourcing business, designing products, streamlining process, improving delivery to monitoring. Furthermore, it has taken several initiatives to build SME portfolio in a risk mitigated manner and has implemented significant changes in (i) Product suite, (ii) Process (iii) Delivery.

Loan Life-Cycle Management

Lead Management System (LMS): Your Bank is hosting an online loan application and tracking facility for MSME borrowers on the Corporate Website www.sbi.co.in. It is an internet-based Credit Proposal Tracking System called Lead Management System (LMS), which allows customers to apply for a loan online and receive an acknowledgement in the form of application reference number.

Customer Relationship Management (CRM): Leads sourced are tracked and monitored for delivery through this system.

Loan Origination Software (LOS-SME) and Loan Life Cycle Management System (LLMS): With a view to adopt the uniform standards of credit dispensation for ensuring quality and preserving corporate memory, loans are processed through LOS and LLMS for small and high value loans respectively.

Contactless Lending Platform

State Bank of India is one of the members of SIDBI led PSB consortium and your Bank’s path-breaking initiative, psbloanin59minutes.com, provides easy access for loans to SMEs registered on GST platform and filing income tax. On this Contactless Lending Platform (CLP), in-principle sanction of loans up to Rs.1 crore is processed. 8,377 in-principle sanctions were generated through CLP by FY2019, amounting to Rs.3,250 lakh.

Project Vivek

Project Vivek heralded a paradigm shift in your Bank’s appraisal system from traditional Balance Sheet based funding, to a more objective appraisal system of leveraging cash flow and other information sources. It is a promising initiative launched by State Bank of India to implement a new Credit Underwriting Engine (CUE) for the SME segment, thereby bringing objectivity in better risk assessment. Moreover, it reduces Turn Around Time (TAT) resulting in better customer experience. By FY2019, a total of 34,477 proposals were processed under Project Vivek. Further, during the year, technical enhancements were done in the project to improve the underwriting process.

SBI and QCI sign MoU on Zero Defect Zero Effect (ZED) Certification for MSMEs: State Bank of India becomes the first Bank to sign a Memorandum of Understanding (MoU) with Quality Council of India on the Zero Defect Zero Effect (ZED) Certification Scheme of Ministry of Micro, Small and Medium Enterprises, Government of India.

As part of this MoU with QCI, your Bank has decided to offer concessions in Pricing/processing charges for MSMEs having better ZED ratings. State Bank of India is also considering incorporating ZED rating as a parameter in its Bank’s internal rating system.

Briefly, this MoU will pave way for a collaborative arrangement on implementation of ZED on a nation-wide scale on specific activities aimed for the benefit of MSMEs. Both your Bank and QCI will define a strategic framework to take forward the vision of Hon’ble Prime Minister for making our MSMEs adopt Zero Defect and Zero Effect practices.

The ZED Certification Scheme of Ministry of MSME is aimed at enhancing the global competitiveness of Indian MSMEs on quality and environment aspects in their systems and processes. It is a continual improvement and rating scheme involving handholding and certification of MSMEs with financial support from the Government of India. Ministry of MSME has nominated QCI as the National Monitoring and Implementing Unit (NMIU) of this Scheme.

So far more than 20,000 MSMEs have registered for ZED and many State Governments are already incorporating ZED in their Industrial Policies.

Trade Receivables Discounting System (TReDS)

State Bank of India was the first among all PSBs to register as a financier during the year on the TReDS platform RXIL and M1xchange, set up to provide finance to MSMEs. With this we now have our presence on all the 3 TReDS platforms in the country. Your Bank was actively participating in the online biddings on the platform and was offering very competitive rates for the benefit of MSMEs. Your Bank rediscounted bills worth Rs.72.51 crore, which were discounted by SBI Global Factors Limited on the 3 TReDS platforms.

3. Business Partnerships/ Tie-ups

Your Bank is expanding its portfolio of Warehouse Receipt Finance and Supply Chain Finance through Business partnerships/Tie-ups with Collateral Managers and Industry Majors.

Warehouse Receipt Finance:

Your Bank has introduced Warehouse Receipt Financing scheme (WHR) to extend finance to traders/owners of goods/manufacturers for processing, provided against Warehouse Receipts issued by Collateral Managers having a tie-up with State Bank of India. Further, WHR issued by Central Warehousing Corporation (CWC) and State Warehousing Corporation (SWC) would also be eligible for WHR finance. The WHR portfolio as on 31^st March, 2019 stands at Rs.6,111 crore.

Supply Chain Finance:

Leveraging state-of-the-art technology and branch network, your Bank has emerged as a major player in Supply Chain Finance by strengthening its relationship with the corporate world.

During the fiscal year, State Bank of India entered into 61 new e-DFS (Electronic Dealer Finance Scheme) and four new e-VFS (Electronic Vendor Finance Scheme) tie-ups covering 351 Industrial Majors, 25,921 of their dealers and 16,572 vendors. The number of oil dealers (Petrol Pumps) on e-DFS crossed 14,806 during the last fiscal.

4. Risk Mitigation:

Your Bank has increasingly been shifting its focus towards Risk Mitigated Products, which include Asset Backed Loans, Overdraft against Bank Deposits/ Government Securities, Bills Discounting facility, and CGTMSE/CGFMU covered loans, amongst others.

Pradhan Mantri Mudra Yojana:

In line with the initiatives of the Government of India, your Bank has laid considerable emphasis on extending credit facilities to eligible units under different variants of Pradhan Mantri Mudra Yojana and has disbursed Rs.33,612 crore for FY2019 under PMMY, against a target of Rs.33,550 crore.

Credit Flow to Micro and Small Enterprises under CGTMSE:

State Bank of India was a pioneer in supporting MSMEs and Micro and Small business, by extending collateral free lending up to Rs.2 crore under guarantee of CGTMSE. Your Bank has a portfolio of Rs.7,830 crore under CGTMSE as on 31^st March, 2019.

D. RURAL BANKING

1. Agri Business

Credit support for agriculture and allied activities gained greater momentum during this year, although the external environment was marred by farm distress and the effects of debt waivers announced by various State Governments. In line with the past trends, the credit flow to agriculture set by the Government for FY2019 was surpassed by your Bank.

FLOW OF CREDIT TO AGRICULTURE
YEAR	TARGET	DISBURSEMENT	% ACHIEVEMENT
FY2016	89,781	1,02,423	114%
FY2017	95,168	1,25,270	132%
FY2018	1,05,741	1,66,819	158%
FY2019	1,16,315	1,56,385	134%

Your Bank has launched nine products for Dairy, Fisheries, Poultry, Sheep rearing, Goat rearing, Piggery, Bee-keeping, Sericulture, and Mushroom Cultivation wherein loans with a limit up to Rs.10 lakh are being sanctioned without obtaining any collateral security under the Mudra scheme with liberalised terms, as allied agricultural activities are means of increasing farmers’income.

During the year, the Agri portfolio growth was ahead of the YTD ASCB trends. The YTD growth in total Agri advances, as on 31^st March, 2019 is Rs.14,430 crore. The comparative growth in overall Agri Advances portfolio is as under:

                                                 (Rs.in crore)

Year	Total Agri	YoY Growth	YoY Growth
Â	Advances	Amount	%
FY2019	2,02,681	14,430	7.67%
FY2018	1,88,251	(3014)	(1.58%)

Your Bank has witnessed an impressive pickup under Risk Mitigated loans such as Gold Loan, ABAL (Asset Backed Agri Loan) and Portfolio Purchases from MFIs, resulting in an increase in the share of Risk-mitigated loans from 27.6% in FY2018, to 30.3% in FY2019 at a whole Bank level. In Portfolio Purchases from MFIs under Direct Assignments, a total of 29 proposals worth Rs.9,555 crore were sanctioned during FY2019.

A new product designed to meet the general-purpose needs of farmers against the collateral of property, called the Asset Backed Agri Loan (ABAL), picked up momentum during the year with a growth of about 142%, albeit on a lower base. This product was readily accepted by customers because of the flexibility it offers.

Your Bank is de-risking its Agri portfolio and supporting farmers at the same time by tying up with local and national level Agri Corporates, wherein the supply chain will ensure cash flows for timely renewal of loan and better incomes for the farmers. Additionally, it is lending under a Cluster-based approach to tap opportunities revolving around areas and centres, which have traditionally been known for shrimp farming, dairy, poultry and, higher value horticulture crops such as pineapple and mango.

Micro credit (SHGs Bank Linkage):

Your Bank has the highest market share in SHG loans outstanding, among all Banks with outstanding loans of Rs.13,444 crore to 6.09 lakh SHGs as on 31^st March, 2019 including more than 50 lakh women members.

Deendayal Antyoday Yojana: National Rural Livelihood - Mission (DAY-NRLM):

Since inception of DAY-NRLM on 1^st April, 2013, your Bank has financed 14,25,670 SHGs under Bank-SHG Linkage and disbursed Rs.23,939 crore.

State Bank of India has won the National Award for highest SHG Bank linkages for the year 2018, instituted by Ministry of Rural Development, New Delhi on 11^th May, 2018. Your Bank’s market share of loans under National Rural Livelihood Mission among PSB is 25.42% as on 31^st March, 2019.

Other Initiatives

Recognising the contribution of rural India to the nation’s economic growth, your Bank is striving to meet the financial needs of the rural segment through various new channels and services. To create focused attention on the importance of soil health card and advocating for sustainable management of soil resources aimed at enhanced Agri production, State Bank of India has observed World Soil Testing Day on 5^th December, 2018 across the country at selected branches by inviting Agriculture Scientists and farmers at field level. The programme was themed “Be the Solution to soil pollution” to encourage Organic Farming.

As widely reported, the Agriculture sector saw developments with a few States announcing waiver of farm loans in response to demands made by the farmers.

Your Bank announced Rinn Samadhan:2018-19 scheme, covering farm sector loans and achieved the set internal targets.

Keeping in view the large number of customers served by your Bank, it organised mass contact programmes on five occasions during the year. Under this initiative, all Rural and Semi-urban branches held informal meetings with farmers to improve customer connect and spread awareness about your Bank’s and Government’s schemes. As estimated, at least 14 lakh farmers attended these meets.

Other remarkable initiatives taken during the year included issuance of 72 lakh KCC-ATM-RuPay Cards to Kisan Credit Card (KCC) borrowers for ease and operational convenience. KCC RuPay Cards work seamlessly with ATMs and PoS machines, enabling farmers to purchase their day-to-day farm requirements on 24x7 basis.

State Bank of India, organised Kisan Mela at nearly 14,000 rural and semi-urban branches across the country. It is an initiative by your Bank to connect with farmer customers, resolve their grievances, and educate them about their rights and your Bank’s initiatives.

As part of Kisan Mela, your Bank also offers KCC farmers an enhancement of 10% to their credit limit on renewing the account. In addition to this, State Bank of India has taken this initiative to reach out to the farmers to educate about the benefits of renewing KCC account to get maximum benefits of interest subvention from Government and coverage under Pradhan Mantri Fasal Bima Yojana. Your Bank has also made farmers aware about the benefits of timely renewal of KCC account and usage of KCC Rupay Card for transactional convenience.

Furthermore, your Bank will sensitise farmers on various Agri-products of your Bank like Asset Backed Agri-loan, Mudra Loan and loans on other allied Agri activities.

2. Financial Inclusion (FI):

Your Bank realises the role it must play as the largest Bank in the country in practicing and promoting FI activities. The spread of digital banking channels and expansion of Business Correspondents (BC) network is giving your Bank the impetus to further grow its FI activities. Thus, to achieve inclusive development and growth, your Bank has worked out strategies and leveraged technology to expand financial services to the door steps of the unbanked with the purpose of bringing them under the ambit of formal banking system.

Your Bank has 57,467 operating BCs and 22,010 branches across the country to offer banking services. The BC channel, which provides customers in unbanked areas an access to various banking products and services while reducing footfalls in the branches, has recorded 39.75 crore transactions amounting to Rs.1,73,381 crore in FY2019, translating to around 15 lakh transactions per day.

Under the flagship Pradhan Mantri Jan Dhan Yojana (PmJdY) of Government of India, State Bank of India has paved the way for universal financial access by being a pioneer in implementing the programme. Your Bank has opened 10.97 crore accounts by FY2019 and issued 9.20 crore RuPay debit cards to the eligible customers. These initiatives taken under financial inclusion as part of key economic policy agenda of the Government over the last decade, has ensured access to Bank accounts for the excluded persons.

To fulfil the needs of Social Security measures, low cost Micro insurance products (PMJJBY, PMSBY) and pension schemes (APY) are provided to the unorganised sector in a big way, covering around 3 crore customers.

Imparting Financial Literacy

With the objective of imparting financial literacy and facilitating effective use of financial services, your Bank has set up around 338 Financial Literacy Centres (FLCs) across the country. During FY2019, a total of 29,450 financial literacy camps were conducted by these FLCs across the country. As a part of the pilot project implemented by RBI, your Bank has set up 15 centres for Financial Literacy at Block level, five each in the state of Maharashtra, Chhattisgarh and Telangana in association with NGOs identified by RBI.

State Bank of India hosted a panel discussion on ‘India-China: Financial Inclusion - Experiences and Challenges’. The discussion was attended by a high-level delegation from China, which included Mr. Li Wei, President, Development Research Centre, PRC, and Minister. Furthermore, it was centred around the initiatives taken by the Indian and Chinese governments towards financial inclusion, the experiences and the challenges thereto.

Rural Self Employment Training Institutes (RSETIs) play an important role in skill development by imparting comprehensive quality training programme to rural youth. Additionally, it facilitates them in setting up micro enterprises. Your Bank has set up 151 RSETIs spread across 27 States and one Union Territory.

RSETIs have trained over 96,999 rural youth in FY2019. Over 70% of the candidates trained are women and 92% of the candidates trained belong to non-general categories (SC/ST/ OBC/ Minorities). More than seven lakh candidates were trained by SBI-RSETIs since 2012 of which 69% were settled, in gainful vocation.

E. NBFC ALLIANCES

Reserve Bank of India has issued guidelines on co-origination of loans with Banks and NBFCs. Based on the guidelines, your Bank has created a new department ’NBFC Alliances’in the month of October, 2018. The main objective of the Department is to partner with NonBanking Finance Companies and Micro Financial Institutions across the country in Co-origination of loans for creation of assets under priority sector.

To achieve this objective, your Bank has formulated a detailed policy approved by The Central Board. Additionally, the NBFC Alliances Department focuses on engaging NBFC/MFIs (other than NBFC-ND-SI) as Business Associates to achieve a growth in Priority Sector Advances. Moreover, the Department also facilitates portfolio purchase and securitisation of loan portfolio with respective Business Units, viz., ABU, SMEBU, REHBU and PBBU.

Your Bank has stepped up the target for purchase of good quality portfolio of assets from NBFCs, as it believes that there is good opportunity to expand its loan portfolio at attractive rates. Your Bank is looking for opportunities both in priority and non-priority sectors. Your Bank had initially planned for a growth of Rs.15,000 crore through portfolio purchase during the current year, which is now being enhanced.

F. OTHER NEW BUSINESS INITIATIVES

1. Special Projects

IFSC Banking Unit at GIFT SEZ: The

Chairman, inaugurated your Bank’s IFSC Unit (IBU) at International Financial Services Centre (IFSC) located at the GIFT-SEZ, Gandhinagar, Gujarat. Many developed countries have financial hubs, which have evolved over a period as International Financial Centres (IFC). These centres provide suitable regulatory regimes and create a business environment to attract talent and capital. Successful IFCs are places where business is conducted between organisations from all over the world using latest financial technologies and products.

While the 100% tax concession available till 2020 and 50% for the next 5 years till 2025 are surely an attraction, they are not the only reason why your Bank has set up an Office in IFSC. The proceeds of ECBs (External Commercial Borrowings) which were hitherto being parked at high cost jurisdictions like London, New York, Singapore and Hong Kong, are now being parked at IFSC GIFT City, to optimise on the cost.

Initiatives for pilgrims at Kumbh Mela:

With an aim to provide banking services to millions of pilgrims and visitors at the Kumbh Mela, State Bank of India undertook various initiatives. For the 50-day Prayagraj Kumbh Mela, your Bank provided all the necessary assistance to the devotees in the form of two 14-hours working State Bank of India branches, four ATMs, three mobile ATMs as well as a forex counter.

2. Strategy

Following the best global practice, your Bank has created the position of Chief Strategy Officer (CSO) during 2018-19 with the objective of defining journey towards realising Mission Statement of your Bank and transforming vision of Top Management into reality. The position of CSO in your Bank will help in establishing robust strategy framework for enhancing value. The CSO’s role also aims for strategic synergy amongst all verticals for enhancing value for Customers, Shareholders and Employees.

The CSO addresses both the business and operational strategy of your Bank. The key areas for CSO organisation have been envisaged as below:

Data Analytics - With support of a core effective group of Analytics professionals, CSO’s role is to churn the Bank’s own data as well as external data to prepare long term insights and actions. The CSO and his team also assist the senior management with quick analytics for decision making.

Market Research, Benchmarking and

Competition - The CSO undertakes market research and analysis of the key products, processes and service lines of the competitors on a continuous basis vis-a-vis our products. This includes service delivery to formulate responsive and creative strategies, mostly in collaboration with the leaders of our Business Units and Field Operations.

Key Project Monitoring - CSO work as a bridge between Top Management and Business Unit owners and Field Managers to keep key strategic projects on track and ensure their speedy and timely implementation.

Few of the projects taken up by CSO for comprehensive improvement of Market Share in major cities of the country include

-    Strategic Tie-up for enhancing the Brand value

-    Marketing and Branding of YONO

-    Realising group synergy

Another strategic initiative taken up by CSO is for Branch Transformation and Re-Imagining of Branch Experience. The objective of the project is to decongest the branches, re-design the desks and transform the branches from being transaction oriented to business oriented and improve service delivery. Besides, several initiatives have been taken up for de-cluttering of branches and uniform branch layout for overall improvement in customer experience.

G. GOVERNMENT BUSINESS

Your Bank has traditionally been the banker of choice to the Government and is the accredited Banker to the major Central Government Ministries and Departments. Being the market leader in Government Business (with a market share of more than 80% in Government commission), your Bank is at the forefront in the development of e-Solutions for both Central and State Governments. This has facilitated their transition to the online mode, resulting in greater efficiency and transparency. Your Bank is an active stakeholder in the Government’s latest initiatives namely, Government e-Marketplace, and is continuously engaged in developing customised technology solutions such as e-Tendering, e-BG, e-Trade, amongst others, to keep pace with the Government’s digital initiatives.

                                      (Rs.in crore)

Particulars	FY2017-18	FY2018-19
Turnover	55,61,295	57,47,997
Commission	3,409	3,974

With a view to facilitate e-Governance, digitisation and bringing in more efficiency and transparency, the following initiatives were implemented during the year:

1. GeM (Govt. e-Marketplace)

State Bank of India is the pioneer amongst Banks for financial integration of payments to suppliers for procurement of common goods and services through GeM portal. Five State GeM Pool Accounts were opened at Uttar Pradesh, Tamil Nadu, Himachal Pradesh, Puducherry, and Gujarat. GeM Pool Accounts of more than 70 Autonomous bodies were opened.

2.    e-Tendering

Your Bank has implemented the e-Tendering solution for various departments of Maharashtra, Punjab, Kerala, UP, and Assam State Government.

3.    PMJAY-Ayushman Bharat

Settlement accounts under the scheme were successfully opened in nine States/ UTs viz Uttar Pradesh, Maharashtra, West Bengal, Assam, Puducherry, Sikkim, Nagaland, Tripura, and Andaman and Nicobar Islands.

4.    Indian Railways

State Bank of India has completed integration for collection of Application fee for recruitment in Railway Protection Force through SB MOPS. mOu with Northern Railways for Cash Pickup through our empanelled agencies was executed in FY2019 covering a Total of nine Railway Zones out of 16.

5.    Direct Benefit Transfer (DBT)

State Bank of India is the sole Banker for processing Direct Benefit Transfer of LPG subsidy (DBTL). Total number of transactions and amount processed in FY2019 are as following:

                                     (Rs.in crore)

Particulars	No. of	Amount
Â	transactions	(Rs.in crore)
Â	(crore)	Â
DBTL	128.95	36,653
DBT (others)	33.06	2,07,526

6.    Auction of items gifted to Honourable Prime Minister

Your Bank has made its services available for collection of proceeds from the auction of items gifted to Honourable Prime Minister at the National Gallery of Modern Arts, New Delhi. The event was executed by the Ministry of Culture.

7.    National Testing Agency

Successful Payment Gateway integration with National Testing Agency for collection of examination fees.

8.    CBSE

SBMOPS was integrated with CBSE platform for fee collection of CBSE affiliated schools.

9.    Pension Payments

State Bank of India has been administering pension payment to 55.57 lakh pensioners through its 16 CPPCs making disbursment of total pension amount of more than Rs.1,56,835 crore. During FY2019 2.79 lakh new pension accounts and eight Autonomous Bodies were on boarded for Pension payments. A number of pensioner connect programmes were conducted across the country.

10.    Small Savings Schemes

State Bank of India services more than 75.79 lakh PPF and 14.79 lakh SSA accounts making it the highest among all the authorised Banks. Additionally, 5.78 lakh PPF accounts and 3.16 lakh SSA accounts were added during this FY.

11.    Other

Your Bank was accorded an approval for opening 33 Accounts for Enforcement Directorate under Ministry of Finance. Your Bank was chosen as an Aggregator Bank for collection of tax and non-tax revenue of the Government of West Bengal. Workshops were conducted across the country for training the personnel of Implementing Agencies.

12.    Awards

Your Bank was awarded First Prize for opening the largest Number of Sukanya Samriddhi Accounts amongst all Banks (Pan India). The award was given at National Savings Institute, New Delhi on 30^th October, 2018 to celebrate “World Thrift Day”.

H. TRANSACTION BANKING UNIT

Your Bank’s Transaction Banking Unit (TBU) leverages technology to provide comprehensive solutions for bulk transaction requirement of clients, facilitating their efficient funds management along with other value-added services such as customised MIS, integration with Corporate ERP and dedicated single point Client Support Cell. Transaction Banking services not only facilitate your Bank to maintain close relationship with clients, but also to assess their other Banking requirements such as Credit, Fund Management and Cross Selling.

Your Bank offers a wide range of TBU products and services to Corporate, Government Departments, Financial Institutions and SME Clients. While Corporate and Government clients continue to be the key focus segment, Bank is also marketing among existing clients as well as start-ups in SME sector.

Keeping in line with market trends, your Bank is continuously updating/evolving the bouquet of TBU products/services offered to clients to match the competitors’products/services.

-    TBU Fee Income increased by 48.50% from Rs.893.66 crore in FY2018 to Rs.1,327.08 crore in FY2019. A 30% plus annual growth has been consistently achieved in fee income during the last few years.

-    TBU Float Income increased by 81.15% from Rs.356.69 crore in FY2018 to Rs.646.15 crore in FY2019.

-    Turnover registered a Y-o-Y increase of 78.39% with transactions amounting to Rs.38,08,314 crore in FY2019 over Rs.21,34,867 crore in FY2018.

-    Your Bank was recognised as “The Best Transaction Bank in India” by The Asian Banker for the second time in a row in 2018.

2. GLOBAL BANKING

The Wholesale Banking Business in your Bank focuses on servicing Corporate clients through customised financial solutions such as working capital finance, export finance, trade transactions and foreign currency loans. It comprises of several teams focused on specific areas such as specialisation of product offerings, acquiring new business and generating new income streams with continuous focus on profitability and risk mitigation.

A. CORPORATE ACCOUNTS GROUP

The Corporate Accounts Group (CAG) is a dedicated vertical handling the “large credit portfolio” of your Bank through 4 offices in 3 Centres viz., Mumbai with two branches and one each in Delhi and Chennai. CAG now is a super specialised set-up handling 29 top rated Business Group accounts and 66 Non-group accounts to ensure that the quality of service for these prioritised relationships is maintained as the best in the class.

The business model of CAG is anchored on the Relationship Management Concept wherein each client group is mapped to a Relationship Manager who leads across -functional Client Service Team. The Account Management Teams (AMTs) work on a central strategy of delivering integrated and comprehensive financial solutions to the clients, through structured products, within a strict TurnAround-Time. The principal objective of the strategy is to make your Bank the first choice of top corporates.

To firmly align with the changing Banking landscape, in June 2018, your Bank undertook a major revamp of Corporate Credit dispensation Structure making it a future ready set-up to drive sustainable growth. Core objectives of this holistic revamp were, strengthening credit risk management function, leveraging analytics, making a paradigm shift of focus in business from ‘Fund to Fee” and Originate to Distribute (O-t-D) so as to improve Bank’s overall wallet share in Corporate Banking Business. In addition to credit relationship, Bank is now actively looking at customer 360 requirements especially in credit light sectors viz -Pharma, FMCG, IT, Auto etc. through its newly established Credit Light Group (CLG) set within the CAG set up.

A Specialised Group, FIG (Financial and Institutional Group) to address credit and transactional banking needs of Insurance Companies, Brokering Firms, Banks (Private and Foreign) and Mutual Funds has also been created within CAG. Both the newly created groups have taken off and have started contributing to the Bank’s business growth.

Banking technology is revolutionising the way customers engage with their finances. Convenience, speed and flexibility are no longer considered attractive add-ons, but have become a standard expectation of the rapidly changing customer-Bank relationship. Towards this end, your Bank is investing continuously in building technological capabilities to become more agile towards customers’needs. We are currently offering cutting edge technology products to our Corporate customers and are using the latest CRM application for customer management.

Overall, the Corporate Accounts unit has reoriented itself to focus on the highest priority and quality individual and group relationships with differentiated coverage.

The total post revamped outstanding loans to clients in the Corporate Accounts unit stood at Rs.2.33 lakh crore and Rs.1.68 lakh crore in respect of fund-based and nonfund-based products as on 31^st March 2018 and the corresponding fund based and non-fund based outstanding are Rs.4.07 lakh crore and Rs.1.75 lakh crore as on 31^st March 2019 respectively.

Corporate Account Group has been a partner in the industrial growth of the country, especially in creation and development of critical infrastructure viz Roads and Highways, Ports, Power, Telecom, Petrochemicals etc. and your Bank wishes to continue its contribution to Nation’s growth as hitherto.

B. TREASURY OPERATIONS

The Global Markets Unit (GMU) performs the Treasury Operations of your Bank with the objective of managing its liquidity in compliance with regulatory requirements, mitigating related risks like liquidity risk, market risk and operational risk. GMU deploys the surplus funds in various investment options based on economic research and scenario analysis and optimises risk and returns. The investment book under Global Markets stood at Rs.9,26,651 crore at FY2019 as against Rs.10,26,438 crore as on FY2018. It also provides Foreign Exchange services and hedging instruments to customers across the country.

(i) INTEREST RATE MOVEMENTS & SLR AND NON-SLR PORTFOLIO OF THE BANK

GMU is responsible for managing regulatory requirements such as your Bank’s SLR/CRR management, maintaining HQLAs for LCR, amongst others. As interest rate markets saw wild movements during the year, RBI increased the overnight repo rates twice during the year, on 7^th June 2018 and 2^nd August 2018. After low CPI prints and easing of crude price, RBI reduced the Repo Rate in its Sixth Bi-Monthly Monetary Policy dated 07^th February 2019 along with change in stance from Calibrated Tightening to Neutral. The repo rate stands at 6.25% post February 2019 policy and has further been reduced to 6% on 4^th April 2019. US Federal Reserve was also on a hiking spree by increasing the Fed Target rates four times during the calendar year 2018. With the last rate hike in December 2018, the Fed rate now stands at 2.50% as on 31^st March 2019.

On the domestic front, the movement of Interest rates was volatile. The benchmark 10Y security (7.17 CG-Sec 2028), which was trading at 7.40% at the beginning of FY2019 touched a peak of 8.18% on 11^th September, 2018 before touching a low of 7.22% on 19^th December, 2018. Excess supply in State Development Loans, depreciation in domestic currency, increase in crude prices made the year a roller coaster ride for yields. Due to this volatility, your Bank made provisions on investments.

By the beginning of Q2 FY201 9, the system liquidity turned negative, which got aggravated due to the NBFC crisis in the month of September 2018. The liquidity shortfall prompted RBI to conduct Open Market Operations (OMO) to improve the system liquidity. The OMO helped to reduce the excess SLR holding of Banks and alleviated the supply pressures. This resulted in easing of 10-year G-Sec yield.

During the year, with the credit growth outstripping the deposit growth, your Bank’s SLR portfolio was brought down in a calibrated manner to generate liquidity. However, in view of the elevated yield levels, your Bank increased the Corporate Bond portfolio as a measure of improving the overall portfolio yield. Net Interest Income stood at Rs.88,349 crore as against Rs.74,854 crore for FY2018. Profit on sale of investments is at Rs.1,023 crore against Rs.12,303 crore for FY2018.

(ii) EQUITY MARKETS

The equity markets touched its alltime high levels in FY2019. Post default by IL&FS and on NBFC liquidity concerns, market saw sharp correction in the Benchmark indices. However, market rallied sharply towards the end of the financial year due to strong inflows from FIIs and Nifty ended with 14.93% gains in FY2019. The outcome of General elections, Fed Policy actions, expectation of Global economic slowdown and the increasing tension on trade war is expected to keep volatility on the higher side. Your Bank has managed its equity portfolio following a strategy of actively rebalancing the portfolio based on key events, global and domestic market conditions, quarterly earnings of the companies and, their future outlook. In addition to the secondary market, your Bank continues to profitably invest in IPOs to improve the return on the portfolio.

(iii) FOREX MARKETS

The GMU handles the foreign exchange business of your Bank, providing solutions to customers for managing their currency flows and hedging risks through options, swaps and forwards, in addition to providing liquidity to markets. Your Bank is a dominant player in Rupee Spot and Rupee Forward markets and has a sufficiently high market share in customer foreign exchange flows. Your Bank is the leader in providing liquidity in CCIL Fx Clear platform. The volume generated in Currency Futures puts your Bank in the bracket of top three client Banks of exchange houses.

GMU manages the FCNR (B) deposit corpus of your Bank and provides FCNR (B) loans and Pre and Post shipment Export Finance in foreign currency to its customers. Your Bank also provides funding support to Bank’s Foreign Operations whenever required. On technological front, your Bank keeps pace with the best currently in vogue.

Treasury Marketing Group (TMG) is the customer engagement arm of Global Markets and plays a pivotal role in marketing of Treasury Products to Institutional and Corporate clients of your Bank. Treasury Marketing Units located across the country are the face of Global Markets to the customers. They interact with the customers daily, identify their needs, and coordinate with other business units for pricing, product structuring and delivery.

Foreign Investments and Institutional Treasury sales desk is part of TMG. It is responsible for mobilising treasury business from Foreign Portfolio Investors (FPI)/Foreign Direct Investment (FDI) clients and financial institutions.

Private Equity/Venture Capital Fund

The JV setup with Macquarie and IFC in 2008, to manage the US$ 1.2 billion India-focused PE fund, is currently in the exit phase and has successfully exited from two road assets during FY2019.

The Oman India Joint Investment Fund (OIJIF), a JV set up in 2010 in partnership with State General Reserve Fund of Oman, has completed its investments for Fund-I of US$ 100 million. Fund-I has made two full exits and one partial exit. On the other hand, Fund-II with a target corpus of US$300 million launched in 2017 has raised commitments of US$ 230 million and has deployed Rs.450 crore across three assets. Fund-II continues to assess various investment opportunities.

During FY2019, your Bank made partial divestment from its strategic investment in National Stock Exchange. Additionally, it made investment commitments in its Alternative Investment Funds portfolio across investment themes such as Special Situations Funds, funds focused on investing in mid-market growth stage companies and technology.

Portfolio Management Services (PMS)

The Bank is the largest retirement benefit fund manager in the country with an impeccable track record. The total AUM as on 31^st March 2019 is Rs.5,08,230 crore. Major clients include Employees’Provident Fund Organisation, SBI Retirement Benefit Funds, Coal Mines Provident Fund Organisation, Kendriya Vidyalaya Sanghthan Employees’Provident Fund and Seamen’s Provident Fund Organisation. The Bank also assists its RRBs in managing their SLR Portfolio. However, the PMS activity of the Bank is being closed by 31^st March 2019, as per RBI’s directives.

3. COMMERCIAL CLIENTS GROUP (CCG)

A. COMMERCIAL CLIENTS

The Corporate Credit Structure and System in your Bank was revamped to setup, a future ready organisation to manage the risks and sustain growth. There was a reorientation of CAG to focus on the highest priority and quality individual and group relationships with differentiated coverage. The CCG is formed for consolidation of select corporate client accounts across CAG, MCG and NBG verticals based on a criterion decided by your Bank. This includes rationalisation of the remaining CAG branches and existing MCG branches into 47 CCG branches. The CCG vertical is headed by a MD and supported by a DMD, five CGMs and other functionaries.

CGMs in the CCG are assigned as the group relationship owners in order to improve the quality of coverage and enable an integrated view on exposure, earnings amongst others, across the entire group. Your Bank has set up experienced team of ‘Structuring Specialists’to support deal structuring for large proposals across lending, bonds, International Banking, and Structured / Mezzanine Finance.

The Non- food domestic advances level in CCG at the end of FY201 9 was at Rs.4,00,766 crore registering a YoY growth of 3.93 %. The Yield on Advances in CCG has improved from 7.50% as on MarRs.18 to 8.68% as on March 2019 recording a growth of 118 bps. During the same period, business per employee has gone up from Rs.121.73 crore as on March 2018 to Rs.146.72 crore as on March 2019. Profit per employee has improved from Rs.1.98 crore as on March 2018 to Rs.3.99 crore as on March 2019. Cost to Income Ratio has declined by 295 bps during the year going down from 9.25% as on March 2018 to 6.30 % as on March 2019. On the recovery front, CCG was successful in recovering Rs.1,364 crore in Advance Under Collection Account under IBC / NCLT mechanism during the said period.

The group continues to provide a robust platform to its customers for Trade Finance and Forex business.

CCG is at a very advanced stage of launching YONO for Corporates. This is going to provide a very user-friendly digital platform for Corporates for transaction banking as well as Trade Finance Business.

B. PROJECT FINANCE AND LEASING

In contrast to the challenges faced by PFSBU during the previous year, which saw stressed accounts becoming NPA, particularly on Thermal Power, Road sector, Telecom among other sectors, this fiscal year 2019 started with a cautious optimism based on learnings from the past experiences. Policy for funding Renewable, City Gas Distribution and Hybrid Annuity Model in Road sector were framed to mitigate the risks involved. The sectors, which showed signs of revival were Roads, Oil and Gas, Renewable Power, Cement, Fertiliser amongst others. The stressed accounts mainly comprising of Thermal Power, Road sector accounts have been transferred to SARG for resolution. Experienced officials are being recruited from different industries to provide Structuring Solutions to our clients. Chartered Accountants are being employed by your Bank to plug income leakages to boost fee income.

Your Bank’s Special Business Unit known as Project Finance and Structuring (PFSBU) deals with the appraisal and arrangement of funds for large projects in infrastructure and other sectors such as Power, Roads, Ports, Railways, Airports, amongst others. It also covers other non-infrastructure projects in sectors viz. Metals, Fertilisers, Cements, Oil and Gas amongst others, with certain threshold on minimum Project Cost. PFSBU also provides support to other verticals for vetting their large ticket term loan proposals. In order to strengthen the policy and regulatory framework for financing infrastructure, inputs are provided to various Ministries of Government of India and the RBI with respect to lenders views on new policies, Model Concession Agreements and broader issues being faced in infrastructure finance.

Project Finance and Structuring Business Performance:

                                                       (Rs.in crore)

Â	FY2017	FY2018	FY2019
Project Cost	83,434	81,701	1,99,317
Project Debt	51,227	58,754	1,33,115
Sanctioned Amount	26,557	19,835	51,351
Syndication Amount	5,809	11,937	31,191

4. STRESSED ASSETS MANAGEMENT

1. Over the last few years, there has been a significant rise in the Gross Non-Performing Assets (GNPA) in the Banking Industry. However, in the first half of FY2019, the GNPA of the SCBs declined, which can be attributed to the following factors:

i.    Resolution of a few high value NPA accounts from the 1^st and 2^nd RBI list of accounts referred to NCLT under IBC, 2016.

ii.    A revival in economic growth conditions of India in FY2018, leading to control in fresh slippages.

iii.    Favourable outlook of steel sector, which was under stress over past few years. Mainly driven by increase in demand, consumption and simultaneous imposition of anti-dumping safeguard duties as well as minimum import prices, the sector has yielded some good recoveries in NPA.

iv.    Strengthening of due diligence, credit appraisal and loan monitoring systems in the Banking industry.

v.    Significant improvement in the Ease of Doing Business ranking for India at 77^th position from 130^th rank due to two successive jumps i.e., 30 positions in 2017 rankings and 23 positions in 2018. It reflects the adoption of global best practices in business reforms.

vi.    Stabilisation after facing short term impacts of demonetisation and implementation of GST.

vii.    Greater interest evinced by ARCs and NBFCs in purchase of impaired/ stressed assets backed by foreign investments.

2.    According to the Financial Stability Report of RBI for December 2018, in a sign of possible recovery from the impaired asset load, the asset quality of Banks showed an improvement with the Gross Non-Performing Assets (GNPA) ratio of SCBs declining from 11.5% in March, 2018 to 10.8% in September, 2018. Further, the resilience of the Indian banking system against macroeconomic shocks was tested through macro stress tests. The results of macro tests suggest that the GNPA of all SCBs may come down from 10.8% in September, 2018 to 10.3% by March, 2019. Moreover, sensitivity analysis conducted to study the resilience of SCBs with respect to credit, interest rate, equity prices and liquidity risks predicts that a severe credit shock is likely to impact the capital adequacy and profitability of a significant number of Banks, mostly PSBs.

3.    The movement of NPAs in the Banking industry and recovery in Written-off accounts during the last four years are furnished below:

                                                                                             (Rs.in crore)

Â	FY2016	FY2017*	FY2018	FY2019
Gross NPA	98,173	1,77,866	2,23,427	1,72,750
Gross NPA%	6.50%	9.11%	10.91%	7.53%
Net NPA%	3.81%	5.19%	5.73%	3.01%
Fresh Slippages + Increase in O/s	64,198	1,15,932	1,00,287	39,740
Cash Recoveries / Up-gradations	6,987	32,283	14,530	31,512
Write-Offs	15,763	27,757	40,196	58,905
Recoveries in AUCA	2,859	3,963	5,333	8,345
PCR	60.69%	61.53%	66.17%	78.73%

4.    The Government of India in its Reforms Agenda for Responsive and Responsible PSBs has directed creation of a Stressed Assets Management Vertical (SAMV). Your Bank takes immense pride for being a pioneer in establishing a dedicated vertical almost decade and a half back by establishing Stressed Assets Management Group (SAMG) during FY2005. In order to focus towards resolution of stressed accounts, SAMG was renamed as Stressed Assets Resolution Group (SARG), which continues to work as a specialised vertical for efficient resolution of high value NPAs. The structure of SARG has been revamped to give focussed approach for resolution of stressed assets across various sectors. At present, the vertical is headed by a Deputy Managing Director and three Chief General Managers overseeing the specialised sector, AMTs functioning under the leadership of seven General Managers. SARG has turned into a centre of excellence in resolution of NPA and stressed assets. As on March 2019, SARG has 20 Stressed Assets Management Branches (SAMBs) and 56 Stressed Assets Recovery Branches (SARBs) across the country, covering 70.62% and 83.71% of your Bank’s Non-Performing Assets (NPAs) and Advances under Collection Account (AUCA) respectively.

5.    Besides initiating hard recovery measures, SARG introduced certain innovative methods and gave first mover advantage to your Bank in areas such as arranging Mega e-Auction of large number of properties on Pan-India basis, identification of un-encumbered properties of the borrowers / guarantors and arranging for attachment of properties before judgement. The cases referred to NCLT for resolution are monitored at a specialised cell at SARG. A total of 442 cases have been referred to NCLT, out of which 350 cases were admitted. Furthermore, 18 cases have been resolved including a few high value cases from the 1^st list of 12 accounts.

6. A significant portion of the recovery in SARG comes from Compromise and Sale of Assets to ARCs. The vertical also implements special OTS schemes (Non-discretionary and Non-discriminatory) from time to time, giving the borrowers a onetime opportunity to settle their dues. A team is set up to look after the sale of Assets to Asset Reconstruction Companies (ARCs) on Cash and Security Receipts (SR) basis.

7. Today, SARG stands as one of the most important verticals of your Bank, when the GNPA of your Bank has already peaked and is on course of a downward journey. Though the credit growth is picking up steadily and performance of treasury operations is dependent on market rates, the importance of NPA resolution/ recovery by SARG is significant as it directly impacts your Bank’s performance. Resolution of stressed assets by SARG presents the following latent income generating avenues for your Bank:

i.    Cash recovery in NPAs and AUCA;

ii.    Up-gradation of accounts;

iii.    Reduction in loan loss provisions;

iv.    Reduced capital requirement;

All the above stated avenues directly contribute to your Bank’s bottom-line. Further, they improve overall asset quality, laying foundation for credit off-take and indirectly contribute towards generation of interest income.

8. Enactment of Insolvency and Bankruptcy Code (IBC) 2016 for resolution of Stressed/NPA assets has provided Banks with a time bound, transparent and effective mechanism to tackle stressed assets. It has led to an efficient price discovery and transparent resolution of accounts resulting in unlocking maximum value in the assets charged to your Bank. A significant portion of recoveries in FY2019 have come through this route. Some of the large accounts from 1^st and 2^nd list of accounts referred to NCLT directed by RBI have been resolved and a few more are expected with resolution plans already in place. This has helped in strengthening your Bank’s balance sheet and provides the opportunity to deploy the realised funds into income yielding assets.

V. SUBSIDIARIES

As a part of mission to provide the entire gamut of financial services across India, the State Bank Group, through its various subsidiaries, provides a whole range of financial services, including Life Insurance, Merchant Banking, Trustee Business, Mutual Funds, Credit Card, Factoring, Security Trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

Non- Banking Subsidiaries:

                                                                                                                                                                  (Rs.crore)

Sr. No	Name of the Subsidiary Company	Ownership (SBI interest)	% of Ownership	Net Profit (Losses) for FY2019
1	SBI Capital Markets Limited (Consolidated)	58.03	100.00	236.27
2	SBI DFHI Limited	131.52	69.04	61.58
3	SBI Mutual Fund Trustee Company Private Limited	0.10	100.00	3.21
4	SBI Global Factors Limited	137.79	86.18	5.35
5	SBI Pension Funds Private Limited	18.00	*60.00	1.89
6.	SBI Foundation	3.99	99.72	0.16
7.	SBI Infra Management Solutions Private Limited	40.00	100.00	(12.00)

*Group holding of SBI is 100% in SBI Pension Funds Pvt. Ltd. (SBI 60%, SBI MF and SBI Capital Markets 20% each)

Non- Banking Subsidiaries: Joint Ventures

                                                                                                                                                               (Rs.crore)

Sr. No	Name of the Subsidiary Company	Ownership (SBI interest)	% of Ownership	Net Profit (Losses) for FY2019
1	SBI Funds Management Private Limited	31.50	63 .00	427.54
2	SBI Cards & Payment Services Private Limited	619.54	74 .00	788 .00
3	SBI Life Insurance Company Limited	621.00	62.04	1327 .00
4	SBI-SG Global Securities Services Private Limited	52.00	65 .00	34.45
5	SBI General Insurance Company Limited	151.00	70 .00	334 .00
6	SBI Business Process Mgt. Services Private Limited*	17.46	74 .00	78 .00
7.	SBI Payment Services Private Limited	4.50	74 .00	(48.84)

* Name of “GE Capital Business Process Mgt. Services Pvt. Ltd.” has been changed to “SBI Business Process Mgt. Services Pvt. Ltd.”

1. SBI CAPITAL MARKETS LIMITED (SBICAP)

                                                                                                                                                              (Rs.crore)

Name of the subsidiary company	Ownership (SBI Interest)	% of ownership	Net Profit (Loss) for FY2019
SBICAP SECURITIES LIMITED (SSL)	96.88	100 .00	57.52
SBICAP VENTURES LIMITED (SVL)	49.98	100 .00	0.52
SBICAP (UK) LIMITED (SUL)	1.72	100 .00	(3.21)
SBICAP (SINGAPORE) LIMITED (SSGL)	61.78	100 .00	(1.65)
SBICAP TRUSTEE CO. LIMITED (STCL)	1.00	100 .00	14.90

SBICAPs is India’s leading investment banker, offering a bouquet of investment banking and corporate advisory services to diversified clients across three product groups - Project Advisory and Structured Finance, Equity Capital Markets and Debt Capital Markets. These services include Project Advisory, Loan Syndication, Structured Debt Placement, Mergers and Acquisitions, Private Equity, Restructuring Advisory, Stressed Assets Resolution, IPO, FPO, Rights Issues, Debt and Hybrid Capital raising. On a standalone basis, SBICAPs posted a pBt of Rs.242.60 crore during FY2019 as against Rs.336.49 crore during the FY2018 and a PAT of Rs.168.19 crore for FY2019 against Rs.236.26 crore in FY2018. On a consolidated basis it has posted a profit of Rs.236.73 crore as against Rs.323.53 crore in the previous year. SBICAPS has not declared any dividend for FY2019 as against 225% in FY2018

A.    SBICAP SECURITIES LIMITED (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Limited, besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in sales and distribution of other financial products such as Mutual Funds, Tax Free Bonds, Home Loan, Auto Loan, Tractor Loan, amongst others.

SSL has over 100 branches and offers Demat, e-broking, e-IPO, and e-MF services to both retail and institutional clients. SSL currently has over 15 lakh clients. The Company has booked gross revenue of Rs.408.36 crore during FY2019 as against Rs.357.56 crore in FY2018.

B.    SBICAP VENTURES LIMITED (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Limited. DFID (Department for International Development) has joined hands with the SBI group to set up the ’Neev Fund’which is being managed by SBICAP Ventures Limited. SVL is acting as the Asset Management Company. SVL has also launched two funds namely Affordable Housing Fund and SME Fund during the year.

First closure of ‘Neev Fund’was on 10^th April, 2015 and the final closure happened on 31^st March 2019 with final corpus of the Fund being Rs.504.20 crore. Fund has invested in the infrastructure sectors such as renewable energy, water and sanitation, agricultural supply chain in eight identified states of India (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh, and West Bengal).

C.    SBICAP (UK) LIMITED (SUL)

SUL, a wholly owned subsidiary of SBI Capital Markets Limited, is positioning itself as a relationship outfit for SBI Capital Markets Limited in UK and Europe. It has built relationships with FIIs, Financial Institutions, Law Firms, Accounting Firms, amongst others, to market the business products of SBICAP.

D.    SBICAP (SINGAPORE) LIMITED (SSGL)

SSGL, is a wholly owned subsidiary of SBI Capital Markets Limited. It commenced business in December, 2012. It has built relationships with FIIs, Financial Institutions, Law Firms, Accounting Firms, amongst others, to market the business products of SBICAP. It is specialised in marketing of Foreign Currency Bonds and securing clients for SBICAP SEC.

E. SBICAP TRUSTEE CO. LIMITED (STCL)

SBICAP Trustee Co Limited (STCL), is a wholly owned subsidiary of SBI Capital Markets Limited. STCL commenced security trustee business with effect on 1^st August, 2008. STCL posted Net Profit of Rs.14.90 crore during FY2019 as against Rs.11.90 crore during FY2018. Moreover, it has launched an Online Will Creation service for the individuals in the name of ‘My Will Service Online’. In addition to this, ‘Trustee Enterprise Management System’- an integrated system to address all the trustee related operations was implemented, thereby becoming the first and only Trustee Company in India to have full automation across all trustee related operations.

2.    SBI DFHI LIMITED (SBIDHFI)

SBI DFHI Limited is one of the largest standalone Primary Dealers (PD) with a Pan India presence. As a Primary Dealer (PD) it is mandated to support the book building process in primary auctions and provide depth and liquidity to secondary markets in G-Sec. Besides Government securities, it also deals in money market instruments, non G-Sec debt instruments, amongst others. As a PD, its business activities are regulated by RBI.

State Bank of India group holds 72.17% share in the Company, which posted a Net Profit of Rs.61.58 crore as on 31^st March, 2019 as against Rs.32.07 crore as on 31^st March, 2018. Total balance sheet size was Rs.7,206.09 crore as on 31^st March, 2019 as against Rs.5,659.46 crore as on 31^st March, 2018.

3.    SBI CARDS & PAYMENTS SERVICES PRIVATE LIMITED (SBICPSPL)

SBI Cards and Payment Services Private Limited is a joint venture between State Bank of India and the Carlyle Group wherein State Bank of India holds 74% stake and CA Rover Holdings (An affiliate of Carlyle) holds 26% stake. SBICPSL is an NBFC and issues credit cards in India. State Bank of India increased its stake in the company in December 2017 from 60% to 74% by buying shares from exiting partner GE Capital.

During FY2019, the Company’s Card base has grown by 32% YoY with total number of credit cards reaching to a level of 82.71 lakh as at 31^st March 2019. Total Spends on card witnessed a YoY growth of 35% to reach a level of Rs.107,350 crore for the same period. The company is positioned at Rank #2 with 17.2% Spends Share and 17.4% Cards base as per RBI report for February 2019 (Previous Year 16.7% in terms of both Spends and Cards base as per RBI report for March 2018). The company delivered Profit after Tax of Rs.788 crore in FY2019 at YoY growth of 36% (Profit after Tax in FY2018 - Rs.581 crore).

New launches during FY2019:

-    New cobranded ‘Apollo SBI Card’launched offering host of benefits and privileges on health and wellness services.

-    ‘SBI Doctors Card’in association with Indian Medical Association launched exclusively for Doctors.

-    Etihad Guest SBI Card offering best-in-class value combined with word class travel experience to frequent international travellers

-    SME Card offering unmatched value proposition to Small and Medium Enterprises (SME) segment

-    Allahabad Bank SBI Card, Cobranded Credit Card with Allahabad Bank, catering to the customers of Allahabad Bank.

Awards received during FY2019:

-    SBI Card received the Reader’s Digest Trusted Brand Award 2018, for the tenth time in the credit card category.

-    SBI Card won the Best Data Quality Award from CIBIL, for the third consecutive year.

-    SBI Card m-Gurukul won Silver Award in Best Learning, Performance and Capability Project - Sales Training category by LEARNX Foundation, Australia.

-    SBI Card won the ‘Excellent Compliance Performer Award 2018’at the coveted Compliance 10/10 awards.

-    SBI Card was awarded as Best Arrangements - Governance & Compliance Awards 2018 at the Compliance Register Platinum held at London, UK.

-    The SBI Card L&D team was awarded with Learning Innovator Award at the GP Strategies India, Learning Connect Event held at Gurugram.

4.    SBI BUSINESS PROCESS AND MANAGEMENT SERVICES PRIVATE LIMITED (SBIBPMSL)

(Formerly GE Capital Business Process and Management Services Private Limited)

SBIBPMSL is a joint venture between State Bank of India and the Carlyle Group, wherein State Bank of India holds 74% stake and CA Rover Holdings (An affiliate of Carlyle) holds 26% stake. SBIBPMSL provides back end services and solutions to SBICPSL. State Bank of India increased its stake in the company in December 2017 from 40% to 74% by buying out shares from exiting partner GE Capital.

For FY2019, the Company generated PAT of Rs.78 crore at a YoY growth rate of 15% (Profit after Tax in FY2018 of Rs.68 crore).

Initiatives undertaken during FY2019:

-    Vision Plus migration to India completed

-    Excalibur (Collection CRM) Phase-I Go-Live from MarRs.19

-    Chat Bot- ELA introduced- 98% Success rate

5.    SBI LIFE INSURANCE COMPANY LIMITED (SBILIFE)

SBI Life Insurance is a joint venture between State Bank of India (SBI) and BNP Paribas Cardif S. A. The equity shares of the Company are listed on National Stock Exchange of India Limited (‘NSE’) and BSE Limited (‘BSE’).

SBI Life has a multi-channel distribution network comprising an expansive bancassurance channel, including State Bank, the largest bancassurance partner in India, a large and productive individual agent network comprising 123,613 agents as of March 31, 2019, as well as other distribution channels including direct sales and sales through corporate agents, brokers, insurance marketing firms and other intermediaries.

During the year ended March 31, 2019, the Company operated in sound and stable manner, with its sole objective of increasing insurance penetration and concentrating on individual regular business through an active and prudent strategy, sales team maintaining the quality as well as quantity and established a firmer market position. The Company has proven its market leadership in the year ended March 31, 2019 with numero-uno position in Individual New Business Premium among private insurers.

Individual business has always been a part of core strategy of the Company. The company witnessed a 15% growth in Individual New Business Premium (NBP) vis-a-vis the industry growth of 6%. The market share of SBI Life Retail New Business Premium (NBP) among all private players as on 31^st March, 2019 is 20.6%. Total New Business of the Company for the year ended FY2019 stands at Rs.13,792 crore; growth of 26%.

The Company continues to maintain the leadership position amongst private players in number of policies issued, which reflects mass coverage and strong market acceptance across geographies amongst life insurer. During the period, total 15,25,439 individual new policies were issued and registered growth of 7%.

During the year, the Company implemented Employee Stock Option Plan (ESOPs) to encourage employee’s performance and incentivise employees.

SBI Life witnessed a PAT of Rs.1,327 crore in FY2019 against Rs.1,150 crore in FY2018, growth of 15%. AUM of the Company recorded a growth of 21% at Rs.1,41,024 crore as on 31^st March, 2019 as compared to Rs.1,16,261 crore as on 31^st March, 2018.

Leveraging wider reach achieved through its network of 908 offices, SBI Life has systematically brought large rural areas under insurance reach.

Awards and recognitions received during the year include:

1.    For the Financial Year 2018-19, SBI Life was awarded the ‘Life Insurer of the Year 2018 - India’by Insurance Asia News Awards for Excellence 2018.

2.    SBI Life Insurance Company Limited has also been declared as the Winner of the ‘Golden Peacock Award for Risk Management’for the year 2018.

3.    SBI Life won the 2^nd Runner Up in the Category of Improvement & Innovation at the 30^th Qualtech Prize 2018.

4.    The RIMS India Enterprise RISK Management (ERM) Award of Distinction 2018, organised by the Risk & Insurance Management Society (RIMS), USA, was also awarded to SBI Life in 2018.

5.    Awarded ‘ICAI - Gold Shield’for Excellence in Financial Reporting for FY2018 under the Insurance category

6.    SBI Life Insurance Company Limited received the ‘Smart Insurer Award in the Life Insurance - Large Category’at ET Insurance Summit 2018.

7.    SBI Life Insurance also won the ‘Life Insurance Provider of the Year 2018’by Outlook Money in the Silver Category.

8.    SBI Life Insurance was recognised as ‘The Economic Times Best Brands 2019’by The Economic Times

9.    SBI Life Insurance won the ‘Intelligent Enterprise’award in the ‘Artificial Intelligence’category by Express Computers.

10.    SBI Life Insurance won the awards for ‘Best Blended Learning Program’and ‘Chief Learning Officer of the Year’at TISS Leapvault CLO Awards 2018.

11.    SBI Life Insurance won ‘Corporate Star Award for Best Training for Employees/Associates’in MICE activities by MTM.

6. SBI FUNDS MANAGEMENT PRIVATE LIMITED (SBIFMPL)

SBIFMPL, the Asset Management Company of SBI Mutual Fund, is amongst the fastest growing AMCs with a growth of over 30% against the industry average of 6.20% in 2018-19. In the last three years, SBIFMPL has achieved a CAGR of 39% against the industry average of around 22%. The Fund has moved up 2 notches in 2018-19 and has achieved 3^rd rank, from being at 5^th rank in the beginning of the year as per Quarterly Average Asset Under Management (QAAUM). SBIFMPL has one of largest investor base with over 95 lakh investors with 12 lakh direct investors and over 47,000 institutional investors including 1210 retirement funds. SBIFMPL is the Largest ETF manager in the country.

SBIFMPL posted a PAT of Rs.427.54 crore during the period ended March 2019 as against Rs.335.82 crore earned during the year ended March 2018 under Indian Accounting Standard (Ind AS). The average “Assets Under Management” (AUM) of the Company during the quarter ended March 2019 were Rs.2,83,807 crore with a market share of 11.59% as against the average assets under management of Rs.2,17,649 crore with a market share of 9.44% during the quarter ended March, 2018. The Company has a fully owned foreign subsidiary viz. SBI Funds Management (International) Private Limited, which is based at Mauritius and manages Offshore Fund. SBIFMPL also provides Portfolio Management services (PMS) and Alternative Investment Funds (AIF).

7.    SBI GLOBAL FACTORS LIMITED (SBIGFL)

SBIGFL is a leading provider of factoring services for domestic and international trade. SBI holds 86.18% share in the Company. The Company’s services are especially suitable for MSME clients for freeing up resources locked in book debts. By virtue of its membership of Factors Chain International (FCI), the Company is able to ameliorate credit risk from export receivables under the 2-factor model.

The Company reported a PBT of Rs.9.47 crore during the year ended FY2019 against Previous Year PBT of Rs.2.08 crore. In current FY PAT is Rs.5.35 crore against Previous Year Loss of Rs.3.24 crore. Turnover for 12 months ended FY2019 is Rs.4,387 crore as compared to turnover of Rs.3,555 crore in previous year (i.e. an increase of 23%). Funds in use (FIU) as on 31^st Mar 2019 is Rs.1,374 crore as compared to Rs.1,276 crore as on 31^st Mar 2018. Turnover in Export Factoring -2 Factor Model for 12 months ended FY2019 is equivalent to EUR 54 Mio (Previous Year EUR 59.15 mio). In I NR terms, the EF turnover touched Rs.440 crore for 12 months ended FY2019, as against Rs.452 crore in previous year.

8.    SBI PENSION FUNDS PRIVATE LIMITED (SBIPFPL)

SBIPFPL has been appointed as the Pension Fund Manager (PFM) along with seven others to manage the pension corpus under National Pension System (NPS). SBIPFPL is one of the three PFM appointed by the Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the NPS for Central Government (except Armed Forces) and State Government employees and one of the eight PFMs appointed for management of Pension Funds under the Private Sector. The total Assets Under Management (AUM) of the company as on 31^st March, 2019 was Rs.1,21,959 crore (YoY growth of 37%) against Rs.89,283 crore on 31^st March, 2018.

The Company maintained lead position amongst PFMs in terms of AUM in both Government and Private Sectors. The overall AUM market share in Private Sector was 59%, while in the Government Sector it was 35%.

The Company was adjudged “Silver Award” Winner as the Pension Manager of the year 2018 by Outlook Money. Awards by Outlook money have been adjudged to the Company for 4^th consecutive year in a row.

9. SBI GENERAL INSURANCE COMPANY LIMITED (SBIGIC)

SBIGIC is a joint venture between State Bank of India and IAG Australia in which State Bank of India holds a 70% stake. At its Executive Committee meeting of the Board, your Bank has approved the sale of 86.2 Lakh shares of Rs.10 each, equaling to 4% stake in its subsidiary SBI General Insurance Company Limited (SBIGIC) for Rs.482 crore. The proposed transaction values SBIGIC at over Rs.12,000 crore. The transaction completion is subject to regulatory approvals.

The cornerstone of the Company’s growth aspiration is focused on the Banca channel whilst developing other channels and products that meet business objectives and drive profitable growth. The Company has entered in to strategic tie-ups with four large car manufactures to drive growth in the Motor portfolio. Gross Written Premium (GWP) stood at Rs.4,717 for FY2019.

In the ninth year of operation, SBIGIC had achieved a profit, to the tune of Rs.334 crore. The Company recorded 32.83% of growth in GWP YoY against an industry growth of 12.95% including crop whereas excluding Crop, SBIGIC recorded growth of 12.4% against Industry growth of 12.6% for FY2019. SBIGIC has grown by 115.6% in Crop Insurance in FY2019 by participating in the PMFBY schemes and extending its geographies. The overall market share among all general insurance companies stands at 2.77% and 5.77% among private insurers (Excluding Standalone Health Insurers). The Company’s market ranking stands 13^th in the industry and 8^th among the private players (Excluding Standalone Health Insurers) in FY2019. SBIGIC occupies 2^nd position in “Personal Accident” both amongst private insurers and overall in the industry in FY2019. The company ranks 3^rd in “Fire” among private insurers and 6^th position in the industry in FY2019. Share of health business decreased from 13.3% to 10.9%. However, there is a growth to the tune of 8.6% for FY2019.

SBI General was awarded “Best General Insurance Company” and “Best Growth in General Insurance” at the Emerging Asia Insurance Awards 2018 organised by Indian Chamber of Commerce at Bangkok. SBI General has been conferred the title “General Insurance Company of the Year” at the India Insurance Summit & Awards 2019, which is the biggest strategic business summit for the entire insurance industry in India. SBI General has won the Gold Award in the category ‘Non-Life Insurance Provider of the Year 2018’at the 17^th edition of Outlook Money Awards. SBI General newsletters, ‘Network’and ‘Connect’, have received an award for “Best Content in Email Marketing Campaign for E-Newsletters” at the India Content Leadership conference and awards 2018, organised by Inkspell Media. The Company Chief Risk Officer was awarded the ‘CRO of the year’in the 2^nd Edition CRO Leadership Summit and Awards 2019.

10. SBI SG GLOBAL SECURITIES SERVICES PRIVATE LIMITED (SBI-SG)

SBI-SG, a joint venture between State Bank of India and Societe Generale with 65% holding by SBI. The Company was set up to offer high quality custodial and fund administration services to complete the bouquet of premier financial services offered by the SBI Group. SBI-SG commenced commercial operations in 2010. The Company’s Net Profit was Rs.34.45 crore as on 31^st March 2019 as against Rs.26.03 crore as on 31^st March 2018. Accumulated profit is Rs.79.90 crore.

Assets Under Custody as on March 2019 rose to Rs.5,40,919 crore from Rs.4,65,231 crore as on March 2018, while the Average Assets Under Administration were at Rs.3,18,197 crore in March 2019 as against Rs.2,53,867 crore in March 2018.

SBI-SG has been rated as one of the leading custodians in India in the Global Custodian magazine’s Agent Banks and Emerging Markets Survey 2017. SBI-SG has also been rated #1 custodian in India in the Global Investor/ISF Sub - Custody survey for 2017.

11.    SBI INFRA MANAGEMENT SOLUTIONS PRIVATE LIMITED (SBIIMS)

The SBIIMS is a wholly owned subsidiary incorporated on 17^th June 2016. The Company has since expanded its operation pan India w.e.f., 1^st July 2018 by setting 17 Circles Infra Offices at all SBI LHO Centres. Its Head Office is located at Raheja Chamber, Ground Floor Free Press Journal Marg Mumbai 400021.The Company is in the process of stabilising its operation at pan India level.

The aim of the company is to give specialised services on Civil, Construction, Electrical, Facility Management, Leasing of Premises etc. It also aims at relieving SBI Officials from dealing with Premise and Facility related issues and compliment it by giving specialised inputs. The company also instrumental in saving cost, manpower, time, and energy used to be consumed by SBI.

12.    SBI PAYMENT SERVICES PRIVATE LIMITED (SBIPSPL)

SBI Payment Services Private Limited (“SBIPSPL”) was incorporated on February 12, 2010 as a wholly owned subsidiary of State Bank of India (“SBI”) and was supporting SBI in conducting Merchant Acquiring Business (“MAB”). In order to build state-of- the-art technology platform domain expertise, innovation centre to design new products, improve customer service and to be future ready, SBI initiated the process to induct a global domain player in SBIPSPL.

During the year, SBI transferred MAB to SBIPSPL and selected Hitachi Payment Services Private Limited (“HPY”), indirect wholly owned subsidiary of Hitachi Limited Japan, as its Joint Venture partner with 26% stake.

The digital payments landscape in India is evolving at a rapid rate and SBIPSPL is playing an effective role in building momentum for transforming India through digitalisation of the economy. In sync with the focus of the Government of India to create a less-cash economy, SBIPSPL’s digital payment acceptance infrastructure is spread across the length and breadth of the country. During the year, a multi option payment acceptance device i.e., MOPAD was launched for facilitating payments via Cards/Bharat QR/UPI on a PoS terminal.

As on 31^st March, 2019, SBIPSPL has deployed 5.75 lakh PoS terminals, 4.18 lakh Bharat QR code and on-boarded 6.31 lakh merchants on BHIM-Aadhaar-SBI and acquired nearly 54 crore transactions during FY2019 with 24% Y-o-Y growth. The number of merchant payment acceptance touch points crossed 16.2 lakh. SBIPSPL has reported an EBITDA of Rs.14.19 crore as on March 31, 2019

Following services are also being offered by SBIPSPL to cater to the requirements of various merchants:

-    DCC-Dynamic Currency Conversion

-    EMI (Equal Monthly Installments)

-    Cash@POS

-    NFC acceptance on PoS terminals

-    Acceptance of AMEX/DINERS/DFS/ JCB/UPI Cards.

-    Electronic Toll Collection.

SBIPSPL is providing customised solutions to premium customers to suit their requirements by integrating with their technology platforms. Some of the notable integrations are with Indian Railways, SOUTHCO (Odisha), APDCL (Assam Power Distribution Co. Limited), Goa - GBSS project (Government of GOA), Cyber Treasury (Govt of Madhya Pradesh), IGR (Inspector General of Registrar) Pune, Noida and Nagpur Metro.

13. SBI FOUNDATION

SBI Foundation was established by State Bank of India in 2015 as a Section VIII company under Companies Act (2013) to undertake the CSR activities of SBI and its Subsidiaries in a planned and focused manner.

With an aim to give back to the society by working towards the socio-economic well-being of the marginalised and vulnerable communities, your Bank is actively working towards impacting people on grassroots level across PAN India with a vision to provide ‘Service Beyond Banking’.

SBI Foundation is presently working on various projects to build a momentum for a transforming India by creating an inclusive development paradigm that serves all Indians without any discrimination based on region, language, caste, creed, religion amongst others. The total CSR spend of SBI Foundation for FY2019 was Rs.16.46 crore. The grants received from Bank’s subsidiaries amounted to Rs.16.66 crore.

The Foundation undertook CSR activities in the following focus areas:

A. HEALTHCARE

SBI Foundation is committed towards contributing positively to United Nation’s Sustainable Development Goals (SDGs)-Goal#3: Good Health and Well Being by bringing about positive change in the lives of underprivileged sections of society by providing free access to quality healthcare. To contribute towards improving the health scenario, your Bank has continued the support to following CSR projects through SBI Foundation:

-    Life: An initiative to prevent and control Thalassemia disease by conducting free tests for around 20,000 people. 5.9% of the tested people were found to be positive.

-    Gift Hope, Gift Life: An initiative to augment deceased Organ Donation in India with a 24/7 toll free national helpline. Moreover, healthcare professionals (Doctors, Nurses, Surgeons amongst others.) were trained and massive awareness programs were conducted during the year.

-    Cancer Care: An initiative to prevent and control Breast, Cervical and Oral Cancer among women by conducting free Biopsy, Mammography and Colposcopy tests.

-    Darpan: An initiative to mitigate damages of Sickle Cell Anaemia disease by conducting free tests.

-    Anugraha: An initiative to provide support for home-based Hospice and Palliative Care services for the rural poor community.

-    Umeed: An initiative to provide crucial preventive care information for safe motherhood from gestation period to delivery and safe childhood for new born babies up to one year of age by use of mMitra- a free mobile voice call service.

B.    EDUCATION

Education is one of the most powerful and proven vehicles to bring transformational change in the development of marginal segment. It plays a vital role in improving the standard of living of an individual and is viewed as an effective tool for bringing socio-economic changes. However, scarcity of resources and lack of infrastructure are the major hindrances in the education sector in India. SBI Foundation is committed to contribute positively to United Nation’s Sustainable Development Goals (SDGs) Goal#4: Quality Education. Through SBI Foundation, your Bank has initiated various projects as mentioned below:

Peepul School Adoption Program: Under this project, a Model school is set up in a public private partnership (PPP) aiming to raise the standard of education and improving learning outcomes in government schools through a total school transformation approach.

Khelwadi: Under this project, 20 Khelwadis are being operated focusing on the aspects of education such as personality building, creative thinking amongst others, for an all-round development of students.

C.    ENVIRONMENT AND SUSTAINABILITY

State Bank of India is committed towards environment protection and to reduce its carbon footprints. Hence, your Bank prioritises responsible interaction with environment to avoid depletion and degeneration of natural resources to maintain its long-term quality.

Waste to gold: An initiative to motivate and develop the skills of vulnerable youth to address waste management in the city; and develop small sustainable businesses for their livelihood.

SBI Corbett: An initiative to provide villages a sustainable waste management system and conduct trainings of SHG Workers to spread awareness in nearby schools and hotels.

Swachh Belur Math: SBI Foundation supported Ramkrishna Mission for construction of 201 toilets at new Pilgrims Abode in Belur Math that will serve 13 lakh visitors each year. To provide sanitation facilities to visitors of the holy Ramkrishna Mission that witnesses thousands of pilgrims a day, SBI Foundation contributed Rs.1.67 crore to this project.

Beat Plastic Pollution: State Bank of India’s Local head Office (LHO) Mumbai organised Cleanliness Drive with the theme ‘Beat Plastic Pollution’, on the eve of “World Environment Day” at Dadar Beach near Chaitya bhoomi. More than 125 staff members actively participated under the leadership of Mr P. K. Gupta, MD (Retail and Digital Banking) and cleaned the plastics and other wastes on Dadar Beach and collected 2 tractor load of garbage.

Plastic free organisation: State Bank of India announced to be a plastic free organisation as part of Bank’s sustainability commitment. This major initiative by your Bank is in sync with the Honourable Prime Minister’s Swachh Bharat Abhiyan and the national commitment to abolish single use plastic by the year 2022. In the next 12 months, SBI will be undertaking phase wise steps to become plastic free. PET water bottles will be replaced with water dispensers at all its offices and meetings. Your Bank will also start using standardised paper folders replacing the plastic ones. Moreover, it will replace single use plastic cutleries and containers in its canteens with those made from biodegradable substances.

D. ARTS, CULTURE,

HERITAGE AND OTHERS

India has a rich legacy of arts, culture and heritage and your Bank is committed to preserve them.

-    Swachh Iconic CSMT: To achieve the dual goals of preservation of culture and heritage and contribute to “The Swachh Iconic Places” initiative, your Bank has initiated a project named “SBI Swachh Iconic CST”, an initiative for Conservation and Restoration of South and East Fagade of the Heritage Building at Chhatrapati Shivaji Maharaj Terminus Mumbai, A UNESCO World Heritage Site.

-    SBI Eklavya: An initiative to provide basic sports facility to the children studying in ashram schools.

E. FLAGSHIP PROGRAMS

SBI Youth for India Fellowship program: SBI Youth for India (YFI) is a Fellowship program initiated, funded and managed by the SBI Foundation, SBI Capital Markets and SBI General Insurance. It provides a framework for India’s best young minds to join hands with rural communities, empathises with their struggles and connects with their aspirations.

Under the initiative, SBI Foundation has partnered with the reputed NGOs, engaged in the developmental work of rural areas, to deploy the youth enrolling for the fellowship, for conceiving and working on innovative projects. YFI has an alumni base of 254 passionate change makers, 70% (approximately) of Alumni are associated with the development sector after the fellowship.

Centre of Excellence for Persons with Disabilities (PwDs) (CoE):

Majority of differently abled persons can lead a better quality of life if they have equal opportunities and effective access to rehabilitation measures. There was an increasing recognition of the abilities and emphasis on mainstreaming them in the society based on their capabilities. CoE, conceptualised with an aim to be a centralised support centre for differently able persons, works on empowering PwDs through skill enhancement to make a significant and measurable improvement that enables a more productive and satisfying life by optimising their cognitive, physical, social, and vocational functioning.

CoE has conducted 11 inclusive training programs for employees with disabilities and their trainers having 10 public sector Banks as participants. CoE has also signed MoUs with Bank of Baroda, Union Bank of India, Vijaya Bank and State Bank of India for the institutionalisation of inclusion and empowerment of employees with disabilities.

CoE has set up a skill centre under its ‘Swabhiman’project for placement linked skill development of PwDs. It has also initiated project ‘Shravan Shakti’to support surgery for fitment of Cochlear implants for hearing impaired children.

Gram Seva:

For the holistic development of the villages, SBI Foundation has adopted 10 Gram panchayats covering 50 of villages in six states of India. Integrated village development is aimed to promote education for all, environment protection, livelihood development, digitisation in Gram Panchayat, skill development and improvement of preventive and primary health care in villages. Over 11,000 families are benefiting from this project.

The objectives of the flagship program are:

-    To link and leverage the specific government schemes/services to villages

-    To lay emphasis on digitalisation and create awareness about online banking

-    Improve the basic infrastructure of villages

-    Encourage Panchayat/Village selfgovernance and create environment for participatory efforts by the people for rural asset creation and community development.

SBI Foundation has won two national level awards during this year for its CSR initiatives.

Name of the	Category
Award	Â
SKOCH CSR	Best CSR Practices
Awards	(Gold) - For Gift Hope,
Â	Gift Life project
ICC Social	Empowering Rural
Impact	Population- For Gram
Awards	Seva project

14. REGIONAL RURAL BANKS (RRBs)

Ownership Percentage of SBI In RRBs sponsored by SBI

35.00%	1.	Andhra Pradesh Grameena Vikas Bank
35.00%	2.	Arunachal Pradesh Rural Bank
35.00%	3.	Chhattisgarh Rajya Gramin Bank
35.00%	4.	Ellaquai Dehati Bank
35.00%	5.	Langpi Dehangi Rural Bank
40.37%	6.	Madhyanchal Gramin Bank
35.00%	7.	Meghalaya Rural Bank
35.00%	8.	Mizoram Rural Bank
35.00%	9.	Nagaland Rural Bank
35.00%	10.	Purvanchal Bank
35.00%	11.	Saurashtra Gramin Bank
37.15%	12.	Utkal Grameen Bank
35.00%	13.	Uttarakhand Gramin Bank
35.00%	14.	Vananchal Gramin Bank
35.00%	15.	Rajasthan Marudhara Gramin Bank
35.00%	16.	Telangana Grameena Bank
35.00%	17.	Kaveri Grameena Bank

RRBs Sponsored by SBI

With more than 2/3^rds of our country’s population living in Rural - India, it presents a huge yet under tapped opportunity for the Indian Banking Sector. Our large network of sponsored Regional Rural Banks (RRBs) is well placed, to play a larger role and have a great potential to address this scenario. Regional Rural Banks have a distinct competitive advantage, due to their large account base and decades of trust-earning service tradition, resulting in close proximity to the rural customers.

-    The State Bank has sponsored (17) Regional Rural Banks operating at regional levels in (17) different States. These RRBs have a combined branch strength of (5,647) spread across (215) Districts. (as on 31^st March 2019).

-    State Bank of India holds 35% stake in each of them except Madhyanchal Gramin Bank (40.37%) and Utkal Grameen Bank (37.15%) as on 31.03.2019 due to delayed infusion of proportionate share capital by Govt of India, with Government of India holding 50% and the respective State Governments holding the remaining 15% stakes.

-    The Sponsored RRBs of SBI are on CBS platform and offer banking services on par with any other commercial Banks operating in the country. The Banks have adopted the best practices and are well placed to handle the ever-evolving demands of customers, particularly in Rural and Semi-urban space, through their customer centric approach.

Business Highlights of FY2019 (As on 31.03.2019):

-    The aggregate deposits and advances of the (17) RRBs (sponsored by the Bank) as on (31^st March 2019) stood at C103,258 cr) and C61,741 cr) respectively.

-    During the year under review, despite the persistently challenging macroeconomic environment, the Bank improved its business, with Deposits growing by (10.80%) and Advances by (10.64%) over the previous year. (up to 31^st March 2019). As a planned strategy to diversify to the portfolio, RRBs expanded their Housing Loan exposure by 26% to take the portfolio to Rs.6599.00 cr.

-    During FY2019, the RRBs together have posted a Net-Loss of C113.81 crs) due to substantial provision of Pension. RRBs have generated gross profit of Rs.1846.75 cr (Profit before Tax and Pension provisions) which was 88% higher than the previous year. However, on account of Provisions towards Pension liability (Rs.1811.76 cr), the Post Tax Net Profit slid to (-) Rs.113.81 cr as against Net Profit of Rs.584.03 crs in FY20118. The Banks continue to focus on improving earnings from their core banking business, strengthening the fee income streams, and maintaining control on operating costs.

-    The combined Gross NonPerforming Assets ratio of the RRBs has improved to (6.92%) in current Financial year as against 8.60% in the previous FY. Net NPA stands at (3.35%) as against (4.53%) in the previous FY.

-    Business per employee during the FYimproved to C7.48 Crs) (as on 31^st March 2019) as against Rs.6.78 Crs in the previous FY.

Major Developments in FY2019:

The year under review witnessed several significant events, some of which are listed below:

-    In January 2019, in line with a Government of India decision to amalgamate all RRBs operating in the state of Punjab, ‘Malwa Gramin Bank’, an RRB in which the Bank had 35% stake, was amalgamated with Punjab Gramin Bank, an RRB sponsored by Punjab National Bank, through a scheme of arrangement as facilitated by Ministry of Finance, Government of India. This event brought down the number of Sponsored RRBs in our fold from 18 to 17.

-    Similarly, Govt. of India has issued notification for amalgamating two of our RRBs namely Kaveri Grameena Bank and Langpi Dehangi Rural Bank with RRBs sponsored by other Banks w.e.f. 01.04.2019.

-    The 17 RRBs marginally expanded their branch network to reach 5,647 branches, as against 5,620 branches at the beginning of the year. The existing Branch network is expected to work more efficiently in the upcoming years, thanks to the introduction of Asset Management Hubs (AMHs) - a Centralised Credit Processing system.

-    The RRBs have opened 168 Asset Management Hubs (AMHs) in the Financial Year, which will henceforth facilitate in processing and sanction of quality loan proposals, thus helping to improve the asset quality of the Banks.

-    An RRB IT Tech Cell has been established at Hyderabad. This hub will act as a single point ‘solution center’for undertaking and responding promptly to the IT requirements/challenges faced at the RRBs. Several of the RRBs have well established in-house IT cells and the Hub will act as a control center for standardising, exchanging and facilitating collaborative development of IT products and solutions between the RRBs.

Schedule V, Part B - Management Discussion and Analysis:

In terms of compliance with the SEBI (Listing Obligations & Disclosure Requirements) (Amendment) Regulations 2018, following ratios have changed by more than 25%, as per details given below:

(In %)	Mar-18	Mar-19	Variation (bps)	% Change
Net Profit Margin	-2.47	0.31	278	+112.55
Return on Net worth	-3.78	0.48	426	+112.70

Net Profit Margin:

The Net Profit has registered YoY growth of 113.17% (from Loss of Rs.6,547 Cr in FY18 to Net Profit of Rs.862 Cr during FY19) as against YoY growth of only 5.49% in Total Income (from Rs.2,65,100 Cr in FY18 to Rs.2,79,644 Cr in FY19).

Return on Net worth:

The Net Profit has registered YoY growth of 113.17% (from Loss of Rs.6,547 Cr in FY18 to Net Profit of Rs.862 Cr during FY19) as against a meager YoY growth of 0.77% in Net worth of the Bank (from Rs.1,77,191 crore in FY18 to Rs.1,78,552 crore in FY19).

VI.RESPONSIBILITY STATEMENT

The Board of Directors hereby states:

i.    that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii.    that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of your Bank as on the 31^st March 2019, and of the profit and loss of Your Bank for the year ended on that date;

iii.    that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of your Bank and preventing and detecting frauds and other irregularities;

iv.    that they have prepared the annual accounts on a going concern basis;

v.    that the internal financial controls had been laid down, to be followed by your Bank and that such internal financial controls are adequate and were operating effectively; and

vi.    that proper system had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

VII. ACKNOWLEDGEMENT

During the year, Shri B. Venugopal was elected by the Shareholders as Director on the Board u/s 19(c) of the SBI Act, 1955 w.e.f. from 7^th June 2018.

Shri Arijit Basu was appointed as Managing Director on the Board w.e.f. 25^th June 2018 and Shri B. Sriram resigned from the Board w.e.f. 29^th June 2018. Smt Anshula Kant was appointed as Managing Director on the Board w.e.f. 7^th September 2018.

Dr Girish Ahuja and Dr Pushpendra Rai have been re-nominated by GOI as Directors u/s 19(d) of the SBI Act, 1955 w.e.f. 6^th February 2019.

The Directors place on record their appreciation for the contributions made by the outgoing Managing Director, Shri B. Sriram to the deliberations of the Board. The Directors welcome the new Managing Directors, Shri Arijit Basu and Smt Anshula Kant and Director, Shri B Venugopal on the Board.

The Directors also express their gratitude for the guidance and co-operation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, Banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support and take this opportunity to express their appreciation for the dedicated and committed team of employees of the Bank.

                                                                                                              For and on behalf of the

                                                                                                          Central Board of Directors

                                                                                                                                     Chairman

Date: 10^th May 2019

---

Mar 31, 2018

I. ECONOMIC BACKDROP AND BANKING ENVIRONMENT

GLOBAL ECONOMIC SCENARIO

Global economic activity gathered momentum in the second half of last year and it continues to grow in 2018. World GDP growth recovered to an estimated 3.8% in 2017 compared to 3.2% in the previous year. Both the developed and the developing countries performed well, growing at 2.3% and 4.8% respectively. The US economy grew more than expected against the backdrop of abatement of past exchange rate appreciation impact and oil price movement coupled with support from good consumption growth and rebound in investment. Euro area also surprised positively witnessing its fastest pace of growth in a decade and surpassing the US growth in 2017. The uncertainty surrounding Brexit weighed on the UK economy, however it recovered in the final months of the year. In Japan, improved global demand for technological products stimulated investment in high-end sectors including auto, machinery including robots and semi-conductors.

Among the emerging and developing world, economic contraction ended in Russia and Brazil, thereby adding to growth. However, despite improvement in oil dynamics Saudi Arabia witnessed negative growth owing to low oil output and sluggish performance of non-oil sector. Even Mexico suffered against the backdrop of uncertainty surrounding NAFTA and presidential elections. Meanwhile, China witnessed its first annual acceleration since 2010 with export growing at their quickest pace in four years.

India’s GDP growth is expected to have moderated to 6.6% in FY2018. However, this is likely to be transitory. Meanwhile, Government reforms continue to provide support to aggregate demand.

Looking ahead, as per IMF projections the world economy is poised to grow at 3.9% in 2018 as well as 2019. However, looming threat of trade wars against the background of increase in tariffs by the US and retaliation by China is one of the risks to global growth. World trade is recovering smartly in 2017, registering a growth of around 10% and 11% for exports and imports respectively, but rising protectionism and trade war can threaten trade and economic growth. In addition, uncertainty surrounding elections in many

European countries including Russia, Italy, Hungary among others and escalation of sanction issue in Iran are other key risks that could dampen the growth prospects.

Another major development having an impact on global economy is the oil price which has recovered to over US$ 80 per barrel recently. Looking ahead, geo-political tensions in middle-east with probable sanctions on Russia may affect oil price dynamics.

INDIA’S ECONOMIC SCENARIO

India’s economic growth is expected to gather momentum in FY2019, benefitting from a conducive domestic and global environment. The factors that will help in achieving 7.4% GDP growth in FY2019 compared to 6.7% in FY2018 are: (i) the troubles relating to implementation of the GST have been sorted out, (ii) credit off-take has improved and is becoming increasingly broad-based, (iii) large resource mobilization from the primary market strengthening investment activity, (iv) the process of recapitalization of PSBs and resolution of distressed assets under the Insolvency and Bankruptcy Code may improve the business and investment environment, (v) global trade growth has accelerated, which should encourage exports and reduce the drag from net exports, and (vi) the thrust on rural and infrastructure sectors in the Union Budget 2018-19 could rejuvenate rural demand and also encourage private investment.

Inflation, both CPI and WPI remain under control for entire FY2018. Average CPI was 3.6% in FY2018 compared to 4.5% in FY2017, while the corresponding figures for WPI are 2.9% and 1.8%, respectively. Assuming a normal monsoon and no major exogenous/policy shocks, CPI is expected to remain in the range of 4.04.5% for FY2019 and even go below 3.5% for some months in Q3 FY2019. Major risks to the inflation outlook are crude oil and other commodity prices and fiscal slippage at both the central and state levels.

For the third consecutive year, Indian Meteorological Department (IMD) has forecasted that monsoon would be “Normal” or around 97% of Long Period Average (LPA) with an error of ± 5% and with a fair distribution of rainfall across major parts of country in 2018.

As a result of normal rainfall during monsoon 2017 and various policy initiatives taken by the Government, the country has witnessed record food grain production at 279.50 million tonnes for FY2018, 1.6% higher than the previous record achieved in FY2017 (275.1 million tonnes). The production of rice, pulses and coarse cereals touched new highs during the year, but wheat production declined.

Gross value added in the industrial sector at basic prices decelerated to 6.8% in FY2018 from 9.8% in FY2017. The slowdown in FY2018 was due to a sharp deceleration in mining and quarrying. In the mining sector, contraction was on account of slowdown in its key constituents such as coal and natural gas production, and decline in crude oil output. The growth of manufacturing, on the other hand, improved with the waning of the transient effects of GST.

On the external front, the current account deficit (CAD) increased to 2% of GDP (US$ 13.5 billion) in Q3 FY2018 from 1.4% of GDP (US$ 8.0 billion) a year ago. For FY2018, we believe CAD would be around 1.8% of GDP compared to 0.7% of GDP in FY2017. This slight increase in CAD during FY2018 is due to US$ 156.8 billion trade balance, which is at a 5-year high.

BANKING ENVIRONMENT

FY2018 remained an eventful year for the banking fraternity. Asset quality, resolution of stressed assets and muted credit growth in H1 continued as major challenges for most banks during the current year. Higher NPAs impacted interest income adversely and led to elevated provisions, thus putting pressure on the profitability of banks. Further, some Public Sector Banks (PSBs) have been put under the Prompt Corrective Action (PCA) framework of RBI, which puts restrictions on key areas viz. dividend payment, branch expansion, etc.

After remaining depressed for nearly two years, the bank credit built upon the uptick that started around June, 2017 and expanded in double digits from December, 2017. The resurgence in credit growth was observed across bank groups, though the pace of growth continues to vary among bank groups. The YoY growth rate of bank credit for ASCBs was 10% as on 30^th March, 2018. Credit extended by private sector banks is higher than PSBs, while credit extended by foreign banks has returned to positive territory after a long contraction. Credit to sectors is becoming broad-based, with off-take by industry turning positive after a protracted period of contraction. Due to the continued stress in other sectors, most of the banks made efforts to lend to retail sector, which registered reasonably good growth, with most banks expanding their retail loan book. However, with resolutions through National Companies Law Tribunal (NCLT) expected to gather momentum and global growth and private investment in India beginning to pick up, green shoots of credit demand have started appearing. On the other hand, the aggregate deposits growth (YoY) continued to decline and is at 54-year low of 6.2%, due to the base effect and currency withdrawal by public.

During the last quarter of FY2018, the bond yields continued to firm up which hit severely the banks’ balance sheet, due to the mark-to-market losses incurred by the banks in their investments. In the post-demonetization period, banks have invested a huge amount of money in Government bonds due to tepid credit growth. In Q3 FY2018 quarterly results, most of the banks have reported a loss due to their higher provisioning against the mark-to-market losses in investments in Government bonds. To ease the pressure, RBI recently has advised the banks to do the mark-to-market loss provisioning in the next four quarters.

On a positive note, in the year, the Government took a significant step to capitalize PSBs in a front-loaded manner, with a view to support credit growth and job creation. This entails the mobilization of capital to the tune of about Rs, 2.11 lakh crore over two years, through budgetary provisions of Rs, 18,139 crore, recapitalization bonds to the tune of Rs, 1.35 lakh crore, and the balance through raising of capital by banks from the market while diluting non-Government equity (estimated potential Rs, 58,000 crore). The other possibility is to raise funds through rights issue to maintain parity of holdings. Going by the MoF (Ministry of Finance) estimates, the Rs, 1.35 lakh crore package seems largely adequate. In FY2018, Government has notified Rs, 80,000 crore recapitalization bonds to capitalize 20 PSBs for meeting their regulatory capital requirement and growth needs.

State Bank of India has merged its five associate banks and Bharatiya Mahila Bank Ltd. with itself from 1^st April, 2017. This is the first such large scale consolidation in the Indian Banking industry. With this merger, your Bank is ranked at the 54 position among the top 1,000 global banks, as per the global ranking by “The Banker” in July 2017. This merger helped your Bank to reduce 1,805 branches and rationalized 244 administrative offices, which saves around Rs, 1,099 crore per annum. We believe that the long-term benefits of the merger will significantly outweigh the near term challenges and the efficiencies generated through the merger will help the Bank to sustain the mission of being an enduring value creator.

Meanwhile, under the Pradhan Mantri Jan Dhan Yojna (PMJDY), banks have opened 31.4 crore accounts with Rs, 79,012 crore deposits (around 6% of the total demand deposits of the ASCBs) till 4^th April, 2018 deposited in their accounts. Out of the 31.4 crore accounts, PSBs have opened 25.4 crore accounts, RRBs have opened 5.1 crore accounts, whereas private sector banks (PrSBs) have opened only 0.9 crore accounts. This indicates that PSBs have accepted the responsibility and have fulfilled their promises in a record time. On a positive note, zero balance accounts under PMJDY have been continuously declining from 76.8% in September, 2014 to around 20% now. PMJDY has also helped the implementation of the Mudra Yojana with Rs,5.28 lakh crore distributed to 11.96 crore beneficiaries in the last 3-years. In an in-house study within your Bank, we have found that there is a traction across Jan Dhan and Mudra accounts.

In regards to competition, while the new breed of Payment and Small Finance Banks, which have started functioning, are still in the process of fine tuning their business models, the Fintech companies with disruptive technologies and having capabilities to address specific pain-points of financial customers, such as remittance, credit and savings, have emerged as a challenge to the banking system.

OUTLOOK

The coming years will be very challenging for the banking system as a whole. The operating environment has become increasingly complex. Although, resolution of stressed assets has progressed satisfactorily, the final outcome will take some more time to reflect in the P&L. This delay is mainly because new laws take some time to mature in practice. However, the structural transformation of banks must move beyond the NPA resolution and address other pressing issues, such as frauds, customer retention and servicing, human resource, cyber security and governance.

The policy initiatives over the last four years have gathered momentum with far reaching structural transformation in all sectors. GST is moving to the next phase with the introduction of e-ways module. Infrastructure growth has notably picked in roads, civil aviation and railways. Digitalization will gather pace as evident from the Report of the Taskforce on Artificial Intelligence. It is unlikely that banks will escape these transformations. Digitalization of banking process will continue during the next year creating new improved service experience. With capital infusion, it is now up to the banks to grab the opportunity and deploy technology in addressing some of the pressing issues mentioned above.

The external environment nevertheless has become uncertain, despite a positive outlook on growth. Trade wars, which are a sign of renegotiation of the old order, have become more acute. The situation will continue in the same direction in 2018. Thus, across the world, banks have revisited their foreign business strategy in line with growing risks. Such cautions prevails among Indian banks as well. The Government of India has advised banks to rationalize their foreign branches. However, this does not constitute a blanket withdrawal but a more realistic strategy in line with changing trade patterns of the country. This rationalization in foreign business will therefore continue.

The coming year will be the last year after which general elections are due. However, we do not expect that policy direction will markedly turn populist. The fiscal and monetary conditions will continue to remain stable even if there are momentary aberrations. But the challenge will lie in taking a decision amid growing uncertainty. Overall the NPA resolution is in sight and the time is opportune for tough and strategic decision making.

ASSETS AND LIABILITIES

The total assets of your Bank have increased by 27.67% from Rs, 27,05,966.30 crore at the end of March 2017 to Rs, 34,54,752.00 crore as at the end of March 2018. During the period, the loan portfolio increased by 23.16% from Rs, 15,71,078.38 crore to Rs, 19,34,880.19 crore. Investments increased by 38.51 % from Rs, 7,65,989.63 crore to Rs, 10,60,986.71 crore as at the end of March 2018. A major portion of the investment was in the domestic market in government securities.

Your Bank’s aggregate liabilities (excluding capital and reserves) rose by 28.52% from Rs, 25,17,680.24 crore as on 31^st March, 2017 to Rs, 32,35,623.44 crore as on 31^st March 2018. The deposits rose by 32.36% and stood at Rs, 27,06,343.28 crore as on 31^st March 2018 against Rs, 20,44,751.39 crore as on 31^st March 2017. The borrowings also increased by 13.99% from Rs, 3,17,693.66 crore, at the end of March 2017 to Rs, 3,62,142.07 crore as at the end of March 2018.

NET INTEREST INCOME

Net interest income increased by 21.01% from Rs, 61,859.74 crore in FY2017 to Rs, 74,853.71 crore in FY2018. Total interest income has increased from Rs, 1,75,518.24 crore in FY2017 to Rs, 2,20,499.31 crore in FY2018 registering a growth of 25.63%.

Total interest expenses have increased from Rs, 1,13,658.50 crore in FY2017 to Rs, 1,45,645.60 crore in FY2018. Interest expenses on deposits during FY2018 recorded an increase of 28.53%, compared to the previous year.

NON INTEREST INCOME AND EXPENSES

Non-interest income increased by 25.77% to Rs, 44,600.69 crore in FY2018, as against Rs, 35,460.93 crore in FY2017. During the year, your Bank received an income of Rs, 448.52 crore (Rs, 688.35 crore in FY2017) by way of dividends from subsidiaries and joint ventures in India and abroad, and Rs, 13,423.35 crore (Rs, 10,749.62 crore in FY2017) by way of profit on sale of investments, an increase of 24.87%. Cost to Income ratio is 50.18% in FY2018 as compared to 49.54% in FY2017.

OPERATING PROFIT

Your Bank registered a growth of 17.04% in Operating Profit in the current financial year. The Operating Profit of your Bank for FY2018 was at Rs, 59,510.95 crore as compared to Rs, 50,847.90 crore in FY2017. Your Bank posted a Net Loss of Rs, 6,547.45 crore for FY2018, as compared to profit of Rs, 10,484.10 crore in FY2017 due to higher provisioning requirements on NPAs, MTM losses in HFT and AFS portfolio, additional employee benefits provisions etc.

PROVISIONS & CONTINGENCIES

Major provisions made in FY2018 were as under:

II. FINANCIAL PERFORMANCE

ACQUISITION OF ERSTWHILE DOMESTIC BANKING SUBSIDIARIES (E-DBS) & BHARATIYA MAHILA BANK LIMITED:

Your Bank has acquired five domestic banking subsidiaries (DBS) of SBI; namely (i) State Bank of Bikaner & Jaipur (SBBJ), (ii) State Bank of Mysore (SBM), (iii) State Bank of Travancore (SBT), (iv) State Bank of Patiala (SBP), (v) State Bank of Hyderabad (SBH); and Bharatiya Mahila Bank Limited (BMBL) with effect from 01^st April, 2017.

The merger of DBS & BMBL with SBI, has been accounted under the ‘pooling of interest’ method as per Accounting Standard 14 (AS 14), “Accounting for amalgamation” and the approved Scheme of Acquisition. Pursuant thereto, all assets and liabilities of the transferor Banks have been recorded in the books of SBI at their existing carrying amounts as on effective date. The net difference between share capital of transferor banks of e-DBS & BMBL and corresponding investments by SBI and cash in lieu of fractional entitlement of shares have been transferred to Capital Reserve.

The total assets taken over are as under:

Rs, 70,680.24 crore for non-performing assets (as against Rs, 32,246.69 crore in FY2017), write back of Rs, 3,603.66 crore towards Standard Assets (as against provision of Rs, 2,499.64 crore in FY2017), Rs, 8,087.57 crore towards Investments Depreciation (as against Rs, 298.39 crore in FY2017).

RESERVE & SURPLUS

Since the Bank has incurred loss in FY2018, no amount (as against Rs, 3,145.23 crore in FY2017) has been transferred to Statutory Reserves. An amount of Rs, 3,288.88 crore (as against Rs, 1,493.39 crore in FY2017) has been transferred to Capital Reserves. An amount of Rs, 1,165.14 crore (as against Rs, 143.69 crore in FY2017) has been transferred from Investment reserve to Revenue and other Reserves and Rs, 192.32 crore from Revaluation Reserve to General Reserve.

(Rs, in crore)

Particulars	Total
Cash & balances with RBI	32,743.73
Balances with Banks & Money at Call & Short Notice	66,680.19
Investments	1,76,603.55
Advances	2,97,884.25
Fixed Assets	6,987.51
Other Assets	38,012.45
Total Assets	6,18,911.68

 

REVALUATION OF FIXED ASSETS

Your bank has reversed the effect of revaluation amounting to Rs, 11,210.94 crore made in earlier periods in the value of certain leasehold properties, which has resulted in write back of depreciation charged in previous year amounting to Rs, 193.24 crore. Consequential effect on capital adequacy ratio arising from the above has been made in the results for the year ended March, 2018.

Since the figures of the current period include the results of the branches of these Banks, the figures of the previous period are strictly not comparable.

PROGRESS ON IMPLEMENTATION OF IND AS

RBI, in its press release dated 5^th April, 2018, has deferred implementation of Ind AS by one year till 1^st April, 2019. Earlier, RBI had issued a road map for implementation of Ind AS for Banks in India for accounting periods beginning from 1^st April, 2018.

A Steering Committee headed by Managing Director (Risk, IT & Subsidiaries) is monitoring the progress in implementation of Ind AS in the Bank to ensure a smooth transition to Ind AS as per the time schedule.

1. RETAIL & DIGITAL BANKING GROUP

III. CORE OPERATIONS

The Retail & Digital Banking Group is the largest business vertical of your Bank, anchoring 96% of total Domestic Deposits, and 57.53% of total Domestic Advances, as of 31^st March, 2018. The Group comprises seven strategic business units and is the largest in terms of its branch network and human resources.

Retail Banking is playing an increasing role in customer acquisition and CASA growth. Your Bank continues to see a strong momentum in the addition of retail deposit customers and consequently, a steady growth in the retail deposits base. Simultaneously, to meet the aspirations of this growing customer base, retail assets are being strategically positioned with a view to occupying a much larger proportion of total advances. Within the retail portfolio, Home and Auto loans are the major contributors. Your Bank is also the largest dispenser of education loans, which demonstrates its unflinching commitment to serve the society at large.

A steady stream of technology driven innovations necessitated by changing customer preferences are transforming the retail banking landscape. Your Bank has a multi-channel delivery model, which allows it to offer its customers a choice to carry out transactions through any channel, at any time and at any place. In FY2018, your Bank increased its offerings across various channels -digital, mobile, internet, social media, in addition to branches, ATMs and Customer Service Points.

With collective efforts across functions, especially operational level, your Bank has streamlined a number of key issues surrounding the Bank. Amidst heightened concern on future regulatory requirements, cost of funds, fast changing consumer preferences, intensifying competition and profitability pressure, your Bank has made a road map towards profitability-oriented performance management. As a way forward to achieve this, your Bank has introduced Return on Risk Weighted Assets (RoRWA) budgeting including bench marking efficiency parameters.

With a view to increase the profitability and Return on Assets (ROA), curtailment of overheads has always been the prime focus of your Bank. With this objective of containing costs, especially in the post-merger scenario, your Bank has conducted various audits like Space Audit, Energy Audit, Telephone Audit and Internet Audit, to name a few, in erstwhile Associate Bank (e-ABsRs,) branches.

Your Bank accords highest priority towards creating an environment of increased risk awareness at all levels. It also aims at constantly safeguarding the appropriate security measures, including cyber security measures, to ensure avoidance or mitigation of various risks. Your Bank is equipped with a Disaster Recovery/Business Continuity Plan (BCP) across all branches and offices to render uninterrupted services in the event of any possible business disruption.

A. PERSONAL BANKING

The significant transformation of the banking industry in India is clearly evident from the changes that have occurred in the financial market. Disruptive innovations in the technological and digital banking products has opened up new vistas for banks to augment revenues and enhance customer delight. This has entailed greater competition and consequently greater risks. Cross-border flows and entry of new products have significantly impacted the domestic banking sector. This is paving the way for innovative product mix, and also necessitates rapid changes in the process and operations to remain competitive. These developments have facilitated greater choice for consumers, and subsequently requires adoption of a strong and transparent, prudential, regulatory, supervisory, technological and institutional framework in the financial sector at par with international best practices.

Your Bank offers a wide range of services in the Personal Banking Segment as mentioned below:

1. Home Loans

Your Bank has the largest Home Loan portfolio in the country, with a market share of 32.13% as on 31^st March 2018, amongst All Scheduled Commercial Banks (ASCBs). Home Loan portfolio constituted 18% of the Whole Bank Advances as on 31^st March 2018.

Total Home Loan and Home Loan Related portfolio as on 31^st March 2018 stood at Rs, 3,41,081 crore.

During the current financial year, there were internal challenges with the merger of five Associate Banks and Bharatiya Mahila Bank Ltd. with your Bank. Further, slowdown in project launches, due to the teething problems in implementation of RERA, impacted business during the first half of the year. Your Bank undertook initiatives to streamline the operations post merger, and the growth revived back in second half of the year despite slow down in the Home Loan market. Various initiatives were taken up during the year to provide superior experience to a home buyer and maintain its position of the most preferred Home Loan provider. Some of the key initiatives undertaken during the year are as under:

To meet the customer expectations of better and faster delivery, your Bank undertook:

-    Home Loan Customer Connect Programme, through which the Bank reached out to over 1 lakh Home Loan Customers across the country, to thank them for their continued patronage and to offer after-sales services.

-    Assured Turn-Around-Time Drive, resulted in reduction of average turnaround time (TAT) of Home Loan Sanction to 9 days for the month of March 2018. This TAT is comparable to the best in the industry.

-    Increased number of feet-on-street to provide door step service at more than 25 centres.

The rise in internet penetration and faster adoption of internet has necessitated easy access to information at the touch of customers’ fingertips. To fulfill these needs, your Bank launched two websites this financial year:

-    SBI Home Loans website (https://homeloans.sbi): It is an exclusive website for Home Loans which apprise customers with instant information regarding Bank’s home loan products. It also provides customers with pre and post sales services, including Application for Disbursement, Statement of Accounts, Next Installment Due Date and Interest Rate History, among others.

- SBI Realty Website (www.sbirealty. in): This website showcases your Bank’s approved projects across India to prospective home buyers. It helps to bring together developers and buyers on a single platform, giving buyers the access to the deals on SBI approved projects.

Affordable Housing is a thrust area of the Government to bridge the huge demand-supply gap of houses in India. Your Bank has been working in tandem to fulfill the mission of “Housing for All” by 2022, by facilitating affordable housing to home buyers. Few initiatives in this regard are as follows:

-    The launch of “SBI Grih Nirman Affordable Housing Project Finance Scheme” with attractive features to tap the emerging potential for financing affordable Housing Projects and is especially geared towards first-time home buyers.

-    Partnered with CREDAI in an event where 375 affordable housing projects were launched by builders across India.

-    Sanctioned 37,007 home loans under PMAY scheme, aggregating to Rs, 7,997 crore during the financial year.

Your Bank is helping upgrade the living standards of its customers by providing auto loans and making owning a car affordable. These auto loan products of your Bank are available in many variants to suit the requirements of various customer segments - salaried, businessmen, self-employed, professionals, senior citizens, NRIs, agriculturists and existing borrowers, among others. Multi-channel sourcing of proposals and faster TAT has made the auto loan products highly popular. This has helped your Bank to increase its penetration in financing cars sold by various manufacturers such as Maruti, Hyundai, TATA Motors, to name a few. The market share of your Bank in Car Loans has also gone up from 33.77% as on 31^st March, 2017 to 34.97% as on 31^st March, 2018.

3. Education Loans

Education is the key growth driver for any economy as it helps create skilled and productive human resources who contribute to the development of the nation. Your Bank takes pride in being the largest Education Loan provider in the country. It has helped 56,042 meritorious students during the financial year to realise their dreams by providing financial assistance to the tune of Rs, 4,949 crore (out of which 35% of the loans have been extended to girl students). In order to broaden the scope of Education Loans to book quality business and enhance customer satisfaction as under, your Bank has taken various steps:

- Provided Education Loans to students of 147 top-rated, premier and reputed institutions identified by the Bank at relaxed norms and concessional interest rates.

-    Door-step services are extended for sourcing high-value education loan applications at select centres.

-    All courses and institutes approved by the Director General of Civil Aviation (DGCA)/ Director General of Shipping (DGS) in the list of eligible courses covered under Education Loans, have been included for financing by the Bank.

-    Bank’s Loan Origination System has been integrated with Vidya Lakshmi Portal (VLP) of Government of India to ensure better tracking of the loan applications and faster sanctioning of loans.

4. Personal Loans

Personal Loan is one of the most popular products of your Bank and is amongst the leaders in this segment. Your Bank has been aggressively catering to the needs of salaried class (both government and private), pensioners and other customers. During FY2018, your Bank has provided Personal Loans to 14 lakh customers amounting to Rs, 50,971 crore. The Bank’s delinquency under this segment is one of the lowest in the industry. This has been possible because of your Bank’s utmost caution in selection of borrowers and careful due diligence.

Your Bank has adopted various technological innovations mentioned as under, to serve the digital-savvy customers:

-    Top-up Insta Credit loan to existing Xpress credit Personal Loan borrowers through internet banking in an end to end digitized mode.

-    Pre-approved instant Personal Loans to the existing SB account holders of the Bank through its YONO app.

-    Overdraft (OD) facility for select customers for purchases done through online shopping websites like Flipkart.

-    Tatkal e-Personal Loans to cater to the needs of unserved and underserved non-salaried customers, based on selected parameters.

-    Personal loan against security of Sovereign Gold Bonds of Government of India on a pilot basis.

5.    NRI Business

As on 31^st March, 2018 your Bank has a 33.34 lakh strong NRI customer base, who are being catered to by 150 NRI intensive branches and 95 dedicated branches across India. With an aim of providing all the NRI related service at a single point, your Bank has set up a centralized back office. This major process innovation undertaken in NRI services will handle the entire gamut of non-financial services including customer support and query management. Your Bank has introduced a mobile app-based remittance facility to the Indian Diaspora residing in USA to remit the funds to India, with a cap of US$ 10,000. SBI Intelligent Assistant (SIA) also known as Smart Chat Assistant evolved from the cutting-edge technology, which efficiently answers queries, is also extended to NRIs.

6.    Corporate and Institutional Tie-ups for Salary Package

A dedicated Sales Architecture has been created in your Bank to facilitate opening of salary accounts of Corporate Employee, Armed forces and other Central/ State Government Employees. A dedicated marketing force named Key Accounts Manager (KAM) provides personalized service along with a bouquet of products under Corporate Salary Package (CSP) at the door step of the salaried customers. The total Salary account customer base has reached 124.07 lakh accounts registering a growth of 38% over FY2017. Under CSP, your Bank offers Complimentary Accident (Death) Insurance cover up to Rs, 20 lakh. During the year, Bank has settled 763 insurance claims amounting to Rs, 37.77 crore.

7. Wealth Management Business - SBI Exclusive

Your Bank’s Wealth Management Services are now made available at 13 centres with 76 dedicated Wealth Hubs and 3 e-Wealth centres. An addition of 5 new centres and 55 new wealth hubs were made during the financial year. The Wealth Hubs are managed by a dedicated group of Relationship Managers and Investment Counselors having in-depth knowledge on markets and products along with senior internal staff in operational roles.

An open platform for investment with a state-of-the-art technology and right selling approach based on Risk Profiling provides the best possible experience to your Bank customers through the Exclusive journey.

The e-Wealth Centers are equipped with on-Video and on-Phone transaction execution facilities with extended Banking Hours. Your Bank’s Endeavour is to provide a best in class holistic experience to Customers.

Your Bank also launched Wealth Management Services for Non-Resident Indians. Clients residing in U.A.E., Bahrain, Qatar, Kuwait and Sultanate of Oman are eligible to onboard as wealth customers. They can access services through e-Wealth Centres or through Wealth Hub during their visit to India.

Your Bank also conducted Signature ‘Annual Investment Conclaves’ addressed by the experts from Financial Industry and Markets on the prevalent market conditions and investment opportunities. These Conclaves were well attended by a large number of existing and prospective Exclusive customers.

Your Bank’s Wealth Management Business has shown an exponential growth in terms of client acquisition and Net New Money

B. ANYTIME CHANNELS

As on	ATMs	Kiosks (MFK + SSK)	Cash Deposit Machines(CDMs), Recyclers	Total (SBI)
31st March 2015	42,454	2,595	1,849	46,898
31st March 2016	42,733	1,231	5,760	49,724
31st March 2017	42,222	986	6,980	50,188
31st March 20181	51,616	#	7,925	59,541

 

# Kiosks are scrapped and not in use

1. ATMs/ Recyclers

Your Bank has one of the largest ATM networks in the world with 59,541 ATMs including Cash Deposit Machines and Recyclers as on 31^st March, 2018. During FY2018, your Bank replaced 6,793 old ATMs and installed 3,883 new ATMs, with improved features and equipped with the latest technology. Your Bank has so far installed 7,925 Recyclers and Cash Deposit Machines (CDM) to provide 24x7 cash deposit and withdrawal facilities. Your Bank has procured new software which will enrich the Customers’ experience while using the ATM machines. This new software will have Hi-resolution graphics screens for better user interactions; one-to-one specific advice to customers of banking products; real time integration with other digital channels; and a host of other new features.

Nearly, 80% of the financial transactions of your Bank are routed through Alternate Channels. Your Bank has a 28.76% of market share (as per RBI Data) in ATM network in India. SBI ATM network transacts 47.21% of the country’s total ATM transactions. On an average, over 1 crore transactions per day are routed through our ATM network. generation during FY2018. The number of wealth clients grew 528% during the year to reach 24,168 clients as on 31^st March, 2018. The Net New Money grew by 566% to Rs,1,998 crore and AUM increased by 390% to Rs,14,284 crore.

Your Bank aspires to play a leading role in building the momentum for investments by embracing the changes happening in the economy and enhancing wealth creation for esteemed customers.

* Merged

Over 2,000 e-Corners (including 250 hi-tech SBI Intouch branches) have been set up across the country where customers can avail entire gamut of services. To ensure and protect customers’ interest, coverage under electronic surveillance is being enhanced.

2.    Swayam: Barcode based Passbook Printing Kiosks

Your Bank rolled out more than 14,000 SWAYAMs (Barcode based Passbook Printing Kiosks) at its branches and e-lobbies/Intouch. Using these kiosks, customers can print their passbooks on their own using barcode technology. On a monthly basis, more than 3.2 crore transactions are recorded at these kiosks.

3.    Green Channel Counter (GCC)

GCC is a POS terminal installed at counters in retail branches. Transaction through GCC is done by swiping ATM/ Debit card followed by PIN validation. The services extended through GCC are cash withdrawal, cash deposit, funds transfer within SBI. GCC per transaction limit is up to ' 40,000 and daily withdrawal limit is a part of ATM withdrawal limit (card variant wise). On an average 9.35 lakh transactions are being routed through GCC per day.

4.    Green Remit Card (GRC)

SBI Green Remit Card is a deposit card through which an individual can remit money in a specified account of SBI. This is especially useful for the migrant depositors. Money can be deposited using GRC through GCC, CDMs and Recyclers. The per transaction limit is of ' 25,000 with a monthly cap of ' 1 lakh per remitter. On a daily average, over 1.50 lakh transactions are being routed through GRC.

5.    Banking on Mobile

State Bank Anywhere Personal: Your Bank’s Mobile Banking App for Retail customers, offers a wide range of features apart from the general banking. The features include Intra/Inter Bank funds transfer (NEFT/RTGS/IMPS/UPI), opening of fixed deposits/e-MOD Accounts, add and manage beneficiaries, among others. Additional value added services such as Aadhaar Linking, Voice Assisted Banking, my Fitness, e-statement subscription/ download, Stop/ Revoke cheque instructions and facility to submit Form 15G/ 15H online for TDS exemption are also available.

State Bank Anywhere Saral: Your Bank’s Mobile Banking App for proprietorship firms allows businesses to transfer funds across Banks, open and operate fixed deposit accounts, make payment to EPFO, view account statements, schedule transactions and recharge/bill payment, among others.

State Bank Anywhere Corporate: Your Bank’s Mobile Banking App for Large Corporate firms with multiple users, allows business houses to operate accounts, transfer funds through NEFT/RTGS, make bill payments/supplier payments, authorize e-cheques /e-STDR, open and operate fixed deposit accounts, among others.

The Mobile Banking channel now has over 305 lakh registered users and has processed transactions amounting to Rs,6,00,000 crore in FY2018. Your Bank has also retained its prime numero-uno position among Banks, both in terms of volume of transactions (21.20%) and value of transactions (19.81%) as per the latest RBI Market Share Report.

Large multinational corporations have leaped on to the digital payments bandwagon to help India become a less cash economy. Your Bank has leveraged on this opportunity to provide the latest digital payment offerings through various collaboration. Your Bank has also partnered with Google India to offer PSP services to their UPI App - Google Tez under the UPI Multi-Bank Integration Model. Over 13 lakh Tez users have linked their Bank accounts with their @ OKSBI handle offered by SBI to transact on the App. In addition, debit card based payment services, P2P lending services are also being planned among others. Users now have the convenience of making bill payments, booking flight tickets, recharging and ordering food through BHIM SBI Pay.

Your Bank has also brought digital payments to the masses to enable UPI payments for over 37 lakh members of Self Help Groups under the Shri Kshetra Dharmasthala Rural Development Programme (SKDRDP) in the state of Karnataka. This was launched in the presence of Hon’ble Prime Minister of India on 29^th October, 2017.

6. SBI Pay (BHIM)

Your Bank’s Unified Payments Interface based-app provides any registered/on-boarded user/merchant the convenience of transferring funds across different Bank accounts through multiple modes (Virtual Payment Address, Bank Account Number, IFSC and scanning QR Code), making it a truly inter-operable offering. 184 lakh users have registered on the SBI UPI system and transactions amounting to Rs,68,000 crore have been successfully processed through the SBI UPI channel.

7.    SBI Buddy

Your Bank’s Mobile Wallet allows users to send and receive money. In addition, users can also shop; book rail, movie or flight tickets; use virtual debit card -Buddy Card to make payments; withdraw cash at SBI ATMs using the wallet and a lot more. Users can now complete the full KYC check to enjoy enhanced limits on the wallet as well. Buddy has seen remarkable growth and has reached a user base of 129 lakh as on 31^st March, 2018. The wallet has facilitated over 496 lakh transactions to the tune of Rs, 1,505.79 crore as on 31^st March, 2018.

Emergence of Fintech companies has made data the prime point for selectively and effectively targeting customers. Increasingly, digital products from banks are being promoted through social networking sites and online advertising. Your Bank has established digital solutions that offer one of the best all-round omnichannel experience for its customers.

8.    YONO

On 24^th November, 2017, State Bank of India launched India’s first comprehensive digital service platform “YONO”, an acronym for ‘You Only Need One’. An integrated omni-channel digital platform, YONO offers banking and other financial products along with access to India’s largest B2C marketplace for its customers to meet their lifestyle needs across 16 categories including Fashion & Lifestyle, Electronics, Education, Home & Furnishing, Travel & Hospitality, Cab Booking & Car Rentals, Entertainment, Food & Dining, Health & Personal Care and others. Your Bank has partnered with 70+ top e-commerce players to provide customized offers and discounts to its customers. With YONO, customers can:

-    Open an SBI bank account digitally in 4 minutes

-    Avail Pre-approved personal loan sans any paperwork in 4 clicks

-    Get overdraft facility against fixed deposit instantly online

-    Get one view of the banking and financial portfolio of SBI Group companies

-    Benefit from intelligent spend analyser

-    Utilize Chatbot ‘SIA’

-    Create dreams to target and fund the dreams

-    Access B2C Marketplace

-    Open a new demat/trading account

-    Link trading/demat account

-    Apply for credit cards online

-    Link credit cards and pay credit card bills seamlessly

-    Avail insurance products online.

Performance highlights of YONO as on 31^st March 2018

-    4.37 Million Application Downloads

-    1.36 Lakh Digital and Insta Savings Accounts opened

-    6.52 Lakh Funds Transfers executed

-    17,000+ Fixed Deposits opened

-    71,000+ Bill payments done

-    77,000+ SBI Credit Cards linked;

41,000 Card payments of Rs, 43 crore done; 33,000 new Card leads generated

-    41,000+ SBI Cap Sec portfolios linked; 9,000 new demat account leads generated

-    11,000+ SBI Life policies linked

-    2,400+ Pre-approved Personal Loans of Rs, 12 crore disbursed

9. Customer Experience Excellence Project (CEEP)

The Customer Experience Excellence Project CEEP has been rolled out at 5,364 branches across the country which are equipped with Self Service machines as ATM, CDM/ Recycler, SWAYAM for Passbook Printing, Electronic Cheque Drop Box and Internet enabled PCs. An integrated Queue Management system (QMS) is in place at these branches to ensure that the customers are serviced promptly without having to wait in queues at the counters. There is a provision of separate token for Senior Citizens/ Disabled persons in QMS to give them preferential service. A Customer Feedback Tab is provided at these branches to enable the customers to give their feedback on the services of the branch. Real time monitoring and Branch choreography are undertaken at these branches to give the customers an excellent service experience.

(Rs, in crore)

ACTUALS
JVs	YTD March, 2017	YTD March, 2018	% YoY change
SBI LIFE	575.97	714.75	24.10
MF	185.24	560.51	202.59
SBI GENERAL	125.97	212.57	68.74
SBI CARDS	25.13	135.83	440.51
SSL	2.43	5.14	111.52
NPS	-	2.44	-
TOTAL	914.74*	1631.24	78.33

*YTD MarRs,17 figure inclusive of e ABs data - 776.61 (SBI) + 138.13 (eABs)

Your Bank’s Mobile App “State Bank No Queue” enables customers to self-generate e-tokens for availing Banking services at CEEP Branches. This App is available on both Android and iOS phones and it helps in reducing waiting time for customers at the branch. It also reduces crowding at a branch as the token is generated before the customer reaches the branch. This helps customers to skip the queue and avail banking services faster. As on 31^st March, 2018, the App has registered more than 23,66,000 (2.37 million) downloads. The usage of the App is increasing on daily basis. The HNI customers are tagged as Priority Customers at these branches.

Your Bank has also undertaken Customer Service Feedback Survey at select CEEP branches to assess the impact of the CEEP initiative on the quality of customer service. The feedback thus received is being used to improve the customer service and facilities available for the customers.

10. Digital Banking

Your Bank has always been a pioneer in innovating new concepts in Banking Sector. One such step was setting up the high-tech, one of its kind, sbiINTOUCH branches, which has brought in a new paradigm in banking. At present, your Bank has 262 sbiINTOUCH branches equipped with state-of-the-art digital technology. These sbiINTOUCH branches cover more than 148 districts across the country.

At the sbiINTOUCH branches, your Bank provides banking services such as the opening of accounts and the printing of personalised Debit Cards in

15 minutes. This has been made possible

Performance Highlights (Income) by revolutionary Touch Technology. Your Bank’s strategy is to create a ‘Phygital’ marketplace within these futuristic branches, to offer customers

1)    Banking through self- service kiosks and

2)    Services of other SBI subsidiaries such as Life Insurance, General Insurance, Mutual Funds, Credit Cards and online trading through SBI Cap Securities. Financial counseling through hi-definition Audio Video conferencing service is provided at select sbiINTOUCH branches, where customers can interact with financial experts.

In August, 2017, your Bank has also launched, the facility of instant issuance of personalized Photo Debit Card - ‘Quick Photo Debit Card’ within five minutes to Saving Bank (SB) account holder of any branch of SBI. Under the facility, an individual SB account holder who has an account with SBI and has lost or damaged his debit card, can visit any sbiINTOUCH Branch with his Aadhar Card and obtain Instant Photo Debit Card, bearing his photograph, through Debit Card Printing Kiosk.

11. Cross Selling

Your Bank is the Corporate Agent of SBI Life Insurance Co. Ltd & SBI General Insurance Co. Ltd. and has Distribution Agreement with SBI Mutual Fund, SBI Cards & Payment Services Pvt. Ltd & SBI Cap Securities Limited for distributing their products. Your Bank also distributes mutual fund products of UTI Mutual Fund, Tata Mutual Fund, Franklin Templeton Mutual Fund, L&T Mutual Fund, ICICI Mutual Fund, and HDFC Mutual Fund. In addition, all branches are authorized for opening pension accounts under National Pension System.

The key highlights for FY2018 are mentioned below:

-    SBI Mutual Fund became 2nd largest amongst Bank distributors in the Industry with an AUM of more than ' 54,000 crore. Your Bank has become India’s number one Bank distributor in SIP with 14.6 lakh live SIPs. Net sales increased from ' 11,464 crore in March, 2017 to Rs,24,374 crore YTD March, 2018 reporting an increase of 113%.

-    Cards issued through Banca Channel crossed 10 lakh and sourcing has increased from an average of 35% up to September, 2017    to 53% in March, 2018.

-    Your Bank received SKOCH Award

- Platinum for its National Pension System Application and was ranked No. 1 in Point of Presence (POP) under various log in day campaigns observed by PFRDA.

-    Under SBI Life, CIF grew to 46,180 in YTD March, 2018 as against 24,470 in YTD March 2017, reporting an increase of 89%. The Home Loan Insurance penetration increased from 45% to 58%.

-    Under SBI General, SP number has increased to 20,646 in YTD March, 2018    as against 14,348 in YTD March, 2017, reported a growth of 44%. The number of Health Insurance policies issued increased by 11% to 7.82 lakh and premium increased by 16% to Rs,179.45 crore over March, 2017. In FY2018, net profit earned by SBI General Insurance Co. stood at Rs, 380 crore out of which Rs,170 crore seeding commission was earned from Long Term Home (LTH) reinsurance.

12. Internet Banking and e-Commerce

Your Bank’s Internet Banking Service brings on board a seamless online experience hosting diverse Banking offerings. Opening and operation of Fixed Deposits/ PPF accounts, Intra/Inter Bank transfer of funds through NEFT/RTGS, submission of Form 15G/15H, Nomination updating facility, foreign international remittances are among the many functionalities, being offered. Some of the services/features launched during the year, that have made Bank’s digital platform more robust and customer-friendly, are access to CIBIL score, Aadhaar linking with CIF, purchase of Sovereign Gold Bonds, SMS alerts in Hindi, GSTN integration, submission of 15G/H Form through RINB portal, submission of Financial Follow up Report (FFR-I & FFR- II) by Vyapaar/Vistaar corporate users and creation of e-TDR & e-STDR for amount of Rs, 1 crore and above through CINB. This highly secure and cost-effective channel has processed 159 crore transactions during FY2018, and the addition of new INB users has registered a growth of 35% over the previous year.

To rejuvenate the e-Commerce ecosystem proactive initiatives have been taken for technology partnerships with various Government Departments enabling them to leverage their e-Governance channels like e-Auction, e-Tendering, e-Freight and online collection of tax dues. Over 17,515 merchants have been on-boarded under ASVA model during FY2018. BHIM SBI Pay has been added as one of the options in SBMOPS.

C. SMALL AND MEDIUM ENTERPRISES

Your Bank is pioneer and market leader in SME financing. With over one million customers, the SME portfolio of Rs, 2,69,875 crore, as on 31^st March, 2018 accounts for nearly 13.17% of the Bank’s total advances.

Considering the important role being played by SMEs in the Indian economy in terms of their contribution to manufacturing output, exports and employment generation, your Bank has always held SME as an important segment.

Your Bank is committed to providing Simple and Innovative Financial Solutions. Your Bank’s approach in driving SME growth rests on the following three pillars:

a)    Customer Convenience,

b)    Risk Mitigation,

c)    Technology based digital offerings.

1) Customer Convenience

With a view to building and sustaining the momentum for Transforming India, your Bank has created largest number of touch points in terms of number of branches and other modes, reaching out to public at large, which includes RMSEs (866), RMMEs (775), CSOs (900), SMECs (89), RASMECs (81) and SME Intensive Branches (1,248).

With a view to enhancing Ease of Doing Business to the Small and Micro Enterprises, your Bank modified its existing delivery model for Small & Medium Enterprises Center (SMEC) and created Asset Management Teams (AMT) for providing end to end relationship with the customers for small value loans up to Rs, 50 lakh. The SMECs have also been strengthened in terms of manpower which has resulted in improvement in service.

Web based loan application and tracking system: Your Bank is hosting an online loan application and tracking facility for MSME borrowers on the Corporate Website www.sbi.co.in. It is an Intranet-based Credit Proposal Tracking System called Lead Management system (LMS), which allows customers to apply online loan request and receive an acknowledgement in the form of application reference number. The data of customers is then automatically forwarded (through concerned network in Circles) to relationship points for converting these leads into business.

Participation in Business Conclaves/ Summits: Your Bank has been actively participating in Business Conclaves and Summits to reach out to entrepreneurs and understand and meet their requirements.

2) Risk Mitigation

Your Bank has been increasingly shifting focus towards Risk Mitigated Products, which includes Supply Chain finance, Asset Backed Loans, Overdraft against Bank Deposits/Govt. Securities, Bills Discounting facility and CGTMSE covered loans, among others.

Supply Chain Finance: Leveraging the state-of-the-art technology and branch network, your Bank is further strengthening its relationship with the Corporate World and has emerged as a major player in Supply Chain Finance.

During the fiscal, your Bank entered into 49 new e-DFS (Electronic Dealer Finance Scheme) and 8 new e-VFS (Electronic Vendor Finance Scheme) tie-ups covering 292 Industrial Majors and 22,406 of their dealers and 12,512 vendors. The number of oil dealers (Petrol Pumps) on e-DFS crossed 13,000 during the last fiscal. There has been 19% YoY growth in e-DFS portfolio.

Pradhan Mantri Mudra Yojana: In line with the initiatives of the Government of India, your Bank has laid considerable emphasis on extending credit facilities to eligible units under different variants of Pradhan Mantri Mudra Yojana and has disbursed Rs, 28,556 crore for FY2018 under PMMY against a target of Rs, 28,300 crore.

Credit Flow to Micro and Small Enterprises under CGTMSE: Your Bank has been a pioneer in supporting MSMEs and for Micro and Small business. Your Bank is extending collateral free lending up to Rs, 2 crore under guarantee of CGTMSE. SBI has a portfolio of Rs, 12,549 crore under CGTMSE as on 31^st March, 2018.

SME ASSIST: Introduction of GST is a transformational move by the Government of India. Your Bank conducted GST workshops in 91 modules/centers as a part of knowledge dissemination initiative on GST, covering 4,087 SME borrowers. Town Hall Meetings were also conducted at all the District Headquarters to bring awareness about GST among MSMEs.

Your Bank rolled out a new Product -SME ASSIST during the fiscal to finance pending input credit claims under GST. As on 31^st March, 2018, your Bank has funded 431 units with a total portfolio of Rs, 228 crore.

3) Digital offerings

Your Bank is leveraging technology in every aspect of the value proposition from sourcing business, designing products, streamlining process, improving delivery to monitoring.

Your Bank has taken several initiatives to build SME portfolio in a risk mitigated manner and has brought about significant changes in

(i) Product suite, (ii) Process (iii) Delivery.

Ecosystem Financing (Project Shikhar) has been introduced by your Bank to take advantage of growing e-commerce footprint in the economy.

Cluster Based Funding: Cluster based approach enables your Bank to deal with well-defined and recognized groups and to tap the growth potential. Since the units belong to a cluster with same kind of activity, it helps in assessing their needs and monitor the overall portfolio. As on 31^st March, 2018, your Bank has helped 441 units under Cluster Finance with total portfolio of Rs, 450 crore.

Warehouse Receipt Finance: Your Bank has introduced Warehouse Receipt Financing scheme (WHR) to extend finance to traders/owners of goods/ manufacturers for own processing against Warehouse Receipts. Warehouse receipt is issued by Collateral Managers with whom your Bank has a tie-up (presently NBHC, NCML, Star Agri, Origo). Further, WHR issued by Central Warehousing Corporation (CWC)/State Warehousing Corporation (SWC) is also eligible for WHR finance. The WHR portfolio as on 31^st March, 2018 stands at Rs, 5,795 crore.

D. RURAL BANKING 1. Agri Business

Against the background of the Union Government’s goal of doubling farmers’ income by 2022, Agriculture and allied activities have got greater focus during the year in your Bank’s lending activity. Your Bank serves about 1.35 crore farmer families all over India. It surpassed the Agri credit flow target set by the Government of India during FY2018, as it has done in the past. This is depicted in the table below:

Flow of Credit to Agriculture Trend

(Rs, in crore)

 

Year	Target	Disbursement	% Achievement
FY2015	84,500	86,193	102%
FY2016	89,781	1,02,423	114%
FY2017	95,168	1,25,270	132%
FY2018	1,05,741	1,66,819	158%

 

Project Vivek

Project Vivek, heralded paradigm shift in your Bank’s appraisal system from traditional Balance Sheet based funding to a more objective appraisal system of leveraging cash flow and other information sources. It is a promising initiative taken and launched by your Bank for new Credit Underwriting Engine (CUE) for the SME segment, which brings in objectivity for better risk assessment. It also reduces Turn Around Time (TAT) resulting in better customer experience. As on 31^st March, 2018 , a total 13,713 proposals have been processed under Project Vivek.

Trade Receivables Discounting System

(TReDS): TReDS have been set up for flow of finance to MSMEs. Your Bank was first among all PSBs to register on the TReDS platform RXIL and M1xchange. Your Bank has been actively participating in the online biddings on the platform and has been offering very competitive rates to the benefit of MSMEs.

Loan Origination Software (LOS-SME) and Loan Life-Cycle Management System (LLMS): With a view to adopt the uniform standards of credit dispensation and for ensuring quality and preserving corporate memory, LOS & LLMS have been introduced for small and high value loans, respectively.

Digital Inspection Application (DIA-SME): This is a Tab and Mobile based application for recording inspection of SME units as a process of digitalization of pre-sanction/ post sanction processes of SME units. Your Bank also records collateral security, location of the properties and place of business with photograph and geo-coordinates through this Digital application.

In order to ease the flow of credit for Agriculture, your Bank has now raised the limit for renewal of mortgage-free crop loans from ' 1 lakh to Rs, 1.5 lakh. It has also introduced a scheme for financing of dairy units under the Mudra scheme with liberalized terms for loans up to Rs, 10 lakh, as allied agricultural activity is a mean of increasing farmers’ income.

A new product which is designed to meet the general-purpose needs of farmers against the collateral of property called the Asset Backed Agri Loan (ABAL), picked up momentum during the year and the growth under this product was about 200%, albeit on a lower base. This product has been accepted by customers because of the flexibility it offers.

Your Bank is de-risking its Agri portfolio and supporting farmers at the same time by entering into local level and national level tie-ups with Agri Corporate, wherein the supply chain will ensure cash flows for timely renewal of loan and better incomes for the farmers. Your Bank is also lending under a Cluster-based approach to tap opportunities that revolve around areas and centres which have traditionally been known for activities like shrimp farming, dairy, poultry and higher value horticulture crops like pineapple and mango.

Recognizing the contribution of rural India to the nation’s economic growth, your Bank has been striving to meet the financial needs of the rural segment through various new channels and services. A pilot project on a hub-and-spoke model for improving turn-around time and the quality of credit appraisals in the Rural and Semi-urban branches was rolled out in over 80 Regions across the country.

As widely reported, the Agriculture sector saw a number of developments with a few States announcing waiver of farm loans in response to demands by the farmers. Your Bank on its own announced two Rinn Samadhan schemes, covering farm sector loans and the internal targets set under both the schemes were achieved.

Keeping in view the large number of customers served by your Bank, it took the lead and organized mass contact programmes on six occasions during the year. Under this initiative, on a pre-fixed day, all Rural and Semi-urban branches of your Bank held informal meetings with farmers to improve customer connect and spread awareness about the Bank’s and Government’s schemes. It is estimated that at least 1.5 million farmers attended these meets.

Other important initiatives taken during the year included issuance of 71.66 lakh KCC-ATM-RuPay Cards to Kisan Credit Card (KCC) borrowers for ease and operational convenience. KCC RuPay Cards work seamlessly with ATMs and PoS machines, enabling farmers to purchase their day-to-day farm requirements on 24x7 basis.

2. Financial Inclusion (FI)

Your Bank realizes the role it must play as the largest bank in the country in practicing and promoting financial inclusion activities. The spread of digital banking channels and expansion of Business Correspondents (BC) networks are giving your Bank the impetus to further grow its financial inclusion activities. Thus, to achieve inclusive development and growth, your Bank has worked out several strategies and leveraged technology to expand financial services to the door steps of people with the purpose of bringing the excluded under the ambit of formal banking system.

Your Bank has 58,274 operating Business Correspondents and over 22,400 branches across the country to offer banking services. The Business Correspondent channel has recorded 31.21 crore transactions amounting to ' 1,24,930 crore in FY2018, translating to around 1-1.5 million transactions per day. The Business Correspondent channel provides customers with access to various banking products and services, reducing the foot-falls in the branches.

Under the Pradhan Mantri Jan Dhan Yojana (PMJDY), your Bank has paved the way for universal financial access by being a pioneer in implementing the programme. Your Bank has opened more than 10 crore accounts up to 31^st March, 2018 and issued 6.62 crore RuPay debit cards to eligible customers. These initiatives taken under financial inclusion are a part of key economic policy agenda of the Government. Over the last decade, your Bank has a major share in providing access to banking services to the excluded in the ecosystem.

To fulfill the needs of Social Security measures, low cost Micro insurance products (PMJJBY, PMSBY) and pension schemes(APY) to the unorganized sector are also provided in a big way, covering over 2 crore of customers. These initiatives are empowering the population to have the benefit of the financial system and move towards a cashless economy.

a.    Imparting Financial Literacy

With the objective of imparting financial literacy and facilitating effective use of financial services, your Bank has set up 336 Financial Literacy Centres (FLCs) across the country. During FY2018, a total of 23,962 financial literacy camps were conducted by these FLCs across the country. As part of the pilot project being implemented by RBI, your Bank has also set up 15 centres for Financial Literacy at Block level, 5 each in the state of Maharashtra, Chhattisgarh and Telangana in association with NGOs identified by RBI.

b.    Rural Self Employment Training Institutes (RSETIs)

Rural Self Employment Training Institutes (RSETIs) play an important role in skill development by imparting comprehensive quality training programme to rural youth. It also facilitates them in setting up of micro enterprises. Your Bank has set up 151 RSETIs spread across 27 States and one Union Territory.

Your Bank RSETIs have trained more than 1 lakh rural youth during FY2018. Over 63% of the candidates trained are women and 83% of the candidates trained belong to non-general categories (SC/ST/OBC/ Minorities). More than 6 lakh candidates have been trained by SBI-RSETIs over a period of seven years of which 67% have been settled, thus building momentum for transforming rural India.

E. OTHER NEW BUSINESS INITIATIVES

1. Payment Solution Vertical

Banking system is witnessing new challenges in its traditional business domain from new digitally enabled entrants. Payment systems, of late, have become the most sought after aspect of banking business on account of the growing penetration of smart phones, e-commerce and launch of a number of innovative products/mobile apps.

Debit Cards: With approximately 26 crore actively used Debit Cards as on 31^st March, 2018, your Bank continues to lead in Debit Card issuance in the country. SBI has a market share of 32.35% in terms of Debit Card penetration as on 31^st March, 2018. In line with the approach of moving towards a digital economy, your Bank has adopted a focused strategy on shifting the usage of Debit Cards by customers from ATM (for cash withdrawals) to PoS/eCom websites by executing regular promotional/activation campaigns in collaboration with leading e-comm and retailers. Your Bank has successfully launched various innovations and functionalities around Debit Cards like Contactless Debit Cards, Bharat QR, Samsung Pay and Visa Checkout.

In order to increase digital participation with customers, your Bank has also tied up with various institutions like Mumbai Metro, Chennai Metro, IIM Ahmadabad, College of Engineering - Pune and others for launching co-branded Debit Cards/ combo Cards.

Such consistent initiatives towards digitizing payment transactions, not only reduce cost of transactions but also help in reducing carbon footprint through lesser use of paper. As a result of these initiatives, your Bank has improved its market share in Debit Card spends from 29.33% as on 31^st March, 2017 to 30.40% as on 31^st March, 2018.

State Bank Foreign Travel Cards: State Bank Foreign Travel Cards (SBFTC) are available on the VISA platform, in eight Foreign currencies namely Japanese Yen, Canadian Dollar, Australian Dollar, Saudi Riyal, Singapore Dollar, US Dollar, Euro and British Pound, providing safety, security and convenience to overseas travellers. SBFTC is also issued as Multicurrency card on MasterCard platform. Initially, it was launched in four currencies viz. US$, GBP, Euro and SGD. During the year, three new currencies viz. AUD, CAD and AED have been added. Your Bank is also aggressively promoting tie-ups with FFMCs (Full Fledged Money Changers).

Rupee Prepaid Cards: Prepaid card usage has been growing for purchase of goods and services as well as for funds transfer in India. Your Bank has issued PPIs for Rs, 950.31 crore during FY2018 registering a growth of 122.90% over the previous year.

Enterprise Wide Loyalty Program -State Bank Rewardz: To encourage and maximize digital adoption amongst SBI customers and also to attract more customers on SBI platform, your Bank launched Loyalty Rewardz program across seven channels during 2015, which is being extended to 4 more channels including YONO. This will encourage repetitive usage of digital transactions thereby creating digital habit amongst customers. State Bank Rewardz has also been implemented through mobile app, which can be downloaded from the Google Play Store and from App Store in iOS

Foray into digitalization of Mass Transit:

The advent in digital technology along with rapid urbanization and infrastructure development, has given a significant boost to the urban public transportation in India. With a vision to ‘Be the Bank of Choice for a Transforming India’, your Bank has taken the following steps on its journey of transforming the transit space in India:

(a)    Your Bank has successfully implemented the ambitious project of NHAI - National Electronic Toll Collection (NETC). Your Bank is issuing SBI FASTag; working on Radio Frequency Identification technology (RFID) and enables the Customers to pay the toll electronically across all the National Highway Toll plazas.

Through SBI FASTag, customers can pay their toll electronically and can top up/recharge their SBI FASTag wallet online through a dedicated portal by using various modes like Debit Cards, Credit Cards, Internet Banking of any Bank. The customer can also view the history of transactions of their vehicle.

Your Bank has issued more than 2.7 lakh tags to customers. Toll transactions through the SBI FASTag has crossed a mark of 68 lakh and total transaction amount has crossed Rs, 140 crore level in FY2018.

(b)    With the aim of digitizing micropayments rapidly, your Bank has participated in various metro and transit projects. Your Bank has been awarded the Nagpur and Noida metro project for implementation of open loop Automatic Fare Collection System based on the qSPARC technology on the RuPay platform.

Your Bank has designed SARVATRA Card in line with the National Common Mobility Card (NCMC) guidelines as envisioned by Ministry of Urban Development (MoUD). This card offers features of a metro travel card on RuPay Prepaid Card, wherein transactions can be conducted offline. Apart from payment of fares in the multi modal transit, this card offers extended usage for retail payments as well as e-commerce.

2. Acceptance Infrastructure (Merchant Acquiring Businesses vertical)

Your Bank is playing effective role in building momentum for transforming India through digitalisation of the economy. In sync with the focus of the Government of India to create a less-cash economy, your Bank has expanded digital payment acceptance infrastructure and rolled out new payment acceptance solutions.

Your Bank continues to be the top acquirer in the country in terms of number of terminals with a market share of 20.20% (as per the latest available RBI data as on 28^th February, 2018). During the year, your Bank introduced two new digital payment acceptance products - Bharat QR and BHIM-Aadhhar-SBI; and on-boarded 2.02 lakh and 4.97 lakh merchants respectively on these platforms. PoS deployed by your Bank has grown from 5.09 lakh as on 31^st March, 2017 to 6.10 lakh as on 31^st March, 2018. In total, the number of merchant payment acceptance touch points crossed 1.96 million as on 31^st March, 2018.

The value of acquiring transactions has reached almost Rs, 1 trillion with 68% increase on Y-o-Y basis. Your Bank has been successful in digitizing sale transactions of retail outlets of oil marketing companies by installing 34,000+ PoS terminals at more than 20,000 retail outlets.

In order to increase penetration of digital merchant payment acceptance infrastructure in semi-urban and rural areas, your Bank has focused on tier V and tier VI centers. As on 31^st March, 2018, about 31% of total PoS terminals deployed are in rural and semi urban areas.

In addition to offering basic acquiring services, your Bank is also providing Value Added Services such as:

-    DCC-Dynamic Currency Conversion

-    EMI facility

-    Cash@POS facility for cash dispensation to debit card holders

State Bank of India has collaborated with major Corporate and also with government departments in digitizing their operations from cash to digital mode. Your Bank has created a robust payment infrastructure for facilitating digital acceptance, which involved customization and integration of its systems with those of corporate and Government departments to ensure seamless flow of

F. GOVERNMENT BUSINESS

Your Bank has traditionally been the preferred and accredited Banker to major Central Government Ministries/ Departments. Commanding the market in Government Business, your Bank has a share of more than 80% in Government Commission. Your Bank is at the forefront in developing e-Solutions for both Central and State Government undertakings. This has facilitated transition of Government Business to the online mode, resulting in greater efficiency and transparency. Your Bank is an active stakeholder in the Government’s latest initiatives such as the Government e-Marketplace and is continuously engaged in developing customized technology solutions such as e-Tendering, e-BG and e-Trade to keep pace with the Government’s digital initiatives.

3.    Indian Railways: Your Bank was awarded the contract to open Inland LCs against indigenous contracts of supplies and works of Indian Railways for an estimated amount of Rs, 50, 000 crore per annum.

4.    Direct Benefit Transfer (DBT/L):

During FY2018, over 28.26 crore transactions were successfully processed through DBT amounting to Rs, 1,24,881 crore. Your Bank is the sole banker for processing Direct Benefit Transfer of LPG (DBTL). Over 114.39 crore transactions amounting to Rs, 23,076 crore were processed through DBTL.

5.    GCCS: Your Bank sponsored GCCS 2017 (5th Annual Global Conference on Cyber Space) as a Platinum Sponsor which attracted delegates from over 100 countries.

6.    Bharat ke Veer Portal (BKV):

Your Bank has proudly associated with the BKV portal of Ministry of Home Affairs by enabling payment gateway to collect donations for NoK (Next of Kin) of Martyrs of 8 Para Military Forces. digital transactions. Some of the notable integrations have been with the systems of Indian Railways, India Posts and e-GRAS for the Government of Haryana.

7.    Migration of Salary/Vendor payments to e-Mode: Migrated salary/vendor payments of Lok Sabha, 80 CDDOs (Cheque Drawing & Disbursing Officers) of MoUD (Ministry of Urban Development); and made salary payments of 1.84 lakh Indian Air Force personnel.

8.    PoS (Point of Sale) terminals: Your Bank has provided PoS terminals to the Indian Railways, Post Offices, Passport Seva Kendras and Ministry of External Affairs.

9.    BHIM UPI: Solution implemented for Passenger Reservation System (PRS) of Indian Railways (Railway reservation counters across India).

10.    e-MRO (Military Receivables Order):

All 31 CDAs/PCDAs (Controller/ Principal Controller of Defence Accounts) have been on-boarded.

11.    e-BG (Bank Guarantee): Your Bank is the first to integrate with Government e-Marketplace (GeM) for online confirmation of BGs/PBGs for procurement.

12.    e-Tendering: MoU (Memorandum of Understanding) has been signed with Uttar Pradesh Government for e-Tendering solution of State Government Departments and Autonomous Bodies.

Â	FY2017	FY2018
Turnover	49,77,798	55,61,295
Commission	2,879	3,050

With a view to facilitate e-Governance, digitalization and bringing in more efficiency and transparency, the following initiatives were implemented during the year:

1.    GSTN: Your Bank has been designated as the sole banker for refunds of GST with a 30% market share in GST collections.

2.    GeM (Govt. e-Marketplace): A MoU has been signed with GeM for financial integration of payments to suppliers to facilitate procurement of goods and services through GeM portal.

13.    RFID FASTag: MoU signed with Odisha State Transport Corporation to provide SBI FASTag facility for their 470+ buses. A MoU was also signed with South Bengal State Transport Corporation to provide SBI FASTag facility to their 750+ buses.

14.    e-Trade: PCDA New Delhi has been on-boarded for online opening of LCs. More than 90% of LCs are being routed through the portal of SBI.

15.    Pension Payments: Your Bank has been administering pension payment to over 53.23 lakh pensioners through the 16 CPPCs (Centralized Pension Processing Centres). The total pension amount disbursed has exceeded Rs, 1,33,475 crore during FY2018. Your Bank has added 2.81 lakh new pension accounts during the year. A number of Pensioner Connect Programmes were held across the country.

16.    Small Savings Schemes: Your Bank services more than 71.58 lakh PPF and 11.64 lakh Sukanya Samriddhi Accounts, which is the highest among all authorized banks. Over 5.31 lakh new PPF accounts and 3.66 lakh new SSA Accounts were opened during FY2018.

G. EFFICIENCY AND COST CONTROL

Your Bank has set up Insurance Cell for Insurance of Bank’s assets and other risks in order to reduce requirement of Capital under Advanced Measurement Approach (AMA) of Basel-II framework. It has enabled your Bank in procuring Insurance Cover with better wordings/cover in Insurance Policy at competitive pricing. This has also facilitated timely lodgment of claims and improved claim settlement. Request for Quotes/Bids are issued only to those Insurance Companies which have a record of settlement of at least 50% of claims in the last three years.

Your Bank has also introduced an innovative, dedicated customer care centre ‘SBI CARE’, a customer facing outfit to cater to customer queries and their non-financial banking requirements with opening centres in Mumbai, Hyderabad, Delhi and Chandigarh. SBI CARE centre will handle Account related enquiry, enquiry on all products, updating of KYC, Aadhaar, Mobile, PAN numbers, Cheque Book requests, Account Statement, ATM Card request, ATM Pin generation, Account opening through Digital platform, lodging of complaints etc., and will offer delightful interactive experience to your Bank’s customers/ public.

Outsourcing Model of Stationery Management Project is currently rolled out in 9 Circles. The Project was implemented to reduce costs incurred on premises, storage, obsolescence of stationery items, manpower, overheads and transportation costs etc. Your Bank is in the process of rolling out the Project in all Circles in the near future.

Under Scanning and Digitalization of post LCPC AOFs, out of total stock of 15.89 crore AOFs held in LCPCs as on 31.03.18, your Bank has scanned 15.74 crore AOFs (99.05% completion), images of such 14.73 crore AOFs have been migrated to Bank’s centralized (EDMS) server. This will help facilitate digital storage and retrieval of AOFs data for operational purpose.

As a result of these initiatives, Branch premises will be decongested and have more space and better look to offer to the customers for their convenience and more fulfilling experience.

2. CORPORATE BANKING GROUP

The Wholesale Banking business ecosystem at your Bank focuses on servicing corporate customers, through customized financial solutions, and is comprised of several teams focused on specific areas to facilitate specialization and customized product offerings to your Bank’s clients.

A. CORPORATE BANKING

The Corporate Accounts Group (CAG), provides corporate banking services to large corporate and institutions, including state-owned enterprises and caters to customers with total credit exposure in excess of ' 5 billion.

It offers fund-based and non-fund-based products, fee and commission-based products and services, deposits, foreign exchange services as well as a range of foreign currency and treasury services, including RBI permitted derivative arrangements provided by the International Banking Group and the Global Markets Group. It also facilitates cash management initiatives, centralized payment solutions, derivatives products, wealth management services, remittance and collection services, online tax payment, end to end payment solutions, cross-selling of a variety of financial products and services offered by other groups in the Bank, including personal banking services, co-branded credit cards and supply chain finance.

Corporate Accounts

The Corporate Accounts unit focuses on your Bank’s prime corporate clients across India. Each client is assigned a dedicated accounts management team led by a relationship manager to coordinate the client’s banking requirements. The Corporate Accounts unit aims to leverage its corporate relationships to grow its fund-based, non-fund-based and fee-based products.

Your Bank ensures focused marketing and customer service for its corporate clients. In addition to corporate internet banking facility with multi-level access and authorization controls, other delivery channels include the Bank’s extensive branch network, credit card offerings and electronic payments platforms. The Corporate Account units’ services are delivered through the Bank’s specialised branches in Mumbai, New Delhi, Chennai, Kolkata, Ahmadabad and Hyderabad.

The Corporate Accounts unit’s corporate loan portfolio primarily consists of fund based products (including cash credit, working capital demand loans, bills discounting, export finance, corporate loans and term loans for project and corporate finance) and non-fund based products (including letters of credit, bank guarantees, deferred payment guarantees). Varied investment products like bonds, commercial paper and nonconvertible debentures, among others are arranged by the Global Market Group of your Bank to corporate customers.

The total outstanding loans to clients in the Corporate Accounts unit stood at ' 3,385.78 billion and ' 4,118.97 billion in respect of fund-based products, and ' 1,895.99 billion and ' 2,172.88 billion in respect of non-fund-based products as of 31^st March, 2017 and 31^st March, 2018 respectively.

The CAG has been instrumental and a co-participant in various development schemes of the Government aimed towards transforming India through sustainable development within the 15-year road map. Towards achieving this vision, CAG has been actively supporting many Infrastructure projects like Roads and Ports (improving connectivity all over India and also contributing to ease of business); Power (in line with the

B. TRANSACTION BANKING UNIT

Government’s Saubhagya Scheme of providing power to all households by March, 2019); Renewable Energy (including wind power, solar roof top and hydro projects, among others for sustainability) and various EPC Projects (to support Government priority projects).

Transaction Banking Unit (TBU), a technology driven platform offers comprehensive transaction related products and solutions to clients. The objectives of TBU are to adopt new technology initiatives catering to bulk transaction requirements of clients along with other value additions like customized MIS, integration with ERP and dedicated single point Client Support Cell, among others. Study and analysis of transaction patterns enables your Bank to develop non-traditional techniques for assessing other Banking requirements like Credit, Fund Management, Cross Selling and other for clients.

Your Bank offers a wide range of TBU products to Corporate, Mid-Corporate, Government Departments, Financial Institutions viz. NBFCs, Insurance Companies, Banks, Mutual Funds and SME Clients which facilitates their fund management requirements.

By keeping a track on market development, your Bank provides technology based futuristic solutions to clients to keep TBU products updated and ahead of its competitors.

While, Corporate Customers and Government clients (both Central and State Government) continue to be the key focus segment, your Bank has grown thrust to SME sector to increase penetration among existing as well as start-up business.

TBU fee Income increased by 33.62% from Rs, 616.96 crore in FY2017 to Rs, 824.39 crore in FY2018. A 30% growth in fee Income has remained consistent in the last three years. Turnover registered a Y-o-Y increase of 67.30% with transactions amounting to Rs, 21,37,369 crore in FY2018 over Rs,12,77,580 crore in FY2017. Your Bank was awarded with “Best Transaction Bank in India” by The Asian Banker for FY2017.

C. PROJECT FINANCE AND LEASING

The project finance environment presented contrasting pictures of sector-specific challenges where on the one hand sectors like Roads exhibited some signs of revival while on the other hand Power, in particular non-renewable and telecom sectors continued to grapple with the macro-economic issues. The overall sentiments of the promoters and lenders remained subdued owing to the continuously rising number of bad loans and stalled infrastructure projects. There are several new initiatives taken by Government as well as RBI, and if these steps deliver successfully, FY2019 may offer some hope to all the stakeholders.

Your Bank’s special business unit Project Finance and Leasing (PFSBU) deals with the appraisal and arrangement of funds for large projects in infrastructure sectors such as power, telecom, roads, ports and airports. It also covers other non-infrastructure projects in sectors like metals, cements, oil & gas, among others, with certain threshold on minimum project cost. PFSBU also provides support to other verticals for vetting their large ticket term loan proposals. In order to strengthen the policy and regulatory framework for financing infrastructure, inputs are also provided to various Ministries of Government of India and the RBI with respect to lenders’ views on new policies, Model Concession Agreements and broader issues being faced in infrastructure financing. The role of PFSBU has further expanded in stressed asset management in view of the substantial increase in the number of stressed assets.

During the year, PFSBU in all earned Rs,176 crore as fee income, which was a growth of 25% over previous year.

D. MID CORPORATE BANKING

Project Finance and Leasing Business Performance

(Rs, in crore)

Â	FY2016	FY2017	FY2018
Project Cost	77,227	83,434	81,701
Project Debt	59,094	51,227	58,754
Sanctioned Amount	18,125	26,557	19,835
Syndication Amount	18,082	5,809	11,937

 

Your Bank’s Mid Corporate Group (MCG) operates through its 14 Regional

Offices across Ahmadabad, Bangalore, Chandigarh, Chennai (2), Hyderabad, Indore, Kolkata (2), Mumbai (2), New Delhi

(2) and Pune. The MCG has 55 branches as on 31^st March, 2018 with 21 branches in metro centres and 34 branches in other urban centres.

MCG Loan Portfolio (Non-Food Domestic)

(Rs, in crore)

Â	2018
MCG Loan Portfolio (Non-Food Domestic)	3,29,772

The overall growth of MCG Vertical during the FY2018 was Rs, 9,433 crore, with a Y-o-Y growth rate of 3.20%. During the year, MCG has sanctioned 80 new connections, with aggregate Fund Based exposure of Rs, 21,551 crore, most of which are investment grade assets.

The Trade Finance (LC & BG) turnover volume of the Group improved by 25.96% from Rs, 76,589 crore as on 31^st March, 2017 to Rs,96,469 crore as on 31^st March, 2018. The forex turnover of the group has improved by 6.22% from Rs,3,41,837 crore as on 31^st March, 2017 to Rs, 3,63,084 crore as on 31^st March, 2018.

MCG follows the approach of having periodical structured interactions, essentially serving as brain-storming sessions, among the key functionaries in the Group, for better understanding of the portfolio handled by the Group. The exchange of ideas and views in these interactions, among the top executives and the operating officials on the ground, has been useful in the Group’s planning for business growth and asset quality management.

The Group continues to partner in growth of its customers in India to expand their activities and provides them support for acquiring assets/companies overseas, including by way of loans to overseas subsidiaries/JVs (backed by Letters of Comfort or Stand-by Letters of Credit).

Your Bank has been an epitome of trust across the length and breadth of the country. It has extended its wings across the globe with financial products for the NRI community, Indian corporate, exporters and importers as well as the local populace and corporate.

Your Bank was the first Indian bank to transcend borders with opening of branch

The breakup of overseas offices of our Bank is as under:

 

Â	Overseas Offices as on 31.03.2017	Offices opened during last 12 months	Offices closed during last 12 months	Overseas Offices as on 31.03.2018
Branches /Sub-Offices / Other Offices	74	2	4	72
Offices of 8 Subsidiaries/JV	113	9	-	122
Representative Offices	5	2	-	7
Associates / Managed exchange Cos /Investments	3	2	-	5
Total	195	15	4	206

 

During FY2018, the Bank opened 1 new branch viz. Hulhumale in Maldives. Nepal SBI Bank Limited, a subsidiary of SBI has opened 7 new branches during the year. During the same period, Sylhet branch (Bangladesh) and Doha branch (Qatar) were closed. Further, 2 Managed Exchange companies and 2 Representative Offices (Dubai & Abu Dhabi) came into the gamut of SBI on account of merger with Associate Banks.

The International Banking Group of your Bank has a balance sheet size of US$ 59,819 Mio and Net Profit of US$ 206 Mio as on 31^st March, 2018. The International Banking arm of the Bank has consistently been a major contributor to the bank’s profits, as under:

 

Financial Years	2015	2016	2017
Contribution of Foreign Offices to Net Profit of the Bank (Solo)	24%	42%	27%

 

The International Banking Group has contributed immensely in transforming the industry landscape of the country. It has positioned itself in the growth trajectory of the economy with its specialized verticals offering their expertise and services on various fronts, thus playing its part in building the momentum for a transforming India in tandem with other drivers which are mentioned as under:

1. Credit: Stimulating Growth

Your Bank has facilitated Indian corporate in their growth strategy including Green Field ventures by arranging debt in Foreign Currency.

of Bank of Madras in Colombo, Sri Lanka in July, 1864. A branch of Imperial Bank of India at London followed in 1921. SBI has now become a pioneer of International Banking among the Indian Public Sector Banks with its presence across all time zones in 206 offices in 35 countries. These offices are being managed by the International Banking Group of the Bank.

SBI has financed bilateral loans to the tune of US$ 3.00 billion to Indian corporate and syndicated loans worth US$ 1.60 billion during the year.

Your Bank was awarded Syndicated Loan House of the Year - India by APLMA (Asia Pacific Loan Market Association).

Infrastructure is a key driver of the overall development of Indian economy. The International Banking Group of the Bank has played pivotal role in setting forth the transforming India journey. Coordinated efforts have been made to ensure faster development of the economy by providing Foreign Currency funds at competitive rates to key infrastructure sectors like Telecom, Ports, Fertilizers and Power sector.

Telecom: Your Bank is the only Indian Bank to have extended External Commercial Borrowings to one of the leading telecom players.

Energy - Oil & Natural Gas: Your Bank has been active in funding overseas acquisition by Oil Exploration and Marketing companies. These acquisitions have significant strategic importance to India, both in terms of augmenting India’s energy security amid unstable crude prices by tying up new sources of crude oil as well as enhancing India’s stature in the global political and economic arenas.

Power: Your Bank has always been leader in providing External Commercial Borrowings to Power sector companies and NBFCs engaged in on-lending to power sector.

Ports: With the current emphasis on “Make in India”, the proportion of merchandise trade in India’s GDP is expected to increase rapidly. Thus, ports would play a vital role in enhancing trade and commerce potential of the country by enhancing their operational efficiency and capacity. With this backdrop and with the intent to have access to cheaper cost of funds, Ministry of Shipping, Government of India has directed all major ports to avail External Commercial Borrowing (ECB) to fund their future capex program. Your Bank was the first among major Banks to support the initiative and meet the foreign currency requirements of Integrated Ports, thus demonstrating its long-term commitment to support country’s infrastructure needs.

Fertilizer: The fertilizer industry has a major role to play in transforming the Indian farming sector and helping India achieve the goal of self-sufficiency in agricultural production. Your Bank has extended External Commercial Borrowing facility to major fertilizer producers in India that is slated to play a very important role in achieving the GoI’s stated target of doubling the income of the farmers in five years.

2. Collaborative Partnership and Image Building

DIFC Dubai Branch of your Bank has partnered with Indian Companies in setting up green field projects in Dubai, thereby promoting Indian Entrepreneurship Skills and Technology, providing employment to the local populace and Indian immigrants and contributing to the New Image of India to be reckoned with in the global arena.

3. Retail & Remittances

Your Bank has been a “window to India for NRIs residing in different parts of the world through its specialized retail and remittances products. As IT infrastructure is the bedrock for improving customer offerings in Retail & remittances segment, a detailed IT strategy was put in place for implementation of IT enablers. The highlights of the year are mentioned hereunder:

-    Remittance business strategy was re-imagined by focusing on developing various area specific Payment and remittance corridors, like India to Nepal, Indonesia to India, Korea to India, Bhutan to India remittance corridors. In addition to this, tie ups were made with third party platform for US-India leg and also for launching of App based remittances.

-    FEBA was launched    at all Subsidiaries & FOs on    Finacle platform. Finacle alert    server for SMS delivery rolled    out in 21 territories.

-    InTouch Branches opened at Male, SBI Mauritius & SBI Nepal during the year.

-    Remittances through ATMs rolled out in Mauritius.

-    Mobile banking launched in UK, Mauritius, Maldives, Canada, Nepal and Sri Lanka.

-    Online Account opening launched at SBI California.

-    Call centre operations of SBIUK relocated to India, resulting in significant cost savings.

-    Launched remittance from USA to India through Transfect Remittance LLC, USA.

-    Student GIC Scheme launched at SBI Canada, thereby offering ease of entry and banking to Indian students interested in pursuing higher studies in Canada.

Global Payment & Services:

Global Payments & Services (GP&S), a unit under International Banking Group (IBG), comprises three branches/offices viz., Global Link Services (GLS), International Services Branch Mumbai (ISBM), and International Services Branch Ernakulam (ISBE). It facilitates online inward remittances from overseas locations to India, Foreign Currency Cheque collection, Opening & Maintenance of Vostro Accounts, Asian Clearing Union (ACU) Transactions and Bank for Foreign Economic Affairs (BFEA) of USSR section.

Highlights:

-    Tie-up with 62 Exchange Companies, and Six Banks for channelizing inward rupee remittances from Middle-East Countries to India.

-    Compliance    framework strengthened for enhanced post transaction monitoring through AMLOCK related to remittances.

-    During FY 2108, GP&S on behalf of domestic branches handled 65,765 Export bills (in US$ and Euro currencies) and 65,232 Foreign Currency cheque collection aggregating to US$ 13,601 Mio.

-    During FY2018, GP&S handled14.03 million online inward remittance transactions amounting to US$ 9,746 Mio, received from various global centres.

4. Trade Finance

SBI has been providing a wide portfolio of Trade Services through a varied range of products and services to exporters and importers through an extensive, well equipped branch network that operates in all time zones in India and abroad. Monitored through a focused Department, Global Trade Department (GTD) in International Banking Group (IBG), the Trade Finance forms a significant part of the International Asset portfolio. SBI being one of the top global banks is in a position to arrange low cost Trade finance to Indian Corporate for their imports.

Global Trade Department in IBG contributes immensely in synergizing Forex business flows from Domestic Offices to Foreign Offices by acting as a robust link between them and addressing related gaps. It also endeavors to leverage the Correspondent / Partner Banks relationships for prospective Trade related business.

Recently in Nov’2017, your Bank hosted the 34th Asian Banker Association Annual Conference to reiterate its commitment to provide support to projects that will encourage Trade, Industrial and Investment Co-operation in the Asian region.

SBI is a prominent player in India- Asia Trade corridor and has been recently awarded as “The Best Trade Finance Bank for the South Asia region” by Global Trade review, London. This is the second consecutive year SBI is awarded at a regional level. We are already “The Best Trade Finance Bank - India” for seven consecutive years in Global Finance.

5.    Foreign Direct Investment

Your Bank has set up Japan Desk which aims to act as a nodal point for channelizing flow of investments between Japan and India through State Bank of India. It provides necessary information / market research / legal support to Japanese companies wanting to incorporate in India. Japanese corporate looking for investment opportunities in India are being facilitated in identifying sectors/industries of interest to them and are provided credible market information. This has facilitated flow of FDI from Japan to India.

SBI has also set up Korea Desk in collaboration with The Korea Development Bank (KDB). Korea Desk in coordination with KDB connects the Korean companies with the opportunities in Indian market. It facilitates Korean companies in setting up new business entities in India. Korea Desk has facilitated acquisition deals.

Under the aegis of Japan Desk and Korea Desk, corporate are provided tailor made credit products and services in a seamless manner for their ease of doing business.

Japan Desk and Korea Desk are unique facilities created in India which have facilitated High Tech companies from Japan & Korea in the area of Automobile, Engineering Goods, Food Processing etc. set up manufacturing facilities in India which helped in creation of employment and also in the mission of Make in India.

6.    IT Initiatives:

Your Bank as a truly Digital Bank has taken a holistic approach to innovate processes to make them customer centric thereby enabling it to capture and convert data into actionable insights by creating a simple, virtual organization that appears ubiquitous to every customer, offering tailored products to the likes, needs and preferences.

The initiatives taken at Overseas

Offices are:

-    Finale E-Banking Application (FEBA) i.e. Retail INB, Corporate INB and Mobile banking solution Implemented at all overseas offices.

-    UK Based Contact Centre has been migrated to Bengaluru (India) thereby extending availability of services to 24x7x365 for UK Customers at much reduced cost.

-    Trade Finance Solution-eTrade from Misys Plc. (UK) a back-end Application for 22 Trade Finance Products such as Bank Guarantee, LCs, Buyers Credit, MRPA etc. since implemented at all FOs to support all Trade Finance requirements at Foreign Offices.

-    Truly digital sbiINTOUCH facility has been extended from Domestic to Foreign Offices as well. As on date it has been rolled out at 3 countries-Male, Mauritius and Nepal.

-    Standalone SWIFT Centers at London and New York have been migrated back to India to ensure better control, oversight and protection against possible cyber threats

-    Enterprise level CRM solution is being implemented across all Foreign offices to improve deep understanding of customer needs and behavior, requiring very little remote support.

-    Bank’s Digital Banking strategy is continuously reworking to initiate various technologies such as Internet of Everything, Open Banking to enhance the choice, utility and experience, Mobility and Wearable. Your Bank has initiated :

Enterprise Project Management tool where every IT project is tracked.

a.    Big data analytics to help deliver products on customer preferences and tracking customer stickiness for successful customer retention.

b.    Bank has begun using Private Cloud selectively and has plan for Document Management Solution to capture its records digitally.

c.    Generation of regulatory and other reports directly from core data under ADF (Automatic Data Flow) for International Banking Statistics (IBS), Bank Exposure and Country Exposure.

Your Bank has always been an integral part of the growth strategy of the Indian economy, and has once again been on the forefront in stimulating growth and facilitating opportunities for building momentum towards a transforming India.

3. STRESSED ASSET MANAGEMENT

For the last few years, the entire banking sector has been under stress due to a spurt in the growth of Non-Performing Assets (NPAs). Rising NPA levels and fresh slippages across sectors can be attributed to the following factors:

i.    Inadequate pickup in the global economy and negative spill overs from global financial markets.

ii.    Less than adequate pick up in domestic growth and declining exports.

iii.    Cancellation of coal blocks.

iv.    Delay in realization of receivables due to subdued demand and reduced market confidence, among others.

v.    Stress in Steel sector due to volatility in prices of steel; low capacity utilization and cheap imports from other countries; imposition of trade barriers by countries; and inverted duty structure.

vi.    Stress in Power sector due to delayed tariff revisions; issues in environmental clearances and land acquisition; high Aggregate Technical & Commercial (AT&C) losses; and poor financial health of DISCOMS.

vii.    Delay in execution of infrastructure projects and related escalation of costs coupled with increase in receivable days and unbilled WIP impacting EBITDA margins, stalled projects, highly leveraged business model and lower than expected equity returns for promoters/ sponsors.

viii.    Stress in other major sectors like Textiles, Telecom, Sugar and Aviation, among others.

According to the Financial Stability Report of RBI for December 2017, risks to the Banking sector remained at an elevated level weighed down by further asset quality deterioration. Further, results of macro stress tests for credit risk at system, bank group and sectoral levels (to test the resilience of the Indian banking system against macroeconomic shocks) predict a grim picture under which GNPA ratio of all Scheduled Commercial Banks (SCB) may increase to 10.8% by March 2018, 11.1% by September 2018 and may further deteriorate if macro-economic situation worsens. Moreover, sensitivity analysis conducted to study the resilience of SCBs with respect to credit, interest rate, equity prices and liquidity risks predicts that a severe credit shock is likely to impact the capital adequacy and profitability of a significant number of banks, mostly PSBs.

The movement of NPAs and recovery in written-off accounts during the last four years are furnished below:

_(Rs, in crore)

The substantial rise in Gross NPAs is partly due to the merger of erstwhile Associate Banks (e-ABs) and Bhartiya Mahila Bank Ltd. (BMBL) with your Bank, wherein a total of Rs, 65,523 crore of NPAs were added to the portfolio.

Industry wise distribution of the NPA portfolio is represented as under: introduced certain innovative methods and thus gave first mover advantage to your Bank in areas like arranging Mega e-Auction of large number of properties on Pan-India basis, identification of unencumbered properties of the borrowers/ guarantors and arranging for attachment of properties before judgment. NCLT cell has also been created in SARG to monitor all the cases referred to NCLT for resolution. A total of 232 cases have so far been referred to NCLT, out of which 215 cases have been admitted. Many cases referred to NCLT from the first list of 12 accounts are expected to be resolved by H1, FY2019.

A major portion of the recovery in SARG comes from OTS/Compromise. The vertical also comes up with special OTS schemes (Non-discretionary and Non-discriminatory) from time to time, to give the borrowers one-time opportunity to settle their dues. A dedicated team is also set up to look after the sale of Assets to Asset Reconstruction Companies (ARCs). Stressed assets are sold to these ARCs on Cash and Security Receipts (SR) basis.

The Government of India in its Reforms Agenda for Responsive and Responsible PSBs has directed creation of a Stressed Assets Management Vertical (SAMV). Your Bank takes immense pride in the fact that SBI has been a pioneer in establishing such a dedicated vertical almost decade and a half ago by establishing Stressed Assets Management Group (SAMG) during FY2005.

In order to give dedicated focus towards resolution of stressed accounts, SAMG has been renamed as Stressed Assets Resolution Group (SARG). SARG continues to work as a dedicated and specialized vertical for efficient resolution of high value NPAs. At present, it is headed by a Deputy Managing Director with three Chief General Managers overseeing the entire effort. SARG has turned into a centre of excellence in resolution of NPA and stressed assets. As on 31^st March 2018, SARG has 20 Stressed Assets Management Branches (SAMBs) and 57 Stressed Assets Recovery Branches (SARBs) across the country and covers 26.34% and 73.16% of your Bank’s Non-Performing Assets (NPAs) and Advances under Collection Account (AUCA) respectively. Besides initiating hard recovery measures, SARG

Despite making concerted efforts to expedite recovery and reducing NPAs, your Bank often faces impediments in the form of legal hurdles, unavailability of strategic investors and lack of buyers for properties put up for auction, among others. For legal constraints, your Bank has approached the concerned authorities at appropriate levels and relevant fora like Gyan Sangam, IBA, etc. The Government and RBI have also responded by enacting new laws, issuing new instructions and amending some of the existing ones, wherever required. RBI has recently come

out with a revised framework for resolution of stressed assets, scrapping various restructuring schemes like S4A, SDR, CDR, 5:25 Flexi restructuring. The revised framework sends out a strong message by ending regulatory forbearance and places higher reliance on the NCLT framework for resolution of stressed assets. In fact, enforcement of Insolvency and Bankruptcy Code (IBC) for resolution of Stressed/NPA borrowers has provided Banks with a time bound, transparent and effective mechanism to tackle stressed assets. Some of the large accounts initially referred to NCLT are moving towards resolution. It is reckoned that most of the large value accounts referred to NCLT may undergo resolution, preventing banks from taking up huge haircuts as the going concern value of those accounts shall be realized. As the system evolves with IBC, it may even pave the way for development of a robust secondary market for stressed assets, leading to efficient price discovery and transparent resolution of accounts resulting in unlocking maximum value for your Bank.

4. TREASURY OPERATIONS

The Global Markets Group performs the treasury functions of your Bank. It is responsible for ensuring safety, liquidity and yield, besides maintaining statutory reserve requirements. The corpus under management of Global Markets increased by 13.6% Y-o-Y to ' 10,26,439 crore, as of 31^st March, 2018. Global Market Group also provides foreign exchange services and hedging instruments for risk management to customers and offers portfolio management services to many retirement funds. The year started off with a challenge to complete the merger of treasuries of the five Associate Banks and Bhartiya Mahila Bank Ltd. with SBI’s treasury. This was successfully completed and the combined treasury started operations on 3^rd April, 2017.

During the year, the net interest income from treasury investments grew 15% Y-o-Y. Global Markets’ G-Sec portfolio also increased 22% Y-o-Y, mainly on account of the merger with Associate Banks and Bhartiya Mahila Bank Ltd. on 1^st April, 2017.

To improve the portfolio yield and to optimally utilize the surplus liquidity, your Bank has increased its Commercial Paper and Corporate Bond portfolio by around 9% on a Y-o-Y basis.

 

A. SLR AND NON SLR PORTFOLIO

Your Bank’s Global Markets Group is also responsible for managing the Bank’s SLR portfolio, as well as liquidity management which includes maintenance of CRR and HQLAs for Liquidity Coverage Ratio (LCR). After an impressive performance in the last two years, this year has proven to be challenging for bond markets due to rising yields. During the year, RBI had cut repo rate by 25 bps to 6% in August, 2017 but has held rates constant since then. The benchmark 10 year (of 6.97% due 2026) paper which was trading at 6.69% on 31^st March, 2017, ended the current fiscal year at 7.53% as on 28^th March, 2018. The new benchmark (of 6.79% due 2027) paper introduced in May, 2017, fell to a low of 6.41% in July, 2017 (on closing basis), but increased for most of the remaining period and reached a high of 7.95% in March, 2018 before easing off to 7.55% as on 28^th March 2018. Due to this sharp rise in yields, your Bank had to increase provisions on investments. The rise in yields was significantly sharper by historical parameters like repo-GSec spread and real interest rates.

B. EQUITY MARKETS

Equity markets continued their rally for most of FY2018. However, post budget, tracking global equity markets, a sharp correction in the markets was seen but Nifty still ended FY2018 with 10.25% gains. Your Bank has managed the equity portfolio using a strategy of actively rebalancing the portfolio based on key events, global and domestic market conditions, quarterly earnings of the companies and their future outlook backed by its research. In addition to the secondary markets, your Bank continues to profitably invest in IPOs to improve the return on the portfolio. A 112% Y-o-Y profit growth has been achieved from equity investments during the year.

C. FOREX MARKETS

The Global Markets Group also handles the foreign exchange business of your Bank, providing solutions to customers for managing their currency flows and hedging risks through options, swaps and forwards, in addition to providing liquidity to markets. The Group also manages the FCNR(B) deposit corpus of your Bank and provides FCNR(B) loans and Pre & Post shipment Export Finance in foreign currency to its customers.

In order to improve ease of doing business for its customers and to keep pace with the transforming India, your Bank continues to increase the use of IT in its Forex offerings. A new platform for large volume customers, Forex Edge, has been launched during the year. This is in addition to your Bank’s earlier platforms, e-Forex and FX-Out, which completes the bouquet of products for forex services. While the Forex Edge platform is for high volume customers, e-Forex is committed towards providing a world class forex solution to medium and small corporate customers, and FX-Out caters to the forex remittances of retail clients without having to route them through a forex authorized branch.

Treasury Marketing Group is the customer engagement arm of Global Markets and plays a pivotal role in marketing of Treasury Products to Institutional and Corporate clients of your Bank. Treasury Marketing Units located across the country, are the face of Global Markets to the customers. They interact with the customers on a daily basis, identify their needs, and coordinate with other business units for pricing, product structuring and delivery.

In May, 2017, your Bank has set up a separate FPI desk for focused attention on FPI/FDI business. Various processes have been put in place to mobilize business from these large investors and the desk has successfully on-boarded 33 counterparties for the fixed income market along with catering to the forex requirements of many large FPI clients. Earlier, in order to improve engagement with other financial sector players including banks and financial institutions, an Interbank Marketing Desk was created under Global Markets Group. This desk is actively building and maintaining mutually beneficial relationships with these clients. Global Markets Group has also augmented its in-house market research team to enhance value added services to your Bank’s clients as well as its own investment decisions. Your Bank believes that increased resources dedicated towards building relationships with customers and counterparties, as well as augmenting the scope and quality of its research, will bear rich dividends and help your Bank in maintaining its leadership position well into the future.

Private Equity / Venture Capital Fund

In this space, the JV set up with Macquarie and IFC in 2008, to manage the US$ 1.2 billion India-focused PE fund, has invested approximately 96% of its total capital commitments. The Fund has invested across eight infrastructure assets namely Telecom Towers, Airport, Thermal Power, Hydro power and NHAI road assets. It is currently in the exit phase and has successfully exited from two road assets.

The Oman India Joint Investment Fund (OIJIF), a JV set up in 2010 in partnership with State General Reserve Fund of Oman, has completed its investments for Fund-I of US$ 100 million. Fund-I has made two full exits and one partial exit. Based on the success of Fund-I, both the partners (SBI and SGRF) decided to launch Fund-II with a target corpus of US$ 300 million. Till date, Fund-II has received commitments of US$ 230 million from sponsors and various domestic financial institutions. Fund-II is currently assessing various opportunities for investing.

During FY2018, your Bank picked up a stake in National e-Repository Ltd. and made an additional equity investment in National e-Governance Services Ltd.

Portfolio Management Services

Your Bank is the largest retirement benefit fund manager in the country with an impeccable track record. The total AUM as on 31^st March 2018 is Rs,4,51,237 crore. Your Bank is ranked No. 1 fund manager (out of 3 fund managers) by Coal Mines Provident Fund Organization and No. 2 fund manager (out of 5 fund managers) by Employees Provident Fund Organization as per the latest data made available by respective client.

1. HUMAN RESOURCES AND TRAINING

A. HUMAN RESOURCES

IV SUPPORT AND CONTROL OPERATIONS

 

Human Capital is the most critical component for your Bank to achieve the Strategic Corporate Goals. Your Bank’s HR policy is being constantly reviewed to align with business goals.

Your Bank considers its employees as its core strength and is proud of its performance oriented and meritocratic culture. It cares for the aspirations of its staff members by constantly trying to enrich their lives and job experiences. Your Bank believes that challenges of the future can be overcome only by a committed and dedicated work force. Your Bank’s HR vision has been built around the principles of inclusiveness, empowerment and development.

Category	31st March, 2017	31st March, 2018
Officers	81,041	1,07,077
Associates	92,979	1,10,348
Subordinate staff & Others	35,547	46,616
Total	2,09,567	2,64,041

 

The financial year began with the historic merger of SBI with its five Associate Banks and Bhartiya Mahila Bank Ltd. (BMB). The merger also witnessed the addition of around 71,000 new employees to the existing work force of around 2,00,000 employees. Initiatives introduced by your Bank such as ‘SANGAM’, helped in smooth on-boarding of employees. The summarised HR Profile of your Bank as on 31^st March, 2018 is as under:

3.    Manpower Planning

Your Bank has adopted a scientific model for manpower planning to ensure optimal utilization of its human resources. To foster optimum expertise and deep domain knowledge, your Bank introduced Job Families concept which is being adopted to place right person in the right job. Your Bank has anticipated the need to prepare future leaders of the Bank. Project Saksham is designed to achieve all this in a structured and holistic way. Leadership development will remain the key focus of the HR function.

4.    Staff Welfare Measures

Your Bank believes its human resource to be professionally trained with high standards of proficient competence. At the same time your Bank also cares for the employee’s personal life. With this motive, your Bank has taken a transformative initiative to promote healthy work-life balance. The Bank is also taking proactive measures to reduce the hardship of the officers by reducing the transfer/posting to its minimum and curtailing it to need based. This new approach will provide the employees a good and healthy work

1.    Vision, Mission & Value

Your Bank is a pioneer, in the Indian public sector in starting an independent ‘Ethics & Business Conduct’ Department to weave its ethos in the operational fabric. Your Bank’s entire work force is committed to adhere to its newly crafted Vision, Mission and Values.

The entire team at SBI is dedicated towards providing simple, responsive and innovative financial solutions to a transforming India by being the preferred choice for any banking transaction. Your Bank believes in providing world class banking facilities through living daily its values of Service, Transparency, Ethics, Politeness & Sustainability (STEPS) towards creating a differentiated experience of our esteemed customers.

2.    Recruitment

Your Bank is focused on developing processes to attract the best talent within the country. It has revamped the recruitment process and developed a stronger employee value proposition to attract the right talent. During FY2018, 2,220 young tech savvy and customer friendly probationary officers, and 600 Specialist Officers were selected through lateral and contractual recruitment process.

environment encompassing mutual respect and empathy in the work place. The fact that the global job site ‘indeed.com’ recently named SBI among the Top 3 Best places to work in India validates this cultural transformation.

Your Bank believes in recognizing and rewarding good work done by the employees. It has rolled out the scheme called ‘SBI Gems’. Senior officials may award Gems to the junior colleagues across the Bank as a token of appreciation. It enhances the loyalty and motivation of employees for the organization.

In extension of the various HR best practices to increase employees engagement, your Bank has launched ‘SANJEEVANI-SBI HR Helpline’. It is a two-way communication channel between the employees and HR Team through Interactive Voice Response System, to provide quick and meaningful resolution of HR matters. Employees can approach sAnJEEVaNi through phone, SMS and e-mail.

Your Bank always aims to set examples by adopting best HR practices to make SBI as a model organization to work for. Your Bank introduced the ‘Bereavement Leave’ of seven days, to help the employee to cope with loss of a near and dear ones. This leave allows employees to spend time with their families in the hour of crisis and grief.

5. Gender Diversity

Gender sensitivity and inclusiveness have always been the corner stone of your Bank’s HR policy. Women employees are spread across all levels of hierarchy, as well as geographical spread. Close to 2,400 Branches are being headed by women officers. Out of total work force of 2,64,041, 24% comprises of women employees.

Your Bank maintains a Zero Tolerance Policy against Sexual Harassment at Workplace and has put in place an appropriate mechanism for prevention as well as redressal of complaints of sexual harassment.

TEAM COMPOSITION

Year	Women	Men
FY2017	23%	77%
FY2018	24%	76%

6. Reservation Policy

Your Bank meticulously follows the GOI directives on Reservation Policy for SC/ST/ OBCs. It has a representation of SC, ST, OBCs and differently-abled persons among all the cadres of its work force. Your Bank believes in having an empathic and caring approach towards all its employees. It has appointed Liaison Officers at Corporate Centre and at all the Local Head Offices of the Bank to redress the grievances of the SC/ ST employees on real time basis. Your Bank also conduct the Pre-Recruitment and PrePromotion training programmes regularly for SC/ST candidates.

Representation of SCs,STs,OBCs and Differently Abled as on 31^st March, 2018

Cadre	Total	Â	Representation		Â
Â	Â	SCs	STs	OBCs	DAPs 2
Officers	1,07,077	18,767	8,340	17,953	1,707
Clerks	1,10,348	18,089	9,322	26,269	2,322
Sub-staff	46,616	11,909	2,946	10,598	290
Total	2,64,041	48,765	20,608	54,820	4,319

‘Differently Abled Persons

7.    Industrial Relations

funds from the Staff Welfare Fund to provide assistance to the retirees in case of critical illnesses.

9. Inculcating Learning Culture

Your Bank emphasises on the importance of skill in its work force and constantly upgrades it through continuous learning process. Your Bank has designed inhouse e-Learning courses for the entire team according to the nature and role of the employee’s function. The completion of such courses has been made mandatory by linking them with Annual Appraisal System of the employees.

 

Your Bank has a strong focus on industrial relations. Apart from proactively taking measures towards employee welfare, your Bank holds constructive dialogue with Associations and Unions for understanding and addressing the needs of our employees.

8.    Care for Retired Employees

Your Bank recognizes the contribution of its employees who have retired from active service and extends a helping hand whenever required. During the year, your Bank has not only provided financial aid for partially meeting the premium for Medical Insurance but has also set aside

B. STRATEGIC TRAINING UNIT

Your Bank has always been a learning organization. To achieve this objective, over the years, your Bank has developed a robust training system, which caters to all categories of the Bank employees. It gears them not only to meet the present needs, but also enables them to remain ahead of the learning and competitive curve. SBI’s training infrastructure in terms of facilities (consisting of six Apex Training Institutes, 54 State Bank Institutes of Learning and Development), content, programmes and trainers is the largest and unparalled in the Indian Banking space.

Your Bank’s Endeavour is always to ensure a continuous, planned and proactive training process for individual growth and organizational effectiveness. New techniques and methodologies are adopted and imparted on a regular basis to establish a virtuous cycle of teach and learn to enhance quality and efficacy of training. This will also transform employees into knowledge workers and enable them to carry forward the Bank’s initiatives towards creating customer delight and enhanced customer experience. Further, in the fast-changing Banking environment, in order to stay relevant, your Bank is continuously grooming all new employees and deskilling the existing ones by adopting world class and prudent techniques in training and development.

REVAMPING THE ‘TRAINING SYSTEM’ AND MAKING SBI FUTURE READY

As quality and competence of the workforce is most critical to your Bank’s performance and future growth, there is a continuous need to inculcate a culture of self-learning and skill enhancement. Moreover, to enhance the reach of training to more employees in a uniform manner, use of digital technology to transform learning is increasingly being adopted through e-learning, e-Gyanshala and Knowledge Helpline. Mass communication programmes for building employee ownership and internal branding have successfully helped your Bank in the past to overcome challenges, and will also continue to be a part of the new dispensation. With the objective of making the Bank future ready, several new initiatives have been taken, few of them are as follows:

1.    Resource Optimization

-    Faculty Selection Process: The selection process for faculty / trainer has been modified with the objective of selecting officials with passion and flair for teaching, as well as requisite command over the chosen field of subject.

-    Verticalisation of Apex Training Institutes (ATIs) to provide specific domain knowledge: With Banking becoming increasingly specialized, a need was felt to have institutes which would specialize in providing domain specific quality training in areas of Credit, International Banking, Risk, Marketing, Rural Banking, IT, Leadership and Human Resources, among others. In this backdrop, the Apex Training Institutes have been entrusted to focus on specialized domains. Each ATI will be guided by an Advisory Council comprising of senior officials of your Bank and an eminent external expert to steer the way forward. An Apex Advisory Council for the whole training system has also been formed.

-    Centralized Control of Learning Centres: The Learning Centres have been renamed as “State Bank Institute of Learning & Development” (SBILD). These ILDs provide short duration role based capsule programs for certifications.

2.    Capacity Building

-    Taking Classroom to Desktop -e-Gyanshala: To assist your Bank’s operational workforce in their daily functioning, a google like search engine - e-Gyanshala, has been developed for providing real time on-line support through various help documents which can be emailed and printed.

-    E-learning: To inculcate self learning, your Bank continues to invest in its e-learning portal to develop e-learning courses on all relevant topics with in-built opportunity of self-assessment and certification through tests.

their duties. Your Bank is the first Bank to roll out this initiative as per RBI directives in all areas, in association with external accredited agencies including Forex Operations (IIBF), Treasury Operations (IIBF), Risk Management (IIBF), Accounts & Audit (NIBM) and Credit Management (Moody’s).

-    Launch of Moody’s Certification: With the objective of Capacity Building in the area of Commercial credit, your Bank launched Credit Certification programme in association with Moody’s Analytics on 10^th October, 2017.

-    Role Based Grade Level Certifications for Employees: All roles in your Bank are being divided in over 40 major categories and role manuals for certifications have been developed by the ATIs for each of these categories to ensure quality and uniformity. All employees up to Assistant General Manager grade will be required to do role specific certification. This will also ensure that all employees attend at least one training during FY2019.

-    Institutional Training for Skill Development: While the ATIs would be imparting domain specific specialized training programmes related to job families, SBILDs will be providing role-based trainings in a uniform manner across locations.

-    Leadership Development: Your Bank has set up the new state-of-the-art ‘State Bank Institute of Leadership’ in Kolkata which has become operational on 23^rd September, 2017. Originally named as State Bank Institute of Management, it has been rechristened to focus on Leadership Development in the changing paradigm. SBIL has been launched as a flagship institute for training senior executives in the BFSI sector and envisioned as a centre of global excellence with world class infrastructure. The facility will be used for enhancing the Leadership Skills of senior executives of SBI/BFSI sector in collaboration with reputed institutions (in India and abroad).

In addition, your Bank is engaging external faculty and subject matter experts apart from its senior executives selected as Guest Faculty. Engaging such external faculty from reputed universities and business schools will not only make participants aware of the best practices in leadership and management across the world, but will also equip them with contemporary managerial and leadership knowledge and skills.

-    National Pool of Trainers:

Your Bank is associated with retired officers, who have domain knowledge, requisite communication skills for imparting knowledge and a flair for teaching.

-    Participants Trained through ATIs/SBILDs: During FY2018, over 1,93,994 SBI employees have received at least one training (excluding multiple trainings).

-    Agradoot: This mass communication programme is conducted for all substaff members. Under this programme in FY2018, 43,275 subordinate staff, constituting 94% of total subordinate staff (including subordinate staff of e-ABs) were covered.

3. Honing Skills Of Leadership

-    Comprehensive Development Plan for Probationary and Trainee Officers: To ensure proper onboarding of new entrants and imparting of comprehensive training, the training policy for Probationary and Trainee Officers has been revised to facilitate continuous learning.

Internet Banking Users (No. in lakh)

 

FY2013	FY2014	FY2015	FY2016	FY2017	FY2018
130	177	220	263	327	479

 

4.    Marketing of Training

-    Marketing of Training Capacity to other Banks and Undertakings:

Spare capacity at ATIs and SBILDs would get created once our proposed digital and structured training interventions viz. e-Gyanshala, e-learning and Certification programmes are fully implemented. This surplus capacity is proposed to be used for revenue generation from other Banks and undertakings .

-    Marketing of e-lessons: Your Bank’s generic e-lessons, which have a huge demand due to its rich content is also proposed to be marketed to other Banks in India and abroad.

5.    Research

A dedicated research wing is being set up at SBIL, Kolkata for high end quality research focused on banking and financial services in the areas across management discipline and fintech.

6.    Transition To Retirement

Your Bank conducts this programme for the senior executives of the Bank on the eve of their retirement. This is to equip and orient them with the change and enable

Some of the new features launched in Net Banking in FY2018 are as under:

-    ABC E-procurement: White Label e-Tendering Portal integrated with MOPS

-    CFMS Andhra Pradesh Integration (SBMOPS, GBSS and RBI for e-Kuber)

-    CPWD Integration, Settlement and Refunds

-    Payment Integration with GEM (Government e-Market Place)

-    PPF Account Nominee display through INB

-    e-Mail Alerts for INB transactions-Retail

-    MySBIWorld (Integration with Credit Cards, Mutual Funds) for Migration

them to lead a happy and satisfying second innings, after having served the Bank for long years.

2. INFORMATION TECHNOLOGY

Your Bank is a strong proponent of leveraging information technology to deliver convenience to its customers. Your Bank has been offering innovative and cutting-edge products to its customers with the objective of enabling banking transactions at anytime and from anywhere.

Digitalization and excellence in operations has been core to your Bank’s strategy in providing convenience to customers. It has resulted in a reduction in turnaround time and extended benefits to your Bank’s customers.

A. INTERNET BANKING

Internet Banking solutions cater to the various payments, fund-transfers, e-Tendering, e-Auction and bulk payments related requirements of the Government/ PSUs/ Large and Medium Corporate as well as for Retail Internet Banking (RINB) customers. This channel has enabled more than 159 crore transactions during FY2018.

from Electra ACS to Bill Desk ACS for Maestro, Mastercard, and Prepaid card

-    Integration with GSTN and reporting of transactions to FRT-TAX Engine on daily basis:

-    Beneficiary addition threshold count increased from 1 to 3 per day for retail customer.

-    Multicity cheque book issue for CA in INB

-    Option of 20 leaves cheque books through INB

B. ATM

Your Bank is building momentum and embracing change for transforming India through the following initiatives:

-    Samsung Pay participation for Token Service - Tap and Go Payment was introduced. It is secured as Tokenised PAN is stored on mobile.

-    INTOUCH Instant Card Issuance Services for SBI Nepal and Mauritius Customers.

-    Branches facilitated with Debit Card Management System (DCMS) support functions for addressing customer concerns with respect to debit cards.

-    Bank issued over 39.50 crore debit cards with approximately 26 crore actively used debit cards, till 31^st March, 2018.

C.    “YONO” (YOU ONLY NEED ONE)

YONO (You Only Need One) is one of the most ambitious, path-breaking, secure digital offering of State Bank of India which was launched on 24^th November, 2017.

D.    CUSTOMER RELATIONSHIP MANAGEMENT (CRM) SOLUTION AND PROJECT IMPACT

The entire project consists of seven releases for CRM (covering Sales, Service and marketing modules), development of IMPACT platform, CRM for FOs and implementation of other solutions (MDM, DLP, SAS Analytics, CRM e-Learning Solution etc.)

The key activities completed during the year are as follows:

-    Lead modules for retail (PBU, REHBU, SME, Agri, MCS, NRI) and corporate business segments (CAG & MCG) rolled out

-    e-CRM Learning tool deployed and integrated with Gyanodaya

-    Customer 360 for Retail, CAG and MCG rolled out

-    Informatica Master Data Management (MDM) went live with Customer 360; MDM will hold master data of Customer, Geography, Product and Service

-    Non-Financial Service (NFS) request module enabled in CRM; 24 different types of service requests can be lodged and tracked through CRM

-    Complaint Management System went live for 13 FOs

-    Data Loss Prevention (DLP) agents deployed in Domestic and Foreign Offices

-    Work in progress towards CRM roll out for contact centre and complaint management as part of Service Module

-    Automation of Service Request processing envisaged with integration of CBS and CRM and handling of service requests by CPCs in coming months

E.    FINANCIAL INCLUSION & GOVERNMENT SCHEMES (FIGS)

Some of the key developments of FY2018 are as under:

-    Development of SAP for Corporate Customers to facilitate acceptance of payment based on Aadhaar Number to Non - Individual / Corporate Merchants like Petroleum Banks, Chain Stores, Malls and Indian Railways.

-    Modification in RD, STDR in BC Channel to enable the closure of RD, STDR available at BC Channel.

-    Functionality for Referral Code (PF number of staff/ BC Code or Aadhaar Number) Capture from Aadhaar Pay App.

-    Customer Enrolment through eKYC for all States except Assam, Meghalaya and Jammu & Kashmir and minor customers under liberalised KYC product.

-    Mini ATM, a new service for Mobile seeding introduced for both non-FI and FI customer enabled.

-    Mini ATM, a new service for Aadhaar linking through Kiosk for both FI and Non FI customers introduced by using Mini ATM.

F.    CORE BANKING DEVELOPMENT

During the year, your Bank’s key developments are as under:

-    Exim Enterprise Edition rolled out at Branches for Trade Finance.

-    Changes for regulatory compliance like GST, FATCA/CRS, Aadhar Linking to accounts, CKYC introduced to reduce efforts and paperless banking.

-    Electoral Bond made available at identified branches.

-    Merger activity of Associate Bank with SBI completed successfully. After merger your Bank has around 42.42 crore customer base in over 24,000 branches.

G. OPERATIONS AND TECHNOLOGY SUPPORT

Post-merger, there was a necessity to rationalize operations and to merge branches/offices located in close proximity to strategic locations within a reasonable time frame so that your Bank may start reaping the benefit of merger.

With this objective, bulk merger of branches was scheduled on various dates, and 1805 branches and 244 admin offices were rationalized. This is expected to reduce operating cost to the tune of Rs, 1,099 crore in a year.

To facilitate geographical distribution of pensioners, your Bank has set up 16 CPPCs at all Local Head Office Locations and one dedicated CPPC for Defense pensioners at Allahabad.

Various facilities provided to pensioners are as under:

-    Submission of Life Certificate at any branch or digitally as per pensioner’s convenience

-    SMS to pensioners containing details of pension after credit of pension every month

-    Pension slips can be generated from any branch, through Internet banking, e-mail, and Samadhaan App

-    Helpline facility is available at all CPPCs

-    Arrear calculation sheet provided to pensioners after every revision

-    For registering complaints, the following can be done:

-    Pensioner can send an SMS “UNHAPPY” to 8008202020

-    Connect with the Bank’s Contact Centre at Toll Free No. 1800110009 which is available 24x7

-    Contact Designated Nodal Officer at all LHO Centre

Some of the key highlights for FY2018 were:

-    Successful revision of pension for Defence pensioners under OROP scheme

-    Payment of arrears to Defence pensioners after de-linking of qualifying service

-    7th CPC revision completed for over

38.50 lakh pensioners of various central, state and autonomous body categories

-    Successful merger of pension data of Associate Banks comprising over 9.5 lakh pensioners

H.    OPERATIONS AND PAYMENT SYSTEM GROUP

Prepaid Cards: Your Bank is leveraging its Prepaid cards solution to provide Automated Fare Collection (AFC) facility to upcoming Metro projects.

Funds Transfer and Settlement: The volume (number) of outward fund transfers through NEFT increased by 37.74% to 316.39 million during FY2018 compared to 229.70 million in FY2017. Your Bank has established itself as a leader in NEFT, with a market share of 15.19% as of 31^st March, 2018 (as per latest data by RBI). The volume (number) of outward fund transfers through RTGS increased by 46.39% to 16.25 million during FY2018 compared to 11.10 million in FY2017. In RTGS, your Bank maintained a market share on 13.36% as on 31^st March, 2018 (as per latest data by RBI).

The volume (number) of messages sent through SWIFT increased by 15.64% to 3.03 million during FY2018 compared to 2.62 million in FY2017.

I.    INNOVATION PROGRAM

Some of the important IT-Innovation projects and activities undertaken by your Bank are as follows:

-    Intrapreneurship Scheme: Your Bank is encouraging employees to undertake innovative projects in the same way as an Entrepreneur. Your Banks developed ‘SBI Intelligent Voice Assistant - SIVA’ which is based on Artificial Intelligence (AI), Machine learning (ML) and Natural Language Processing (NLP).

Emerging/ Niche technologies and are useful for the Bank are procured. During the year, 6 startups have been engaged. In some cases, use case evaluation is being undertaken.

- Hackathons: During the year, your Bank conducted three end-to-end Hackathons (Idea submission till Working prototype submissions) to secure solutions for YONO, Wealth Management and CMP across themes such as Facial Recognition, Voice based authentication/ chatbot, Signature Recognition, Mandate Registration process automation, Automated real time customer identification using AI/ ML/ Cognitive tech/ IOT/ Beacons and others.

J. IT SPECIAL PROJECTS III

During the financial year, Quick Photo debit Card facility was made available to all SBI customers for getting their debit Card printed at any of our sbiINTOUCH branches. In addition, sbiINTOUCH branches were launched at three overseas centres of Nepal (Kathmandu), Maldives (Male) and Mauritius, during the financial year.

During FY2018, onboarding facility and OTP through email for NRI customers; and Secure OTP for all transactions have been provided in Wealth Management Application. Further, for better monitoring of performance of SWAYAM Barcode based Passbook printing kiosks at various levels, SWAYAM Transaction and Health Dashboard have been deployed.

Branch Darpan, a web-based application has been made operational in the FY2018, which provides self-assessment for the Branches on various parameters/ aspects of Customer Delight, including infrastructure, ambience, cleanliness, display of notices and subsequent monitoring by Controllers at various levels.

K. ANALYTICS

The future of Banking business is data driven and SBI with its mammoth database, has potential to reap the benefits.

Some of the major works carried out by Analytics Team during FY2018 are listed below:

1. Cost Efficiency

To improve the CIR of the Bank, Analytics Team has completed few projects which are:

-    Rationalization of currency chests

-    Cost per transaction across various digital channels

-    Performance analysis of SBI POS Machines

-    Identification of Mini Currency Administration Cell (Mini-CACs)

2.    Business Opportunities

-    Churn Prediction Model for Current Accounts

-    Propensity Model for Loans to (SSBL & Mudra)

-    Churn Prediction Model for HNI Customers

3.    Risk Management

-    Identification of Shell companies

4.    Innovation

-    Downtime and reduction via ATM Fault Prediction

-    Tweet Classification

-    Employee Search Engine

-    Collaborative Project with BU to increase Cross-selling Income

L. BUSINESS INTELLIGENCE

Business Intelligence is core of any business and Business Intelligence Department at GITC also plays a pivotal role. Your Bank’s Business Intelligence Department has made data available at right time for business decisions through various reports and dashboards.

For operational convenience and control, a number of new dashboards have been hosted by BID on mobile devices as well as on desktops. Latest BI tools are being procured to improve visualization and ease of use.

M. OFFICE365

Office365 provides a productivity suite of applications for the employees of your Bank. All State Bank users were migrated on Office365 platform in the month of September, 2017. This has enabled employees to access the Banks email and other services like one Drive, Skype and others from anywhere, reducing the dependency on office desktop.

The Office365 suite of application has replaced the old email solution in your Bank (EMS) and also provided services like One Drive for business which solves the documents sharing problem among employees for better collaboration. Microsoft Teams provides an integrated virtual workplace to the employees, which will increase communication and collaboration among the departments and teams on a single platform.

N. SOCIAL MEDIA

Your Bank’s social media presence was established in November, 2013 and its social media strategy has come a long way in last few years. Your Bank has been consistently ranked number one globally among Top 100 Banks using Social Media by The Financial Brand in their list of ‘Power 100 Ranks’.

Taking cue from various interactions on social media, focus has been kept on creating contact of customer’s choice, be it tutorial videos on our various digital products, important announcements, security tips for using digital products or tax saving options.

Your Bank’s Twitter handle has featured on Brand Equity’s Twitter Advertising Index seven times during this financial year. SBI was the first Indian bank to achieve 100 Million views on YouTube and 1.5 million views on Quora. Your Bank has also focused on creating content for the new age professionals present on LinkedIn and is one of the most engaging Indian banks on the platform. This year the official pages on Integral and Face book started making use of the ‘stories’ feature to engage the audience.

O. COMPLAINT MANAGEMENT DEPARTMENT (GITC)

Complaint Management Department (CMD) at GITC handles customer complaints lodged in Complaint Management System (CMS) and also complaints received through e mails relating to Anytime channels including Debit Card Transactions (ATM/POS/PG); Prepaid Card Transactions (aTM/POS/Pg); INB (Corporate & Retail INB) Transactions; Mobile Banking Transactions - SB Anywhere, State Bank Buddy and UPI; AEPS (Debit Card Transactions) and SBI E-pay Transactions.

The objectives of the department are as follows:

a.    To handle and resolve the complaints within prescribed TAT.

b.    Analyse the reasons for complaints and suggest remedial measures.

c. Coordination with contact centres of SBI, other bank’s complaint handling teams, and NPCI to ensure effective handling of complaints.

P. IT SPECIAL PROJECT II

Oracle Financial Services Analytical Application (OFSAA): The key metrics which defines the coverage of project consists of the following:

-    Consistent and Integrated delivery across 22 modules

-    With insights of more than 650 OBIEE reports

-    Covering 10 departments in risk and finance

-    Covering more than 250 internal stakeholders

-    Covering 500 million accounts

-    Across 23,500 branches

-    Spread over 27 countries

-    Through more than 15 sources of data

List of IT - Awards received during FY2018
CII Award for Customer Obsession 2016	1.    Order of Merit Award for Banking Events. 2.    Accelerator (BEDA_T+O)
Skoch Award	1.    Order of Merit Award for Banking Events Data 2.    Accelerator(BEDA_T+O)
ABF Retail Banking Awards 2017	Debit Card Initiative of the Year - India
IDRBT Banking Technology Excellence	1. Best Bank Award for Use of
Awards for the year FY2017	Technology for Financial Inclusion Among Large Banks 2. Best Bank Award for Electronic Payment Systems among Large Banks
CIO 100 by IDG	Best CIO
CSI	1.    Best CIO of the year 2.    Best CISO of the year 2017 3.    Best Bank in terms of Implementations of Cognitive Technologies
ASSOCHAM Technology Award	Emerging technology award
SKOCH AWARD Technologies for Growth	1. 5 Order of Merit
Awards, 2017	2.    3 Gold 3.    2 Platinum 4.    1 Best Technology Bank
FINNOVITI 2018	Best Innovative Product Award
IBA Banking Technology Conference	1. Best Technology Bank of the Year
Awards FY2017	(Large Category Bank) 2.    Most Innovative Project using IT (Emotion Tracker) 3.    Best Financial Inclusion linitiatives 4.    Runner up- Best use of Digital and Channels Tech
ET NOW BFSI (Banking Financial Services	1. Banking
& Insurance) Awards, 2018	2. Best CIO (Individual Category)

3. RISK MANAGEMENT

A. RISK MANAGEMENT OVERVIEW

Risk Management at your Bank includes risk identification, risk assessment, risk measurement and risk mitigation and its main objective is to minimize negative impact on profitability and capital.

Your Bank is exposed to various risks that are an inherent part of any banking business. The major risks are credit risk, market risk, liquidity risk and operational risk which includes IT risk.

Your Bank has policies and procedures in place to measure, assess, monitor and manage these risks systematically across all its portfolios. Your Bank is amongst the leaders to undertake implementation of the Advanced Approaches under Credit, Market and Operational risk. Your Bank has also undertaken the Enterprise and Group Risk Management Projects, which aim to adopt global best practices. The projects are being implemented with support from external consultants.

RBI Guidelines on Basel III Capital Regulations have been implemented and your Bank is adequately capitalized as per the current requirements under Basel III. An independent Risk Governance Structure, in line with international best practices, has been put in place, in the context of separation of duties and ensuring independence of Risk Measurement, Monitoring and Control functions. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination. The various risks across Bank and the SBI Group are monitored and reviewed through the Executive Level Committees and the Risk Management Committee of the Board (RMCB) which meets regularly. Risk Management Committees at Operational unit and Business unit level are also in place.

1. Credit Risk

Credit Risk is defined as the possibility of losses associated with the diminution in the credit quality of borrowers or counterparties from outright default or from reduction in portfolio value. Credit Risk emanates from a bank’s dealings with an individual, non-corporate, corporate, Bank, financial institution or sovereign.

Mitigation Measures

Your Bank has put in strong credit appraisal and risk management frameworks in place for identification, measurement, monitoring and control of the risks in credit exposures. Industrial environment is scanned, researched and analysed in a structured manner by a dedicated team for deciding your Bank’s outlook and growth appetite for each of the identified 39 industries/sectors, which constitute about 70% of the Bank’s total domestic exposure. Risks in these sectors are monitored continuously and wherever warranted, the industries concerned are reviewed immediately. Impact of events like rise in Crude oil prices, profitability of telecom majors, power sector reforms, RERA implementation, Gems & Jewellery, the upheaval in commodity prices to name a few, were analysed and appropriate responses to these situations were strategized by your Bank to mitigate possible risks. Exposure to sensitive/ stressed sectors like Real Estate/Telecom are reviewed at regular intervals. Sectors like Power, Telecom, Iron & Steel, Textiles, which are going through a challenging phase, are watched continuously and analysis of new developments are shared with the business groups to enable them to make informed credit decisions. Knowledge sharing sessions are conducted for the benefit of the operating staff at various levels.

Credit rating thresholds for each industry are decided on the basis of the outlook. Your Bank uses various internal Credit Risk Assessment Models and scorecards for assessing borrower wise credit risk. Models for internal credit ratings of the borrowers have been developed in-house. They are reviewed through cycles of comprehensive validation and back testing frameworks.

Your Bank has adopted an IT platform for credit appraisal processes through a Loan Originating Software/Loan Lifecycle Management system (LOS/LLMS). Models developed by the Bank are hosted on these platforms which are interfaced with CIBIL and RBI defaulter’s lists.

In order to focus on capital conservation and maximization of return on capital, your Bank has introduced Risk Based Budgeting (RBB). Risk sensitive return on capital is measured based on Return on Credit Risk Capital (RoCrC). Achievement of the budgeted advances level are subject to scrutiny under the specified levers. Risk Adjusted Return on Capital (RAROC) framework has been implemented from July’2015. The Customer level RAROC calculation has also been digitized. Further, behavioral models for monitoring and scoring the retail borrower performance have been developed and hosted on Credit Risk Data Mart. Your Bank has procured the ORACLE “OFSAA” platform for the Credit Risk Management System and the implementation of the system has been initiated with the shortlisted System Integrator.

Your Bank has put improved mechanism in place to manage Credit Concentration Risk, by way of risk sensitive Internal Prudential Exposure Limits framework for single as well as group borrowers. These limits are fixed on the basis of the internal risk rating of the borrower. This framework is one step ahead of the regulatory prescription of Prudential Exposure norms, which is ‘one size fits all’ in nature. These exposure norms are monitored regularly at a defined periodicity.

Your Bank conducts Stress Tests every half-year on its Credit portfolio. Stress Scenarios are regularly updated in line with RBI guidelines, industry best practices and changes in macro economic variables.

RBI has allowed your Bank to participate in the parallel run process for Foundation Internal Ratings Based (FIRB) under the Advanced Approaches for Credit Risk. The data under parallel run of FIRB is being submitted to RBI. Models for estimation of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) are hosted in Credit Risk Data mart for computation of IRB capital. Independent Risk Advisory (IRA) launched last year to examine Medium and High value credit proposals, has been further strengthened to increase the coverage.

2. Market Risk

Market Risk is the possibility of loss that Bank may suffer on account of change in value of its trading portfolio, on account of market variables such as exchange rate, interest rate and equity price, among others.

Mitigation Measures

Your Bank’s market risk management consists of identification and measurement of risks, control measures, monitoring and reporting systems.

Market risks are controlled through various risk limits, such as Net Overnight Open Position, Modified Duration, PV01, Stop Loss, Upper Management Action Trigger, Lower Management Action Trigger, Concentration and Exposure Limits.

Your Bank has Asset class wise risk limits for its trading portfolio and monitors the same on an ongoing basis.

Currently, market risk capital is computed under the Standardised Measurement Method (SMM). Your Bank has submitted Letter of Intent to the Reserve Bank of India for migration to Internal Models Approach (IMA) under the Advanced Approaches for market risk.

Value at Risk (VaR) is a tool used for monitoring risk in your Bank’s trading portfolio. Enterprise level VaR of the Bank is calculated on a daily basis and also back tested daily. The Stressed VaR for market risk is also computed on a daily basis. The VaR methodology is supplemented by conducting quarterly stress tests of the trading portfolio.

3. Operational Risk

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

Mitigation Measures

Key elements of your Bank’s Operational Risk Management Policy, among others, include ongoing review of systems and controls, creation of awareness of operational risk throughout the Bank, timely incident reporting, enhancing operational risk awareness through RAW (Risk Awareness Workshop), improving early warning information through implementation of Key Indicators (comprising of Key Risk Indicators (KRIs), Key Control Indicators (KCIs) and Key Process Indicators (KPI)), the resolution of risk issues by effectively tracking and follow- up of outcomes of assessment, assigning risk ownership, aligning risk management activities with business strategy. All these components ensure better capital management and improve quality of Bank’s services/ products/ processes, besides ensuring compliance with regulatory requirements.

RBI has granted In-Principle approval to your Bank (on a solo basis) to migrate to AMA (Advanced Measurement Approach) for computation of operational risk capital charge on Parallel Run basis.

For FY2018, your Bank on a stand-alone basis, had assigned capital for Operational Risk as per Basic Indicator Approach (BIA). Capital charge as per AMA has also been calculated as part of Parallel Run.

Your Bank Celebrated Risk Awareness Day on 1^st September. Risk culture is being embedded through training to staff at all levels through e-learning lessons.

4.    Enterprise Risk

Enterprise Risk Management aims to put in place a comprehensive framework to manage various risks and alignment of risk with strategy at the whole Bank level. It encompasses global best practices such as Risk Appetite, Material Risk Assessment and Risk Aggregation, among others.

Mitigation Measures

As part of your Bank’s vision to transform the role of Risk into a Strategic function, a Board approved Enterprise Risk Management (ERM) Policy is in place.

With an objective of maintaining a sound risk profile, your Bank has developed a Risk Appetite Framework incorporating limits for major risk metrics. For promotion of a strong risk culture in the Bank, Risk Culture Framework is being operationalised in a phased manner.

Your Bank conducts a comprehensive Internal Capital Adequacy Assessment Process (ICAAP) exercise on a yearly basis with respect to adequacy of Capital under normal and stressed conditions. The Pillar 2 risks, such as Liquidity Risk, Interest Rate Risk in Banking Book (IRRBB), Concentration Risk and others along with the Pillar 1 risks such as Credit, Market and Operational risks are covered under ICAAP.

5.    Group Risk

Group Risk Management aims to put in place standardized risk management processes in Group entities.

Mitigation Measures

Policies relating to Group Risk Management, Group Liquidity and Contingency Funding Plan (CFP), Arm’s Length and Intra Group Transactions and Exposures are in place.

Monitoring of consolidated Prudential Exposures and Group Risk components is also being done regularly. A quarterly analysis of risk-based parameters for Credit Risk, Market Risk, Operational Risk and Liquidity Risk, among others, is presented to the Enterprise & Group Risk Management Committee (EGRMC)/ Risk Management Committee of the Board (RMCB).

The Group Internal Capital Adequacy Assessment Process (Group ICAAP) document includes an assessment of identified risks by Group entities, internal controls and mitigation measures, and capital assessment, under normal and stressed conditions. All Group entities where SBI has 20% or more stake and management control, including Nonbanking entities, carry out the ICAAP exercise and a Group ICAAP Policy is in place to ensure uniformity.

6. Basel Implementation

Your Bank has been identified as D-SIB by the Regulator and has to keep additional Common Equity Tier 1 (CET1) 0.60% of RWAs applicable from 1^st April, 2016 in a phased manner and it will become fully effective from 1^st April, 2019. Your Bank has also started maintaining Capital Conservation Buffer (CCB) in a phased manner and will reach 2.5% by 31^st March, 2019.

Your Bank has been declared as the Winner of ‘Golden Peacock Award for Risk Management’ for the year 2017.

B. INTERNAL CONTROL

Your Banks’ internal audit function evaluates effectiveness of controls and the adherence to internal processes and procedures. The internal audit function undertakes a comprehensive risk based audit of all operating units of your Bank in line with regulatory guidelines relating to Risk Based Supervision. Internal audit in your Bank is independent, enjoys sufficient standing in the Bank and is headed by a Deputy Managing Director. The Internal Audit (IA) function works under the guidance and supervision of the Audit Committee of the Board.

Keeping pace with rapid digitalization, your Bank has initiated technology driven interventions, in conducting various audits and moving towards automation in your Bank’s audit processes. Some key initiatives include the following:

a)    System-based off-site transaction monitoring and Concurrent Audit of business units to ensure continuous monitoring of controls.

b)    Early Review of sanctions, to assess quality of loans of ' 50 lakh and above.

c)    Web based RFIA (Risk Focused Internal Audit) which is flexible, scalable and expandable with enhanced level of automation.

d)    Online self audit by branches, for self-assessment by branches and vetting by controllers.

e)    Audit findings are made available on MIS dash board on T+1 basis, to facilitate identification of concerns and monitoring of compliance by Management.

ii.    Your Bank has adopted the process of Risk Focused Internal Audit (RFIA), wherein audit prioritization is decided based on assessment of risk in various activities and businesses conducted by the Bank.

iii.    As part of RFIA, IA Department conducts various audit, viz., Credit Audit, Information Systems Audit, Home Office Audit (audit of foreign offices), Concurrent Audit, FEMA Audit, Audit of Outsourced Activities of the Bank, Expenditure Audit and compliance audit. It also undertakes Management Audit of business verticals to assess their strategic effectiveness.

Risk Focused Internal Audit (RFIA)

IA Department undertakes a critical review of the entire operations of audited units through RFIA, an adjunct to Risk Based Supervision, as per RBI directives. The domestic branches have been broadly segregated into three groups (Group I, II & III) on the basis of business profile and risk exposures. During FY2018, IAD has audited14,638 domestic branches/BPR entities under the RFIA.

FEMA Audit

FEMA Audit of branches categorized as authorized dealers is conducted by audit officials, who are well versed with Foreign Exchange Business and FEMA / RBI guidelines. During the FY2018, 430 audited units were covered, under FEMA Audit.

Credit Audit

Credit Audit aims at achieving continuous improvement in the quality of Commercial Credit portfolio of the Bank, through critically examining individual large commercial loans with exposures of Rs, 10 crore and above annually. Critical accounts with exposure of ' 100 crore and above, are reviewed at Half-Yearly intervals. The Credit Audit System also provides feedback to the Business Units, by way of warning signals, about the quality of advance portfolio in the unit and suggests remedial measures.

Early Review of Sanction (ERS - Large Loans)

Audit in high value credit area has an off-site review machanism (Early Review of Sanction - Large Loans) of all the pre-sanction and sanction process of individual advances of Rs,5 crore and above, within 3-6 months of sanction / enhancement / renewal. ERS has been integrated with Loan processing software for online review, submission of ATR and monitoring by controllers.

Early Review of Sanction (ERS -Small Loans) was introduced to review sanctions of more than Rs, 50 lakh up to Rs, 5 crore, to capture the critical risks in the proposals sanctioned at an early stage and apprise the Controllers of such risks, for mitigation thereof.

Information System and Cyber Security Audit

All Branches are subjected to Information System (IS) Audit to assess the IT related risks, as part of the periodic audit. IS Audit of centralised IT establishments is carried out by a team of qualified officials/ outside experts. During the FY2018, IS Audits of 86 centralised IT establishments were conducted. In line with the RBI guidelines on ensuring Cyber Security of the IT System of the Bank, we have initiated the process of conducting Cyber Security audit from the yerar 2017-18.

Foreign Offices Audit - Home Office Audit

During the FY2018, Home Office Audit was carried out at 20 foreign offices. Management Audit was completed at one Representative office and one Subsidiary.

Concurrent Audit System

Concurrent Audit system is essentially a control process, integral to the establishment of sound internal accounting functions and effective controls. Concurrent Audit covers your Bank’s Advances and other risk exposures as prescribed by the regulatory authority. Concurrent Audit System has been revamped by introducing a web-based solution.

Off-Site Transaction Monitoring System (OTMS)

As part of our initiative towards continuous monitoring of controls, Off-Site Transaction Monitoring System (OTMS), a web based solution, was introduced, to further strengthen the transaction audit, to capture control gaps without much loss of time and take corrective actions. At Present, 37 types of exceptions are being monitored and flagged to the branches for verification by them. The exceptions are periodically reviewed and enlarged, depending upon the need and certain triggers.

Legal Audit

Legal Audit was conducted, to cover all loan and Mortgage related documents of high value loans of Rs, 5 crore and above. During the FY2018, Legal Audit has been completed in 11,100 accounts.

Audit of Outsourced Activities

Audit of Outsourced activities is conducted to provide reasonable assurances that adequate systems and procedures are in place to mitigate legal, financial and reputational risks that may arise on account of outsourcing of financial and IT related activities to third parties. During FY2018, 657 audits have been conducted covering 57 activities, which includes ATM services, Corporate BCs, Recovery & Resolution agents, Doorstep banking, Cheque printing etc. Total No. of 537 vendors have been covered during the year.

The Bank has engaged the services of

58,000 individual BCs and CSP under financial inclusion plan, who are being audited and during FY2018, 29,038 such audits were conducted.

Management Audit

Management Audit covers business verticals, administrative Offices / departments and examines the strategy, processes and risk management practices. It encompasses Corporate Centre establishments / Circle Local Head Offices / Apex Training Institutions and Regional Rural Banks (RRB) sponsored by the Bank. During FY2018, 38 establishments / administrative offices were audited under Management Audit.

C. COMPLIANCE RISK MANAGEMENT

Your Bank has been ascribing highest level of importance to Compliance Risk Management and has taken a number of initiatives to strengthen compliance function keeping in view the scale and complexities of business operations. Some key initiatives are:

All products, process, policies are vetted from the regulatory compliance perspective before they are approved and operationalized or reviewed.

A Compliance Risk Management Committee, comprising of Senior Executives from Business Verticals and Support functions oversees all compliance related issues. The committee meets regularly and extends necessary guidance to the all concerned in the smooth implementation of Risk Based Supervision (RBS) of RBI and other regulatory matters.

Compliance Testing of RBI’s regulations and guidelines is regularly carried out and the testing universe is being expanded to ensure that the control mechanisms are in place to comply with regulatory guidelines.

Compliance culture is crucial for the Bank to manage the compliance risk effectively and is being strengthened through various forms of communication and interactions across the organization. The Bank has also created a pool of trainers capable of handling sessions on compliance.

All of the above will help your Bank in strengthening compliance function.

D. AML-CFT MEASURES:

In order to mitigate risks arising out of non-compliance of KYC norms, AML/CFT guidelines, your Bank has put in place a Board approved and transparent Know Your Customer (KYC) Policy incorporating therein Bank’s framework for customer acceptance, customer identification, monitoring of transactions, Customer Risk categorization and reporting of transactions to FIU-IND. The Policy has been updated and subsequent changes, as and when notified by RBI, are also being circulated through e-Circular for Branches /Offices for ensuring meticulous compliance of the same by all operating functionaries. A robust system is in place containing a combination of manual as well as system enabled methodology to ensure KYC compliance in the Bank.

Your Bank has allotted Uniform Customer Identification Code (UCIC) to all individual customers as per RBI guidelines. Periodical updating of KYC is undertaken by the bank as per RBI guidelines. E-KYC is made mandatory for account opening to strengthen its AML and KYC procedures.

A number of initiatives have been undertaken to bring greater awareness amongst Bank staff about KYC and AML/ CFT compliances. For creating awareness of KYC Compliance e-lessons have been mandatory for all staff members. AML-CFT Day is being observed on 2^nd November every year. Pledge has been taken on that day at all branches/processing centres and Administrative Offices. Similary 1^st August is observed as KYC Compliance and Fraud Prevention Day.

Your Bank has procured a new AntiMoney Laundering solution (FICO) which is being rolled out in Domestic and Foreign branches and will enable online screening of transactions/SWIFT messages, Risk Scoring and Transaction Monitoring to fully comply with the regulatory requirements in India and respective geographies of Foreign Offices.

4. OFFICIAL LANGUAGE

Your Bank took innovative steps to propagate use of official language in reaching out to its 42 crore customers. The key highlights are mentioned below:

Introduction of Online Rajbhasha Roster

Your Bank has developed and introduced an online Rajbhasha Knowledge Roster for its staff members where they can submit details of their knowledge of Hindi.

Executives of the Bank pledged to do most of their Correspondence and Internal work in Hindi on 14th of every month

All executives of your Bank pledged to do most of their correspondence and internal work in Hindi on 14th of every month which is being regularly followed by them.

One day Hindi Workshop at District Headquarters

Your Bank’s different Administrative Offices conducted one day Hindi Workshop for staff of their offices and branches starting December, 2017 in the district headquarters spread all over the country.

“Prayas” awarded First prize by RBI

“Prayaas” the quarterly Hindi house magazine of your bank is honored with First prize in the Hindi-in-house magazine competition organised by the RBI for the year 2016-17.

Aashirwad Rajbhasha Ratna Award 2017

Renowned literary and cultural organization ‘Aashirwad’ recognized your Bank with special award for excellent implementation of Hindi; special award to PRAYAS for excellence in Hindi house magazine category; and Rajbhasha Ratna Award 2017 to your Bank’s DMD (H.R.) and CDO for valuable contribution in promoting official language policy.

Different Administrative Offices of your Bank bagged prizes from GoI

Your Bank’s Administrative Offices at Bengaluru, Sambalpur, Tirupati, Guntur, Jammu, Delhi, Vadodara, Jabalpur and Bhubaneswar were also recognized for excellence in implementing official language policy by the Government of India.

5. MARKETING AND COMMUNICATIONS

The Marketing & Communications (M&C) department is responsible for your Bank’s initiatives for all brand and product marketing and public relations. The primary objective of this department is to optimize your Bank’s efforts in promoting its products and services, adopting contemporary marketing approach to get brand prominence among prospective customers as well as to reinforce the brand’s image among existing customers. The M&C department’s key responsibilities include developing and implementing integrated marketing strategies to address business challenges of different business units divisions of your Bank including Indian and overseas operations. This department comprises of skilled professionals and domain specialists drawn from various relevant fields of media, marketing communications, advertising and public relations.

Your Bank took a giant leap by merging five subsidiaries and Bhartiya Mahila Bank Ltd. with itself. With this mega merger, your Bank also undertook a re-branding exercise. The M&C department, under the guidance of the Bank’s senior management undertook the implementation of a brand identity refresh to energise the brand to stay relevant to the youth as well as global audiences. While the legendary SBI monogram has been retained, combining it with the abbreviated SBI word is the key change in the refreshed brand identity. The monogram has been refined for greater clarity. The M&C department played a vital role in the implementation of the new brand identity across the country.

Apart from the re-branding campaign, the M&C department rolled another big campaign ’Home Loan Balance Transfer Campaign’. The department also rolled out integrated campaign merging products for six different festivals. Appropriate media vehicles were used for all these campaigns.

Hindi House magazine ‘Prayas’ bagged GoI Rajbhasha Kirti Prize 2017

Your Bank’s Hindi House magazine PRAYAS was accredited with ‘1st Prize’ in ‘Rajbhasha Kirti Awards, 2017’. Present Chairman Shri Rajnish Kumar received the prize from Hon’ble President of India. PRAYAS got this prestigious award consecutively for the second time.

Your Bank launched YONO - India’s only comprehensive, omni channel digital platform in November, 2017. The M&C department played a key role in this launch, by way of developing the go-to-market strategy and executing a comprehensive communications plan across multiple media including digital media.

The M&C department developed and rolled out ‘The Green Marathon’ in collaboration with your Bank’s sustainability department. This initiative will raise consciousness among the Bank’s staff and public at large. This activity was conducted in six cities in two months.

As a transforming economy, India is witnessing several changes across various aspects. To help build momentum for the Bank’s growth, alongside routine marketing activities, promotion of the Bank’s various digital initiatives will hold the centre stage. The core responsibility of the department will remain towards maintaining favorable brand perception of SBI among varied cross sections of the country’s populace; while playing the role of a catalyst in marketing its products and services by way of appropriate marketing and communications strategy implementation.

It would be the department’s continued endeavour to enable business units to strategies and implement cost efficient marketing programs and to enhance your Bank’s image among different stakeholders. Your Bank is committed towards enhancing its brand equity and affinity through concerted marketing initiatives.

6. VIGILANCE MECHANISM

At your Bank there are three aspects to the vigilance function - Preventive, Punitive and Participative. During this year Vigilance Awareness Week was observed from 30th October, 2017 to 4^th November, 2017, with the theme “My Vision - Corruption Free India”. Vigilance Department has taken initiatives for spreading this messages through various channels during the Vigilance Awareness Week, 2017, through Alternate Channels, IVR, Social Media, Gram Sabha by RRBs and Mass pledge at RRB’s.

The concept of Whistleblower is another effective tool for Preventive Vigilance. To highlight any malpractices under Whistle Blower Scheme, a portal has been launched by your Bank. Whistle Blower can lodge a complaint online and also monitor the progress made in this regard. There is already a well-defined Whistle Blower policy in our Bank, which acts as a deterrent for the employees to keep themselves away from malicious activities. We keep the secrecy of the whistleblower and give protection to them so that they continue to be an effective tool against wrongdoings without fear.

Branches, where certain lapses of grave nature are observed, are identified and suo-motu investigations are conducted so that possible fraudulent activities could be checked, and remedial measures are undertaken.

During FY2018, a total of 1,266 cases (908 new cases) were taken up for examination, out of which 786 cases have since been concluded.

7. ASSET AND LIABILITY MANAGEMENT

Effective Asset and Liability Management (ALM) is vital for sustainable and qualitative growth of banks. It aims to strengthen Balance Sheet Management by constantly reviewing the market conditions, capturing the signals emanating, scanning the regulatory environment and initiating proactive measures for value creation.

The Asset Liability Management Committee (ALCO) of your Bank oversees the Interest Rate and Liquidity Risks, reviews the components of balance sheet and sets up benchmarks for efficient management of these risks and constantly monitors them. ALCO inter alia, reviews the Interest Rate scenarios, pattern of growth of liability products, credit growth, market behaviour, liquidity management and adherence to the regulatory prescriptions. ALCO sets the pricing of the liabilities and reviews at monthly intervals, the Marginal Cost of Funds based Lending Rates (MCLR) in terms of regulatory requirements. Your Bank, a pioneer in introducing global best practices, has transformed the process of Asset & Liability Management and rolled out updated Oracle Financial Services Analytical Application (OFSAA) during the year.

In order to encourage branches to garner stable funds and assess their profitability based on cost of funds, a new model for Funds Transfer Pricing based on daily average balances and dynamic bid/offer curves for pricing loans and deposits raised by branches has been implemented.

The levels of High Quality Liquid Assets (HQLA) and cash outflows are effectively monitored in a highly dynamic environment. As per regulatory requirement, your Bank has started computing LCR on daily basis. Monitoring LCR in significant currency (US$) is also undertaken and reviewed by ALCO.

Studies are conducted at regular intervals to assess the behavioral pattern of non-contractual assets and liabilities, embedded options available to customers, off-balance sheet exposures, impact of probable loan losses and others. The inputs derived there from are used for effective management of on-balance sheet and off-balance sheet items.

As part of best Risk Management practices, updated Internal Policies are put in place on ‘Deposits’, ‘Whole Bank Asset and Liability Management’, ‘Whole Bank Stress Testing of Liquidity and Interest Rate Risks’ by introducing the concepts such as ‘reverse stress testing’. As part of contingency planning, Contingency Funding Plan (CFP) is in place and reviewed regularly.

Your Bank has adopted the advanced approach for assessing the impact on Earnings at Risk (EaR) and Market Value of Equity (MVE) with pre-defined tolerance limits that determine the risks associated with them and enables the Management to initiate appropriate preventive steps in a likely scenario of erosion in Net Interest Income.

In line with the regulatory requirements, your Bank has evolved Internal Capital Adequacy Assessment Process (ICAAP) with robust methodology, responses and an effective framework.

8. ETHICS AND BUSINESS CONDUCT

Banking deals with the trust of the people. Trust calls for the highest level of ethical conduct from the Banking sector. This is the reason for creation of Ethics & Business Control Department at SBI. This department came into operation last year under Chief Ethics Officer, who plays a major role. Ethical conditioning empowers its human resources and helps in distinguishing right from wrong, in a particular situation.

Your Bank firmly believes that ethical character is shaped, reinforced and influenced by the decisions we make every day. In this context, sustained promotion of ethical awareness will give impetus to the overall operating culture and take the Bank to the next level by strengthening its moral muscles. Towards this purpose, best international practices are being learnt, technology being leveraged and ethics being encouraged as a part of regular conversations at different organizational layers; and a normative sense of congruence is being developed across various functions in the Bank.

Your Bank has already unveiled its New Vision, Mission and Values Statements after a gap of almost 10 years to reflect its contemporary persona as an agile and tech savvy bank.

9. CORPORATE SOCIAL RESPONSIBILITY

Your Bank believes that it has a solemn duty to make sustainable social change in the lives of the less fortunate and underprivileged members of the society. Your Bank always places the interest of the common man, especially the most marginalized, at its core. Your Bank earmarked 1% of the previous year’s net profit as the budget for CSR spend for the year. Its CSR activities are widespread and deep-rooted and have made true difference in the lives of thousands from the underserved and downtrodden communities. CSR is a continuing commitment of your Bank for developing the quality of life of the community and society as a whole.

FOCUS AREAS

-    Healthcare

-    Education

-    Sanitation

-    Skill Development and Livelihood Creation

-    Environment Protection

-    Culture, Sports and others

CSR SPEND DURING FY2018

The CSR spend of the Bank for the FY2018 stood at Rs, 112.96 crore. This is the sixth successive year, where your Bank’s CSR spend has crossed the mile stone of Rs, 100.00 crore. The sector wise spend is as under:

SUPPORTING HEALTHCARE:

National Health Policy, 2017 was approved by the Government in March, 2017 with an objective to achieve highest possible level of good health and well-being. It seeks to achieve universal access to quality health care. However, since long healthcare sector has remained a thrust area for your Bank’s CSR activity. Your Bank provides basic infrastructure to improve the conditions of the common man. To deliver quality healthcare to those belonging to underprivileged and economically weaker sections of the society. Your Bank has supported large number of hospitals. The major initiatives of your Bank in health care sector are as under:

Ambulances and Medical Vans: Your Bank has donated Rs, 2.88 crore to over 23 charitable organisations for acquiring Ambulances and Medical Vans

Health Equipment and Surgeries: Your Bank has donated Rs, 5.33 crore to over 35 charitable organisations/hospitals for acquiring various medical/surgical equipment like Stress Test Machine, Dialysis Machine, BIPAP Ventilators, Digital X-Ray Machines, Artificial limbs, Automated Bio-chemistry Analysers, Surgical Microscopes and Retinal Equipment. This has improved the capacity and potential of the hospitals to serve large number of deprived patients.

Community Outreach Programmes:

Your Bank organised camps to focus on curative and preventive healthcare for the under privileged rural population. The areas covered are mentioned below:

-    Eye check-up

-    Cancer detection

-    Reproductive healthcare check-up

-    Basic health check-up (Blood Pressure, HB and others)

-    Diabetes check up

-    Mammography for women

-    Cataract operations

SUPPORTING EDUCATION

Your Bank always strives to support education of weaker social group in remote, unreachable and underdeveloped area. The areas covered are given below:

-    Donated computers and printers to various schools

-    Provided water filters for access to clean drinking water

-    Provided toilets to the schools

-    Persons with Disabilities (PwDs) were given vocational training

-    Donated Rs, 82 lakh for providing school buses/vehicles for transportation facilities to underprivileged children

DRINKING WATER AND SANITATION

Your Bank is committed to the Government’s mission of “Swachh Bharat” and has undertaken several initiatives across the country including building toilet blocks; providing sanitary napkin vending machines and incinerators, dumper bins and dust bins, among others. Also, provision of drinking water (R.O.) and toilets in schools is being made.

ENVIRONMENT AND SUSTAINABILITY

Your Bank is committed to environment protection and contributes positively to reduce the carbon footprint. Responsible interaction with environment to avoid depletion and degeneration of natural resources and maintain long term quality of the environment is a priority for your Bank.

Your Bank has contributed Rs, 2.05 crore towards the following:

-    Acquiring solar power plant, solar water heater and solar street lamps

-    Tree plantations

-    Maintenance of parks and gardens

-    Donating battery operated vehicles

SBI CHILDREN’S WELFARE FUND

Your Bank constituted SBI Children’s welfare Fund as a Trust in 1983, which extends grants to Educational Institutions engaged in the welfare of underprivileged children like orphans, destitute, and physically challenged. The corpus of the fund is made by the staff members and matching contribution is provided by your Bank. During FY2018, your Bank has donated Rs, 98 lakh to various educational institutes all across the country.

SKILL DEVELOPMENT INITIATIVES AND LIVELIHOOD CREATION

Rural Self Employment Training Institutes (RSETIs): India is one of the youngest nation in the world with more than 54% of its population below 25 years of age. Employability of the growing young demography is one of the important factors in the economic development of the country. The skill development initiatives support the supply of trained manpower.

Your Bank has set up 151 Rural Self Employment Training Institutes (RSETIs) across the country as institution to help mitigate the unemployment and underemployment problem among youth in the country.

Your Bank has contributed Rs, 9.03 crore for construction of 9 RSETI buildings. The recurring expenditure for skill development programs for youth was Rs, 47.52 crore at 151 RSETIs of your Bank across the country.

V. SUBSIDIARIES

As a part of mission to provide the entire gamut of financial services across India, the State Bank Group, through its various subsidiaries, provides a whole range of financial services, including Life Insurance, Merchant Banking, Trustee Business, Mutual Funds, Credit Card, Factoring, Security Trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

Non- Banking Subsidiaries:

(Rs, crore)

Sr. No	Name of the Subsidiary Company	Ownership (SBI interest)	% of Ownership	Net Profit (Losses) for FY2018
1	SBI Capital Markets Ltd. (Consolidated)	58.03	100.00	327.32
2	SBI DFHI Ltd.	131.52	*69.04	32.07
3	SBI Mutual Fund Trustee Company Pvt Ltd.	0.10	100.00	3.83
4	SBI Global Factors Ltd.	137.79	86.18	(3.24)
5	SBI Pension Funds Pvt. Ltd.	18.00	*60.00	1.39

*Group holding of SBI is 100% in SBI Pension Funds Pvt. Ltd. (SBI 60%, SBI MF and SBI Capital Markets 20% each) and in SBI DFHI State Bank holding is 72.17% (SBI 69.04%, after merger of Associate Banks and SBI Capital Markets 3.13%).

Non- Banking Subsidiaries: Joint Ventures

(Rs, crore)

Sr. No	Name of the Subsidiary Company	Ownership (SBI interest)	% of Ownership	Net Profit (Losses) for FY2018
1	SBI Funds Management Pvt. Ltd.	31.50	63	331
2	SBI Cards & Payment Services Pvt. Ltd.	581	74	363
3	SBI Life Insurance Company Ltd.	621.00	62.10	1150
4	SBI-SG Global Securities Services Pvt. Ltd.	52.00	65	26
5	SBI General Insurance Company Ltd.	159.47	74	396
6	SBI Business Process Mgt. Services Pvt. Ltd.3	17.46	74	66

1. SBI CAPITAL MARKETS LIMITED (SBICAP)

SBICAPs is India’s leading investment banker, offering entire bouquet of investment banking and corporate advisory services to varied client base across three product groups - Infrastructure, Equity Capital Markets and Debt Capital Markets. These services include Project Advisory, Loan Syndication, Structured Debt Placement, Mergers & Acquisitions, Private Equity, Restructuring Advisory, Stressed Assets Resolution, IPO, FPO, Rights Issues, Debt and Hybrid Capital raising.

On a standalone basis, SBICAPs posted a PBT of Rs, 349.35 crore during FY2018 as against Rs, 312.57 crore during the FY2017 and a PAT of Rs, 244.64 crore for FY2018 against Rs, 217.95 crore in FY2017. On a consolidated basis it has posted a profit of Rs, 327.32 crore as against Rs, 251.80 crore in the previous year.

SBICAPS declared dividend at 225% during FY2018 as against 200% in FY2017.

A.    SBICAP SECURITIES LIMITED (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Limited, besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in sales and distribution of other financial products like Mutual Funds, Tax Free Bonds, Home Loan, Auto Loan, Tractor Loan, among others.

SSL has over 100 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 15 lakh clients. The Company has booked gross revenue of Rs, 357.56 crore during FY2018 as against Rs, 250.35 crore in FY2017.

B.    SBICAP VENTURES LIMITED (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Limited. DFID (Department for International Development) has joined hands with the SBI group to set up the “Neev Fund” which is being managed by SBICAP Ventures Limited. SVL is acting as the Asset Management Company.

The Neev Fund had its Initial close on 10^th April, 2015 and current corpus of the Fund is Rs,469.39 crore. Fund will be invested in Infrastructure sectors such as renewable energy, water and sanitation, agricultural supply chain in 8 identified states of India (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh and West Bengal). SVL has started earning Management Fees.

C.    SBICAP (UK) LIMITED (SUL)

SUL is a wholly owned subsidiary of SBI Capital Markets Limited. SUL is positioning itself as a relationship outfit for SBI Capital Markets Limited in UK and Europe. Relationships are the business products of SBICAP.

D.    SBICAP (SINGAPORE) LIMITED (SSGL)

SSGL, is a wholly owned subsidiary of SBI Capital Markets Limited. SSgL commenced business from December 2012. Relationships are being built with FI Is, Financial Institutions, Law Firms, Accounting Firms, etc. to market the business products of SBICAP. It has been specialising in marketing of Foreign Currency Bonds and securing clients for SBICAP SEC.

E.    SBICAP TRUSTEE CO. LIMITED (STCL)

SBICAP Trustee Co Limited (STCL), is a wholly owned subsidiary of SBI Capital Markets Limited. STCL commenced security trustee business with effect from 1^st August, 2008. STCL posted Net Profit of Rs,11.90 crore during FY2018 as against Rs,11.68 crore during FY2017. STCL successfully launched an Online Will Creation service for the individuals in the name of ‘My Will Service Online’. It also launched its ‘Trustee Enterprise Management System’ - an integrated system to address all the trustee related operations and thus has become the first and only Trustee Company in India to have full automation across all trustee related operations.

2.    SBI DFHI LIMITED (SBI DFHI)

SBI DFHI Limited is one of the largest standalone Primary Dealers (PD) with a pan India presence. As a Primary Dealer (PD) it is mandated to support the book building process in primary auctions and provide depth and liquidity to secondary markets in G-Sec. Besides Government securities, it also deals in money market instruments, non G-Sec debt instruments, etc. As a PD, its business activities are regulated by RBI.

SBI group holds 72.17% share in the Company. The Company posted Net Profit of Rs, 32.07 crore in the FY2018 as against Rs, 176.44 crore in the FY2017. Total balance sheet size was Rs, 5,659.46 crore as on 31^st March 2018 as against Rs, 3,187.70 crore as on 31^st March 2017.

3.    SBI CARDS & PAYMENTS SERVICES PRIVATE LIMITED (SBICPSL)

SBI Cards and Payment Services Private Limited is a joint venture between State Bank of India and the Carlyle Group wherein SBI holds 74% stake and CA Rover Holdings (An affiliate of Carlyle) holds 26% stake. SBICPSL is a NBFC and is in the business of issuing credit cards in India. During the year, SBI increased its stake in the company from 60% to 74% by buying out shares from exiting partner GE Capital.

During the FY2018, the Company’s Card base has grown by 37% YoY with total number of credit cards reaching to a level of 62.58 lakh as at 31^st March 2018. The Spends on card witnessed a YoY growth of 73% to reach a level of Rs, 79,808 crore for the same period. The company is positioned at Rank #2 with 16.75% Spends Share and 16.42% Cards base as per RBI report for MarRs,18 (Previous Year 13.06% in terms of Spends and 15.34% in terms of Cards base as per RBI report for March’17) The company delivered Profit after Tax of Rs,363 crore for the FY17-18 (PBT of Rs, 776 crore). This includes one off adverse impact of Rs, 219.9 crore due to change in accounting policy. Excluding the one off PBT has grown by ~30% YoY.

During the period the Company received many awards which includes:

-    SBI Unnati Card wins of SKOCH Financial Inclusion Award at the 48th SKOCH Summit

-    Corporate Card Team has been awarded by VISA for becoming “No.

1 Commercial Card Issuer” for VISA India

-    SBI Card awarded with ‘Best Data Quality Award’ in NBFC category by CIBIL

4. SBI BUSINESS PROCESS AND MANAGEMENT SERVICES PRIVATE LIMITED (SBIBPMSL)

(Formerly GE Capital Business Process and Management Services Pvt Ltd)

SBIBPMSL is a joint venture between State Bank of India and the Carlyle Group, wherein SBI holds 74% stake and CA Rover Holdings (An affiliate of Carlyle) holds 26% stake. SBIBPMSL provides back end services and solutions to SBICPSL. During the year, SBI increased its stake in the company from 40% to 74% by buying out shares from exiting partner GE Capital.

During the FY2018, the Company generated PAT of Rs, 66 crore at a YoY growth rate of 41%.

During FY2018, the Company undertook following key initiatives:

-    Bharat QR launched on Mobile Application to enable transactions through mobile application

-    Instant Payment Credit functionalities made available when online payment done through 3rd party

-    New features like Card full statement and one click Loan, Flexi-pay booking are now available on MOBILE Application

-    Digital for Customers - SBI mobile app “#1 rated Mobile App

5. SBI LIFE INSURANCE COMPANY LIMITED (SBI LIFE)

SBI Life Insurance is a joint venture between State Bank of India (SBI) and BNP Paribas Cardif S. A. During the year ended 31^st March, 2018, Initial Public Offer of 120,000,000 equity shares of face value of Rs, 10 each of the Company at Offer Price of Rs, 700 per equity shares aggregating to Rs, 8,388.73 crore (net of employee discount) through an Offer for Sale by State Bank of India and BNP Paribas Cardif S.A. of 80,000,000 equity shares and 40,000,000 equity shares, respectively was completed. The equity shares of the Company were listed on National Stock Exchange Limited (‘NSE’) and Bombay Stock Exchange Limited (‘BSE’) on 3^rd October, 2017.

SBI owns 62.1% of the total capital and BNP Paribas Cardif S. A. holds 22%, while remaining 15.9% share is held by public. SBI Life has a unique multi-distribution model encompassing vibrant Bancassurance, Retail Agency, Institutional Alliances and Corporate Solutions distribution channels.

The Company has proven its market leadership in FY2018 with number 1 position in Individual New Business Premium among private insurers.

The company witnessed a 30% growth in Retail New Business Premium (NBP) vis-a-vis the private industry growth of 26%. The market share of sBi Life Retail New Business Premium (NBP) among all private players as on 31^st March, 2018 is 21.8% vis-a-vis 20.7% for last year.

SBI Life witnessed a PAT of Rs, 1,150 crore in FY2018 against Rs, 955 crore in FY2017. AUM of the Company recorded a growth of 19% at Rs, 116,261 crore as on 31^st March, 2018 as compared to Rs, 97,737 crore as on 31^st March, 2017.

Leveraging wider reach achieved through its network of 825 offices, SBI Life has systematically brought large rural areas under insurance. The Company has sold 24% of total policies in this segment in FY2018. A total of 649,599 lives covered by the company are from the underprivileged social sector.

Awards and recognitions received during the year include:

1.    Brand of the Year 2016-17 Award in the Insurance Category by WCRC.

2.    Ranked #1 (in a jointly held spot) in Customer loyalty in the Life Insurance Category in a survey conducted across more than 15 key cities in India, according to Kantar - IMRB Survey 2017.

3.    Won the “DSCI Excellence Awards 2017” under category “Best Practices for Insurance Sector” for the year 2017, by the Jury under the Chairmanship of Mr. Pramod Bhasin, Founder & Non Executive, Vice Chairman of Genpact.

4.    Awarded ‘India’s Leading insurance Company - Life’ (Private sector) at the Dun & Bradstreet BFSI Summit 2018’.

5.    Adjudged as one of the ‘Most Trusted Brand, 2017’ for the Seventh consecutive year by The Economic Times Brand Equity - Nielsen survey.

6.    SBI FUNDS MANAGEMENT PRIVATE LIMITED (SBIFMPL)

SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 5th largest Fund House in terms of Average “Assets Under Management” and a leading player in the market with over 7.8 million investors. SBIFMPL is the largest ETF manager in India with over 50% market share in fast growing ETF market. SBIFMPL posted a PAT of Rs,331.03 crore during the year ended Mar 2018 as against Rs, 224.32 crore earned during the year ended March 2017. During the current year, SBI MF crossed the historic milestone of INR 2 Trillion AUM mark. The average “Assets Under Management” (AUM) of the Company during the quarter ended March 2018 were Rs, 2,17,649 crore with a market share of 9.44% as against the average assets under management of Rs, 1,57,025 crore with a market share of 8.58% during the quarter ended March, 2017. The Company has a fully owned foreign subsidiary viz. SBI Funds Management (International) Private Limited, which is based at Mauritius and manages Off- shore Fund. SBIFMPL also provides Portfolio management services (PMS) and Alternative Investment Funds (AIF). During the year the Company’s gross sales through digital platforms crossed Rs, 10,000 crore.

7.    SBI GLOBAL FACTORS LIMITED (SBIGFL)

SBIPFPL has been appointed as the SBIGFL is a leading provider of factoring services for domestic and international trade. SBI holds 86.18% share in the Company. The Company’s services are especially suitable for MSME clients for freeing up resources locked in book debts. By virtue of its membership of Factors Chain International (FCI), the Company is able to ameliorate credit risk from export receivables under the 2 factor model.

The Company reported a PBT of Rs, 2.08 crore during the year ended FY2018 (PY

- PBT Rs, 3.25 crore) & PAT (Loss) of Rs, 3.24 crore (PY - PAT Rs, 1.01 crore). Turnover for 12 months ended FY2018 is Rs, 3,555 crore as compared to turnover of Rs, 3,047 crore in previous year (i.e. an increase of 17%). FIU as on 31^st March 2018 is Rs, 1,276 crore as compared to Rs, 1,059 crore as on 31^st March 2017. Turnover in EF under

2 Factor Model for 12 months ended FY2018 is equivalent to EUR 59 Mio (PY EUR 42 mio). In INR terms, the EF turnover touched Rs, 452 crore for 12 months ended FY2018, as against Rs, 321 crore in previous year, i.e. an increase of 41%.

8.    SBI PENSION FUNDS PRIVATE LIMITED (SBIPFPL)

SBIPFPL has been appointed as the Pension Fund Managers (PFM) along with 8 others to manage the pension corpus under National Pension System (NPS). SBIPFPL is one of the three PFM appointed by the Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the NPS for Central Government (except Armed Forces) and State Government employees and one of eight PFM appointed for management of Pension Funds under the Private Sector. The total Assets Under Management (AUM) of the company as on 31^st March, 2018 was Rs, 89,283 crore (YoY growth of 34%) against Rs, 66,723 crore on 31^st March, 2017.

The Company maintained lead position amongst Pension Fund Managers in terms of AUM in both Government and Private Sectors. The overall AUM market share in Private Sector was 58%, while in the Government Sector it was 35%.

The Company was adjudged winner in the “Pension Fund House Category” by Outlook Money for the year 2017. Awards by Outlook money have been adjudged to the Company for 3rd consecutive year in a row.

9. SBI GENERAL INSURANCE COMPANY LIMITED (SBIGIC)

SBIGIC is a joint venture between State Bank of India and IAG Australia in which SBI holds 74% stake. The cornerstone of the Company’s growth aspiration is focussed on the Banca channel whilst developing other channels and products that meet business objectives and drive profitable growth. The Company has entered in to strategic tie-ups with three large car manufactures to drive growth in the Motor portfolio.

Gross Written Premium (GWP) stood at Rs, 3,553 crore for FY2017-18. In the seven years of operation, for the first time in FY2017 SBIG had achieved profit, to the tune of Rs, 396 crore. The Company recorded 36.1% growth in GWP YoY against an industry growth of 17.5% including crop whereas excluding Crop SBIGIC recorded growth of 24.0% against Industry growth of 17.1% for FY2017-18. SBIGIC has grown by 124.8% in Crop Insurance in FY2017-18 by participating in the PMFBY schemes and extending our geographies. The Overall market share among all general insurance companies stands at 2.35% and 5.42% among private insurers. The Company’s market ranking is 14th in the industry and 9th among the private players in FY2017-18. SBIGIC occupies 2nd position in “Personal Accident” among private insurers & 4th position in the industry in FY2018. The company ranks 3rd in “Fire” among private insurers and 7th position in the industry in FY2018. Share of health business decreased marginally from 14.3% to 13.4%. However, there is a growth to the tune of 27.1% for FY2018 against Industry growth of 22.4%.

SBI General wins the ET Best BFSI Brands Award 2018. The ISO 27001:2013 certification awarded to SBI General for its Information Security practices. SBI General Insurance was awarded the Bancassurance Leader award in the 7th edition of Insurance awards organised by Fintelekt.

10. SBI SG GLOBAL SECURITIES SERVICES PRIVATE LIMITED (SBI-SG)

SBI-SG, a joint venture between State Bank of India and Societe Generale with 65% holding by SBI. The Company was set up to offer high quality custody and fund administration services to complete the bouquet of financial services offered by the SBI Group. SBI-SG commenced commercial operations in 2010. The Company’s Net Profit was Rs, 26.03 crore in FY2018 as against Rs, 11.74 crore in FY2017. Accumulated profit is Rs, 45 crore.

Average Assets Under Custody in March 2018 rose to Rs, 4,82,435 crore from Rs, 3,27,158 crore as in March 2017, while the Average Assets Under Administration were at Rs, 2,54,089 crore in March 2018 as against Rs, 1,83,779 crore in March 2017.

SBI-SG has been rated as one of the leading custodians in India in the Global Custodian magazine’s Agent Banks and Emerging Markets Survey 2017.

SBI-SG has been rated #1 custodian in India in the Global Investor/ISF SubCustody survey for 2017.

11.    SBI INFRA MANAGEMENT SOLUTIONS PVT. LTD.

SBI Infra Management Solutions Private Limited, incorporated on 17^th June, 2016, is engaged in providing real estate management services to State Bank of India.

The Company commenced its pilot operations w.e.f. 8^th March, 2017 at six centres in India i.e. Greater Mumbai and Navi Mumbai, Twin City Ahmadabad and Gandhinagar, Greater Chennai, Kolkata Metropolitan area, Greater Hyderabad and Delhi NCR for some benchmark value. The Company is at present efficiently handling more than 60 projects of construction/ interior/retrofitting/ purchasing/leasing etc.

After successful run of pilot projects, the Company has extended all the activities related to premises and estate irrespective of value of all the six circles (situated at aforesaid six centres) and corporate centre establishment from January 2018. The Company is also likely to expand its operations further on pan India basis by the mid of financial year 2018-19.

12.    SBI FOUNDATION

SBI Foundation was established by State Bank of India in 2015 as a Section VIII company under Companies Act (2013) to undertake the CSR activities of SBI and its subsidiaries in a planned and focused manner.

SBI Foundation aims to give back to the society by working towards the socioeconomic well-being of the marginalized and vulnerable communities. Your Bank is actively working towards impacting people on a grassroots level across PAN India with a vision to provide ‘Service Beyond Banking’.

SBI Foundation is presently working on various projects and many initiatives has been taken to build a momentum for a transforming India by creating an inclusive development paradigm, that serves all Indians without any discrimination on the basis of regional, linguistic, caste, creed, religious or other barriers.

The CSR budget for FY2018 was Rs, 20 crore, the grant received was Rs, 25.71 crore (including grant received from subsidiaries). SBI Foundation sanctioned 28 proposals amounting to Rs, 49.53 crore. The total disbursement during the year stood at Rs, 27.18 crore.

The CSR activities are undertaken in the following focus areas:

A. HEALTHCARE

The vast majority of rural population is deprived of basic medical facilities due to lack of healthcare infrastructure in various parts of the country. SBI Foundation is committed to contribute positively to United Nation’s Sustainable Development Goals (SDGs)-Goal#3: Good Health and Well Being by bringing about positive changes in the lives of underprivileged sections of society by providing free access to quality healthcare.

To contribute towards improve the health scenario, your Bank has undertaken the following CSR projects through SBI Foundation.

a.    Sishu Rakhsha: A project to curtail infant mortality rate by providing complete screening facilities and immediate treatment to the infants.

b.    SBI Life: An initiative to prevent and control of Thalassemia diseases by facilitating Thalassemia tests to the public.

c.    Cancer Care: A project which aims to prevent and control of Breast and Cervical Cancer among women.

d.    SBI Darpan: This project works on mitigating damages of Sickle Cell Anaemia diseases.

e.    SBI Umeed: The objective of the program is to curtail maternal, infant mortality and morbidity in expecting mothers and their infants by providing the preventive care information through mobile call facilities.

f.    SBI Eye care: This initiative aims to provide free cataract surgeries in the underprivileged rural areas of India.

B.    EDUCATION

Education is one of the most powerful and proven vehicle to bring transformational change in the development landscape. Education plays a vital role in improving the standard of life of an individual and is viewed as an effective tool for bringing social economic changes. Scarcity of resources and lack of infrastructure are the major hindrances in the education sector in India. SBI Foundation is committed to contribute positively to United Nation’s Sustainable Development Goals (SDGs) Goal#4: Quality Education. Through SBI Foundation, your Banks has initiated various projects as mentioned below:

a.    Gyanshala: This is a middle school education project for urban slum children (Grade IV to Grade VIII) to provide them quality education as other privileged children receive in their schools.

b.    Beti Padhao Kendras: Under this initiative, Beti Padhao centres were started with an aim to provide basic education (up to Grade V) to girl children in remote rural areas.

c.    SBI Udaan: This project works towards quality education along with Arts, Crafts and Sports development for children in slums and remote areas.

d.    Shiksha Sahay: This project supports tribal school for maintaining the quality education and other basic needs.

C.    ENVIRONMENT AND SUSTAINABILITY

Your Bank is committed to environment protection and contribution to reduce the carbon footprint.

a.    Waste to gold: A project that aims to motivate and develop the skills of vulnerable youth to address waste management in the city; and develop small sustainable businesses for their livelihood as well.

b.    SBI Corbett: Under this project, SBI Foundation is providing villages a sustainable waste management system and conducting trainings of SHG Workers to provide awareness in nearby schools and hotels.

D.    ARTS, CULTURE, HERITAGE AND OTHERS

To achieve the dual goal of preservation of culture & heritage and contribute to ‘The Swachh Iconic Places’, SBI Foundation has started two projects under this category as mentioned below:

a)    Swachh Iconic CSMT: This initiative aims for conservation and restoration of south and east fagade of the heritage building at Chhatrapati Shivaji Maharaj Terminus Mumbai (A UNESCO World Heritage Site).

b)    SBI Eklavya: SBI Foundation is providing basic sports facility to the children under ashram schools of Marathwada region of Maharashtra.

E.    DISABILITY

The vision is to enable the Persons with Disabilities (PwDs) to avail better livelihood opportunities by market linked training and jobs in the organized sector. Therefore, to support the PwDs your Bank has started the following projects:

a.    Project Parivarthan: The initiative aims to make inclusive employment of the underprivileged and PwDs the norm in companies by providing them market-oriented trainings.

b.    Project SBI Shravan Shakti: Under this initiative, your Bank has facilitated fitment of Cochlear Implants to hearing impaired children.

c.    Project Swabhiman: This project aims to provide job linked training to PwDs by establishing and running skill centres.

Flagship Programs

SBI Youth for India Fellowship program:

SBI Youth for India (YFI) is a Fellowship program initiated, funded and managed by the SBI Foundation in partnership with reputed NGOs. It provides a framework for India's best young minds to join hands with rural communities, empathise with their struggles and connect with their aspirations

Under the initiative, SBI Foundation has partnered with the reputed NGOs, engaged in development work in rural areas, to deploy the youth enrolling for the fellowship, for conceiving and working on innovative projects. YFI has an alumni base of 184 passionate change makers, 60% of Alumni are associated with the development sector after the fellowship.

Centre of Excellence for PwDs (CoE):

Majority of persons with disabilities can lead a better quality of life if they have equal opportunities and effective access to rehabilitation measures. There has been an increasing recognition of abilities of persons with disabilities and emphasis on mainstreaming them in the society based on their capabilities. It was conceptualized with a goal to be a centralized support centre for persons with disabilities.

CoE primarily works on empowering PwDs through skill enhancement to make significant and measurable improvement that enables individuals to enjoy a more productive and satisfying life by optimizing their cognitive, physical, social and vocational functioning.

Awards and Accolades

SBI Foundation has won seven national level awards during the year for its CSR initiatives.

Name of the Award	Category
Golden Globe Tiger Award for Excellence & Leadership in CSR	Best CSR Practices
Golden Globe Tiger Award for Excellence & Leadership in CSR	Innovation in CSR
Golden Globe Tiger Award for Excellence & Leadership in CSR	CSR Leadership Award
ET Now presents CSR Leadership Awards	Best CSR Practices
ET Now presents CSR Leadership Awards	Innovation in CSR
ET Now presents CSR Leadership Awards	Promoting Employment for the Disabled
Bureaucracy Today CSR Excellence Awards	Care of Senior Citizens
FICCI CSR Awards	Appreciation Plaque in the Health Category

 

CoE has conducted five inclusive training programs for employees with disabilities and their trainers. Seven public sector Banks participated in the training program. CoE has also signed MoUs with Bank of Baroda and Union Bank of India for institutionalization of inclusion and empowerment of employees with disabilities. CoE has set up skilling centres in various cities for placement linked skill development of PwDs.

SBI Gram Seva: India resides in its villages, and for the holistic development of the villages, SBI Foundation has adopted 10 Gram panchayats covering 50 of villages in 6 states of India.

The objectives of the flagship program are:

a.    To link and leverage the specific government schemes/services to villages (families)

b.    To lay emphasis on digitalization and create awareness about online service (including online banking)

c.    Improve the basic infrastructure of villages (set up computer labs, community rooms and others)

d.    Encourage Panchayat/Village self-governance and create environment for participatory efforts by the people for rural asset creation and community development.

e.    Integrated village development is aimed to promote education for all, environment protection, livelihood development, digitalization in Gram Panchayat, skill development and improvement of preventive and primary health care in villages.

VI. RESPONSIBILITY STATEMENT

The Board of Directors hereby states:

VII. ACKNOWLEDGEMENT

i.    that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii.    that they have selected such accounting policies and applied them consistently and made judgments and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of your Bank as on the 31^st March 2018, and of the profit and loss of Your Bank for the year ended on that date;

iii.    that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of your Bank and preventing and detecting frauds and other irregularities;

iv.    that they have prepared the annual accounts on a going concern basis;

v.    that the internal financial controls had been laid down, to be followed by your Bank and that such internal financial controls are adequate and were operating effectively; and

vi.    that proper system had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

During the year, Shri M. D. Mallya and Shri Deepak I. Amin retired from the Board w.e.f. 25^th June 2017, consequent upon completion of their term. Shri Sanjiv Malhotra was reappointed as Independent Director u/s 19(c) of the SBI Act w.e.f. 26^th June 2017 on the Board. Shri Bhaskar Pramanik, Shri Basant Seth and Shri Pravin Kutumbe were elected by the Shareholders as Directors on the Board u/s 19(c) of the SBI Act w.e.f. 26^th June 2017. Smt. Anjuly Chib Duggal retired from the Board w.e.f. 31^st August 2017 consequent upon her retirement as Secretary, Department of Financial Services and Shri Rajiv Kumar was nominated as GOI Nominee Director in her place w.e.f. 12th September 2017.

Smt. Arundhati Bhattacharya, Chairman retired on completion of her tenure on 6^th October 2017 and Shri Rajnish Kumar was appointed as Chairman in her place w.e.f. 7^th October 2017.

Dr. Purnima Gupta has been nominated by GOI as Director u/s 19(d) of the SBI Act w.e.f. 1^st February 2018. Shri Pravin Kutumbe resigned from the Board w.e.f. 8^th March 2018 consequent upon his appointment as Whole-Time Member in IRDA.

The Directors place on record their appreciation for the contributions made by the outgoing Chairman, Smt. Arundhati Bhattacharya and Directors, namely, Shri M. D. Mallya, Shri Deepak I. Amin, Smt. Anjuly Chib Duggal and Shri Pravin Kutumbe, to the deliberations of the Board. The Directors welcome the new Chairman, Shri Rajnish Kumar and Directors,

Shri Bhaskar Pramanik, Shri Basant Seth, Shri Rajiv Kumar and Dr. Purnima Gupta on the Board.

The Directors also express their gratitude for the guidance and co-operation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation for the dedicated and committed team of employees of the Bank.

                                                                    For and on behalf of the Central Board of Directors

                                                                   Chairman

Date: 22^nd May, 2018

 

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Mar 31, 2017

I SUPPORT AND CONTROL OPERATION

1. HUMAN RESOURCE AND TRAINING

1.1 PEOPLE ARE THE MOST VALUABLE ASSET

Your Bank witnessed various challenges during the year but remained on a growth path by transforming itself. This was made possible by the entire bank being guided by a common vision, shared values, and following high standards of integrity and governance. The powerful performance of your Bank is the outcome of a talented and hardworking set of employees, constantly motivated towards driving your Bank’s success. The HR policy of your Bank is constantly being synchronised to meet business goals, and increase employee empowerment. Your Bank is committed to provide an enabling workplace, ensuring employee welfare and offering opportunities to develop and grow.

The Summarised HR Profile of the Bank is as under:

Your Bank’s HR vision has been built around principles of inclusiveness, empowerment and development. Its people are its strength and your Bank is proud of its performance oriented and meritocratic culture. Your Bank’s Career Development System (CDS) has been highly successful in ensuring a credible, data backed and performance evaluation process. The system ensures strong accountability, performance visibility, and greater alignment between individual and organisation goals. Besides bringing fair and transparent assessment, CDS also drives employee development through a thorough competency assessment every year.

For a bank with a large footprint and diversified set of roles, specialisation of skills becomes very important to drive success. To foster optimum expertise and ensure deep domain knowledge, your bank has defined career paths for its Scale II-V officers along with 7 Job Families- Credit & Risk, Sales, Marketing & Operations, HR, Finance & Accounts, Treasury & Forex, IT and Analytics.

Based on officer’s interest and expertise, they specialise and rotate within roles of any of these job families. To ensure optimum exposure and ‘Right person for the Right job’, your Bank is in the process of deploying a scientific postings allocation process through the use of our automated tool ‘PROSPER’.

A strong and eminent leadership team, coupled with an engaged and enthusiastic young talent group has been a strong force in driving your Bank’s success. Your Bank is focused on developing processes to attract the best talent within the country. It has revamped the recruitment process and developed a stronger employee value proposition to attract better talent. Opportunities of overseas exposures at junior levels has been introduced for attracting newer talents to come on board. The recruitment strategy is strongly being supported by campus re-branding activities, greater engagement through recruitment portals and digital marketing plans.

In FY2017, Your bank added 13,097 young tech savvy and customer friendly employees. The list includes over 2000 POs, 160 Management Trainees, over 100 domain experts in wealth management, Digital and e-Commerce and clerical employees.

The total staff strength of the Bank is as under:

Category	As on 31st March 2016	As on 31st March 2017
Officers	80,818	81,041
Associates	88,606	92,979
Subordinate Staff & Others	38,315	35,547
Total	207,739	209,567

Inclusiveness and diversity: With the growing scale, your Bank ensures adherence to the core principles of inclusiveness and gender equality. Your Bank employs over 46,676 women employees across geographies and at different levels of hierarchy. Nearly 2,000 branches are being headed by women officers. Your bank has laid utmost emphasis to ensure a healthy and conducive work environment for its women employees.

Your Bank maintains a zero tolerance policy against sexual harassment at workplace and has put in place an appropriate mechanism for prevention as well as redressal of complaints. The affirmative action as directed by GoI is taken care of during the recruitment as well as promotion process. Out of 21 cases of sexual harassment reported during the year, 15 have been disposed off.

Furthermore, your Bank provides reservations, as per GoI directives, for Scheduled Castes, Scheduled Tribes and Other Backward Classes in its workforce. It therefore, has a share of SC, ST, OBC and differently-abled persons, amongst all cadres in the work force. Apart from the corporate center, Liaison officers have been designated at all 14 circles to effectively redress grievances of SC/ST employees.

It has been the constant endeavor of your Bank to adopt best in-class industry practices and processes in people management. Few key recent interventions undertaken by your Bank are mentioned below:

- Performance Linked Incentive (PLI) scheme has been re-designed to make it more broad-based and in-line with Career Development System grade as benchmark. Separate ‘Reward and Recognition’ scheme was introduced to appreciate achievements beyond normal course of business.

- Leveraging advanced technologies, a ‘Work from Home’ policy has been introduced in your Bank. This is an employee friendly measure to help them balance personal and professional aspirations.

- For attracting and retaining talent and making SBI the first choice amongst young generation, your Bank is also in the process of restructuring its compensation package. Your Bank is in the process of introducing ‘Smart Compensation Package’ for officers up to Scale III from FY2018 onwards.

- Compensations in the form of leased housing, medical reimbursements, cashless treatment at over 100 hospitals, and other employee friendly policies like sabbatical, flexitime scheme and medical insurance for retired employees has been formulated to attract young talent.

- With the focus of promoting ethics in the organisational fabric, an Ethics and Business Conduct department has been set-up, and is headed by the Chief Ethics Officer of your bank.

A Learning Culture

People development is at the heart of your Bank’s agenda. It offers a slew of learning interventions not only at each stage of the employee lifecycle, but also specialist programs according to the nature and role of the employee’s function. Such focused learning interventions, aimed at enhancing the technical and managerial competencies, have not only helped groom managers in their current role, but are also focused on their evolution as future leaders and visionaries of your Bank. Furthermore, your Bank is in the process of designing individual development plans for each of its potential leaders to empower and enable them in their growth path.

Industry Relations

Your Bank has a strong focus on industrial relations. It holds consultative meetings with Associations and Unions as a part of having a constructive dialogue for understanding and addressing grievances of various employees. These consultations are regularly carried out at Corporate Centre, as well as the Circles. Various issues raised by federations are examined and necessary action is undertaken.

1.2 STRATEGIC TRAINING UNIT

Towards the objective of maintaining the brand of an enduring value creator and a great place to work, your Bank continues a planned, proactive training process for individual growth and organisational effectiveness. New techniques and methodologies are adopted and imported on a regular basis from across the globe to establish a virtuous circle of teach and learn to enhance quality of training and transform employees into knowledge workers so that they can carry forward our initiatives towards creating customer delight. The training system functions under the overall supervision and guidance of the STU. The training apparatus at present consists of five Apex Training Institutes (ATIs) and 43 State Bank Learning Centres. Your Bank has been able to create a virtual Knowledge university within the institution, with a capacity of classroom training of 3,400 employees per day in all areas of Banking, Economy, Leadership, Ethics, Marketing, Administration and Soft Skills, in addition to a robust digital learning platform. It is creating links and providing training support to neighbouring countries and in the Middle East

Other Training Initiatives:

Agradoot : A specially designed mass-communication programme named ‘Agradoot’ was organised country wide for subordinate staff including Bank guards to focus on the relevance and importance of their role in your Bank; and motivating them towards enhanced customer service. Around 32,000 members of subordinate staff were trained and many of them expressed it was for the first time in their careers that they felt highly cared for.

Certification Programme on Credit: It was launched to develop adequate credit skills and to keep the officials updated at all times. It focuses on the commercial credit skills required to handle the entire loan life cycle of Advances.

Certification Programme for Branch Managers (CPBM): It has been developed for officers placed in operations and marketing mainly for the first time/prospective Branch Managers.

Mentoring of Branches: The initiative of Branch Mentoring by Top Executives has a renewed focus on inclusive mentoring with qualitative impact on the branches which are facing issues like customer complaints, NPA and IR etc. Each mentor is engaged with only two branches identified by the Circle.

Quizzing Culture: Promotion of Quizzing Culture continued with holding of regular products/processes quiz contest by business verticals/departments. A ‘Mega Quiz’ spread over four levels is also organised at the corporate level.

Sweating of Assets: Your Bank’s training footprint is getting inclusive and global. Your Bank has opened up its training system to other outside institutions including Public and Private Sector Bank officers and other Government Departments.

Contribution to Nation Building: Your Bank’s training system contributes in many ways towards nation building. SBLCs have contributed extensively to financial Literacy/ financial inclusion by conducting classes in various schools/engineering colleges and in villages. During the demonetisation period, your Bank conducted several onsite/offsite awareness workshops/seminars for the masses on digital transactions. Your Bank also trained personnel for various payment Banks, which are recent additions to India’s financial landscape.

Digital Initiatives:

Mobile App for POs &TOs: An Application has been created to serve as a dashboard for tracking and monitoring the progress of newly joined PO’s and TO’s. This can be used for broadcasting inspiring quotes and videos, announcements, lesson completion status, trainings attended and various other requirements for the entire period of probation.

Video Lab: A state-of-the-art video lab has been established, wherein video lessons of your Bank’s faculty on various subjects will be recorded. The lab will also be used for digital storage of photographs and videos of important training events across the country, with the aim of creating in-house audiovisual content for training.

STU Website: The website of the Strategic Training Unit has been completely revamped. It is now the epicenter, where all learning materials are accessible by all Apex Training Institutes and SBLCs at one place via the Intranet.

Feedback for External Trainings: A web based application for providing feedback by officials attending external trainings has been developed and rolled out.

Training Dash Board: An in-house tool ‘Training Dash Board’ has been developed and made available to all the HR functionaries to arrive at data of trained/untrained staff for easy follow-up.

Inclusion Centre:

An Inclusion Centre for differently-abled employees is operational with an objective to enable financial inclusion, training, empowerment and upgradation of skills of people with different abilities in a systematic way. Some of the activities / initiatives undertaken by your Bank are mentioned below.

- Specially designed programmes have been conducted for differently-abled employees like training for visually and hearing impaired employees of your Bank.

- Employees have been sensitised for inclusion and mainstreaming of employees with different abilities during post training - field implementation.

- Grievance redressal for differently abled employees has been entrusted to Inclusion Centre located at Corporate Centre.

- Provided Talking software and OCR Readers/Scanners to VI employees.

- Created three Specialised Communities in SBI Aspirations for Differently Abled Employees (VI /HI / OH).

- Identified four SBLCs on pilot basis to promote complete barrier free accessibility for persons with different ability.

Training Challenge of Merger:

On the face of stiff challenge to train large number of employees of five Associate Banks and Bhartiya Mahila Bank on the products and processes of SBI within the quickest possible time, your Bank has geared up the training machinery with various special programmes designed and scheduled. Further, with a view towards easing the transition of these employees into the Bank, a ready reckoner on popular asset products of P-segment, SME segment, Agri segment, REH&HD and Tech products has been distributed. Twelve Training establishments of Associate Banks will come into the fold of SBI from day one of merger.

State Bank Institute of Management (SBIM) Kolkata:

The new ‘Centre of Excellence’ will become operational in the second quarter of FY2018.

Awards:

Your Bank is the humble recipient of the following awards for its training initiatives:

- Golden Peacock National Training Award: As a mark of outstanding performance in the area of training to its employees ‘State Bank of India’ has been declared as the Winner of ‘Golden Peacock National Training Award’ for the year 2017 in the sector of financial services (Banking).

- National Award 2016: Awarded for Empowerment of Persons with Different Abilities in the sub-category Best Employer-2016 by Government of India, Ministry of Social Justice and Empowerment.

- Helen Keller Award 2016: It was presented by National Centre for Promotion of Employment for Disabled People (NCPEDP) for the second successive year in the category Role Model Company/NGO/Institution for its commitment towards promoting equal employment opportunities for Differently Abled Persons.

ISO Certification:

Your Bank constantly strives to achieve quality standards for its Learning Centres in terms of training resources, infrastructure and academic activities. All the five Apex Training Institutes (ATIs) and 40 SBLCs out of 43 are accredited with certification, of which 13 SBLCs were accredited during FY2017.

2. INFORMATION TECHNOLOGY

State Bank of India is a strong proponent of leveraging information technology to deliver convenience to its customers. Your Bank has been offering innovative and cutting-edge products to its customers with the objective of enabling banking transactions at anytime and from anywhere. Your Bank’s technology strategy has evolved in tune with the current consumer trends of social collaboration, mobility, cloud-based platforms and big data analytics.

Digitisation and excellence in operations has been core to your Bank’s strategy in providing convenience to customers. It has resulted in a reduction in turnaround time and extended benefits to your Bank’s customers.

1. Internet Banking

Internet Banking solutions cater to the various payments, fund-transfers, e-Tendering, e-Auction and bulk payments related requirements of the Government/ PSUs/Large and Medium Corporate as well as for Retail Internet Banking (RINB) customers. The Corporate Internet Banking (CINB) is well suited to Small, Medium and Large Corporate. It has also been immensely successful in establishing traction with Government Treasury & Accounts Departments. Online collection of fees/funds for institutions, corporate and government departments is being facilitated through Multi Option Payment System (MOPS) and State Bank Collect. Merchant-acquisition is facilitated through aggregators.

This cost-effective channel has enabled more than 140 crore transactions during FY2017, achieving 12.9% growth over the previous year. Your Bank’s robust Retail Internet Banking (RINB) platform has also been optimised for visually impaired customers following WCAG (Web Content Accessibility Guidelines).

Internet Banking Users

(No. in lakh)

2013	2014	2015	2016	2017
130	177	220	263	327

During FY2017, your Bank has continued to be a major player in the e-Commerce space in the country. Over 50,027 merchant tie-ups were done, directly or via State Bank Collect/ e-Commerce aggregators. Your Bank has facilitated more than 37 crore e-Commerce transactions up to 31st March 2017.

Some of the new features launched in Net Banking during FY 2017 are as follows:

- Online PAN Updation

- Online OD for e-Commerce purchases (Flip kart)

- INB Infrastructure Transformation and database segregation to meet future growth

- Submission of stock statement through CINB

- Direct integration with 102 merchants/ government departments

- NPS Online account opening

- Personalised Image Based Gift Card Issuance Facility

- IMPS facility for SARAL Users

- Spend Analyser

- Facility to register for receiving account statement by email at periodic intervals

- Online locker enquiry

- Quick transfer for SARAL

- Mobile number registration in CBS through Contact Center

- Delivery of INB password through email to NRI

- Setting up Auto Sweep (transfer to MODs)

- NPS contribution and unfreezing

- Facility to download PPF account statement financial year wise

- Save Now Travel Later - Cox & Kings: Recurring Deposit

- SBI FLEXI RD

- Issuance of ATM PIN Pre Printed Kit through INB Branch Interface

- Direct integration with EPFO for contribution by corporate

2. Analytics

Your Bank is using analytics extensively to maximise operating efficiency. Predictive analytics and customer segmentation are used with the objective of enhancing customer revenues through cross-selling and up-selling. Risk Analytics is used both for appraisal of fresh applications and for ongoing monitoring of the loan portfolio. Analytics is also used to improve ATM, network availability and performance, to fine tune target setting for and performance tracking of the Bank’s employees, and to optimise deployment of capital against revenue opportunities. Analytics-driven, pre-qualified lending programs launched in 2016 have generated significant business, while reducing cost of acquisition. Improved and timely intelligence delivery to branches/ operating functionaries has also resulted in quantifiable growth in customer retention and wallet share.

3. TAB Banking

Digital Inspection Application (DIA)

Tab Apps for recording the pre-sanction and post-sanction inspections of the customers is available for seven products. DIA is integrated with LOS, CBS and HRMS where the customer data is pre-populated and field staff needs to capture the photographs of borrowers, collateral, factory, stock and others with date, time and geo-coordinates. The inspection reports are automatically mailed to the field staff in their EMS mail address. The Application also has auto reminders for upcoming post-sanction inspections, stock and insurance expiry dates.

DIA - Lite Version for Mobiles and Desktop

The Digital Inspection App Lite version for SME and Agri are available for mobile phones. Field officers can capture the photographs with date, time and geo-coordinates using the Mobile App and then continue the data entry for inspection in the desktop site. All features provided in the tab are available in the desktop site.

4. SBI Workspace Business Challenge

In order to prevent unauthorised access to data on mobile device, your Bank decided to set up an Enterprise Mobility Management (EMM) infrastructure to facilitate Bring Your Own Device (BYOD) through SBI Workspace.

This solution provides a cost efficient way of delivering applications on mobile devices, providing data security and flexibility of operations to the end users. It protects mobile devices such as smart phones and tablets used by Bank officials from malicious software, hackers, data leakage, and unauthorised access. It also provides secure and controlled access to Bank’s intranet websites, apps, e-mails and files, among others.

5. Core Banking Development

Project CBS Roopantar was implemented during the year to deliver faster customer service. It offers a unique user experience to your Bank’s over 1,60,000 tellers, thereby achieving an increase in their productivity through data entry reduction, maker checker process enhancements and enables various applications/tools as widgets on the CBS login screen.

6. IT Special Projects

During the year, e-wealth hubs were made operational at New Delhi and Mumbai centres for UHNI/HNI customers offering portfolio management, investment advisory through self service portal and video assist services.

‘Branch Infrastructure Management System (BIMS)’ - A web application has been developed and customised, to enable the Branch Officials and their Controllers to have a comprehensive view of the infrastructure/ physical assets of a branch / office.

7. Social Media

Your Bank’s social media presence was established in November 2013. In a short span of 3.5 years, your Bank’s social media strategy has come a long way. Your Bank has been consistently ranked number one globally among Top 100 Banks using Social Media by The Financial Brand in their list of ‘Power 100 Ranks’. We have adopted an aggressive social media strategy, which has strengthened our foothold in the social space not just in the Indian market but on a global scale as well. Your Bank boasts of having the highest fan-base on Facebook globally, among banks. It also leads the chart on LinkedIn and Pinterest among Indian banks.

SBI’s Facebook Page was launched on 7th November, 2013. Today it is the most popular page amongst all Indian Banks with more than 10 million followers. Your Bank has leveraged this platform to promote its latest products and services and provided responses to the innumerable comments received on this platform.

Keeping in view the young customers of the Bank, your Bank has also launched SBI Mingle - the Social Media Banking Platform which offers a host of banking services on Social Media. Services like account enquiries, cheque book request, SMS alert registration and fund transfer including P2P transfer is available through the platform.

Your Bank’s YouTube channel leads all Indian banks in terms of subscriber base. It uploaded more than 400 videos that have garnered over 40 million views and has over 44,000 subscribers, indicating appreciation by the digital users.

Your Banks has figured in Twitter advertising index for 6 weeks in a row. The Instagram handle also garnered more than 2.3 lakh followers. In the current financial year, your Bank also launched its presence on Quora.

8. Integrated Data Strategy,

Processing and Management (IDSPM)

After persistent efforts, IDSPM has achieved T 1 status (T 5 on month ends) of data. This is best of class in the industry. This has significantly reduced time taken for generation of reports and updating of dashboards.

IDSPM has provided more than 1 00 types of data/reports related to demonetisation at T 0 / daily/weekly/ monthly intervals to various government authorities and top management.

On the Big Data front, in order to cater to the ever-increasing volume and types of data, your Bank is in the process of setting up of a data lake. This will facilitate faster processing of large volume of structured and unstructured data and perform advanced analytics with a view to gain insights for business decision and development of new products.

9. Project Management Office

Your Banks has put in place a Project Management Office which created a seamless process through which business requirements came to IT in a standard and structured manner. Projects are planned in a standard manner considering elements such as Schedule management, RAID, stakeholder management and Interface Management. These customised processes are implemented through a workflow based toolset. All the project managers in GITC are given hands on training. A majority of business users are also given training on these tools. Senior management fully supported the uptake of these capabilities. A comprehensive set of dashboards are designed for business and IT leaders to provide insight into project performance.

10. Customer Relationship

Management Solution

Customer Relationship Management (CRM) as a concept has always been integral to the customer centric vision of your Bank. It has always been a pioneer in implementing new age solutions to enhance the customer experience and increase the moments of customer delight. Your Bank has also been a forerunner in catering to the need of the customers in this digital age.

In the context of the present ‘Always-on-Always-Connected’ day and age, your Bank’s customers demand and deserve a consistent, high quality service experience, across all interaction points - at the branch, online, over the phone or at any of the self-service stations. Customers expect a continuity of context/conversation across interactions that they have had with the bank over time. Towards that end, the Bank is implementing a robust full featured CRM system to deliver efficient and seamless high quality customer experience. The CRM system will leverage the Bank’s Data Warehouse and Analytics capabilities to proactively address customer’s needs and offer the right product/services at the right time. Apart from increased cross-sell and up-sell capabilities, reduced turn-around-time, Customer 360⁰ view, automated and streamlined processes, improved reporting and effective decision making would be some of the key benefits of the CRM system.

11. ATMs

In a constant endeavour to improve technology to enhance customer satisfaction and convenience, ATM channel during the year made several technology advancements which includes the following:

- ATM Switch Consolidation to handle approximately 90,000 ATM terminals.

- Debit Card Management system (DCMS) to Single DCMS for better performance and prompt dealing with various customer requests related with linking/delinking, blocking and unblocking of the Debit Card.

- Green Pin through channels viz. ATM, INB, IVRS, SMS.

- Disabling ATM receipt printing at customer’s option.

- Quick Cash facility enabling State Bank Customers to withdraw favourite cash in shortest time.

- Ping Module for quick fault identification by segregating connectivity issues from other local issues for quick resolution of the ATMs which are down.

- Tool on Internet with 24*7 monitoring of ATM, which resulted in high availability of ATMs.

- IMT (Instant Money Transfer) facility through which cardholder can send money instantly to any mobile number in India. The receiver can withdraw the money through an ATM without using a debit card.

- Deposit Transaction Limit increased from Rs.49,900 to Rs.2 lakh in all SBI CDM and Cash Point Machines.

- SBI Finder helped in real-time monitoring of ATM/CDM status especially during the demonetisation phase.

12. Payment System Group Prepaid Cards: Your Bank issues Prepaid Cards in both Indian and Foreign Currency. Different variants of INR Prepaid cards such as EzPay cards, Gift cards, Smart Payout cards, Quick Pay Cards, Imprest Cards and Achiever Cards, among others are issued to individual and corporate customers. State Bank Foreign Travel Cards are available in eight foreign currencies namely the Japanese yen, the Canadian dollar, the Australian dollar, the Saudi riyal, the Singapore dollar, the U.S. dollar, the Euro and the British pound to provide safety, security and convenience to overseas travellers. During FY2017, there has been a growth of 100% in INR prepaid cards. In FY 2017, your Bank issued over 32,200 foreign travel cards and 3,68,400 INR prepaid cards.

13. Funds Transfer and Settlement

Your Bank offers Real Time Gross Settlement (‘RTGS’), National Electronic Fund Transfer (‘NEFT’) and National Electronic Clearing Service (‘NECS’) fund transfer facilities for qualifying transactions at its branches as well as through internet banking. In addition, NEFT is offered through your Bank’s mobile banking services. NEFT and RTGS continue to be the most cost effective and time efficient modes for remittance. The volume (number) of outward fund transfers through NEFT during FY 2017 were 229.70 million. Bank has established itself as a leader in NEFT, with a market share of 13.45% as of 31st January, 2017 (as per latest data by RBI). In RTGS, Bank maintained a market share on 10.34% as on 28th February, 2017 (as per latest data by RBI). NEFT fund transfer transactions through your Bank’s mobile banking service have also increased significantly in recent years.

14. Lotus Project

Being the largest and the most trusted bank for over 300 million customers in India, your Bank continues to be a key driver with its bouquet of technology-driven solutions to spearhead banking and financial participation in India.

Your Bank continues to modernise its IT architecture; by optimising and modernising the IT landscape with a view to increase efficiency and improve control.

Technology driven channels through the digital transformation aims to bring about efficiencies in cost/income ratios as well as higher customer satisfaction scores. It also brings apart from a positive change in the working culture of the Bank and sets it at par with the most modern global banks. Your Bank’s capabilities are driven by a cutting edge cognitive infrastructure capable of understanding customer needs accurately and satisfying the same in the preferred manner. In the delivery of the digital transformation, for the first time in its history, your Bank has adopted agile methodology with a design thinking approach, to address the business needs through this initiative. Market recognition of these transformational aspects in technology has been recognised globally resulting in several rewards and accolades by prestigious industry bodies.

15. New Developments in FI&GS (Financial Inclusion & Government Schemes)

- Enabled inter-operable ATM Card based Transactions BC/CSP Outlet.

- Merchant Transactions menu for CSPs through Kiosk Application provided convenience of e-payment for goods/services purchased by customer from CSP outlet.

- Rolled out of SBI Aadhaar Pay Merchant App, facilitating less cash economy.

- OTP based refund facility under IMPS helped easy refund of failed IMPS transactions to the authentic customer.

- BUDDY integration with Kiosk Banking enabled cash deposit and withdrawal from Buddy at Kiosk Channel.

- Deployment of robust Direct Benefit Transfers solution to handle higher volumes and provide T 0 processing with complete accounts and funds reconciliation.

- New Solution for processing State Government subsidies offers DBT services to state level subsidy paying agencies.

List of IT - Awards received during FY 2017

Award	Category 1
IDRBT Banking Technology Excellence Awards for the year 2015-16.	(1) Innovative Use of Technology (in Large Bank category) (2) Digital Banking (in Large Bank category)
CSI IT Innovation and Excellence Awards 2016	Best Bank in terms of Big Data Analytics implementation
SKOCH Award	EMI for e-Commerce, SBI Mingle
Finnoviti Awards 2017	EMI for e-commerce, Automation of Credit Risk related tranche
IBA Banking Technology Awards 2017	Best Technology Bank of the year, Best Digital & Channels Technology (Runner-up), Best Use of Analytics (Runner-up), Best Financial Inclusion Initiatives (Runner-up), Best Financial Inclusion Initiatives (Runner-up)
Netapp Innovation Award 2017	Innovative Use of Data Storage, Green IT
NPCI - National Payments Excellence Award	Special Recognition Award for winning in all categories

List of Awards received for BEST CIO, FY2017

Award	Category
CIO 100 by IDG Media Pvt. Ltd.	Best CIO
BFSI IT Leadership Award 2016	Best CIO
CSI IT Innovation and Excellence	Best CIO
Awards 2016
Hosted by UBS Transformance	Life Time Achiever Award

3. RISK MANAGEMENT

A. RISK MANAGEMENT OVERVIEW

Risk Management at your Bank includes risk identification, risk assessment, risk measurement and risk mitigation and its main objective is to minimise negative impact on profitability and capital. Your Bank is exposed to various risks that are an inherent part of any banking business. The major risks are credit risk, market risk, liquidity risk and operational risk which includes IT risk.

Your Bank has policies and procedures in place to measure, assess, monitor and manage these risks systematically across all its portfolios. Your Bank is amongst the leaders to undertake implementation of the Advanced Approaches under Credit, Market and Operational risk. Your Bank has also undertaken the Enterprise and Group Risk Management Projects, which aim to adopt global best practices. The projects are being implemented with support from external consultants.

RBI Guidelines on Basel III Capital Regulations have been implemented and your Bank is adequately capitalised as per the current requirements under Basel III. An independent Risk Governance Structure, in line with international best practices, has been put in place, in the context of separation of duties and ensuring independence of Risk Measurement, Monitoring and Control functions. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.The various risks across Bank and the SBI Group are monitored and reviewed through the Executive level committees and the Risk Management Committee of the Board (RMCB) which meets regularly. Risk Management Committees at Operational unit and Business unit level are also in place.

1. CREDIT RISK

Credit Risk is defined as the possibility of losses associated with the diminution in the credit quality of borrowers or counter-parties from outright default or from reduction in portfolio value. Credit Risk emanates from a bank’s dealings with an individual, non-corporate, corporate, Bank, financial institution or sovereign.

Mitigation Measures Your bank has put in strong credit appraisal and risk management frameworks in place for identification, measurement, monitoring and control of the risks in credit exposures. Industrial environment is scanned, researched and analysed in a structured manner by a dedicated team for deciding your Bank’s outlook and growth appetite for each of the identified 37 industries/sectors, which constitute about 70% of the Bank’s total domestic exposure. Risks in these sectors are monitored continuously and wherever warranted, the industries concerned are reviewed immediately. Impact of events like BREXIT, demonetisation, telecom tariff war, falling prices of power and the upheaval in commodity prices to name a few, were analysed and appropriate responses to these situations were strategised by your Bank to mitigate possible risks. Exposure to sensitive sectors like Real Estate are reviewed at regular intervals. Sectors like Power, Telecom, Iron & Steel, Textiles, which are going through a challenging phase, are watched continuously and analysis of new developments are shared with the business groups to enable them to make informed credit decisions. Knowledge sharing sessions are conducted for the benefit of the Top Executives and for the operating staff.

Credit rating thresholds for each industry are decided on the basis of the outlook.

Your Bank uses various internal Credit Risk Assessment Models and scorecards for assessing borrower wise credit risk. Models for internal credit ratings of the borrowers have been developed in-house. They are reviewed through cycles of comprehensive validation and back testing frameworks.

Your Bank has adopted an IT platform for credit appraisal processes through a Loan Originating Software/Loan Lifecycle Management system (LOS/LLMS). Models developed by the Bank are hosted on these platform which are interfaced with CIBIL and RBI defaulters lists.

In order to focus on capital conservation and maximisation of return on capital, your Bank has introduced Risk Based Budgeting (RBB). Reduction in risk and return on capital is measured based on Return on Credit Risk Capital (RoCrC). Achievement of the budgeted advances level are subject to scrutiny under the specified levers. Risk Adjusted Return on Capital (RAROC) framework has been implemented from FY2016. The Customer level RAROC calculation has also been digitised. Further behavioural models for monitoring and scoring the retail borrower performance have been developed and hosted on Credit Risk Data Mart.

Your Bank has put improved mechanism in place to manage Credit Concentration Risk, by way of introduction of risk sensitive Internal Prudential Exposure Limits framework for single as well as group borrowers. These limits are fixed on the basis of the internal risk rating of the borrower. This framework is one step ahead of the regulatory prescription of Prudential Exposure norms, which is ‘one size fits all’ in nature. These exposure norms are monitored regularly at a defined periodicity.

Your Bank conducts Stress Tests every halfyear on its Credit portfolio. Stress Scenarios are regularly updated in line with RBI guidelines, industry best practices and changes in macro economic variables.

RBI has allowed your Bank to participate in the parallel run process for Foundation Internal Ratings Based (FIRB) under the Advanced Approaches for Credit Risk. The data under parallel run of FIRB is being submitted to RBI. Models for estimation of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) are hosted in Credit Risk Data mart for computation of IRB capital. Independent Risk Advisory (IRA) is a new initiative launched by your Bank in its efforts to strengthen Credit Risk Management. Medium and High value credit proposals are examined by the Independent Risk Advisory department.

2. MARKET RISK

Market Risk is the possibility of loss that Bank may suffer on account of change in value of its trading portfolio, on account of market variables such as exchange rate, interest rate and equity price, among others.

Mitigation Measures

Your Bank’s market risk management consists of identification and measurement of risks, control measures, monitoring and reporting systems.

Market risks are controlled through various risk limits, such as Net Overnight Open Position, Modified Duration, PV01, Stop Loss, Upper Management Action Trigger, Lower Management Action Trigger, Concentration and Exposure Limits.

Your Bank has Asset class wise risk limits for its trading portfolio and monitors the same on an ongoing basis.

Currently, market risk capital is computed under the Standardized Measurement Method (SMM). Your Bank has submitted Letter of Intent to the Reserve Bank of India for migration to Internal Models Approach (IMA) under the Advanced Approaches for market risk.

Value at Risk (VaR) is a tool used for monitoring risk in your Bank’s trading portfolio. Enterprise level VaR of the bank is calculated on a daily basis and also back tested daily. The Stressed VaR for market risk is also computed on a daily basis. The VaR methodology is supplemented by conducting quarterly stress tests of the trading portfolio.

3. OPERATIONAL RISK

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

Mitigation Measures

Key elements of your Bank’s Operational Risk Management Policy, among others, include ongoing review of systems and controls, creation of awareness of operational risk throughout the Bank, timely incident reporting, enhancing operational risk awareness through Risk & Control Self- Assessment (RCSA) process, improving early warning information through implementation of Key Indicators (KIs) (comprising of Key Risk Indicators (KRIs), Key Control Indicators (KCIs) and Key Process Indicators (KPI)), the resolution of risk issues by effectively tracking and follow-up of outcomes of assessment, assigning risk ownership, aligning risk management activities with business strategy. All these policies ensure better capital management and improve quality of Bank’s services/ products/processes, besides ensuring compliance with regulatory requirements.

RBI has granted In-Principle approval to your Bank (on a solo basis) to migrate to AMA (Advanced Measurement Approach) for computation of operational risk capital charge on Parallel Run basis.

For FY 2017, Bank on a stand-alone basis, had assigned capital for Operational Risk as per Basic Indicator Approach (BIA). Capital charge as per AMA has also been calculated as part of Parallel Run.

Your Bank celebrated Risk Awareness Day on 1st September. Risk culture is being embedded through training staff at all levels through e-learning lessons.

4. ENTERPRISE RISK

Enterprise Risk Management aims to put in place a comprehensive framework to manage various risks and alignment of Risk with Strategy at the whole Bank level. It encompasses global best practices such as Risk Appetite, Material Risk Assessment and Risk Aggregation, among others.

Mitigation Measures

As part of your Bank’s vision to transform the role of Risk into a Strategic function, a Board approved Enterprise Risk Management (ERM) Policy is place.

Your Bank is currently implementing Material Risk Assessment by identifying risks material to the organisation, measuring the levels of risks and aggregating the same to provide an enterprise level risk profile.

Your Bank conducts a comprehensive Internal Capital Adequacy Assessment Process (ICAAP) exercise on a yearly basis with respect to adequacy of Capital under normal and stressed conditions. The Pillar 2 risks, such as Liquidity Risk, Interest Rate Risk in Banking Book (IRRBB), Concentration Risk and others along with the Pillar 1 risks such as Credit, Market and Operational risks are covered inder ICAAP.

5. GROUP RISK

Group Risk Management aims to put in place standardised risk management processes in Group entities.

Mitigation Measures Policies relating to Group Risk Management, Group Liquidity and Contingency Funding Plan (CFP), Arms Length and Intra Group Transactions and Exposures are in place.

Monitoring of consolidated Prudential Exposures and Group Risk components is also being done regularly. A quarterly analysis of risk-based parameters for Credit Risk, Market Risk, Operational Risk and Liquidity Risk, among others, is presented to the Enterprise & Group Risk Management Committee (EGRMC)/Risk Management Committee of the Board (RMCB).

The Group Internal Capital Adequacy Assessment Process (Group ICAAP) document includes an assessment of identified risks by Group entities, internal controls and mitigation measures, and capital assessment, under normal and stressed conditions. All Group entities where SBI has 20% or more stake and management control , including Nonbanking entities, carry out the ICAAP exercise and a Group ICAAP Policy is in place to ensure uniformity.

6. BASEL IMPLEMENTATION

Your Bank has been identified as D-SIB by the Regulator and has to keep additional Common Equity Tier 1 (CET1) 0.60% of RWAs applicable from April 1, 2016 in a phased manner and it will become fully effective from April 1, 2019. Your Bank has also started maintaining CCB in a phased manner and will reach 2.5% by March 2019. Your Bank is fully equipped to comply with all regulatory norms with reasonable cushion over the minimum regulatory capital requirement.

B. INTERNAL CONTROLS

Your Banks’ internal audit function independently evaluates the adherence to internal processes and procedures. The internal audit function also undertakes a comprehensive risk based audit of all operating units of your Bank in line with regulatory guidelines relating to Risk Based Supervision. Keeping pace with the rapid digitization, your Bank has initiated technology driven intervention in conducting various audits and moving towards automation in your Bank’s audit processes. Some key initiatives include the following:

- Web based Concurrent Audit System covering the higher band of business exposures prescribed by the regulators

- Offsite Transaction Monitoring System(OTMS) to monitor exceptions observed in transactions

- Web based Early Review Mechanism to ensure early review of quality of loans of Rs.50 lakh and above

- Web based RFIA (Risk Focused Internal Audit) which is flexible, scalable and expandable with enhanced level of automation

- Loan product based modules in RFIA for audit of loans under different schemes / products

- Online self-audit by branches, for self assessment by branches and vetting by controllers.

- Audit findings are made available on MIS dash board on T 1 basis, ensuring monitoring of compliance by Management.

Your Bank has in-built internal control systems with well-defined responsibilities at each level. It conducts internal audit through its Inspection & Management Audit (I&MA) Department. Audit Committee of the Board (ACB) exercises supervision and control over the functioning of I&MA Department.

Your Bank carries out mainly two streams of audits - Risk Focused Internal Audit (RFIA) and Management Audit, covering different facets of Internal Audit requirement. Your Bank’s accounting units are subjected to RFIA. The Bank’s Management Audit covers administrative offices and examines policies and procedures, besides quality of execution thereof.

Besides, the I&MA department conducts Credit Audit, Information Systems Audit (Centralised IT establishments & Branches), Home Office Audit (audit of foreign offices), Concurrent Audit, FEMA Audit, Audit of Outsourced Activities of the Bank and Expenditure Audit. Also, to verify the level of rectification of irregularities by the branches, Compliance Audit is conducted at select branches.

Risk Focused Internal Audit (RFIA)

I&MA Department undertakes a critical review of the entire operations of audited units through RFIA, an adjunct to Risk Based Supervision, as per RBI directives. The domestic branches have been broadly segregated into three groups (Group I, II and III), on the basis of business profile and risk exposures. During FY 2017, I&MA has audited 10,349 domestic branches/BPR entities under RFIA.

FEMA Audit

FEMA Audit which was being done as part of RFIA, has been made a separate audit and is conducted by the officials who are well versed with Foreign Exchange business and FEMA/ RBI guidelines. During FY2017, 575 auditee units were covered, under FEMA Audit.

Management Audit

Management Audit encompasses Corporate Centre establishments/Circle Local Head Offices/Apex Training Institutions, Associate Banks and Regional Rural Banks (RRB) sponsored by the Bank. During FY2017, 35 establishments/administrative offices were audited under Management Audit.

Credit Audit

Credit Audit aims at achieving continuous improvement in the quality of Commercial Credit portfolio of the Bank, through critically examining individual large commercial loans with exposures of Rs.10 crore and above annually. High Risk Accounts with exposure of Rs.100 crore and above are reviewed at half-yearly intervals. The Credit Audit System also provides feedback to the Business Units, by way of warning signals, about the quality of advance portfolio in the unit and suggests remedial measures.

Loan Review Machanism (LRM)

Audit in high value credit areahas an off-site review machanism (Loan Review Mechanism) of all the pre-sanction and sanction process of individual advances Rs.5 crore and above, within 3-6 months of sanction/enhancement/ renewal. LRM has been integrated with LLMS for online review, submission of ATR and monitoring by controllers.

Early Sanction Review (ESR)

Early Sanction Review (ESR) was introduced to review sanctions of more than Rs.50 lakh up to Rs.5 crore, to capture the critical risks in the proposals sanctioned at an early stage and apprise the controllers of such risks, for mitigation thereof.

Information System Audit (IS Audit)

All Branches are subjected to Information System (IS) Audit to assess the IT related risks, as part of RFIA of the branch. IS Audit of centralised IT establishments is carried out by a team of qualified officials/outside experts. During the FY2017, IS Audits of 32 centralised IT establishments were conducted.

Foreign Offices Audit - Home Office Audit

During the year FY2017, Home Office Audit was carried out at 51 branches, Management Audit at four Representative offices, one Country Head Office and one Subsidiary / Joint Venture.

Concurrent Audit System Concurrent Audit system is essentially a control process, integral to the establishment of sound internal accounting functions and effective controls. Concurrent Audit covers your Bank’s Advances and other risk exposures as prescribed by the regulatory authority. Concurrent Audit System has been revamped by introducing a web-based solution and made more efficient.

Off-site Transaction Monitoring System (OTMS)

Off-Site Transaction Monitoring System (OTMS), a web based solution, was introduced, to further strengthen the transaction audit, to capture the deviations without much loss of time and take corrective actions, through continuous offsite monitoring. Exception data is being generated by Data Warehouse (DW), based on certain business rules and monitored continuously. At Present, 27 types of exceptions are being monitored and flagged to the branches for verification by them. The exceptions are periodically reviewed and enlarged, depending upon the need and certain triggers.

Legal Audit

Legal Audit was rolled out in all the Business Verticals in 2014, to cover all loan and Mortgage related documents of high value loans of Rs.5 crore and above. As on 31st March 2017, Legal Audit has been completed in 9,170 accounts.

Audit of Outsourced Activities

A full fledged Department has been set up under GM (CAU), to oversee the Audit of Outsourced Activities of your Bank.

C. COMPLIANCE RISK MANAGEMENT

Your Bank has been ascribing highest level of importance to Compliance risk management and has taken number of initiatives to strengthen compliance function keeping in view the scale and complexities of business operations. Some key initiatives are:

- All new products, process, policies are vetted from the regulatory perspective before they are approved and operationalised. The review of the existing policies/process/products are also subjected to Compliance vetting. This will help your Bank in improving the level of compliance;

- A Compliance Risk Management Committee (Comp RMC) has been constituted comprising of Senior Executives from Business Verticals and Support functions, to oversee all compliance related issues. The committee meets regularly and extends necessary guidance to the all concerned in smooth implementation of Risk Based Supervision (RBS). The committee has further formed Review and Validation Groups, comprising senior officials, to oversee quality and consistency of information / data points as per the prescribed process framework, and ensure timely submission under RBS Information System;

- Compliance Testing of RBI’s regulations and guidelines is regularly carried out to assure that the control mechanisms are in place, and adequate to comply with regulatory guidelines. Feedbacks are also given to various stakeholders to improve control mechanisms and also to design new ones wherever warranted.

D. AML-CFT MEASURES:

- Your Bank has a dedicated AML/CFT department for effective Transaction monitoring with a view to prevent misuse of banking channels. To address emerging complexities in AML/CFT space, your Bank in the process of upgrading its software in tune with that prevalent in major global banks;

- A number of initiatives has been undertaken to bring greater awareness amongst Bank staff about KYC and AML/CFT compliances. For creating awareness of KYC Compliance amongst all staff, e-lessons have been made mandatory for all Staff members. Online quiz is being conducted across your Bank to actively involve the Staff. AML-CFT Day is being observed on 2nd November every year. Pledge has been taken on that day at all branches / processing centres and Administrative Offices. Similarly 1st August is observed as KYC Compliance and Fraud Prevention day.

4. OFFICIAL LANGUAGE

Your bank made concerted efforts to promote Official Language Hindi and other Indian languages in the Bank. The key highlights are given below :

Learning of Regional Languages through Hindi

The Government of India expects that staff of the banks should have knowledge of local language so that they can connect with the customers in their language and provide them better customer service. In order to meet this expectation, Official Language Departments at Circles brought out following publications to make their staff conversant with local language through Hindi medium:

- Aaiyey Assamia Seekhein

- Aaiyey Seekhein Hindi se Odia

- Hindi-Punjabi Samvad-Sahayika

- Hindi bhasha ke madhyam se Kannad Seekhein - Kannada Kali

- Aaiyey Malyalam Seekhein

Observance of World Hindi Day

World Hindi Day was observed on 10th January 2017 in all the foreign offices of your Bank with the objective of creating favourable environment for the progressive use of Hindi and to motivate and encourage staff members to do their work in Hindi as required in Annual Programme. To mark the occasion, different competitions and activities were held on this day. A list of some of the competitions and activities conducted are given below:

- Hindi Crossword competition

- Hindi General Knowledge Quiz competition

- Competition on creating advertisements and slogans in Hindi

- Audio-visual display of popular Hindi stories and related questions-answers session

- Staging of popular dramas

- Singing of Hindi songs competition

- Hindi book reading competition

- Panel discussion on promotion and propagation of Hindi language abroad

All India Online Hindi Quiz Competition

An all India Online Hindi Quiz Competition for the staff of your Bank was conducted during the months of August and September. Over 13,000 staff members participated in the competition. This competition was organised on the newly developed website of OL Dept. During this period, number of hits made on it crossed 1,20,000 mark.

Rajbhasha Fortnight observed in all the 3 linguistic regions

During the year Rajbhasha Fortnight was celebrated in your Bank in all the three regions i.e. ‘A’, ‘B’ and ‘C A video message of Honorable Chairman Smt. Arundhati Bhattacharya was recorded on the eve of Hindi Day - 14th September 2016 and was broadcasted for to all the staff members.

Felicitation of Shri Prasoon Joshi

State Bank of India felicitates eminent personalities who have given valuable contribution to enrich Hindi language and literature. The Chairman of your Bank Smt. Arundhati Bhattacharya felicitated renowned Hindi writer, poet, lyricist and Ad Guru Shri Prasoon Joshi during FY2017.

Shields to circles for excellence in use of Hindi

Corporate Centre awarded shields and certificates to circles in linguistic region ‘A’, ‘B’ and ‘C’ East and South for excellence in implementation of Official Language Policy. During the year, New Delhi, Ahmedabad, Kolkata and Hyderabad circle bagged first place and Lucknow, Mumbai, Bhubaneswar and Bengaluru circle lifted the runners up shield respectively.

Inspection by Committee of Parliament on OL

The Committee of Parliament on Official Language inspected your Bank’s Corporate Centre, Sansad Bhavan branch and RBO, Udaipur during the year. Your Bank has been entrusted with the coordination work during the inspection/tour programme of the Committee. Your Bank efficiently coordinated with the Committee members and also ensured effective implementation of the recommendations. An appreciation letter from the Convener of the Committee addressing your Bank’s Honorable Chairman was received for excellence in arrangements made during the inspection.

A training programme for Rajbhasha Officers and officers associated with the work of implementation of Official Language Policy at LHOs and AOs in linguistic region ‘A’ & ’B’ was organised at SBLC, Panchkula on 18th June 2016 and for Region ‘C’ at SLC, SBT, Ernakulam on 18th March 2017. Topics like compilation of questionnaire for the Committee and related preparations/arrangements were covered during the training programme.

A bilingual Compendium of Important Guidelines for Top Executives for inspection of Committee of Parliament on Official Language was brought out during the year and uploaded on Rajbhasha Department Website on State Bank Times.

‘Prayas’ got Rajbhasha Kirti Award from the Honorable President of India

‘Prayas’ the quarterly Hindi house journal of your Bank got Rajbhasha Kirti Award from the Honorable President of India.

Bank’s Chairman felicitated with

‘Rajbhasha Ratna’ Award

Your Bank’s Chairman Smt. Arundhati Bhatacharya was conferred with Rajbhasha Ratna Award for the year 2016 by the renowned literary-social-cultural organisation ‘Aashirwad’.

TOLICs under Bank’s leadership got shields for best performance

Town level Official Language Implementation Committees were formulated under your Bank’s leadership got prizes for best performance. These shields were conferred by Honorable Governors of respective states. Your Bank’s Hindi in house journal ‘Prayas’ was also adjudged among best magazines by the Reserve Bank of India.

5. MARKETING AND COMMUNICATION

The Banking sector has, since the past three years witnessed radical disruptions led by fintech companies, and as a result, conventional Banks have had to modify / augment their business strategies, especially in the area of technology based customer value propositions. Besides, even conventional products have been put to test by way of smart and increased marketing initiatives by leading public and private sector banks.

With this intent your Bank’s management appointed a Chief Marketing Officer (CMO) in March 2016. The CMO heads the Marketing & Communications (M&C) department which has been set up at the Corporate Centre of your Bank. With the setting up of this department, the erstwhile Corporate Communications & Change department was subsumed into this department. The M&C department is responsible for your Bank’s initiatives for all brand and product marketing, public relations and corporate social responsibility. With the objective of optimising its efforts in promoting your Bank’s products and services adopting contemporary marketing approach and to give impetus to the bank’s digital initiatives to connect with the youth, the M&C department’s key responsibilities include developing and implementing integrated marketing strategies to address business challenges of different divisions of your Bank including Indian and overseas operations of the Bank.This department comprises of domain skilled professionals/ specialists drawn from various relevant fields -media, marketing communications, advertising and public relations.

The department has started work on all business groups and other functions of your Bank. Some key successful initiatives rolled out by the department during FY 2017 include the Hope Loans Campaign - a novel concept to support NGOs working in different areas of social work whilst promoting the Bank’s asset products viz Home, Auto and Personal Loans. Through this initiative, your Bank could give away Rs.3.88 crore to 5 NGOs working in the area of education, health/ shelter, clean energy and mobility solutions. Besides this, another major campaign was rolled out to address the opportunity on the back of demonetisation scenario the country witnessed in the 3rd quarter. The campaign titled #cashkiaadatbadlo has been received reasonably well, the success of which is evidenced in highest ever number of transactions of debit cards, downloads of e-wallet State Bank Buddy and SBI Pay, the UPI digital payments solution. Towards the end of March, the M&C department also developed the advertising campaign for the merger of SBI’s associate banks with your Bank. Besides these campaigns, it has been overwhelming for the Bank to receive positive feedback, especially from customers and staff about the fresh approach to its advertising execution. Going forward, besides working on other marketing initiatives, especially in the area of digital marketing, your Bank hopes to leverage the might of State Bank Group to strengthen its marketing thrust to stay relevant and competitive given the evolving and dynamic financial services industry landscape.

6. VIGILANCE MECHANISM

At your Bank, there are three aspects to the vigilance function - Preventive, Punitive and Participative. During this year, Vigilance Awareness Week was observed from 31st October 2016 to 5th November 2016, with the theme ‘Public participation in promoting integrity and eradicating corruption’. As a part of observance of Vigilance Awareness Week, ‘Integrity Pledge’ has been administered to staff and the public at large. Further, SBI as a Corporate has also undertaken the Integrity Pledge. To create awareness, Gram Sabhas have been organized and Integrity Pledge has been administered at these Sabhas also.

The concept of Whistleblower is another effective tool for Preventive Vigilance. To highlight any malpractices, under Whistle Blower Scheme, a portal has been launched by the Bank. Whistle Blower can lodge a complaint online and also monitor the progress made in this regard. There is already a well-defined Whistle Blower policy in your Bank, which acts as a deterrent for the employees to keep themselves away from malicious activities. We keep the secrecy of the whistleblower and give protection to them so that they continue to be an effective tool against wrongdoings without fear.

Branches, where certain lapses of grave nature are observed, are identified and Suo-motu investigations are conducted so that possible fraudulent activities could be checked and remedial measures are undertaken.

During FY2017, a total of 1163 cases (753 new cases) were taken up for examination, out of which 805 cases have since been concluded.

7. ASSET AND LIABILITY MANAGEMENT (ALM)

- Asset and Liability Management occupies the centre stage in the overall management of financial institutions. ALM practices require specialised knowledge and skill to efficiently handle dynamic and evolving challenges in the financial sector.

- Your Bank has effective ALM Management team in place with requisite skills to manage the Balance Sheet. While the ALM Management of your Bank is guided by Regulatory guidelines, your Bank is in the forefront in developing effective management models in the domain of ALM by bringing in the best global practices.

- The Asset Liability Management Committee (ALCO) of your Bank oversees the Interest Rate and Liquidity Risks, reviews the components of balance sheet and sets up benchmarks for efficient management of these risks. ALCO, inter alia, reviews the Interest Rate scenarios, pattern of growth of liability products, credit growth and liquidity management and approves appropriate pricing of Bank’s products. In terms of regulatory requirements, your Bank has moved to Marginal Cost of Funds based Lending Rates (MCLR) with effect from 1st April 2016.

- Studies are conducted to gauge the behavioural pattern of assets and liabilities, which do not have any definite contractual maturity, to assist the ALM teams. These behavioural studies encompass the embedded options available to customers, off-balance sheet exposures, impact of probable loan losses etc.

- Your Bank has put in place appropriate policies for conducting ‘Asset & Liability Management’, ‘Stress Testing’ the Balance Sheet components. In line with the regulatory requirements, the Liquidity Risk Management approach is built on the premise of ensuring optimal liquidity position and avoiding concentration of funding. As part of contingency planning for liquidity, appropriate ‘Contingency Funding Plan’ is in place.

- The guidelines of Basel Committee on Banking Supervision (BCBS) on Liquidity Risk to promote Short term resilience by maintaining mandated Liquidity Coverage Ratio (LCR) is strictly followed by the Bank. The levels of High Quality Liquid Assets (HQLA) are effectively monitored in a highly dynamic environment.

- Advanced approach of assessing the impact on Earnings at Risk (EaR) and Market Value of Equity (MVE) determines the likely erosion of Net Interest Income (NII) under the Interest Risk Management. Permissible limits are pre-defined and continuously monitored. Proactive steps are initiated whenever warranted.

- In line with the regulatory requirements, your Bank has evolved Internal Capital Adequacy Assessment Process (ICAAP) with robust methodology, responses and an effective framework in place.

ALM Department of your Bank, being the support group to ALCO is equipped with robust systems and processes and conducts the above functions in a professional way.

8. ETHICS & BUSINESS CONDUCT

Your Bank has ceaselessly been showing its unflinching commitment with the highest professional and ethical standards regardless of its growing size, scope and reach. It has also been providing visionary thought leadership to Indian Banking over the years. In spite of the large staff complement, vast network of branches and spread in all the time zones, our Vision, Mission and Values form the fabric that holds us together wherever we are and whatever we do.

Upholding the same ethos of more than 200 years, the Bank has taken one more seminal initiative by envisaging and creating the position of the Chief Ethics Officer in the Bank who will establish and oversee an independent Ethics and Business Conduct Function in the organisation. Idea is to anchor, promote, nurture and institutionalise a positive ethical culture in the organisation leading to enhanced brand equity and market reputation. The position of Chief Ethics Officer has been constituted for the first time in any Indian public sector organisation.

9. CORPORATE SOCIAL RESPONSIBILITY

Social Responsibility is deeply ingrained in the culture of your Bank. The Bank has been undertaking social welfare initiatives much before the formal CSR concept became common practice or an industry norm. Your Bank believes that it owes a solemn duty to the less fortunate and underprivileged members of the society to make sustainable social change in their lives. Your Bank has always placed the interest of the common man, especially the most marginalised, at its core. SBI has always been a caring and enabling organisation and sustainable business practices is at the heart of our business operations. Your Bank has been setting aside 1% of its net profit for CSR initiatives and its CSR initiatives have made a true difference in the lives of millions from underserved communities. Your Bank is committed to the economic and social wellbeing of the socially and economically impoverished.

Focus areas of SBI’s CSR activities

- Healthcare

- Education

- Skill Development and Livelihood Creation

- Environment Protection.

CSR spend during 2016-17

The CSR contribution of your Bank for FY 2017 was Rs.109.82 crore. The Bank’s local head offices (Circles) spent Rs.89.82 crore and the remaining Rs.20 crore was donated to SBI Foundation.

This is the fifth successive year, when your Bank’s CSR spend has crossed the milestone of Rs.1000 million. The sector wise spend is as mentioned hereunder:

Supporting Healthcare

More than 66% of India’s population still lives in rural area and has no or very limited access to medical care. Lack of proper healthcare infrastructure and high vulnerability of children are major concerns in rural India. Unaffordability, unavailability and lack of awareness are the major reasons behind low health care index in India.

The primary focus has always remained to provide the basic infrastructure to ameliorate the conditions of the common man. To deliver quality healthcare to those belonging to underprivileged and economically weaker sections of the society, your Bank has supported large number of hospitals. The major initiatives of the Bank in health care sector are as under:

Medical Vans: Your Bank donated Rs.6.87 crore to over 49 charitable organisations for acquiring ambulances and medical Vans.

Health Equipments and Surgeries: Your Bank donated Rs.7.52 crore to 23 charitable organisations/hospitals for acquiring various medical/surgical equipments like Stress Test Machine, Dialysis Machine, Eye Equipment, X-Ray Machine, ICU facility and New Born care unit. This has improved the capacity and potential of the hospitals to serve the deprived patients.

Old Age Homes and Mobility Solutions: Your Bank donated Rs.1.50 crore for supporting old age homes and providing relief to Divyangjan (PwDs).

Community Outreach Programmes: Your Bank organised camps to focus on curative and preventive healthcare for the under privileged rural population. The areas covered are given below:

- Eye Check-up

- Cancer detection

- Reproductive healthcare check-up

- Basic health check-up (Blood Pressure, HB etc.)

- Diabetes check up

Reputed local NGOs played a pivotal role in organising these camps.

Supporting Education

Education is the backbone of a country’s social and economic development. Several areas of the country lack basic schooling facilities, especially rural areas. Lack of infrastructure, transportation facilities and basic amenities are the key hindrances for education in rural India. Your Bank always strives to support education for economically weaker social groups in remote, unreachable and underdeveloped areas. The key contributions in the education sector are mentioned below:

Holistic Support: Your Bank contributed Rs.1.35 crore towards supporting infrastructure across several schools located in rural/remote areas.

Computers and Peripherals: Your Bank contributed Rs.1.15 crore towards setting up of computer labs/IT labs. Many NGOs were also supported for acquiring computers, soft boards and setting up digital classrooms.

Schools Buses/Vehicles: Your Bank donated Rs.3.99 crore for acquiring 35 school buses/vehicles to help schools in rural areas to provide transportation facility to underprivileged children.

Support to Persons with Disabilities (PwDs):

An amount of Rs.1.57 crore was donated to reputed NGOs for the following activities:

- Distribution of artificial limbs, callipers, crutches and wheel chairs among others

- Distribution of other aids and devices

- Community Based Rehabilitation project for mentally/physically challenged persons

- Braille Embosser System

- Special Vehicles for disabled

Environment and Sustainability

Your Bank is committed to environment protection and contributes positively to reduce the carbon footprint. Responsible interaction with environment to avoid depletion and degeneration of natural resources and maintain long term quality of the environment is a priority for your Bank. Your Bank has contributed Rs.3.57 crore in the following areas for:

- Acquiring solar power plant, solar lamp, solar water heater, solar street lamps.

- Purchase, commissioning and maintenance of a number of solar power plants.

Skill Development initiatives and Livelihood Creation

Rural Self Development Training

Institutes (RSETIs)

India is one of the youngest nations in the world with over 54% of its population below 25years of age. Employability of the growing young demography is one of the important factors in the economic development of the country. Your Bank has set up 116 Rural Self Employment Training Institutes (RSETIs) across the country as institution to help mitigate the unemployment and underemployment problem among youth in the country.

Your Bank has contributed Rs.12.84 crore for construction of 10 RSETI buildings and other infrastructure support. The Recurring expenditure for Skill development programs for youth was Rs.34.73 crore across 116 RSETIs of the Bank .

SBI Youth for India Fellowship program

SBI Youth for India is a Fellowship program initiated, funded and managed by your Bank in partnership with reputed NGOs. It entails the urban educated youth to voluntarily get involved in various developmental projects in rural areas. Under this initiative, your Bank partnered with seven reputed NGOs, and engaged in development work in rural areas to deploy the youth enrolling for the fellowship. The fourth batch of 61 fellows are working at 32 locations across nine states. They are working on various projects to understand the need of rural community and address them with innovative solutions. Most of these projects fall within the scope of Sustainable Development Goals (SDGs) which include No Poverty, Good Health and Well-Being, Quality Education, Affordable and Clean Energy, Reduce Inequality/Life on Land and Climate Action, among others.

SBI Children’s Welfare Fund

Your Bank constituted the SBI Children’s welfare Fund as a Trust in 1983. It extends grants to educational institutions engaged in the welfare of underprivileged children such as orphans, physically challenged and destitute. The corpus of the fund is made by staff members and matching contribution is provided by your Bank. During FY2017, your Bank donated Rs.71 lakh to various educational institutes.

Awards and accolades:

Your Bank won the prestigious Golden Peacock Award for Sustainability.

V. ASSOCIATES AND SUBSIDIARIES

INTRODUCTION AND PERFORMANCE HIGHLIGHTS

As a part of mission to provide the entire gamut of financial services across India, the State Bank Group, through its various subsidiaries, provides a whole range of financial services, including Life Insurance, Merchant Banking, Trustee Business, Mutual Funds, Credit Card, Factoring, Security Trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

ASSOCIATE BANKS

The five Associate Banks of SBI had a Market share of around 5.02% in deposits and 4.41% in advances as on 31st March 2017. Associate Banks together had 6,847 branches and 9,075 number of ATMs.

The performance highlights of the Associate Banks as on 31st March 2017 (Rs. in crore)

S. No	Name of the Bank	SBI Share of Ownership		Total Assets	Agg. Deposits	Total Advances	Op. Profit	Net Profit	CD Ratio	CAR %	Gross NPAs%	Net NPA %
		Investment	%
1	State Bank of Bikaner & Jaipur	676.12	75.07	1,16,293	1,03,662	68,774	1,942.14	-1,368.33	66.34	9.25	15.52	10.53
2	State Bank of Hyderabad	367.55	100.00	1,63,190	1,42,955	87,715	2,909.86	-2,760.26	61.36	11.73	20.76	12.84
3	State Bank of Mysore	628.63	90.00	88,996	77,769	38,608	913.58	-2,006.26	49.64	12.41	25.68	16.90
4	State Bank of Patiala	4,859.10	100.00	1,22,829	1,00,507	77,100	1,454.83	-3,579.46	76.71	12.43	23.15	15.48
5	State Bank of Travancore	885.11	79.09	1,25,917	1,14,323	52,506	1,503.32	-2,152.46	45.93	12.19	16.79	10.22

State Bank of Bikaner and Jaipur

Awards and Accolades

Some of the awards and accolades received by the Bank during the current year are mentioned below:

- Awarded the ‘Rajbhasa Kirti Prize’ by Hon’ble President of India for best performance in Rajbhasa Niti during FY 2016.

- Best Performance Award (3rd prize amongst all PSBs) conferred by PFRDA for implementation of Atal Pension Yojna Phase-II.

- SME Excellence award 2016 in category of Micro Lending by ASSOCHAM.

- Second best performing public sector Bank for FY2016 by State Forum of Bankers Club, Kerala.

State Bank of Hyderabad (SBH)

Awards and Accolades

- Received Second Prize in Region ‘C’ under ‘Rajbhasha Kirti Puraskar’ from the Government of India, Ministry of Home Affairs, Dept of Official Language, New Delhi.

- Awarded by ‘Dun & Bradstreet’ as ‘India’s Top Bank’s & Banking Awards 2016’ for completing 75 years of operation.

- Awarded ‘IDRBT Banking Technology Excellence Award’ by Sri Raghuram Rajan, Ex-Governor of RBI.

State Bank of Mysore

Awards and Accolades

- Awarded with Eco-Technology Savvy Bank Award- Winner(Emerging Category)by CIMSME for the year 2016-17.

- MIPSED, Tumakuru, RSETI sponsored by State Bank of Mysore is awarded with ‘AA’Grading (the highest grading) for 2015-16 by MoRD. GOI.

State Bank Of Travancore

Awards and Accolades

- Skoch Award for segment leadership in MSME received on 8th June 2016.

- Skoch Award for Social Inclusion received on 8th June 2016.

- Skoch Order of merit to SBT RSETI’s for qualifying in SBT Rural Development Trust.

- National Award for Excellence in Lending to Micro Enterprises from Government of India, Ministry of Micro Small and Medium Enterprises (Special Award - amongst the Associates of SBI).

- SMEs Excellence Award 2016 - Best MSME Bank from Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Non- Banking Subsidiaries

(Rs. crore)

Sr. No	Name of the Subsidiary Company	Ownership (SBI interest)	% of Ownership	Net Profit (Losses) for FY 2017
1	SBI Capital Markets Ltd. (Consolidated)	58.03	100.00	251.80
2	SBI DFHI Ltd.	139.15	*63.78	176.44
3	SBI Mutual Fund Trustee Company Pvt Ltd.	0.10	100.00	2.42
4	SBI Global Factors Ltd.	137.79	86.18	1.01
5	SBI Pension Funds Pvt. Ltd.	18.00	*60.00	1.03

*Group holding of SBI is 100% in SBI Pension Funds Pvt. Ltd. (SBI 60%, SBI MF and SBI Capital 20% each) and in SBI DFHI State Bank holding is 72.17% (SBI 63.78%, ABs 5.27% and SBI Capital 3.12%).

Non- Banking Subsidiaries: Joint Ventures

(Rs. crore)

Sr. No	Name of the Subsidiary Company	Ownership (SBI interest)	% of Ownership	Net Profit (Losses) for FY 2017
1	SBI Funds Management Pvt. Ltd.	31.50	63	224.32
2	SBI Cards & Payment Services Pvt. Ltd.	471.00	60	390.41
3	SBI Life Insurance Company Ltd.	701.00	70.10	955
4	SBI-SG Global Securities Services Pvt. Ltd.	52.00	65	11.74
5	SBI General Insurance Company Ltd.	159.47	74	153
6	GE Capital Business Process Mgt. Services Pvt. Ltd.	9.44	40	47

A. SBI CAPITAL MARKETS LIMITED (SBICAP)

SBICAPs is India’s leading investment banker, offering entire bouquet of investment banking and corporate advisory services to varied client base across three product groups - Infrastructure, Equity Capital Markets and Debt Capital Markets. These services include Project Advisory, Loan Syndication, Structured Debt Placement, Mergers & Acquisitions, Private Equity, Restructuring Advisory, Stressed Assets Resolution, IPO, FPO, Rights Issues, Debt and Hybrid Capital raising.

On a standalone basis, SBICAPs posted a PBT of Rs.312.57 crore during FY2017 as against Rs.425.29 crore during the FY2016 and a PAT of Rs.217.95 crore for FY2017 against Rs.283.39 crore in FY2016.

SBICAPS declared dividend at 200% during FY 2017 as against 320% in FY 2016.

1. SBICAP SECURITIES LIMITED (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Limited, besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in sales and distribution of other financial products like Mutual Funds, Tax Free Bonds, Home Loan, Auto Loan, Tractor Loan, among others.

SSL has over 100 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 12 lakh clients. The Company has booked gross revenue of Rs.250.35 crore during FY2017 as against Rs.160.82 crore in FY2016.

2. SBICAP VENTURES LIMITED (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Limited. DFID (Department for International Development) has joined hands with the SBI group to set up the “Neev Fund” which is being managed by SBICAP Ventures Limited. SVL is acting as the Asset Management Company.

The Neev Fund had its Initial close on 10th April, 2015 and current corpus of the Fund is Rs.469.39 crore. Fund will be invested in Infrastructure sectors such as renewable energy, water and sanitation, agricultural supply chain in 8 identified states of India (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh and West Bengal). SVL has started earning Management Fees.

3. SBICAP (UK) LIMITED (SUL)

SUL is a wholly owned subsidiary of SBI Capital Markets Limited. SUL is positioning itself as a relationship outfit for SBI Capital Markets Limited in UK and Europe. Relationships are being built with FIIs, Financial Institutions, Law Firms, Accounting Firms, etc. to market the business products of SBICAP.

4. SBICAP (SINGAPORE) LIMITED (SSGL)

SSGL, is a wholly owned subsidiary of SBI Capital Markets Limited. SSGL commenced business from December 2012. Relationships are being built with FIIs, Financial Institutions, Law Firms, Accounting Firms, etc. to market the business products of SBICAP. It has been specialising in marketing of Foreign Currency Bonds and securing clients for SBICAP SEC.

5. SBICAP TRUSTEE CO. LIMITED (STCL)

SBICAP Trustee Co Limited (STCL), is a wholly owned subsidiary of SBI Capital Markets Limited. STCL commenced security trustee business with effect from 1st August, 2008. STCL posted Net Profit of Rs.11.68 crore during FY2017 as against Rs.13.35 crore during FY2016. STCL successfully launched an Online Will Creation service for the individuals in the name of ‘My Will Service Online’. It also launched its ‘Trustee Enterprise Management System’ - an integrated system to address all the trustee related operations and thus has become the first and only Trustee Company in India to have full automation across all trustee related operations.

B. SBI DFHI LIMITED (SBI DFHI)

SBI DFHI Limited is one of the largest standalone Primary Dealers (PD) with a pan India presence. As a Primary Dealer (PD) it is mandated to support the book building process in primary auctions and provide depth and liquidity to secondary markets in G-Sec. Besides Government securities, it also deals in money market instruments, non G-Sec debt instruments, etc. As a PD, its business activities are regulated by RBI.

SBI group holds 72.17% share in the Company. The Company posted Net Profit of Rs.176.44 crore in the FY 2017 as against Rs.72.19 crore in the FY2016. Total balance sheet assets was Rs.3,187.70 crore as on 31st March 2017 as against Rs.5,836.20 crore as on 31st March 2016.

The market share of SBI DFHI was 2.97% amongst all market participants and 19.13% amongst Standalone PDs as on 31st March 2017.

C. SBI CARDS & PAYMENTS SERVICES PRIVATE LIMITED (SBICPSL)

SBICPSL is a stand-alone credit card issuing company in India. It is a joint venture between State Bank of India and GE Capital Corporation, wherein SBI holds 60% stake.

During the year ended 31st March 2017, SBI Card delivered a strong business performance. The Company’s Card base has grown by 26% Y-o-Y with total number of credit cards reaching to a level of Rs.45.69 lakh. Similarly, Company achieved card spends of Rs.43,436 crore with Y-o-Y growth rate of 51%. The Company has registered Profit after Tax of Rs.390 crore at a growth rate of 38% as compared to the previous year.

In terms of industry rankings SBI Card became 2nd both in Cards & Spends category during the current financial year.

- On Card base, it has moved from 3rd position to 2nd position with market share of 15%.

- On spends, it has moved from 4th position to 2nd position with market share of 13%.

The Company has launched five new products during the year to strengthen the bouquet of product offerings to cardholders:

- SBI Elite Card (Product refresh of erstwhile SBI Signature Card)

- SBI Unnati Card

- Co-branded Cards like Central SBI Select & Select Cards

- Co-branded banking cards such as SBI South Indian Bank Card and SBI Karnataka Bank Card

SBI Cards received the following awards during the current year:

- SBI Card bagged five awards at the 25th World HRD Congress in partnership with TIMES Ascent (Times of India group):

- CEO with HR Orientation

- Most Influential HR Leader in India

- Best workplace practices

- Award for Managing health at work

- Best advance in employee engagement

- Adjudged as the 14th best ‘Dream Company to work for, selected amongst the top 75 companies across the country

- Readers’ Digest Most Trusted Brand Award 2016

- ’Best Credit Card Program’ for SimplyCLICK at the MasterCard Innovation Awards 2016.

- The Compliance Register Platinum Awards: Runners up in two categories Best Compliance Team - Regulated Firms and Best Head of Compliance.

- Bronze Award for ‘Achievement in Audio Visual Film’ for SBI SimplySAVE Card at WOW Awards Asia 2016.

- At the Global Compliance Register Platinum Award Ceremony in London, SBI Card won the award for ‘Compliance Excellence’ and also bagged the Runner Up award in ‘Best Head of Regulatory Compliance’ category.

- Awarded ‘Excellent Compliance Performer-2016’ across Indian industries at the Annual Compliance 10/10 awards.

- SBI Card also won ‘Compliance Team of the Year-Overseas’ award at GRCI Annual Awards 2016 across Australia.

- Legal team has been awarded the ‘Best In-House Legal Team of the Year (Mid-Size)’ at the Indian Legal Awards organized by Legal Era Magazine.

- Awarded for Best Loyalty Program in Financial Sector: Non-Banking, during The Customer FEST Show at the 10th edition of Loyalty Summit.

- SBI Card team has been awarded “Best Data Quality” in NBFC Category for second time in the row at the recently concluded CIBIL conference awards.

D. SBI LIFE INSURANCE COMPANY LIMITED (SBILIFE)

SBI Life Insurance is a joint venture between State Bank of India (SBI) and BNP Paribas Cardif. SBI owns 70.1% of the total capital and BNP Paribas Cardif holds 26%, while Value Line Pte. Ltd. (an affiliate of KKR Asian Fund II L.P.) and MacRitchie Investments Pte. Ltd. (an indirect wholly owned subsidiary of Temasek Holdings Pvt. Ltd.) hold 1.95% each. SBI Life has a unique multi-distribution model encompassing vibrant Bancassurance, Retail Agency, Institutional Alliances and Corporate Solutions distribution channels.

The Company has proven its market leadership again in FY 2017 with a growth rate higher than the growth of the industry. The company witnessed a 43% growth in New Business Premium (NBP) vis-a-vis the private industry growth of 24%. The market share of SBI Life New Business Premium (NBP) among all private players as on March 31, 2017 is 20.0% vis-a-vis 17.3% last year. The Company has been ranked No. 1 in New Business Premium among the private industry. Further, the Company has achieved 38.9% growth in Individual Adjusted Premium Equivalent (APE) vis-a-vis 26.4% growth for private industry.

SBI Life witnessed a PAT of Rs.955 crore in FY 2017 against Rs.861 crore in FY 2016. Assets held as on 31st March 2017 recorded a Y-o-Y growth of 23% at Rs.102,240 crore.

Leveraging wider reach achieved through its network of 801 offices, SBI Life has systematically brought large rural areas under insurance. The Company has sold 24% of total policies in this segment in FY 2017. A total of 589,932 lives covered by the company are from the underprivileged social sector.

The Company’s primary commitment is to its customers and during the year, the Company has improved its Death Claim Settlement Ratio to 98% and further reduced complaints related to mis-selling to 0.20% of the policies sold, which is the best in the industry. The Company’s focus in the coming times will be on further enhancing its distribution efficiency, lowering operational cost, introducing innovative products and continue to be customer centric.

The various awards received are a testimony to SBI Life’s quality and commitment towards customer centricity and professional excellence. Awards and recognitions received during the year include:

1. ’Life Insurance Company of the Year’ and ‘Bancassurance Leader Life Insurance (Large Category)’ at the Indian Insurance Awards 2016 organised by Fintelekt.

2. Won LIMRA and LOMA Silver Bowl Award 2016 under “Best use of Social Media from a Company Operating outside of the U.S.’’ category.

3. Won in ‘CLO Chief Learning Officer Summit India - 2016’ in the following categories:

a) Induction Training Program

b) Mobile Learning Program

4. One of the ‘Most Trusted Brand, 2016’ for the Sixth consecutive year by The Economic Times Brand Equity - Nielsen survey

5. iCMG Global Awards for

a) IT Service Management -Architecture Excellence

b) Top 30 Global CIO Award

6. Plaque award for commended Annual Report from Institute of Chartered Accountants of India (ICAI) for Excellence in Financial Reporting for FY 2016

Adjudged the runner up of the ‘Outlook Money Awards 2016’ in the Life Insurance category.

E. SBI FUNDS MANAGEMENT PRIVATE LIMITED (SBIFMPL)

SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 5th largest Fund House in terms of Average “Assets Under Management’ and a leading player in the market with over 5.8 million investors. SBIFMPL posted a PAT of Rs.224.32 crore in FY2017 as against Rs.165.36 crore earned during FY2016. The average “Assets Under Management’ (AUM) of the Company during the quarter ended March 2017 were Rs.1,57,025 crore with a market share of 8.58% as against the average assets under management of Rs.1,06,781 crore with a market share of 7.89% during the quarter ended March, 2016. The Company has a fully owned foreign subsidiary namely SBI Funds Management (International) Private Limited, which is based at Mauritius and manages Offshore Fund.

F. SBI GLOBAL FACTORS LIMITED (SBIGFL)

SBIGFL is a leading provider of factoring services for domestic and international trade. SBI holds 86.18% share in the Company. The Company’s services are especially suitable for MSME clients for freeing up resources locked in book debts. By virtue of its membership of Factors Chain International (FCI), the Company is able to ameliorate credit risk from export receivables under the 2 factor model.

The Company sustained its profitability during FY2017 also, and has reported a PBT of Rs.3.25 crore (PY - PBT Rs.2.53 crore) & PAT of Rs.1.01 crore (PY - PAT Rs.0.86 crore). Turnover for FY2017 is Rs.3,047 crore as compared to turnover of Rs.2,532 crore in previous year (i.e. an increase of 20%). FIU as on 31st March 2017 is Rs.1,059 crore as compared to Rs.1,008 crs as on 31st March 2016. Turnover in EF under 2 Factor Model for FY2017 is equivalent to EUR 41.91 Mio (PY EUR 32.80 mio). In INR terms, the EF turnover touched Rs.306.58 crore for FY2017, as against Rs.237.52 crore in previous year.

The Company is adequately capitalized with AAA / A1 ratings from reputed rating agencies for its borrowing programmes.

G. SBI PENSION FUNDS PRIVATE LIMITED (SBIPFPL)

SBIPFPL has been appointed as Pension Fund Manager along with 6 others to manage the pension corpus under NPS. SBIPFPL is one of the three Pension Fund Managers (PFM) appointed by Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the National Pension System (NPS) for Central Government (except Armed Forces) and State Government employees. SBIPFPL, a wholly owned subsidiary of the State Bank Group, commenced its operations from April 2008. The total “Assets Under Management’ of the company as on 31st March 2017 was Rs.66,723 crore (YoY growth of 45%) against Rs.46,019 crore in March 2016.

The Company maintained lead position amongst Pension Fund Managers in terms of AUM in both Government and Private Sectors. The overall AUM market share in Private sector was 62%, while in the Government sector it was 35%.

The Company has a full-fledged dealing room adequately managed by experienced Bond and Equity markets specialists.

The Company was adjudged the “Best Pension Fund Manager’ under Pension Fund Manager category for the year 2016 by Outlook Money for the 2nd consecutive year.

H. SBI GENERAL INSURANCE COMPANY LIMITED (SBIGIC)

SBIGIC is a joint venture between State Bank of India and IAG Australia in which SBI holds 74% stake. The Company’s strong focus is on disciplined pricing and fair and transparent claims management practices. The cornerstone of the Company’s growth aspiration is focussed on the Banca channel whilst developing other channels and products that meet business objectives and drive profitable growth. The Company has entered in to strategic tie-ups with three large car manufactures to drive growth in the Motor portfolio.

Gross Written Premium (GWP) stood at Rs.2,607 crore for FY2017. In the seven years of operation, for the first time in FY2017 SBIG has achieved profit, to the tune of Rs.153 crore. The Company recorded 27.7% growth in GWP Y-o-Y against an industry growth of 32.4% including crop whereas excluding Crop SBIGIC recorded growth of 18.6% against Industry growth of 17.5% for FY2017. SBIGIC has grown by 194% in Crop Insurance for FY2017 by participating in the PMFBY schemes and extending our geographies. The Overall market share among all general insurance companies stands at 2.04% and 4.9% among private insurers. The Company’s market ranking is 14th in the industry and 8th among the private players in YTD December 2016. SBIGIC occupies 2nd position in “Personal Accident” among private insurers & 3rd position in the industry FY2017. The company ranks 2nd in “Fire” among private insurers and 6th position in the industry in FY2017. Share of health business increased from 11% to 14.3%, for SBIG this has translated to a growth of 73% Y-o-Y against Industry growth of 23.8%. Health Insurance ranking improved from 17th to 13th at an overall industry level. IAG has given their intention for dial-up to increase their stake to 49%.

SBI General won at the India Insurance Awards 2016 in the ”Under-served Market Penetration” and in the ”Commercial Lines Growth Leadership; and SBI General was adjudged as a ”Best ET BFSI Awards 2016” by Economic Times. The company has been certified as a “Great Place to Work” in FY2017.

I. SBI SG GLOBAL SECURITIES SERVICES PRIVATE LIMITED (SBI SGGSSPL)

SBISG, a joint venture between State Bank of India and Societe Generale with 65 % holding by SBI, was set up to offer high quality custody and fund administration services to complete the bouquet of financial services offered by the SBI Group. SBISG commenced commercial operations in 2010. The Company’s Net Profit was Rs.11.74 crore in FY 2017 as against Rs.8.66 crore in FY 2016. Accumulated profit is Rs.20 crore.

Average Assets Under Custody in March 2017 rose to Rs.3,27,158 crore from Rs.2,10,370 crore as in March 2016, while the Average Assets Under Administration were at Rs.1,83,779 crore in March 2017 as against Rs.1,31,254 crore in March 2016.

SBISG was rated as the best sub custodian by Global Finance Magazine in 2015.

J. SBI FOUNDATION

During FY2017, SBI Foundation (the company promoted by your Bank, under Section 8 of Indian Companies Act) has undertaken CSR projects in almost all the focus areas outlined in CSR Rules ofCompanies Act. During the year, the Foundation approved 26 projects worth Rs.24.71 crore and disbursed an amount of Rs.9.89 crore. The projects have disbursement schedule running into the current year FY2018 also. Major projects undertaken by SBI Foundation are as under:

1. Healthcare:

- Lifeline Express (Mobile hospital on train)

- Eye Care (Cataract surgeries)

- SBI- Anugraha (Home based hospice and palliative care)

- Cancer Cure

- Shravan Shakti (Cochlear Implant surgeries)

- Care for Senior Citizens

- Jeevan Daan (Organ donation)

- Sanjeevani - Clinic on Wheels

- Mauli Seva (Care for mentally ill and destitute women)

- Health checkup for female inmates of Byculla Jail (Mumbai)

2. Education:

- Beti Padhao Kendras (Girl Child Education in five states)

- Bodhshala (Community Schools)

- Digital Class (In four states)

- Khelwadi (Play School for underprivileged children)

- Disha (Career guidance and counseling)

- Virtual Eye (Computer education for visually impaired)

3. Environment:

- Protect Himalayas (Plantation of trees)

- Harith Kalingdwar (Plantation of trees)

4. Rural Development :

- Draught Proofing of Villages

5. Women Empowerment & Gender Equality:

- Samriddhi-Action for Adolescent Girls (UNFPA Project)

6. Promoting inclusive workplace and environment:

- Centre of Excellence for PwDs

7. Sanitation:

- Swachch Belur Math (Construction of toilet block of 203 units)

8. Poverty and Hunger:

- Supporting Mid-Day Meals (Akshaya Patra)

9. Skill Development

- Kaushal Vikas (paramedical and allied health training)

K. SBI INFRA MANAGEMENT SOLUTIONS PVT. LTD.

Bank’s wholly owned subsidiary “SBI Infra Management Solutions Pvt. Ltd” have been incorporated on 17th June, 2016 to look after the following works related to real estate of SBI:

(i) Transaction Management/ Advisory Services:

Buying, selling or leasing of premises, renewal of leases etc. and providing advisory services on existing and upcoming business centres, identification of strategic locations.

(ii) Project Management:

Planning, execution & monitoring of construction of new building, interior and furnishing of all SBI premises, landscaping etc. and also major changes/repair projects.

(iii) Facility Management:

Repair and Management Services to create a safe, pleasant, efficient and productive environment for the Bank officials and their customers.

VI. RESPONSIBILITY STATEMENT

The Board of Directors hereby states:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of your Bank as on the 31st March 2017, and of the profit and loss of Your Bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of your Bank and preventing and detecting frauds and other irregularities;

iv. that they have prepared the annual accounts on a going concern basis;

v. that the internal financial controls had been laid down, to be followed by your Bank and that such internal financial controls are adequate and were operating effectively; and

vi. that proper system had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

VII. ACKNOWLEDGEMENT

1. During the year, Shri Tribhuwan Nath Chaturvedi retired from the Board w.e.f 28th August 2016, consequent upon completion of his term. Shri V.G. Kannan, Managing Director-A&S retired on attaining superannuation on 31st July 2016. Dr. Urjit R. Patel, retired from the Board w. e. f. 27th September 2016 consequent upon his appointment as RBI Governor and Shri Chandan Sinha, was nominated as RBI Nominee Director in his place w. e. f. 28th September 2016. Shri Sunil Mehta resigned from the Board w. e. f. 15th March 2017, consequent upon his appointment as Non-Executive Chairman of Punjab National Bank.

2. Shri Dinesh K. Khara was appointed as Managing Director under section 19(b) w. e. f 9th August 2016 on the Board.

3. The Directors place on record their appreciation for the contributions made by the respective outgoing Directors namely, Shri Sunil Mehta, Shri Tribhuwan Nath Chaturvedi, Dr. Urjit R. Patel and Shri V.G.Kannan to the deliberations of the Board.. The Directors welcomed the new Directors Shri Chandan Sinha and Shri Dinesh K. Khara on the Board.

4. The Directors also expressed their gratitude for the guidance and co-operation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

5. The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation for the dedicated and committed team of employees of the Bank.

For and on behalf of the

Central Board of Directors

Chairman

Date: 19th May, 2017

---

Mar 31, 2015

Dear Members,

As part of focus on NPAs, Stressed Assets Management Group (SAMG) continues to work as a dedicated and specialised vertical, headed by a Deputy Managing Director, created specially to efficiently resolve high value NPAs. With five Regional Offices, each headed by a General Manager and two Chief General Managers overseeing the entire effort, SAMG has turned into a centre of excellence in the NPA resolution effort of the Bank. Effective 1st April, 2014, SAMG as a logical extension took over 42 Stressed Assets Resolution branches from National Banking Group, to extend its expertise for the resolution of high value retail NPAs, taking total number to 17 SAM and 42 SAR branches across the country. Currently, SAMG covers 23.4% and 62.60% of the Bank''s Non Performing Assets (NPAs) and Advances under Collection Account (AUCA) respectively. The recovery efforts of SAMG are supplemented by efforts put in by front-line operating staff across all verticals and branches of the Bank across the country. The CSPs are also being trained for acting as Banks recovery agents for extended coverage.

Exhibit 28: NPA Management Performance

(Rs in crores) FY 11-12 FY 12-13

Gross NPAs 39,676 51,189

Gross NPA% 4.44 4.75

Net NPA% 1.82 2.10

Fresh Slippages 24,712 31,993

Cash Recoveries/ 9,618 14,885 Up-gradations

Write Offs 744 5,594

Recoveries in Written 962 1,066 Off Accounts

(Rs in crores) FY 13-14 FY 14-15 Gross NPAs 61605 56,725

Gross NPA% 4.95 4.25%

Net NPA% 2.57 2.12%

Fresh Slippages 41,516 29,444

Cash Recoveries/ 17,924 13,011 Up-gradations

Write Offs 13,176 21,313

Recoveries in 1,543 2,318 Written Off Accounts

However, while making all out efforts for reducing the NPAs, the bank often faces certain impediments in the legal process, which delay recovery. The Bank has approached the concerned authorities at appropriate level for ironing out those impediments. Despite these constraints, all actions initiated for resolution are constantly followed up and strategies are periodically reviewed for expeditious resolution of NPAs and the Bank is fully geared to meet the asset quality challenges of FY2016 when near-term pressure is expected to ease.

RESTRUCTURING OF ASSETS

Corporate Debt Restructuring of assets is being done only in cases that are technically feasible and economically viable and where the promoter''s commitment to the project is ensured. Such cases are restructured only after conducting techno-economic viability (TEV) study. Further, restructuring is done also as per the guidelines put in place by RBI. Restructuring has attained prominence in recent years due to global slowdown, sluggish growth in the domestic market and the down-turn in industry. Moreover, restructuring of viable units enables the Bank to recover funds locked with the borrower, aids continued functioning of the industry and helps in keeping manpower gainfully employed.

CONTROLLING NPAs

The Bank has endeavoured to contain the increase in NPAs, the strategies for resolution are being constantly reviewed and revisited. Suitable measures for prevention of NPAs by timely identification and diagnosis of problems of irregular accounts, tracking and reviewing Special Mention Accounts, account wise monitoring etc have been put in place. The Bank has adopted a two fold strategy for controlling fresh accretion and resolution of existing NPAs.

CONTROLLING FRESH ACCRETION TO NPAS

- Early diagnosis of the problems and analysis of the reasons for irregularity, with appropriate strategies for time bound action to prevent slippage as NPA. - Industry wise exposure limits have been set to minimize risk.

- Loan portfolio is monitored on an ongoing basis.

- Account tracking Centres have been set up to prevent accounts slipping into NPA category.

- A system of Tele-calling/ personal contact/ SMS alert/ sending notices etc is being followed on default of overdue installments / irregularity in accounts.

IMPROVING RESOLUTION OF NPAS

- In cases where soft recovery measures do not fructify, legal action is being initiated.

- Filing suits in Debt Recovery Tribunals and other Courts for recovery of dues.

- Nodal officers monitor DRT Cases and liaise closely with DRT officials. Lawyers'' meets are conducted and the performance of advocates is constantly monitored to expedite DRT process.

- Action under SARFAESI Act is taken promptly to recover the dues by sale of secured assets.

- Identifying Companies and promoters as Wilful Defaulters and arranging for display of their names on the websites of Credit Information Companies such as CIBIL. These names are also reported to RBI.

- Credit cum Recovery camps are being organised.

- Involving Business Correspondents, Business Facilitators and Self Help Groups in recovery of Agricultural NPAs., Lok Adalat / Bank Adalat are arranged.

- Review of NPAs at various levels is done at regular intervals.

- BIFR cases are closely followed up.

- E-auction has been introduced for better price realisation.

- Sale to ARCs is also explored in select cases

- Identifying and engaging with strategic investors for takeover of stressed assets.

- Entering into One-Time Settlements with borrowers.

- Using Resolution Agents to take possession of properties mortgaged to the Bank and arranging for their auction.

- Considering Debt Asset swaps in some cases.

- Engaging investigation agencies to trace out unencumbered assets of promoters and guarantors and obtaining attachment before judgement over these properties.

- Publishing photographs of defaulters in newspapers

where warranted.

- Persuading Large Corporate borrowers under stress

to sell non-core assets, dilute their shareholding and bring in strategic investors thus reducing debt and improving viability.

- The Bank organised a "Mega Auction" in Q4 of FY2015, where over 250 properties were put to auction under SARFAESI Act on the same day. The properties put up for auction are located across the length and breadth of the country.

- SAMG is also setting up a centralised repository of all fixed assets / properties charged to the Bank, wherein, pictures with description and walk through videos of all securities are available. Going forward, we plan to make the portal available in the public domain for preview of securities by ARCs and other interested buyers.

- Properties available for auctions are also showcased in "Property Mall", wherein, space is taken in shopping malls in the prominent locations, to display pictures/videos of properties being put up for auction.

INITIATIVES TAKEN TO CLAMP DOWN ON NPAs

Early Warning Signal (EWS): As part of its proactive management of stressed assets to contain and control NPAs, we are in the process of introducing a system which would generate Early Warning Signals in the form of actionable alerts that would help the Bank to identify assets at the incipient stage of stress and facilitate their early resolution. The objective is to tackle problem loans well before they turn SMAs.

AT@M: The web based Assets Tracking and Monitoring (AT@M) software enables all stake holders to have a single point of view along with granular drill down up to account level. It covers monitoring of SMAs as well as Sub Standard accounts.

The Bank also tied up with GE Capital for proactively making calls to stressed accounts (SMAs) in Retail segment and Real Estate sector, to prevent slippages.

SBI has Assets Tracking Centres at Circle level to track and monitor probable NPA accounts (SMAs) in SME and Agriculture segments, for making calls on the customers and follow up for recovery.

Tele-calling to borrowers/guarantors has been introduced at Stressed Assets Resolution Branches to help in their recovery efforts. In order to simplify and add technology in the work flow of the call centres, a web based portal has been put in place, to efficiently monitor the call centre process.

The Bank has formed various committees to periodically review stressed assets and suggest resolution and turn around strategies.

2. Asset Quality improvement Measures for P-Segment

PBBU Assets quality has improved during FY2015. To strengthen the assets quality, following strategies have been adopted:

- SMS sent to borrowers before and after EMI due date

- Soft recovery entrusted to specialised teams - A campaign for Auto Loan recovery "Aar Ya Par Paisa Ya Car" launched

- Updation of defaulters'' details in Credit Information Companies'' database being followed up - Auctioning of defaulters'' assets hypothecated/ pledged with the Bank

- Portfolio Health Check and Skip Tracing for Auto Loan, Education Loan and -press Credit carried out

3. asset Quality improvement measures for agriculture Loans

- Several initiatives and innovative campaigns rolled out for arresting slippages and quick resolution of NPAs resulted in reducing the Agri NPA level to below 31st March, 2014. The initiatives adopted are: - ''R1U2 Campaign'' (Recover One & Upgrade Two) - launched to target NPA accounts, which pulled standard accounts to NPA under Single CIF Multiple accounts norm. The Campaign resulted in reduction of NPAs to the tune of Rs.214 crores.

- "Project Zero Campaign" launched to drive renewal of NPA KCC/ACC accounts. The campaign is driven by SMS based daily monitoring of renewal / closure. Under the campaign, 2.81 lakhs KCC/ACC accounts renewed / closed upto 31st March, 2015.

- SBI has renewed the National level tie-up with Shriram Automal India Limited to support branches in auction of seized tractors to reduce agri NPAs.

- Gold loan auctions carried out on fixed dates each month to drive NIL NPA position in Agri Gold Loan.

4. asset Quality improvement measures for corporate accounts

The asset quality of CAG remained well under control, with the gross NPAs at 0.44 % of total advances.

Every effort is made to improve the asset quality through regular engagement with promoters of weak and stressed accounts. All high value stressed accounts and D rated borrowers are kept under special watch of General Manager for reduction in exposure. The sale to Asset Reconstruction Companies (ARCs) is examined in all eligible stressed accounts. These efforts have led to decline in retained NPA of Mid Corporates from 17,250 crores as on March 2014 to 14,775 crores as on March, 2015.

2. INTERNATIONAL OPERATIONS International Banking Group (IBG)

International Operations of the Bank is guided by the overarching principle of supporting global Indian corporatesandIndian diasporaspreadacrossgeographies. In addition, the Bank also targets the local populace in line with its vision to become a truly International Bank. To this end, the Bank has a separate Business Unit - International Banking Group (IBG) headed by Managing Director & Group Executive (CB) and supported by Deputy Managing Director & Group Executive (IB).

global presence

The number of foreign offices of the Bank at 191 is spread across 36 countries. Diversity in operating structures is a cornerstone of the Bank''s expansion activity in different markets. During FY2015, the Bank has opened a new Representative Office in Myanmar and Indian Visa Application Receiving Centre at Dhanmondi, Bangladesh.

Exhibit 29: Break-up of Foreign Offices (No.)

FY2014 New Offices FY2015 opened during the year

Branches /Sub-Offices / Other 68 1 69 Offices

Subsidiaries / JV (7) 0 (7)

Offices of Subsidiaries/JV 110 0 110

Representative Offices 8 1(1) 8

Associates / Managed exchange 4 0 4 Cos /Investments

Total 190 2(1) 191

* Luanda Rep Office in Angola was closed and Yangon Rep Office in

Myanmar was opened.

The Group has dedicated verticals in Credit and NPA management, Compliance, Risk, Treasury, Human Resources, Operations, General Banking, and Strategy to support the extensive international operations of the Bank. IBG supports its major stakeholders through its business functions as detailed below:

CORPORATES Merchant Banking

The Bank facilitates raising debt in Foreign Currency by Indian corporates by way of External Commercial Borrowings through syndicated deals in conjunction with other Indian and Foreign Banks, and also through bilateral arrangements.

Highlights

- Premier Mandated Lead Arranger and Book Runner during the FY2015.

- 10 Syndications aggregating US$7.057 billion.

- 15 Bilateral Loans aggregating US$2.563 billion to Indian corporates on a bilateral basis.

treasury management

In addition to supporting the global liquidity, liability management framework and investment portfolio of the Bank, Treasury Management Group also undertakes foreign exchange and hedge transactions for corporates. In April, 2014, the Bank successfully priced a Rule 144A/ Reg S US$1.25 billion multi-tranche Bond issue. Apart from bonds, some of the other sources of liquidity at Foreign Offices were:

a. Long Term bilateral loans from multilateral agencies like Korea Exim Bank, EIB, KfW IPEX Bank

b. Medium Term bilateral loans from Correspondent Banks.

c. Medium term Syndicated Loans

d. Reciprocal Lines.

e. Repo arrangement

f. Lines against Bankers'' Acceptance

Highlights

- Investment Portfolio at US$4487 Million - Interest Income from Investment - US$160 Million - Divestment Income - US$36 Million

- Investment provisions written-back - US$94 Million

Back Office Centralisation Project

During FY2015, the Back Office Centralisation Project was initiated to enable migration of the Back Office (BO) functions across foreign offices to Global Markets Unit Kolkata. Till 31st March, 2015, 10 foreign offices had shifted their BO functions.

INDIVIDUAL CUSTOMERS

Through specialized remittance products the Bank enables a ''window to India'' for NRIs residing in different corners of the world. In some countries with considerable Indian diaspora, the Bank also engages in retail lending activities for both Indian as well as local customers.

Global Link Services (GLS)

Global Link Services (GLS), a specialised outfit, caters to centralised processing of Export Bills collection, Cheque collection and online inward remittance transaction. Tie- ups with 30 exchange companies and seven banks in the Middle-East Countries for routing remittances through the Bank have substantially contributed to the inward remittances business. During FY2015, your Bank launched a new online instant remittance product ''Russia to India Flash'' for remittances from Russia to India.

Highlights

- Export Bills Handled (on behalf of Domestic Branches) - 70,012

- Foreign Currency Cheques Collected - 47,116 - Online Inward Remittance - 89,02,307

FINANCIAL INSTITUTIONS

The Group also facilitates linkages of the Whole Bank with international stakeholders such as Correspondent Banks, Foreign Regulators, International Chambers of Commerce, etc. As such, there is considerable synergy between IBG and other Business Verticals such as Mid Corporate Group, Corporate Banking Group and Global Markets etc.

Highlights

- Correspondent banking relationships with 346 reputed International Banks across 88 countries - 1,617 Relationship Management Application (RMA) arrangements with Society for Worldwide Interbank Financial Telecommunication (SWIFT)

- Master Risk Participation Agreements (MRPAs) entered into with 32 banks with aggregate funded and non-funded exposure of over US$4 billion.

REGULATORS

The Bank is committed to the policy of zero tolerance of non-compliance with regulatory guidelines. Regulatory concerns identified by regulators/auditors are addressed on priority basis. Status of remediation is placed before the Audit Committee of the Board.

The Bank has adopted an Independent Risk Governance Structure covering domestic and international operations. A country Risk Management Policy in tune with RBI guidelines is in place. Country-wise and Bank-wise exposure limits are monitored and reviewed on regular basis. Trends of credit risk, operational risk and market risk in respect of overseas operations are monitored, analysed and reported periodically to top management and central risk management departments of the Bank.

EMPLOYEES

The Bank ensures employee satisfaction through continuous engagements with senior management, improving productivity and retention. Further, the Bank encourages communication and awareness in its multi-cultural and multi-ethnic workplaces abroad.

SOcIAL SEcTOR

The Bank engages in several corporate social responsibility projects in many countries of its presence. The Bank also sponsors local and Indian festivals as also cultural programme to increase its visibility and enhance soft power of India as well its Indian brand.

Nepal SBI Bank Limited, a subsidiary of State Bank of India was the only Bank to restore total banking services at its branches within only 5 days after the disastrous earthquake in Nepal. Mobile Currency Exchange counters were opened at Kathmandu airport to assist travellers evacuated from the disaster zone. In addition to swift response in mobilizing services to normalize the financial system, the Bank also extensively engaged in humanitarian efforts.

SBI &JBiC Sign Export Credit Line Agreement

In September, 2014, SBI and Japan Bank for International Cooperation (JBIC) signed a loan agreement to set up an export credit line. The loan is co-financed with the Bank of Tokyo-Mitsubishi UFJ Ltd (BTMU) which brings the total co-financing amount to JPY 13.5 billion and US$21 million approximately. This credit line will be utilised by Meja Urja Nigam Private Limited (MUNPL) to finance the procurement of steam turbine generator equipments from Japanese Company and its subsidiary in India to construct a super critical pressure coal-fired power plant (660MWx2 units) in Meja, Uttar Pradesh. MUNPL is a joint venture equally invested by NTPC Ltd and UP Rajya Vidyut Utpadan Nigam Limited.

3. TREASURY OPERATIONS

Global Markets Group, which manages the Bank''s treasury, has given a stellar performance this year with a 21% increase in net interest income, 85% jump in profit on sale of investments and a 33 bps improvement in yield on a portfolio of close to ''4.9 Lakhs crores. The Group has maintained the pre-eminent position of the Bank in providing foreign exchange / hedging products to customers, portfolio management services to retirement funds and in maintenance of CRR.

FY2015 has been a favourable year for the Indian debt and equity markets as fall in CPI inflation (adjusted for new series) from 8.24% in March 2014 to 5.17% in March 2015 and formation of a stable government helped improve sentiment, boosting FII inflows. RBI reduced its benchmark repo rate by 50 basis points to 7.5% and cut SLR from 23% to 21.5%.

Bond yields fell by more than 100 basis points during the year, while equity markets rallied by more than 25%. Your Bank has seized this opportunity to book record profits of Rs.3,428 crores through sale of investments, exceeding our FY2014 profit by 85%. Interest income has also gone up by 15%, while interest expenses are down 36% through better fund management, resulting in an almost 21% increase in Net Interest Income of Global Markets. In CRR management, your Bank again outperformed its peers by 195 basis points, resulting in interest-cost saving of around Rs.85 crores.

In the equity markets, profits increased 132% YOY as we expanded the universe of securities, and increased the size of trading portfolio to benefit from the favourable market conditions.

Global Markets provides foreign exchange solutions to the customers for managing their currency flows and hedging risks through options, swaps, forwards and bullion services. Our treasury marketing outfits complement this through frequent interactions with customers to provide them with inputs about market developments and suggesting products to suit their requirements. The Group also manages FCNR(B) corpus of the Bank and provides funds for FCNR(B) loans and Export Finance in foreign currency like PCFC/EBR for customers in India.

Profits from forex and derivatives increased by around 9% to Rs.1,600 crores (unaudited) this year, despite reduced volumes due to declining oil prices.

To streamline our global forex operations, including 191 overseas offices in 36 countries and 675 domestic branches, an integrated Global Back-Office has been set up in Kolkata. In addition, we have significantly improved reconciliation of transactions in our Nostro accounts with foreign branches/correspondents through implementation of Transaction Life-Cycle Management (TLM) reconciliation software.

We have also rolled out an internally designed and developed web based outward remittance product called "FX-Out" which will be accessible at all branches to facilitate transfer of funds upto Rs.10 lakhs to overseas centres.

We continue to explore opportunities in the area of Private Equity (PE) and Venture Capital Fund (VCF) Investments. During FY2015, five new VCF investments amounting to Rs.495 crores were committed to.

The JV set up with Macquarie and IFC in 2008, to manage a US$ 1.2 billion India-focused PE fund, has invested approximately 96% of its total capital commitments. The Oman India Joint Investment Fund (OIJIF), set up in 2010, has completed its investments for Fund 1 worth US$ 100 million. The partners have decided to launch Fund 2 with a corpus of US$ 300 million. Further, the social infrastructure focused VCF, the Neev Fund, with a target fund size of Rs.660 crores was operationalised jointly with DFID (UK) and SBICAP Ventures Limited.

Portfolio Management Services increased its AUM by 13.65% YOY to over Rs.3,15,000 crores in FY2015. It has consistently outperformed private sector peers in generating returns for the Employees Provident Fund Organisation (EPFO) funds, and was ranked by CRISIL as the best fund manager for EPFO for the third year in a row.

To retain its pre-eminent position in the specialized domain, Global Markets continuously invests in skill development of dealers through training sessions conducted by industry experts and short courses in prestigious institutions like IIMs and NIBM.

1. HUMAN RESOURCES

The Bank believes that Human Resources Management is an important facet of organization''s effectiveness. Aligned with the best practices of a caring and responsible employer, and befitting its status of ''first among the equals'' in the banking industry, our Bank has been making constant endeavour to improve the functioning of HR as a strategic business partner by nurturing its loyal and dedicated employees who have made significant and lasting contributions towards achieving the Bank''s goals on an upward scale, on year to year basis.

Towards this end, the Bank has taken important measures to meet the business challenges, which include, recruiting young and qualified candidates in large numbers; improving the working /service conditions of the employees representing a wide diversity of group / interests; re-skilling them through training interventions, workshops, seminars, video-conferencing; assisting in the career development of the employees by providing for a scientific and objective approach to measure their performance; incentivising the top performers ; putting in place an organised structure for skill / capability building in critical positions and by implementing various measures for talent retention. All these have contributed in a big way to generate a highly satisfying working environment wherein the employees feel happy, engaged and enthusiastic about their work and take positive action to further the Bank''s business interests and reputation.

In keeping with the Management tradition of being proactive in employee engagement which is critical for the Bank to sustain growth with profit, the current leadership has taken it to greater heights by taking important initiatives as detailed below during FY2015.

INITIATIVES :

Project ''Saksham''- Career Development System (CDS) and Manpower Planning -- The rapidly changing business environment, competition from the Public / Private Sector Banks and ever increasing expectations from the young and demanding customers have put high onus and responsibility on the Bank for higher productivity and customer service. To meet these challenges, your Bank is recruiting young and qualified candidates in large numbers, changing the products and processes. In order to keep the employees empowered and motivated at all levels, a Career Development System (CDS ), known as ''Saksham'' has been launched with the objective of scientific and objective approach for performance measurement and resource planning at all levels in the Bank. The new Career Development System provides for very high levels of transparency and is designed to provide an opportunity for a systematic, dynamic and progressive career planning to the individual. The revised CDS is intended to be an effective tool for promotion, incentives and rewards.

Scientific resource / manpower planning would ensure that each of our units is adequately staffed to match the workload and business potential, result in improvement in staff productivity and to rationalize and merge roles and redistribution of staff to meet branch expansion requirements.

Talent Management and Career Option - As a part of talent management and to support the talent retention process, necessary course of action was initiated in areas covering, grooming of young officers in basic banking during the initial phase of their career, capability building /re- skilling through training intervention, seminar, workshop, completion of mandatory assignments during the early stages, identification of officers for job specialization, posting in critical positions/specialized areas, viz., Credit, Forex operations, Marketing for a certain period. Movement across verticals in the specialized area is also contemplated.

Campus Recruitment - In order to further strengthen the human resource pipeline and to meet the skill gap requirements of the Bank in specialized areas, 190 young ''B'' school graduates of 2015 batch belonging to top ''B'' schools were recruited as Management Trainees.

EMPLOYEE ENGAGEMENT :

Performance Linked incentive Scheme - In order to keep the employees focused and motivated for a higher level of productivity and profitability, an IT enabled ''One Umbrella'' Performance Linked Incentive Scheme has been implemented by the Bank in modification of the earlier incentive scheme, covering both core and non-core business. The incentive amount payable is linked to the category of the positions vis-a-vis level of performance.

SBi Aspirations - "SBI Aspirations" a social media forum, has been put in place for a two- way interaction whereby employees of the Bank can share their ideas, enhance their knowledge, find the solutions of the critical problems and express their views freely. With a view to facilitating employees endeavour in enhancing brand value and image of the Bank among the public, a code of conduct has been drawn up for the employees to follow while communicating in social media in a more responsible and ethical way within the framework of their Service Rules / Service Conditions.

Sabbatical Leave - Taking a holistic view of employee requirements, provision of sabbatical leave with enlarged facilities has been introduced for women and Single Men (with children and / or Aged parents) employees of the Bank.

SBi Pinkathon - It turned out to be the biggest Bank sponsored all-women run event in six cities across India, with the specific purpose of getting more and more women to adopt a fitter lifestyle for themselves and their families and to spread awareness about breast cancer and other issues that put women''s lives at risk. The employee interest in the events stood a testimonial of their awareness and contribution to the socially relevant issues.

improvement in employee productivity - The large- scale recruitment of Gen-next employees in the Officers as well as in the Assistant grade over the last 4 / 5 years has not only brought about a far- reaching attitudinal change among staff in their customer interface and services across the branches, it has also become a catalyst in enhancing / improving the productivity and efficiency of the employees, thereby resulting in increased growth in business and profitability for the Bank. The business per employee (BPE) has increased from Rs.704 lakhs to Rs.1,234 lakhs during the period from FY2011 to FY2015. The profit per employee (PPE) also increased from Rs.3.85 lakhs in FY2011 to Rs.6.02 lakhs in FY2015, which is indicative of the improved performance trend of the Bank.

Women Employees in the Total Workforce:

At present, the number of women employees in the total workforce of the Bank is 44,790 which constitutes 21% of the total staff strength. The composition of women employees in different cadres during the last 3 years is as under:

Exhibit 35: Sc / St / PWD Representation in employment: Category Total SC ST PWD

Officers 78,540 14,833 5,566 664 (18.88% ) (7.08%) (0.84%)

Assistants 94,455 15,800 8,370 1,794 (16.72%) (8.86%) (1.89%)

Sub-staff 40,243 10,810 2,804 234 (26.86%) (6.96%) (0.58%)

Total 2,13,238 41,443 16,740 2,692 (19.43%) (7.85%) (1.26%)

Bank provides reservation to Scheduled Castes, Scheduled Tribes & Persons with Disabilities (PWDs) as per GOI directives. In order to deal with issues relating to reservation policy and effectively redress the grievances of the SC / ST employees, Liaison Officers have been designated at all Local Head Offices of the Bank as also at the Corporate Centre at Mumbai.

STATUS ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE :

The Bank has a zero tolerance towards sexual harassment at workplaces and has put in place appropriate mechanism for prevention and redressal of complaints of sexual harassment at workplaces so as to ensure that women work with dignity and without fear. Complaints of Sexual Harassment of Women filed & disposed off during FY2015

Total No. of cases filed Total No. cases disposed off

14 10

AWARDS AND ACCOLADES:

- Bank was honoured with the ''Randstad Award'' for encouraging best practices in building the ''Employer Brand''.

- ''Brand of the year'' in banking in India was awarded to the Bank at the World Branding Awards that took place in Paris, France on March 25th, 2015.

2. STRATEGIC TRAINING UNIT (STU)

In a quest for becoming an organization which is a great place to work, your Bank has been quietly revolutionizing its training system. While the Bank continues a planned, proactive process for individual growth and organizational effectiveness, new techniques, trainers and methodologies are being imported from all corners of the globe to establish a virtuous circle of teach/learn/ teach/learn to enhance quality, transform employees into knowledge workers so that they can carry these towards creating customer delight. A strong, robust infrastructure of Learning Centres encompassing the latest developments in technology, benchmarked with the best learning practices worldwide, including e-learnings, is being developed to meet the challenges of tomorrow.

Our training system functions under the overall supervision and guidance of the STU of the bank and the training apparatus at present consists of five Apex Training Institutes (ATIs) and 47 Learning Centres. The sixth ATI, styled ''State Bank Institute of Management'', is being set up at Rajarhat, New Town, Kolkata.

INCLUSION OF VISUALLY IMPAIRED (VI) AND HEARING Impaired (HI) employees

Inclusion is a National goal. Including differently abled citizens is a great part of it. Our Bank has 611 VI and 253 HI Employees and we are constantly innovating ways to train and equip them with skills to ensure that they become better contributors.

We partner with NGOs as part of this process, and welcome ideas and suggestions. Let''s take an example of Mr. Chellam, one of our employees.

Mr. Chellam is working as Grahak Mitra in our Sivakasi Main Branch. After undergoing an extensive training programme at State Bank Learning Centre his proficiency has gone up and he now prints more than 300 passbooks a day and answers customer queries. He also serves customers by linking their UID (Aadhar) number to their Bank accounts and updating their phone in their customer profile. There are many other such colleagues, who have been empowered to serve our customers better.

financial literacy centres (FLcs)

Financial Literacy Centre at Rashtrapati Bhawan, New Delhi has been inaugurated on 11th December 2014 the birthday of our First Citizen. The target group for Financial Literacy is Domestic Help, labourers and school going children between 10-18 years of age, etc. They are explained basic essentials like managing income, savings and investments, main features of Prime Minister''s Jana Dhan Yojana, Jeevan Jyoti Bima Yojana and Suraksha Bima Yojana and basic banking like Savings Bank Accounts, Recurring Deposits, Fixed Deposits as such. What is tried is to empower the ordinary citizen, who feels a little intimidated when he steps into a public office, like a bank, through experience and learning in a congenial atmosphere, at our bank dummy banking branches. This initiative will be rolled out countrywide.

PRINCIPLES THAT DRIVE LEARNING ACTIVITIES:

- During FY2015, training made mandatory for all employees.

- A culture of self-learning in the organisation, which be more cost effective and convenient in the long run, being promoted.

- A convenient e-learning platform to drive efficient e-learning.

- Training programmes aligned with current corporate priorities of the Business Units.

- A Mass Communication Programme for sharing and communicating corporate concerns conducted across the Bank.

- Constant upgrades of our training content and delivery learning to be at par with global best practices being tried.

NEW INITIATIVES TAKEN:

- Mandatory Learning and Weightage in AARF:

The Bank has made a system of mandatory learning, consisting of role based e-Lessons, Study Courses, On-line courses, from reputed international Business schools among others, compulsory for assistants and officers.

- Approving certification courses for self-learning:

With a view to improving knowledge levels in the organisation, new external study courses are being promoted under Staff Reward and Recognition Scheme and staff encouraged to under take thes courses.

- SBI Aspirations: With the spirit of enhancing learning and sharing in the Bank, the Bank has started learning communities for selected roles. The role holders are encouraged to participate and share their experiences within these communities as and when they participate in training programmes. The Bank has introduced ideation blogs in the STU community.

- SMS Alerts: To keep our staff updated on all relevant matters on a real time basis, suitable text messages on current banking issues are being sent to employees on a daily basis.

- Training Needs Assessment: As a first step towards

Knowledge/Skill mapping, an exercise for bridging training gaps and honing skills was conducted across the Bank, covering 2,12,704 employees

- Aarohan: ''Aarohan - Aim.. Aspire.. Achieve..'': For enhancing quality and professionalism in all our endeavours, the "Aarohan" training was implemented covering 2,08,019 employees.

- Quizzing Culture in Bank: To encourage curiosity in our employees and also provide a platform to showcase their knowledge, STU conducted online quiz competitions across the Bank along with Mega Quiz Competition.

- Mentoring of Newly Appointed Officers: The

system of mentoring of newly appointed officials has always been in existence in the bank. In order to facilitate integration of Probationary Officers and Trainee Officers, the Bank introduced a formal system of mentoring by senior officials.

- research Advisory committee: A Research Advisory Committee was formed to improve the quality of Research Work carried out by our Faculty and Research Officers and to make it more useful to the Bank.

- cyber Security Workshop: This workshop was designed for all Banks to participate in and was conducted in association with Truth Labs and Microsoft. The discussion on how cyber criminals can compromise our systems including wi-fi routers and other equipment to defraud victims and underscored the importance of ethical hackers to help protect our technology environment.

HIGHLIGHTS:

- Revamped onboarding and induction training of new recruits, with mentoring programme.

- Supporting architecture for training in specialised skills, including risk, marketing etc., with external training partners and in-house e-lessons and 44 Harvard Manage Mentor e-modules.

- Leveraging of social media for knowledge updation among Staff members.

- Mass communication programme called ''Aarohan'' with a coverage of 2,08,019 employees with further engagement with 536 in-house e-lessons, 345 Mobile Nuggets and 350 e-capsules.

- Mandatory e-lessons for POs/TOs/Officials opting for CAG/MCG/SAMG assignments/Newly Recruited Assistants.

- ''Gyanodaya'' - the e-learning portal is now extended to all Associate Banks.

- Case Studies, Research Projects and e-publications are available on the portal under ''e-library''.

- Exciting business simulation games used for behavioural learning

3. RISK MANAGEMENT AND INTERNAL CONTROLS

(A) RISK MANAGEMENT

The Bank is exposed to various risks that are an inherent part of any banking business. The major risks are credit risk, market risk, liquidity risk and operational risk which includes IT risk. The Bank has policies and procedures in place to measure, assess, monitor and manage these risks systematically across all its portfolios. The Bank is amongst the leaders to undertake implementation of the Advanced Approaches under Credit, Market and Operational risk. The Bank has also undertaken the Enterprise and Group Risk Management Projects which aim to adopt global best practices. The projects are being implemented with support from external consultants.

RBI Guidelines on Basel III Capital Regulations have been implemented and the Bank is adequately capitalized as per the current requirements under Basel III. An independent Risk Governance Structure, in line with international best practices, has been put in place, in the context of separation of duties and ensuring independence of Risk Measurement, Monitoring and Control functions. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.

The various risks across Bank and the SBI Group are monitored and reviewed through the Executive level committees and the Risk Management Committee of the Board (RMCB) which meets regularly. Risk Management Committees at Operational unit and Business unit level are also in place.

NEW INITIATIVES IN RISK MANAGEMENT:

- Your Bank has started the Dynamic Credit rating review of borrowal accounts to capture deterioration in credit quality promptly and to initiate corrective action and facilitate correct pricing of risk.

- An Early Warning Control System (EWCS) is being put in place to put in place a system driven, parameterized, quantified, trigger based monitoring system of credit exposures.

- Your bank has developed behavior model for monitoring and scoring the retail borrower performance. The coverage of behavior model is gradually being expanded to cover entire retail related basket of products.

- Coverage of Loan Originating system/Loan Lifecycle Management system (LOS/LLMS) is being steadily augmented to cover the entire credit portfolio.

- In order to focus on capital conservation and maximisation of return on capital, your Bank has introduced Risk Based Budgeting (RBB) . As a measure to quantify the reduction in risk we will be introducing levers to assess improvement periodically, based on Credit Risk Weighted Assets (CRWAs). Achievement of the budgeted advances levels will be subject to achievements under the specified levers.

- The VaR and Stressed VaR for market risk are computed on a daily basis. Enterprise VaR is also back-tested daily.

- The Operational Risk Management project is in advanced stage with collation of internal loss data, external loss data, RCSA phase IV and Scenario analysis phase II under process.

- Group Risk is measured through Contagion Risk, Concentration Risk, Strategic Risk and Reputation Risk Indices.

- Risk culture is being embedded through training of staff at all levels through e-learning lessons.

- The Bank is implementing the Risk Adjusted Return on Capital (RAROC) framework in FY 2015-16.

- The Risk Appetite statements for the Enterprise and Group are being re-looked and formalised.

CREDIT RISK

Credit Risk is defined as the possibility of losses associated with the diminution in the credit quality of borrowers or counterparties from outright default or from reduction in portfolio value. Credit Risk emanates from a bank''s dealings with an individual, non-corporate, corporate, Bank, financial institution or sovereign.

MITIGATION MEASURES

- Your bank has strong credit appraisal and risk assessment practices in place for identification, measurement, monitoring and control of the credit risk exposures. The Bank uses internal Credit Risk Assessment Models and score cards for assessing credit risk under different exposure segments. Internal ratings of the Bank are subject to comprehensive rating validation framework.

- Credit Risk Management Department studies 37 industries covering sectors, such as Telecom, Power, Coal, Aviation, NBFC, Textile, Iron and Steel covering approximately 85% of the Banks'' credit exposures. The detailed study covers market factors, potential and Portfolio Quality Index (PQI) based on which Industry-wise limits are set for taking bank-wide exposures.

- RBI has allowed the Bank to participate in the parallel run process for Foundation Internal Ratings Based (FIRB) under the Advanced Approaches for Credit Risk. The data under parallel run of FIRB is being submitted to RBI.

- Models for estimation of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) have been developed internally. The Bank has procured Credit Risk Management System (CRMS) for computation of IRB capital.

- The monitoring of Prudential Exposure norms for Single and Group borrowers, Substantial Exposure Norms and unsecured Exposures is being done regularly.

- Bank regularly conducts Stress Test on its Credit portfolio. Stress Scenarios are regularly updated in line with RBI guidelines, Industry best practices and changes in macro economic variables.

MARKET RISK

Market Risk is the possibility of loss a Bank may suffer on account of changes in values of its trading portfolio, due to change in market variables, such as exchange rates, interest rates and equity price, among others.

MITIGATION MEASURES

- The Bank''s market risk management consists of identification and measurement of risks, control measures, monitoring and reporting systems.

- Board approved policies for Market Risk Management, Trading in Foreign Exchange, Derivatives, Interest Rate Securities, Equities, Mutual Fund and Limit Management Framework among others are in place.

- Market risks are controlled through various risk limits, such as Net Overnight Open Position, Modified Duration, Stop Loss, Management Action Trigger, Cut Loss Trigger, Concentration and Exposure Limits.

- The Bank has Asset class wise risk limits for its trading portfolio and monitors the same on an ongoing basis.

- Currently, market risk capital is computed under the Standardised Measurement Method (SMM). The Bank has submitted Letter of Intent to the Reserve Bank of India for migration to Internal Models Approach (IMA) under the Advanced Approaches for market risk.

- Value at Risk (VaR) is a tool for monitoring risk in the Bank''s trading portfolio. The VaR methodology is supplemented by conducting quarterly stress tests of the trading portfolio.

OPERATIONAL RISK

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

MITIGATION MEASURES

- The main objectives of the Bank''s Operational Risk Management are to continuously review systems and control mechanisms, create awareness of operational risk throughout the Bank, assign risk ownership, align risk management activities with business strategy and ensure compliance with regulatory requirements, which are the key elements of the Bank''s Operational Risk Management Policy.

- The Bank had submitted its application to RBI to migrate to the Advanced Measurement Approach (AMA) for Operational risk.

- Important policies, manuals and framework

documents in line with RBI guidelines on Operational Risk Management Framework (ORMF) for migration to AMA are in place.

- For FY2015, Bank had assigned capital for

Operational risk as per Basic Indicator Approach (BIA). Capital for AMA for FY2015 has also been arrived at as part of Bank''s project to migrate to AMA.

ENTERPRISE RISK

Enterprise Risk Management Project aims to put in place a comprehensive framework to manage various risks. It encompasses Global best practices like Risk Appetite, Risk Aggregation and Risk-based Performance Management System.

MITIGATION MEASURES

- As part of the Bank''s Risk Management Project to transform role of Risk into a Strategic function, aligned with Business Objectives, Bank has initiated the Enterprise Risk Management (ERM) module. Board approved ERM Policy delineates the roles and responsibilities of various Committees / Functionaries to manage risks.

- The Bank has a comprehensive Internal Capital Adequacy Assessment Process (ICAAP) Policy. The Pillar 2 risks, such as Liquidity Risk, Interest Rate Risk in Banking Book (IRRBB), Concentration Risk etc, and overall Risk Management practices as well as adequacy of Capital under both normal and stressed conditions are assessed as per the Policy.

GRouP RISK

Group Risk Management aims to put in place standardised risk management processes in Group entities.

MITIGATION MEASURES

- Policies relating to Group Risk Management, Arms Length and Intra Group Transactions & Exposures are in place.

- Exposure limits for Large Borrower Exposure and Capital Market Exposure as per RBI have been adopted for the Group. In addition, limits for Unsecured Exposures, Real Estate and Intra-Group Exposures have been set by the Bank.

- Monitoring of consolidated Prudential Exposures and Group Risk components is also being done regularly.

- A quarterly analysis of risk-based parameters for Credit Risk, Market Risk, Operational Risk and Liquidity Risk, among others, is presented to Group Risk Management Committee/Risk Management Committee of the Board.

- The Group Internal Capital Adequacy Assessment Process (Group ICAAP) document includes an assessment of identified risks by Group entities, internal controls and mitigation measures, and capital assessment, under normal and stressed conditions. All Group entities, including Non- banking entities, carry out the ICAAP exercise and a Group ICAAP Policy is in place to ensure uniformity.

INFORMATION SECURITY RISK

Information Security risk seeks to establish stringent information security structure to prevent data loss and threats.

MITIGATION MEASURES

- Bank has put in place robust and agile Information Security framework in line with Business Strategy as also ever emerging cyber threats.

- The Information Security Policy and Standards benchmarked against Global Standards and are reviewed annually.

- The application setups undergo security reviews before launching as also are reviewed periodically.

- Bank''s SOC is one of the largest in the Global Banking sector as it covers all 20,000 strong network of Bank''s offices (Domestic and Foreign) and Associate Banks. The SOC has the following attributes:

- Capability of handling 60,000 Events Per Second (EPS) which is scalable up to 5 Lakhs EPS

- Operates on 24x7x365 days basis for Real- time monitoring of security events across the enterprise and thus provides Secure Banking platform to the customers.

- Visibility over the security threats from within and outside the Bank and improves Incident Reporting and Management.

- Regular security drills and employee awareness programmes are conducted to ensure security and increase awareness. Disaster Recovery Drills are conducted regularly as part of the implementation of the Business Continuity Management System (BCMS). Bank has achieved following International Accreditations for various critical IT setup -

- ISO 27001 for Information Security Management System (ISMS)

- ISO 22301 for Business Continuity Management System (BCMS)

(B) INTERNAL CONTROLS

The Bank has in-built internal control systems with well-defined responsibilities at each level. It conducts internal audit through its Inspection & Management Audit Department. Audit Committee of the Board (ACB) exercises supervision and control over the functioning of the I & MA Department. The inspection system plays an important and critical role in identification, control and management of risks through the internal audit function, which is regarded as one of the most important components of Risk Management Process. The Bank carries out mainly two streams of audits - Risk Focused Internal Audit (RFIA) and Management Audit, covering different facets of Internal Audit requirement. The Bank''s accounting units are subjected to RFIA. The Bank''s Management Audit covers administrative offices and examines policies and procedures, besides quality of execution thereof.

Besides, the department conducts Credit Audit, Information Systems Audit (Centralised IT establishments & Branches), Home Office Audit (audit of foreign offices) and Expenditure Audit (at administrative offices) and oversees policy and implementation of Concurrent Audit (domestic and foreign offices) and Circle Audit. To verify the level of rectification of irregularities by branches, audit of compliance at select branches is also undertaken. During FY2015, 9,889 domestic branches/BPR entities were audited under the Risk Focused Internal Audit.

RISK FOCUSED INTERNAL CONTROL AUDIT

The I&MA Department undertakes a critical review of the entire operations of audited units through RFIA an adjunct to Risk Based Supervision as per RBI directives. The domestic branches have been broadly segregated into three groups (Group I, II & III) on the basis of business

profile and risk exposures. While audit of Group I branches is administrated by the Central Audit Unit (CAU) headed by a General Manager, audit of branches in Group II and III category and Business Process Re-engineering (BPR) entities are conducted by 13 Zonal Inspection Offices, each of which is headed by a General Manager.

MANAGEMENT AUDIT

Management Audit encompasses Audit of Corporate Centre establishments / Local Head Offices / Apex Training Institutions, Associate Banks and Regional Rural Banks (RRB) sponsored by the Bank. To enhance the effectiveness of Management Audit, periodicity has been reduced from the existing once in three years to two years. 46 establishments / administrative offices were audited under Management Audit during FY2015.

CREDIT AUDIT

Credit Audit aims at achieving continuous improvement in the quality of Commercial Credit portfolio of the Bank by critically examining individual large commercial loans with exposures of Rs.10 crores and above annually. The Credit Audit System also provides feedback to the business unit by way of warning signals about the quality of advance portfolio in the unit and suggests remedial measures. Credit Audit also carries out a off-Site review (Loan Review Mechanism) of all the pre-sanction and sanction process of all individual advances above Rs.5 crores within 6 months of sanction / enhancement / renewal. During FY2015, 9,129 accounts were subjected to on-site Credit Audit.

INFORMATION SYSTEM AUDIT

All Branches are being subjected to Information System (IS) Audit to assess the IT related risks as part of RFIA of the branch. IS Audit of centralised IT establishments is carried out by a team of qualified officials/ outside experts. During FY2015, IS audit of 38 centralised IT establishments were completed.

FOREIGN OFFICE AUDIT

During FY2015, Home Office Audit was carried out at 48 branches, Management Audit at one Representative office / Country Head Offices and two Subsidiaries / Joint Ventures.

CONCURRENT AUDIT SYSTEM

Concurrent Audit System is essentially a control process, integral to the establishment of sound internal accounting functions, effective controls and overseeing of operations on a continuous basis. Concurrent Audit System is reviewed on an on-going basis in accordance with RBI directives, so as to cover the Bank''s Advances

and other risk exposures as prescribed by the regulatory authority. I&MA department prescribes the processes, guidelines and formats for the conduct of concurrent audit at branches and BPR entities. During the year, Concurrent Audit System has been revamped, along with the introduction of a web-based solution, with external auditors appointed as Concurrent Auditors at a few centres.

CIRCLE AUDIT

Circle Audit, which is a delegated audit, covers low-risk areas, and is conducted between two RFIAs. This enables an auditee unit to be better prepared for the RFIA. In FY2015, 10,671 units were audited by the Circle Audit Department.

EARLY SANCTION REVIEW [ESR]

ESR mechanism introduced in audit system since September, 2014 to review sanctions of more than Rs.1 crore up to Rs.5 crores. The objectives of ESR are:

- To capture the critical risks in the proposals

sanctioned, at an early stage and apprise the Controllers of such risks for mitigation thereof at the earliest.

- Improve the quality of pre-sanction process / sanctions in respect of exposures falling in this category.

- Improve the quality of sourcing of loan proposals. - During FY2015, 4,339 accounts have been reviewed under ESR.

OFF-SITE TRANSACTION MONITORING SYSTEM (OTMs)

Exception data generated by Data Warehouse (DW) based on requirements submitted by Offsite Monitoring Centre (OMC) at I&MA Hyderabad. OTMS, a web based solution has been introduced to capture deviations and take corrective actions. Presently 11 types of deviations are being monitored and will be reviewed as per requirements.

LEGAL AuDIT

Legal Audit was rolled out in all the Business Verticals in June, 2014 to cover all loan and Mortgage related documents pertaining to accounts with aggregate exposure of Rs.5.00 crores and above. As on 31st March, 2015 Legal Audit has been commenced in 8,976 eligible accounts and already completed in 3,310 accounts.

4. INFORMATION TECHNOLOGY

A. CORE BANKING PROJECT

CBS environment has been benchmarked to support one billion accounts, over 250 million transactions in a day, and delivering a throughput of over 17,000 transactions per second. Biometric authentication as a second-factor authentication has been implemented in branches for all CBS users. The process for the systematic and proactive risk identification, assessment, measurement, monitoring and mitigation of various risks in the IT vertical has been initiated.

Exhibit 37: Alternate channels Growth

As on ATMs Kiosks Cash Deposit Total (MFK SSK) Machines (Numbers) (CDMs)

31.03.2013 25,247 2,196 698 28,141

31.03.2014 40,768 2,583 1,516 44,867

31st March,2015 42,454 2,595 1,849 46,898

ATMs

State Bank of India, along with its Associate Banks has one of the largest ATM networks in the world with more than 54 thousands ATMs including Kiosks and Cash Deposit Machines as on 31st March, 2015. The ATM Base 24 Switch has recently been upgraded to handle close to 50,000 ATMs, in addition of Electra Switch.

The objective is to strengthen ATM facilities across every nook and corner of this vast country and enhance customer convenience. During FY2015, SBI has installed 1,686 ATMs. The total number of ATMs (standalone) now stands at 46,898 as on 31st March, 2015 (Includes ATM Kiosks CDM). Population group wise, the Bank has 50:50 coverage of Metro/Urban and Semi-Urban/Rural population groups.

With a 29.84% market share, of India''s ATM population, SBI''s ATM network transacts 49.65% of the country''s total ATM transactions. On an average, over 99.96 lakhs transactions per day are routed through our ATM network. Our ATM network is one of the busiest in the country with average hit rate of more than 185 transactions per day per ATM. State Bank Group has a Debit Card base (standalone 16.07 crores) of 20.59 crores.

On an average, the volume of cash that our ATMs dispense is Rs.2731 crores a day and 8.33 million transactions a day. On any given day, each of our ATMs dispense Rs.5.88 lacs a day and serve 185 transactions.

More than 4,000 ATMs (during FY2015) have been enabled as Talking ATMs for Visually Impaired Customers during FY2015, which took the total Talking ATM strength to 8,600 as on 31st March, 2015. Every new machine added comes with this feature ab initio.

Care for the physically challenged is our priority too. 2,414 of our ATMs have ramps to facilitate easy access for the physically challenged. Wherever possible, ramps and/or side railings are provided.

Over 950 of our ATMs are on solar power and the count keeps growing. ATM user-safety is our concern too. Apart from physical care taker arrangements, 2,488 ATMs have been brought under electronic surveillance during the year. The total number of e-corners installed in the Bank has crossed the 500 mark with more than 200 being installed in FY2015.

CASH DEPOSIT MACHINES (CDMs)

SBI is aggressive in rolling out CDMs for cash deposit by customers at these machines. As 31st March, 2015, the number of CDMs installed was 1,849 These CDMs are available to the customer 24 x 7 for their convenience.

B. iNB & E-COMMERCE

INTERNET BANKING

The Bank''s online banking platform onlinesbi.com provides robust and customer friendly net banking services to its retail and corporate customers, including PSUs and Government Agencies. This cost-effective channel has enabled more than 86 crores transactions during FY2015, achieving 39% growth over the previous year. Our robust Retail Internet Banking (RINB) platform has also been optimised for visually impaired customers.

The Corporate Internet Banking (CINB) is well suited to Small, Medium and Large Corporates. It has also been immensely successful in establishing traction with Government Treasury & Accounts Departments as well. Online collection of fees/funds for Institutions, Corporates and Government Departments is being facilitated through Multi Option Payment System (MOPS), StateBankCollect and merchant-acquisition through independent aggregators. Internet based solutions also cater to the e-Tendering, e-Auction and bulk payments related requirements of the Government/PSUs/Large and Medium Corporates.

During FY2015, the Bank has continued to be a major player in the e-Commerce space in the country. Through over 20,000 merchant tie-ups, direct or through State Bank Collect or through e-Commerce aggregators, the Bank has facilitated more than 72 crores e-Commerce transactions during the year. Some of the new features in Net Banking launched in FY2015 are:

- Facility to register/inquire/cancel nomination

through internet banking.

- Linking of Aadhaar Number and LPG customer ID.

- IRCTC - Quick Pay for quick booking of IRCTC tickets.

- Online resetting of login password by using ATM card credentials.

-Generation of Form 15G/H.

- ATM Card holder can set daily transaction

limit,channel type (ATM or POS or CNP) & usage type (domestic or international) through INB.

- In State Bank Anywhere mobile app for smart phones, Quick Transfer of small amounts can be done without beneficiary registration, using QR Code or account details.

- To prevent frauds perpetrated through fake/altered cheques, CINB provides facility to Corporates to upload particulars of cheques issued by them. This will be used for data validation during cheque payment.

- Loan against shares/facility has been launched to leverage the customer''s investments in shares for loans to meet unforeseen expenses. Customers can apply online for loans up to 20 lakhs against their shares.

- Facility has been provided to view details of units held with SBI Mutual fund through Internet banking.

- NRI customers can raise a request for disposal of inward/outward funds in their account through Internet Banking, instead of sending letters/email to the branches.

MOBILE BANKING

The Bank is the market leader for mobile banking services in India. The Bank''s mobile banking service, State Bank Freedom, offers low cost, round-the-clock, real time banking services focused on convenience and security.

Depending on the mode of access, mobile banking facilities include account balance enquiries, mini-statements, check book requests, trading account enquiries, fund transfer within the Bank and to other banks in India, mobile credit top-ups, railways and air ticket reservations, payment of bills, payment of life insurance premiums as well as inter-bank mobile payment services. The Bank has also introduced a prepaid stored value account called Mobicash.

TAB BANKING

The Bank has launched Tab Banking services for opening Saving Bank A/C, giving in-principle sanction of housing loan & auto loan and for recording PSS (Pre-Sanction Survey) of SME Loans. Staff will complete all account opening formalities by using tab, including taking photograph, uploading of KYC documents. The account opening details will be loaded in CBS platform and account number will be advised to customer. On the same line, Housing Loan / Auto Loan sales team visit the customer''s place, staff capture the KYC details, particulars of income and deductions and details of proposed property on the tab. Based on data furnished and cost of project, applicant will be advised on approx. housing loan amount and the EMI amount.

IT - FOREIGN OFFICES

IT-FO provides round-the-clock round-the-year IT support to 153 Foreign Offices (FOs) of the Bank in 26 countries. These FOs use Finacle Core Banking application along with a host of add-on/surround applications like Finacle Treasury, ACE Pelican, SWIFT Connect, AMLOK, FNR etc. to meet all the regulatory requirements besides providing high class customer experience.

To provide a better and robust IT platform, currently all these FOs are being migrated to an upgraded improved version of Finacle Core Banking application. FOs in 17 countries have already migrated as on 31st March, 2015; the remaining FOs in 9 countries are to be migrated by August, 2015.

A number of major projects have been taken up for implementation viz. e-Trade, INB, Mobile Banking, Supply Chain Finance, Loan Origination/Management System, observance of Foreign Account Tax Compliance Act(FATCA) etc. which will go a long way towards further enhancing & reinforcing our foreign operations.

ENTERPRISE DATA WAREHOUSE

(1) integration of Domestic and Overseas Exposure

With a view to have MIS for single view of exposure (fund/non-fund based credit, Non-SLR investment and derivative exposure), EDWP has integrated domestic and overseas credit exposure on individual borrower as well as group for both domestic and overseas operations (both on and off balance sheet for credit risk management). This is to be updated at monthly intervals. Under the project, integration has been done for customers of all 18,200 domestic branches and 180 overseas branches. The exposure can be viewed across various dimensions like Borrower Constituent, Retail /Corporate, Asset Class, Facilities, etc. Written off and restructured accounts of individual customer as well as group customers has also been taken into account under the project.

(2) Customer One View (COV)

With large customer base and wide variety of products, Bank faced challenges in Customer Relation Management, Customer Service and came up with a solution named Customer One View (COV). The COV aims to provide 360 degree view of retail and corporate customers. It helps Bank to understand customer profile and serve accordingly. To meet this objective, DWP gathers data from various sources of Bank as well as from different subsidiaries and then process (massage/scrub) it to produce information nuggets on Customer portfolio/ profitability/Risk grade/Next Best Product etc.

(3) COV integration with CBS

COV is integrated with CBS to enable frontline staff to meet customer expectation by offering next best product and tap cross selling business opportunities by leveraging core strength of Data Warehouse Data repository & advanced analytics. Salient features are as under-

- Web services deployed at CBS & DWP end X New menu button "COV" has been introduced in CBS B@ncslink.

- Customer portfolio and Next Best Product available on a click to Teller.

- Acceptance/Rejection of the offer is recorded.

PAYMENT SYSTEM GROUP (PRE-PAID CARDS)

Prepaid cards are issued in both I NR and Foreign Currency. Different variants of INR Prepaid cards such as Ez Pay cards; Gift cards; Smart Payout cards; Quick Pay Cards; Imprest Cards; Achiever Cards; etc are issued to individual & corporate customers. State Bank Foreign Travel Cards are available in eight foreign currencies namely the Japanese yen, the Canadian dollar, the Australian dollar, the Saudi riyal, the Singapore dollar, the U.S. dollar, the Euro and the British pound, providing safety, security and convenience to overseas travellers. In FY2015, we have issued 24,555 Foreign Travel cards and approximately 231,000 INR prepaid cards.

NETWORKING

State Bank Connect is the Bank''s secure and robust principal connectivity platform and is the backbone of its overall technology infrastructure. The State Bank Connect primary point-to-point links have recently been migrated to Multi Protocol Level Switch (MPLS) architecture for ensuring higher uptime and dynamic upgrade of bandwidth. The Bank and its Associate Banks are dependent on State Bank Connect to support business- critical applications such as the Bank''s core banking application, trade finance software, ATMs, payment systems, cash management software, corporate email and internet portals

CORPORATE WEB AND MAIL SERVICES

Internal Social Media "SBI Aspirations" a collaboration platform designed to empower the Bank''s employees to be more innovative, productive, and knowledgeable and to generate new ideas was launched on 1st July, 2013. It is a platform that empowers employees to develop, nurture and remain in contact with network of other colleagues, sharing knowledge, ask queries using forum and discuss new creative ideas within communities.

With a view to popularise the SBI Aspirations platform, we have introduced a number of initiatives like The Best Blog contest, quizzes, creation of new communities, Photo- vote contest etc., Further the platform was integrated with Knowledge Helpline & HR portals. The Best Blog Contest generated a lot of buzz amongst employees and encouraged people to start participating on this platform. The photo-vote contest #InOneYear saw a total of 444 people joining this contest community and 450 people adding a profile photo to their profile. The photo- vote contest was also successful in getting 349 photos uploaded and 3446 likes in total.

The platform was made available to all the foreign office employees and also for the local based officials in Foreign office.

External Social Media

Bank has marked its presence on External Social Media sites like Facebook, Twitter and YouTube for listening to and engaging with the young generation customers. We have achieved great response to our pages on these social media portals.

(1) YouTube

Our YouTube channel which was launched on 23rd January, 2014, is the leading YouTube channel amongst all Indian banks in terms of subscriber base. We have uploaded more than 120 videos on our YouTube channel. Currently it has over 6,500 subscribers; way ahead of other bank channels which have had their presence on YouTube for over 4 to 5 years. Also our channel has garnered around 3.50 lakhs views implying the fact that the digital audience is liking our content.

(2) Facebook

Our Facebook Page was launched on 7th November. 2013. Our Facebook Page reached its 1 million fans milestone within 15 months of its launch and in just another 2.5 months we crossed the 2 million Fans mark. We are ahead of Kotak Mahindra Bank, Citibank, IDBI Bank and YES Bank, all of whom have been on this social networking site for at least 4 to 5 years.

During the course of this year we had taken a number of initiatives to engage with audiences on this social platform. We have conducted various quizzes and contest on the themes like FIFA World Cup, Savings Mantra, Photo-vote contests etc.

(3) Twitter

Our Twitter handle was launched on 4th April, 2014. Today we have more than 1.30 lakh followers of our handle. Our Twitter handle crossed the 1 Lakh followers mark in March, 2015; within 11 months of its launch and it is the second highest followed handle amongst all Indian Banks, who have been on Twitter for over 3 or 4 years, such as ICICI Bank, HDFC Bank, Axis Bank, IDBI Bank & Kotak Mahindra Bank. Our Handle was certified as a Verified Handle by Twitter within 10 months, while some other bank handles with more than 4 years of presence are yet to get Verified Status. We have conducted various quizzes and contests on Twitter promoting our products and services. We have also extended the use of hashtags (#) to gain more visibility

We also are in talks about launching our official pages on other networking sites like GooglePlus and LinkedIn. Also we are evaluating how Social Media can be leveraged for business productivity by targeted advertising of our products and services.

DIGITAL BANKING

With an objective of becoming the pioneer in "Next Generation Banking with a difference" and enhancing the value proposition for our Retail Customers, 7 Digital Banking Outlets (DBOs) under the sub-brand "sbiINTOUCH" have been opened during the year.

DEVELOPMENT CHANNEL

(1) ATM Card Limit/Channel/Usage Modifications Through INB

A facility has been provided to State Bank Group customers in Internet Banking for modifying the daily limits (ATM, POS/PG) of ATM Card, disabling/enabling of channel (ATM,POS, PG), disabling/enabling of usage (domestic, international).

(2) cardless Deposit

This facility is available for walk-in depositors of the bank to deposit money in any account maintained with us. Deposit menu will be invoked by touching the CDM screen. The walk-in customers will simply enter his/ her own mobile number, beneficiary mobile number and key-in the beneficiary account number. Once accepted, cash will be scanned, counted and verified, Beneficiary will receive SMS on his registered mobile number on successful cash deposit.

Transactions are limited to Rs.49,900 or maximum of 200 pieces of notes. The facility is currently available across 1,763 CDMs.

(3) State Bank anywhere

The latest initiative from the Bank comes to users in the form of a mobile smart phone application. The application State Bank Anywhere is now available on Android, iOS, Windows, and Blackberry platforms. The behemoth internet banking offering of State Bank of India has been bundled to provide a complete suite of banking services to the users conveniently on the move through this innovation.

Features like mPassbook, on line issue of e-TDR, e-STDR, e-RD, Quick transfer using QR code through IMPS without beneficiary registration, RTGS funds transfer, credit card (VISA) transfers, Aadhar seeding to bank accounts have been provided.

In addition host of regular banking services such as balance enquiry, mini statement, cheque book requests, funds transfer in self and third party accounts, IMPS transfers, NEFT, transfers within SBI group, mobile top up and DTH recharge, Profile setting, refer a friend, feedback have been provided.

CINB module of the Banks Internet banking is being provided separate Application named as State Bank anywhere-Saral.

To reach a wider audience segment, Hindi version of State Bank Anywhere in the name "State Bank Kahin Bhi" has also been launched. The Hindi version will make the usage of mobile banking more easy and comfortable for a larger number of customers.

SBI FINDER:

To facilitate users to easily find SBI ATMs, CDMs, Branches and E-corners in an area within the specified radius, a customer convenience smart phone application "SBI Finder" has been developed and rolled out on Android and iOS platforms. It provides directions to reach the SBI ATMs, CDMs, Branches and E-corners located within a specified radius of customer''s current location using GPS.

SBI HOLIDAY CALENDAR:

With a view to display Bank''s holidays in different States / Circles of the Bank, SBI Holiday Calendar customer convenience application for smart phone on Android and iOS platforms is available.

CORE DEVELOPMENT

Key developments during FY2015 were:

Integration of e-KYC with account opening in CBS:

The Aadhar based attributes are verified from UIDAI database and certified for this purpose. This development will help the customers in opening their accounts with our Bank without having to produce physical copies of their identification documents to the Bank branch.

New screen provided to branches to enter the details for LPG-ID registration in CBS:

This has been done to facilitate the customers who do not have Aadhar numbers. They can still link their account to the LPG_ID for the purposes of availing the subsidy.

Automatic seeding of Aadhar number to newly opened accounts under Financial Inclusion:

In all those accounts which are opened on the basis of Aadhar card / details submitted by the customer, the Aadhar number will be automatically linked to the account thus opened.

RBI''s KYC Compliance:

Notices were generated and sent to all the KYC non- compliant customers in March, 2015, as specified by RBI.

Updation of correct Mobile Numbers:

Functionality developed to notify the teller about missing or invalid mobile number for a customer whenever his account is transacted in CBS application to enable him/her to capture / correct the same. This will help the branches to update the CBS data with the latest mobile number of the customer, as the mobile number is required for sending various types of SMS''s to the customers.

TECHNOLOGY AWARDS

Exhibit 41: List of Awards received during FY2015 Award Category Received in

SAP Ace Award Best Run Pay Roll August 2014

IDRBT Awards 2014 Best Bank Award for Use October, of Technology for Financial 2014 Inclusion Best Bank Award for Electronic October, Payment Systems 2014

Finnoviti 2015 Analytics at SBI January, Award 2015

Performance Planning & January, Budgeting at SBI 2015

Global Finance Best Trade Finance Bank 2015 January - India 2015

CSI Excellence in Banking Financial Services & February, IT Awards 2014. Insurance 2015 Special Mention Award)

IBA Banking Best Technology Bank of February, Technology Awards the Year 2015 2015

Best Use of Data Best use of technology to enhance customer experience- shared with Union Bank of India Best use of digital and channels technology Best use of technology for leveraging technology in Training & Human resources, e-learning initiatives

Best Payment initiatives - Runner up

CIBIL Award Data Quality March, 2014-15 2015

5. BuSiNESS PRocESS RE-ENGiNEERiNG

During FY2015, SBI has made several improvements to its Business Processes as an on-going exercise for meeting the highest principles of excellence. These include the following:

- Productivity benchmarks for various processing centres

- Rightsizing of Networks and Zones for creating a structure that is more enabling & efficient.

- Cost Control, under Project Stationery Management, is being implemented by reducing and rationalising registers/ forms & introduction outsourcing model for stationery management.

- PPOs have been digitised for easy access, efficiency & productivity of the operating staff.

- Centralisation of cheque book printing is being implemented to reduce printing cost.

6. vIGILANcE

The essential function of the Bank''s Vigilance Administration is not only to check the non-compliance of systems and procedures and initiating suitable disciplinary action against serious transgressions, but also to devise and implement various preventive measures by reviewing the systems and processes to ensure higher effectiveness and least vulnerability.

The concept of vigilance as an investigative process and an exercise for punitive action has over time evolved to that of ''Vigilance for Corporate Growth'', the emphasis getting shifted from punitive vigilance to ''Preventive and Proactive Vigilance'' through an active participation of all concerned. Some of the Bank''s important preventive measures comprise the following:

- Preventive Vigilance Committee (PVC) Meetings are being held at the branches and the BPR outfits at quarterly intervals.

- Under Whistle Blower Scheme, our staff members are expected to advise appropriate authorities about irregular and unethical practices, if any, being indulged in by colleagues and even seniors.

- Suomoto investigations are conducted at fraud and complaint prone branches. The primary aim of such investigations is to find out non-adherence to the systems and procedures by the branch, which may lead to perpetration of fraud in future. Suitable corrective measures are initiated to stop irregular practices, if any, brought out in the report.

During FY2015, 1,109 cases of officers were taken up for examination under the vigilance category, compared to 1,024 cases during the previous financial year, and closed 1,126 cases in FY2015 in comparison to 1,063 cases closed during FY2014

7. OFFiCiAL LANGUAGE

The Bank made unprecedented efforts in the area of implementation of Official Language Policy and launched Mobile banking application in Hindi named ''STATE BANK KAHIN BHI'' during the fiscal year for their customers. This has the facility for making all type of banking transactions in Hindi on mobile phone. Within 6 months of its introduction almost 15 lakhs users have downloaded this app and got a rating on an average of 4.4 out of 5.

All the ATMs of the bank have the option of all the major regional languages, official language Hindi and English. Thus the customers can make transactions in their language of choice.

During FY2015, SBI launched a new corporate website in Hindi and all other websites of the bank including Corporate and internet banking websites in Hindi are being updated at regular intervals. This is another initiative of SBI in widening and strengthening its relationship with customers.

Bank''s Security Manual and RTI Manual are brought out in Hindi also. A compilation of training material in Hindi named ''Hindi Prashikshanavali'' has been brought out during the fiscal year to help staff members use Hindi in their day to day operations.

Notable progress has been made in the work of bringing Bank''s HRMS portal on Hindi platform in a phased manner. Standard E-mails emanating from HRMS department for more than 2,00,000 employees of the Bank every month have been started in bilingual i.e. Hindi and English.

AWARDS:

- Indira Gandhi Rajbhasha Shield 2014 (Honorable President of India Shri Pranab Mukherjee has given the shield on 14th September, 2014 at Vigyan Bhavan, New Delhi),

- RBI Hindi Journal Shield (Received from Governor, RBI, Dr. Raghuram G. Rajan), and - Best Bank Town Level Official Language Implementation Committee award which was given to our Lucknow, Siliguri and Thiruvananthapuram town committees by Honourable Governors of respective states.

8. CORPORATE SOCiAL RESPONSiBiLiTY (CSR)

Responsiveness to the needs of the society and responsibility to meet those needs is ingrained in the ethos of our Bank. CSR is not an isolated practice or initiative for the Bank but runs through its entire business paradigm. Our CSR activity touches the lives of millions of poor and needy across the length and breadth of the country. CSR is embedded in many of our business initiatives and has been practised in State Bank of India since 1973, under Community Services Banking covering various social, environmental and welfare activities. The Bank has a comprehensive Corporate Social Responsibility (CSR) Policy, approved by the Executive Committee of the Central Board in August 2011 and earmarks 1% of the previous year''s net profit as CSR spend budget for the year. The CSR budget for the FY2015 was Rs.109 crores. Against this budget, the actual CSR spend was Rs.115.80 Crores during FY2015.

focus areas of our csr activities are:

- Supporting education.

- Supporting healthcare.

- Supporting sanitation

- Livelihood creation.

- Assistance during natural calamities like floods/

droughts etc.

CATEGORY WISE Classification:

Exhibit 42: Category wise Classification

Category Amount(Rs in crores)

Supporting Healthcare 28.56

Supporting Education 41.20

Sanitation 13.64

Vocational training/Livelihood 24.24

Others 4.16

Natural calamities 4.00

Total 115.80

SUPPORTING EDUCATION

Technology is a vital part of the modern education. To support school education especially in the schools for the under privileged children, Bank has provided large number of computers across the country during FY2015 at a spend Rs.7.21 crores.

Infrastructure support by way of furniture, scientific instruments and other educational accessories and donation of large number of school buses/vans for the benefit of physically/visually challenged children and children belonging to economically weaker section of society have been provided by all our Circles.

SUPPORTING HEALTHCARE

To help in delivering quality healthcare, particularly to those belonging to underprivileged and economically weaker sections of the society and also to respond to the need of quick shifting of critical patients to hospitals, Bank has donated 79 ambulances and medical vans in rural and semi urban centres of various States and Union Territories. Further, Bank has donated various medical equipment to Eye Hospitals, Blood Banks and Cancer Hospitals. Major spend under healthcare was assigned to cancer detection & prevention.

SUPPORTING SANITATION

Participating in the National endeavour of Swachh Bharat Mission, Bank has supported reputed NGOs for construction of toilets in needy schools especially girls schools under ''Swachh Vidyalaya Campaign''. During 2014-15, Bank has donated Rs.13.64 crores for construction of 435 toilets in 398 schools in nine districts.

LIVELIHOOD CREATION

For skill building of the rural youth, Bank has provided infrastructure support of Rs.21 crores to 24 Rural Self Employment Training Institutes (RSETIs). At present 117 RSETIs are being run by the Bank, which is the highest number of RSETIs established by any Bank in the country. RSETIs of the Bank are rendering yeoman service in skilling the rural youth under CSR.

SBI YOUTH FOR INDIA

SBI Youth for India is a unique Indian rural fellowship Programme initiated, funded and managed by State Bank of India (SBI) in partnership with reputed NGOs of the country. It provides a framework for India''s bright young minds to join hands with rural communities,

empathizes with their struggles and connects with their aspirations. The selected fellows, mostly from the urban areas and from some of the top institutes/corporates work with experienced NGOs on challenging grass root development projects

ASSISTANCE DURING NATURAL CALAMITIES

Your Bank has always been at the forefront to help the States affected by natural calamities. During the FY2015, the Bank has lent its helping hand to the States of Jammu & Kashmir and Andhra Pradesh with a donation to the Chief Minister''s Relief Fund of the respective States to provide succour to the people affected by flood/cyclone.

HONOURS AND AWARDS: SCALING NEW HEIGHTS Of ACCOLADE For CSR

CSR activities of the Bank during the year FY2015 have received wide attention and appreciation. This year witnessed the highest number of awards (25 awards) for the Bank which includes its CSR achievements.

THE COVETED AWARDS INCLUDE:

- Golden Peacock Award for Sustainability, London.

- Golden Peacock Award for Corporate Social Responsibility, Mumbai

- Indo- American Chamber of Commerce Best Bank Award, Mumbai

- Global Finance Magazine, New York '' Best Emerging Markets Bank in Asia Pacific 2015'' Award - World Branding Forum, London ''Brand of The Year Award''

- BFSI '' Environmental Award, Singapore - CMO Asia Award for Best CSR Practices, Mumbai - Business World Magazine ''Socially Responsible Bank'' Award, Mumbai.

- Golden Globe Tigers Awards for CSR best Practices & Innovations in CSR. - Kuala Lumpur.

GREEN INITIATIVE

State Bank of India, in its constant endeavour to enhance the sustainability of the environment and cutting down on consumption of paper, has encouraged our shareholders to receive the Bank''s Annual Report in electronic form (eAR). In order to incentivize the switch over to electronic mode by the shareholders, it was decided by the bank to contribute a nominal sum to a charitable cause for each annual report sent to shareholders.

In recognition of the support and acceptance of eAR by shareholders in FY2014, the Bank has contributed Rs.3.09 crores, representing Rs.100/- for each eAR, to the SBI Children''s Welfare Fund, which is dedicated towards improving the lives of underprivileged and downtrodden children.

The Bank has also taken proactive steps to reduce the direct impact of its operations on the environment. From recycling programs to energy conservation in offices and branches, the Bank is working to reduce its operational footprints on the environment. Some of the measures introduced are:

- Wind based power projects commissioned and the power generated from these projects power Bank''s branches/offices in the States of Maharashtra, Gujarat and Tamil Nadu.

- Installed Solar ATMs, introduced Green Channel Banking (Paperless Banking)

- Initiated a pilot project to determine the Carbon footprint levels, which will help in determining the Bank''s resource consumption pattern and enable the Bank to take effective steps to implement various measures for sustainable usage in a cost effective way.

- The Bank has put in place SMART i.e. Specific, Measurable, Achievable, Realistic and Time bound Green Banking Goals, some of which have obtained star rating at all Local Head Office premises from Bureau of Energy Efficiency. Construction of ''Green'' buildings, waste water treatment plants, programs to sensitize staff on energy savings are some of the other initiative taken.

- The recycling plant housed at the basement of the SBI Bhavan converts the waste generated to compost which is used at State Bank Bhavan and State Bank residential quarters.

- Over 54,000 SBI group ATMs and Cash Deposit machines (CDMs) ensure reduced consumption of paper at Branches.

- Committed to financing of renewal energy projects (solar) to the tune of 75,000 crores over the next 5 years in view of GOI target for generation of 10,000 MW from renewable energy by 2019 subject to viability/feasibility and other laid down criteria pertaining to financing such projects.

- Tree plantation drive undertaken during monsoons across all Circles and more than 450,000 trees planted during last three years.

- Rainwater Harvesting Projects have been implemented in a number of Bank''s Buildings across the country.

As a part of mission to provide the entire gamut of financial services across India, the State Bank Group, with a network of 22,887 branches (including 6,554 branches of five Associate Banks), in addition to banking services, the Group, through its various subsidiaries, provides a whole range of financial services, including Life Insurance, Merchant Banking, Trustee Business, Mutual Funds, Credit Card, Factoring, Security trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

Associate Banks

The five Associate Banks of SBI had a Market share of 5.22% in deposits and 5.66 % in advances approximately as on 31st March 2015. Associate Banks together have 8,561 number of ATMs, which are shared by entire State Bank Group.

Exhibit 43: The performance highlights of the Associate Banks as on 31st March, 2015 (Rs.In crores)

Name of the Bank SBI Share of Total Agg. ownership Assets Deposits %

Investment %

State Bank of Bikaner 676.12 75.07 102302 83237 & Jaipur

State Bank of Hyderabad 367.55 100.00 154503 131194

State Bank of Mysore 628.63 90.00 79469 65058

State Bank of Patiala 1659.10 100.00 116709 91987

State Bank of Travancore 505.85 78.91 105595 90328



Total Op. Net CD Adv. Profit Profit Ratio

State Bank of Bikaner 71153 2104 777 85.48 & Jaipur

State Bank of Hyderabad 108753 2914 1317 82.89

State Bank of Mysore 53296 1331 409 81.92 State Bank of Patiala 80648 1599 362 87.67

State Bank of Travancore 69907 1372 336 77.39

CAR Gross Net Return % NPA NPA on % % Equity %

State Bank of Bikaner 11.57 4.14 2.54 12.92 & jaipur State Bank of Hyderabad 11.26 4.58 2.24 13.73

State Bank of mysore 11.42 4.00 2.16 9.40

State Bank of Patiala 12.06 5.41 3.88 5.41

State Bank of travancore 10.89 3.37 2.04 6.65

Awards and Accolades

- State Bank of Bikaner & Jaipur was awarded the "Social Banking Excellence Award: 2014: Public Sector Banks Category" by ASSOCHAM.

- State Bank of Hyderabad Bank has received "Best Bank (Public Sector) Award instituted by ABP News.

- State Bank of Mysore was awarded Best Bank Award for Tech Savvy - by Chamber of Indian Micro, Small &

Medium Enterprises, New Delhi

- State Bank of Patiala has received " Best Bank Award For New Initiative- Runner Up" from Chamber of Indian Micro Small and Medium Enterprises (CIMSME) New Delhi.

Subsidiaries

Exhibit 44: Non Banking subsidiaries

Name of the (Rs in crores) Subsidiary Company Ownership (StateBank % of Net Profit (Losses) interest)/crores Ownership for the FY2015

SBI Capital Markets Limited (Consolidated) 58.03 100 334.10

SBI DFHI Limited 139.15 63.78 92.55

SBI Mutual Fund Trustee Company Private Limited 0.10 100 0.94

SBI Global Factors Limited 137.79 86.18 (46.23)

SBI Pension Funds Private Limited 18.00 60 1.99

Name of the Subsidiary Company Ownership(StateBank % of Net Profit (Losses) interest)/crores Ownership for the FY2015

SBI Funds Management Private Limited 31.50 63 163.43

SBI Cards & Payment Services Private Limited 471.00 60 266.70

SBI Life Insurance Company Limited 740.00 74 820.04

SBI-SG Global Securities Services Private Limited 52.00 65 5.69

SBI General Insurance Company Limited 150.22 74 (105.33)

GE Capital Business Process Mgt. Services Private Limited 10.80 40 31.03

A. SBI CAPITAL MARKETS LiMiTED (SBiCAP)

SBICAP is India''s leading investment bank, offering financial advisory services to varied client base across three product groups - Infrastructure, Non- Infrastructure and Capital Markets (equity and Debt). These services include Project Advisory, Loan Syndication, M&A, Private Equity and Restructuring Advisory.

On a standalone basis, SBICAP posted a PBT of Rs.507.90 crores during the FY2015 as against Rs.388.89 crores during the FY2014 and a PAT of Rs.338 crores in FY2015 against Rs.265.47 crores in FY2014.

SBICAP and its 5 subsidiaries together, posted a PBT of Rs.509.59 crores during the FY2015 as against Rs.389.65 crores during the FY2014 and PAT of Rs.334.10 crores during FY2015 as against Rs.262.37 crores in FY2014.

SBICAP declared 430% dividend in FY2015 against Rs.260% in FY2014.

As a leader in its space, SBICAP has attained recognition in the form of some of the most prestigious awards in the industry namely,

Awards:

- IFR Asia Regional Awards High Yield Bond - Tata Steel''s US$1.5 billion dual -tranche senior notes.

- Asiamoney - Regional Capital Markets Awards - Best High Yield Bond- Tata Steel $ 1.5 billion dual tranche senior bond.

Rankings:

- No.1 Mandated Lead Arranger in Asia-Pac Ex-Japan Loans League Tables 2014, with Market share of 8.4% as per Bloomberg.

- No.1 Book Runner Asia-Pac ex-Japan Loans - market share 12.5% as per Bloomberg.

- No.1 India Loans Mandated Arranger (INR)- Markets Share 75.5% as per Bloomberg.

- In the India Loans MLA Tables SBI tops the list with market share of 57.3% as per Bloomberg.

- No.1 Book Runner Asia Pacific & Japan with market share of 14.6% as per PFI Thomson Reuters League table.

- Ranked No.1 MLA with 7.2% market share in the Dealogic Global Project Finance League Laos rankings 2014.

- No.1 MLA Asia Pacific Project Finance Loans (19.6%) as per Dealogic.

- No.1 Asian Project Finance Loans with 28.9% market share as per Dealogic.

1. SBIcap Securities limited (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Limited, besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in sales and distribution of other financial products like Mutual Funds, Tax Free Bonds etc.

SSL has over 100 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 7.80 lakhs clients in March, 2015 . The Company has booked gross revenue of Rs.114.01 crores during FY2015 as against Rs.79.02 crores in FY2014.

SSL was awarded appreciation certificates from National Stock Exchange of India for being a Top Performing Member in "Gold ETF mobilization" and "New Client Enrollment".

2. SBICAPS Ventures Limited (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Limited DFID (Department for International Development) has joined hands with the SBI group to sponsor the "Neev Fund" to be managed by SBICAP Ventures Limited SVL will act as the Asset Management Company.

The Funds will be invested in Infrastructure sectors such as renewable energy, water and sanitation, agricultural supply chain in 8 identified states of India (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh and West Bengal).

3. SBICAP (UK) LIMITED (SUL)

SUL is a wholly owned subsidiary of SBI Capital Markets Limited SUL is positioning itself as a relationship outfit for SBI Capital Markets Limited in UK and Europe. Relationships are being built with FIIs, Financial Institutions, Law Firms, Accounting Firms, etc to market the business products of SBICAP.

4. sbicap (Singapore) limited (ssgl)

SSGL, a wholly owned subsidiary of SBI Capital Markets Limited, which commenced business with effect from December 2012. Company has posted Net Profit of Rs.7.51 crores during FY2015 as against Net loss of Rs. 2.81 crores during FY2014.

5. sbicap trustee co. LIMITED (STcL)

SBICAP Trustee Co Ltd (STCL), a wholly owned subsidiary of SBI Capital Markets Limited, which commenced security trustee business with effect from 1st August 2008, has posted Net Profit of Rs.11.16 crores during FY2015 as against Rs.8.81 crores during FY2014. It has made available a facility for online creation of will.

B. SBI DFHI LIMITED (SBI DFHI)

SBI DFHI Ltd is one of the largest standalone Primary Dealers (PD) with a pan India presence. As a Primary Dealer (PD) it is mandated to support the book building process in primary auctions and provide depth and liquidity to secondary markets in G-Sec. Besides Government securities, it also deals in money market instruments, non G-Sec debt instruments, etc. As a PD, its business activities are regulated by RBI.

SBI group holds 72.17 % share in the Company. The Company posted Net Profit of Rs.92.55 crores in FY2015 as against Rs.60.70 crores in FY2014.

The market share of SBI DFHI was 3.03% amongst all market participants and 16.18% amongst Standalone PDs as on March, 2015.

c. SBI cards & payments services private LIMITED (SBicPSL)

SBICPSL, the stand-alone credit card issuing company in India, is a joint venture between State Bank of India and GE Capital Corporation, wherein SBI holds 60% stake.

SBICPSL is 3rd largest in the industry in terms of Cards in force with 15% market share with a base of 31.58 lakhs as at March, 2015 as compared to 15% market share with a base of 28.58 lakhs as at March, 2014. Company has 11.2% market share in terms of spends in FY2015 against 11% in FY2014.

The company''s net profit during the year FY2015 is Rs.266.70 Crores. Company has wiped out its accumulated losses and declared dividend in FY2015. SBI Card launched SytleUP Card, a new Co-branded Card in partnership with Fashion at Big Bazaar (A Future Group Enterprise) in December, 2014 and Mumbai Metro Card in March, 2015. SBI Cards has been awarded Gold in the category "Credit Cards" in the Readers Digest Trusted Brand Survey 2015.

d. Sbi Life Insurance Company

LIMITED (SBILIFE)

SBI Life Insurance Company Limited is a Joint Venture between State Bank of India and BNP Paribas Cardif in which SBI holds 74% stake. SBI Life has a unique multi- distribution model comprising Bancassurance, Retail Agency, Alternate, Group Corporate and Online Channels for distribution of insurance products.

Market share in New Business Premium (NBP) among all private players as on March, 2015 is 15.9%. SBI Life recorded 10.81% YOY increase in PAT to Rs.820 crores in FY2015 against Rs.740 crores in FY2014. The ''Assets under Management'' of SBI Life recorded a YOY growth of 21.99% to reach Rs.71,339 crores as on 31st March 2015. The company has been ranked No. 1 in the industry in (NBP) during FY2015 among all Private Insurance players.

Leveraging wider reach achieved through its 750 branch network, SBI Life has systematically brought large rural areas under insurance. The company has sold 22% of total policies in this segment in FY2015. A total of 65,745 lives covered by the company are from the underprivileged social sector. The Company has been substantially exceeding the minimum social and rural regulatory norms.

In FY2015, SBI Life reinforced its outreach initiatives in the realm of child welfare, across different parts of the country, in line with its approved CSR goals. The company has extended its support to nurture not only the educational aspirations of the children but also providing for their physical well-being. Significant measures have been taken to aid the provision of better infrastructure and healthcare facilities to remote areas of the country to ensure that all sections of the society gets an equal opportunity to sustain them in a healthy environment.

Awards and recognitions

- Best Training Provider of the Year.

- Best Practice in Learning Transfer for Improving Business Bottom Line.

- Plaque for commended Annual Report from Institute of Chartered Accountants of India (ICAI) for Excellence in Financial Reporting, 2013 -2014.

- 3 Awards at World HRD Congress 2015.

- Award for Excellence in HR through Technology .

- Award for Best HR Strategy in line with business .

- Award for Managing Health at work .

- FINNOVITI - Digital Innovation Award for Connect Life.

- Inspiring Wok Place Award 2014 in BFSI.

- ''Platinum Award for Excellence in Life Insurance'' by Skoch Financial Inclusion and Deepening Awards 2014.

- Indian Insurance Awards 2014 for ''Non-Urban Coverage-Life Insurance''.

- Best Life Insurance Company Award by Asia Banking, Financial Services and Insurance Excellence 2014.

- The Most Admired Life Insurance Company and the Best Life Insurance Company in the Private Sector, in the BFSI 2014 Awards.

- Most Trusted Private Life Insurance Brand by The Economic Times, Brand Equity and Nielsen Survey for four consecutive years.

- Golden Peacock National Training Award, 2014.

- Innovation Awards by BNP Paribas Cardif for ''Online Recruitment Solutions'' and for ''Creating New Markets using existing products: QROPS''.

These awards are a testimony to SBI Life''s quality and commitment towards customer centricity and professional excellence

While the focus at SBI Life during FY2014 was to revamp entire product portfolio to comply to revised IRDAI regulations; in FY2015, it shifted back to designing specific products to cater to the changing market requirements. To fill these gaps and to provide products as per customer needs, SBI Life introduced various products such as: SBI Life - Guaranteed Savings Plan, a guaranteed income plan; SBI Life - Smart Income Protect, life insurance savings plan with regular cash inflows:; SBI Life - Smart Champ Insurance, a child insurance plan and SBI Life - Suraksha Plus, a group term insurance plan.

E. SBI FUNDS MANAGEMENT PRiVATE LiMiTED (SBIFMPL)

SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 6th largest Fund House in terms of Average "Assets Under Management" and a leading player in the market with over 4 million investors.

SBIFMPL posted a PAT of Rs.163.43 crores in FY2015 as against Rs.155.57 crores earned during FY2014.

The average "Assets Under Management" (AUM) of the company during the quarter ended March, 2015 stood at Rs.72,942 crores with market share of 6.30%.

The Company has a fully owned foreign subsidiary namely SBI Funds Management (International) Private Limited, which is based at Mauritius and manages Off-shore Fund. SBI Funds Management (International) Private Limited is a 100% subsidiary of SBIFMPL.

f. sbi global factors limited

(SBIGFL)

SBIGFL is a leading provider of factoring services for domestic and international trade. SBI group holds 86.18 % share in the Company. Company''s services are especially suitable for MSME clients for freeing up resources locked in book debts. By virtue of its membership of Factors Chain International (FCI), the Company is able to ameliorate credit risk from export receivables under the 2 factor model.

Notwithstanding challenges in growing top line and improving asset quality in the prevailing economic slowdown, the Company registered an operating profit of Rs.49.78 crores during FY2015.

The company is adequately capitalized with AAA/ A1 ratings from reputed rating agencies for its borrowing programmes.

G. SBI PENSION FUNDS PRIVATE LiMiTED (SBIPF)

SBIPF is one of the three Pension Fund Managers (PFM) appointed by Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the National Pension System (NPS) for Central Government (except Armed Forces) and State Government employees.

SBIPF, a wholly owned subsidiary of the State Bank Group, commenced its operations from April, 2008. The total "Assets Under Management" of the company as on 31st March, 2015 were Rs.31,407 crores (YOY growth of 69 %) against Rs.18,624 crores in FY2014.

The Company maintained lead position amongst Pension Fund Managers in terms of AUM in both Government and Private Sectors.

The overall AUM market share in Private sector was 73 %, while in the Government sector it was 35 %. The company maintained its number 1 rank in both Private Sector and Government Sector.

H. SBI GENERAL INSURANCE COMPANY LIMITED (SBIGIc)

SBIGIC is a joint venture between State Bank of India and IAG Australia in which SBI holds 74% stake. The company''s strong focus is on disciplined pricing, fair and transparent claims management practices.

The cornerstone of the company''s growth aspiration will be focussed on the banca channel whilst selectively developing alternate channels and products that meet our business objectives.

Gross Written Premium (GWP) stood at Rs.1580 crores for FY2015. Company recorded 33% growth in GWP YOY against an industry growth of 9%.

Overall market share among all insurance companies (including Govt companies) increased from 1.5% to 1.9% and in 3.5% to 4.1% among private players.

Improved in market ranking - overall to 13th from 18th in FY 2014 and to 8th in FY2015 from 12th among the private players.

SBIGIC occupies 2nd position in "Personal Accident" at an overall industry level and 2nd position in Fire among Private Insurers.

awards and recognitions

- Winner - iCMG (inter Company Marketing Group) Excellence Award for Enterprise Architecture in 2014.

- Runner-up - IAIDQ Data Quality Asia Pacific Award 2014.

- iAAA rating from ICRA for claim paying ability.

I. sbi sg global securities

services private limited (SBISG)

SBISG, a joint venture between State Bank of India and Societe Generale, was set up to offer high quality custody and fund administration services to complete the bouquet of financial services on offer by a financial conglomerate.

SBISG commenced commercial operations in Custody in May 2010 and Fund Accounting Services in Sept 2010.

Company''s Net profits in Rs.5.69 crores in FY2015 as against Rs.0.21 crore in FY2014.

The Assets Under Custody as on 31st March, 2015 rose to Rs.169,587 crores as against Rs.1,15,701 crores on 31st March 2014, while the Assets Under Administration were at Rs.79,090 crores in FY2015 as against Rs.62,901 crores in FY2014.

Responsibility Statement

The Board of Directors hereby states:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2015, and of the profit and loss of the bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities;

iv. that they have prepared the annual accounts on a going concern basis;

v. that the internal financial controls had been laid down, to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

vi. that proper system had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Acknowledgement

During the year, Shri Hemant G. Contractor and Shri S. Vishvanathan, Managing Directors, retired on attaining superannuation on 30th April, 2014. Shri Deepak I. Amin nominated u/s 19(d) by the Government has resigned from the Board w.e.f. 8th May, 2014. Sarvashri S. Vankatachalam, D. Sundaram, Parthasarathy Iyengar and Thomas Mathew retired from the Board w.e.f. 24th June, 2014 consequent upon completion of their term. Shri G. S. Sandhu retired from the Board w.e.f. 10th November, 2014. Shri J. B. Mohapatra retired from the Board w.e.f. 21st November, 2014 consequent upon completion of his term. Shri A. Krishna Kumar, Managing Director, retired from the board w.e.f. 30th November, 2014 consequent upon superannuation.

Shri Sanjiv Malhotra, Shri M. D. Mallya, Shri Sunil Mehta and Shri Deepak I. Amin were elected as Shareholder Directors under section 19(c) w.e.f. 26th June, 2014. Shri B. Sriram and Shri V. G. Kannan were appointed as Managing Directors under section 19(b) w.e.f. 17th July, 2014 on the Board. Dr. Hasmukh Adhia was nominated as Director under section 19(e) on the Board w.e.f. 11th November, 2014.

The Directors place on record their appreciation of the contributions made by the respective outgoing Directors, namely, Shri Hemant G. Contractor, Shri S. Vishvanathan, Shri S. Venkatachalam, Shri D. Sundaram, Shri Parthasarathy Iyengar, Shri Thomas Mathew, Shri J. B. Mohapatra, Shri G. S. Sandhu and Shri A. Krishna Kumar, to the deliberations of the Board. The Directors welcome the new Directors Shri Sanjiv Malhotra, Shri M. D. Mallya, Shri Sunil Mehta, Shri Deepak I. Amin, Shri B. Sriram, Shri V. G. Kannan and Dr. Hasmukh Adhia on the Board.

The Directors also express their gratitude for the guidance and co-operation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank.

For and on behalf of the Central Board of Directors

Date: 22nd May 2015 Chairman

---

Mar 31, 2013

Financial Performance

Profit

The Operating Profit of the Bank for 2012-13 stood at Rs. 31,081.72 crores as compared to Rs. 31,573.54 crores in 2011-12 registering a marginal decline of 1.56%. The Bank has posted a Net Profit of Rs. 14,104.98 crores for 2012-13 as compared to Rs. 11,707.29 crores in 2011-12 registering a growth of 20.48%.

While Net Interest Income recorded a growth of 2.40%, the Other Income increased by 11.73%, Operating Expenses increased by 12.33% attributable to higher staff cost and other expenses.

Net Interest Income

The Net Interest Income of the Bank registered a growth of 2.40% from Rs. 43,291.08 crores in 2011-12 to Rs. 44,331.30 crores in 2012-13. This was due to higher growth in the advances and investment portfolios.

The gross interest income from global operations correspondingly rose from Rs. 1,06,521.45 crores to Rs. 1,19,657.10 crores during the year registering a growth of 12.33%.

Interest income on advances in India registered an increase from Rs. 77,309.15 crores in 2011-12 to Rs. 85,782.26 crores in 2012-13 due to higher volumes. The average yield on advances in India has declined from 11.05% in 2011-12 to 10.54% in 2012-13. Interest income on advances at foreign offices has grown by 26.17%.

Income from resources deployed in treasury operations in India increased by 13.82% mainly due to higher average resources deployed. The average yield, which was 7.51% in 2011-12, has increased to 7.54% in 2012-13.

Total interest expenses of global operations increased from Rs. 63,230.37 crores in 2011-12 to Rs. 75,325.80 crores in 2012-13. Interest expenses on deposits in India during 2012-13 recorded an increase of 20.88% compared to the previous year, whereas the average level of deposits in India grew by 14.3%. The average cost of deposits has consequently increased from 5.95% in 2011-12 to 6.29% in 2012-13.

Non-Interest Income

Non-interest income stood at Rs. 16,034.84 crores in 2012-13 as against Rs. 14,351.45 crores in 2011-12 registering an increase of 11.73%.

During the year, the Bank received an income of Rs. 715.51 crores (Rs. 767.35 crores in the previous year) by way of dividends from Associate Banks/ subsidiaries and joint ventures in India and abroad.

Operating Expenses

There was an increase of 8.29% in the Staff Cost from Rs. 16,974.04 crores in 2011-12 to Rs. 18,380.90 crores in 2012-13. Other Operating Expenses registered an increase of 19.89% mainly due to increase in expenses on rent, taxes and lighting, advertisement & publicity, law charges, postage, telegrams & telephones, insurance and miscellaneous expenditure.

Operating Expenses, comprising both staff cost and other operating expenses, have registered an increase of 12.33% over the previous year.

Provisions and Contingencies

Major amounts of provisions made in 2012-13 were as under:

- Rs. 961.29 crores write back from provisions for depreciation on investments, excluding amortization of premium on Held to Maturity category (as against Rs. 663.70 crores provided towards depreciation on investments in 2011-12).

- Rs. 5,953.88 crores towards Provision for Tax, excluding deferred tax creation of Rs. 107.97 crores (as against Rs. 6,320.09 crores in 2011-12 excluding deferred tax reversal of Rs. 455.93 crores).

- Rs. 11,367.79 crores (net of write-back) for non- performing assets (as against Rs. 11,545.85 crores in 2011-12).

- Rs. 749.61 crores towards Standard Assets (as against Rs. 978.81 crores in 2011-12). Including the current years provision, the total provision held on Standard Assets amounts to Rs. 5,289.58 crores.

Reserves and Surplus

- An amount of Rs. 4,417.86 crores (as against Rs. 3,516.98 crores in 2011-12) was transferred to Statutory Reserves.

- An amount of Rs. 19.17 crores (as against Rs. 14.38 crores in 2011-12) was transferred to Capital Reserve Fund.

- An amount of Rs. 6,453.26 crores (as against Rs. 5,536.50 crores in 2011-12) was transferred to other Reserve Funds.

Table 1: Key Performance Indicators

Indicators SBI SBI Group

2011-12 2012-13 2011-12 2012-13

Return on Average Assets (%) 0.88 0.91 0.89 0.89

Return on Equity (%) 16.05 15.94 16.49 15.97

Expenses to Income (%) (Operating Expenses to Total Net Income) 45.23 48.51 53.51 56.35

Book Value per share (Rs.) 1214.78 1394.79 1540.64 1769.19

Basic Earnings Per Share (Rs.) 184.31 210.06 241.55 266.82

Diluted Earnings Per Share (Rs.) 184.31 210.06 241.55 266.82

Capital Adequacy Ratio (%) (Basel-I) 12.05 11.22 11.84 11.07

Tier I 8.50 8.23 8.30 8.10

Tier II 3.55 2.99 3.54 2.97

Capital Adequacy Ratio (%) (Basel-II) 13.86 12.92 13.68 12.82

Tier I 9.79 9.49 9.65 9.46

Tier II 4.07 3.43 4.03 3.36

Net NPAs to Net Advances (%) 1.82 2.10 1.81 2.07

Assets

The total assets of the Bank increased by 17.28% from Rs. 13,35,519.23 crores at the end of March 2012 to Rs. 15,66,261.04 crores as at the end of March 2013. During the period, the loan portfolio increased by 20.52% from Rs. 8,67,578.89 crores to Rs. 10,45,616.55 crores. Investments increased by 12.41% from Rs. 3,12,197.61 crores to Rs. 3,50,927.27 crores as at the end of March 2013. A major portion of the investment was in the domestic market in government securities.

Liabilities

The Banks aggregate liabilities (excluding capital and reserves) rose by 17.24% from Rs. 12,51,568.03 crores on 31st March 2012 to Rs. 14,67,377.36 crores on 31st March 2013. The increase in liabilities was mainly contributed by increase in deposits and borrowings. The Global deposits stood at Rs. 12,02,739.57 crores as on 31st March 2013 against Rs. 10,43,647.36 crores as on 31st March 2012, representing an increase of 15.24% over the level on 31st March 2012. The borrowings increased by 33.21% from Rs. 1,27,005.57 crores at the end of March 2012 to Rs. 1,69,182.71 crores as at the end of March 2013 mainly attributable to borrowings from RBI in India and borrowings & refinance outside India.

I CORE OPERATIONS

I. 1. Customer Service

Our vision statement unambiguously spells out the centricity of the customer in the Banks business strategies and operations. A multi-tiered structure of committees constantly review existing services and suggest improvements. Important issues raised by these Committees and action taken thereon, as well as analysis of the consolidated data for customer grievances for all Circles are placed before the Customer Service Committee of the Board every quarter, to identify common systemic and policy issues that require rectification.

The Bank has a well defined and documented Grievance Redressal Policy which provides for:

- A dedicated Customer Care Cell

- Banks Web based Complaint Management System (CMS) has been redesigned and launched as a single online Grievance Lodging and Redressing System for the Bank. Customers can lodge their complaints through various channels including written complaint at branch, by calling at the toll free number of Banks Contact Centre 1800 425 3800 / 1800 11 22 11, online through Banks website www.sbi.co.in, sending SMS message UNHAPPY to number 8008 202020 etc. All complaints are lodged through CMS and are acknowledged with a unique ticket number immediately on lodging. Bank has mandated and has been able to redress a majority of the customer grievances within a maximum period of three weeks of receipt, as against the time limit of 30 days prescribed in the BCSBI Code. All ATM related complaints of Bank customers are redressed within the RBI-prescribed 7 days.

- While the Bank strives to achieve the highest standards in customer service, it has also put in place a Board approved Compensation Policy to compensate the customer financially in the unlikely event of any slippage in services extended. The Policy ensures that the aggrieved customer is compensated without having to ask for it.

- Over 70% of the recommendations of the Damodaran Committee have already been implemented.

- Suitable structure has been put in place at the Branches, Regional Business Offices, Local Head Offices, Administrative offices and at the Corporate Centre of the Bank for handling requests and appeals under the RTI Act 2005, Consumer Forums, etc.

Customer Friendly Initiatives

During 2012-2013, in the backdrop of slowing investment/consumption/net exports, constrained food production, high inflation, distress in several industry and infrastructure sectors-textile, chemicals, iron and steel, food processing, construction, telecom- major initiatives were taken by your Bank towards catalyzing investment & growth, to facilitate the flow of credit to critical sectors of the economy including agriculture, infrastructure, micro, small & medium enterprises, housing, exports, and with a view to reducing customer distress/pain points & raising levels of customer satisfaction. These initiatives include:

- Pricing concessions

- Interest rates Base rate was twice reduced during the year from 10% to 9.75% as on 20/9/2012, and then again to 9.70% as on 4/2/2013, the lowest amongst all banks and so pegged, to bring relief to all borrowers, particularly SME units, home loan borrowers, who continued to enjoy the lowest home loan interest rates, and commercial real estate accounts, which were aligned with the prevailing retail housing loans in terms of interest rates.

- Guarantee fees were absorbed by the Bank, both for exporters( ECGC fees) and fees payable by MSE units to CGTMSE for guarantee cover on collateral free loans upto Rs. 1 crore.

- Process innovations

- Relationship management platform was strengthened across business verticals-Accounts Management teams for corporates, premier banking services for high networth customers, relationship managers for SMEs (ME&SE)

- The number of processing cells(RACPCs/ SMECCs), supported by loan origination software, were increased and revamped, for quicker processing of loans

- Touch-points with customers were expanded, through opening of branches and increasing Customer Service Points, BC outlets in remote areas

- Cluster models were introduced at all currency chest branches for efficient cash management at semi-urban/rural areas

- A dedicated wing was created in all processing cells to monitor NPA accounts

- Product changes

- We have a great CASA franchise and savings bank accounts form the bulwark. The savings bank account is normally the first on-board facility availed by a customer and the referral point for all future services from the Bank. To preserve and enhance the value of our savings bank offering, your Bank introduced the following initiatives during the year :

- Minimum balance in savings account was done away with.

- The penalty on non-maintenance of Average Quarterly Balance stands withdrawn.

- The inter-core transfer transactions have been made free, and cash deposit minimum charges were reduced from Rs. 25 to Rs. 10.

- Introduction of Personal Accident Insurance Policy for all savings bank account holders at a nominal rate received tremendous response.

- Proactively, providing CTS-2010 compliant multi- city cheque- books benefited all our customers

- Unfixed Deposits scheme applicable to term deposits of 6 months was extended to term deposits upto one year.

- A new tractor loan scheme with relaxations in eligibility, margin, security, interest & upfront fee was launched. Also a revised KCC scheme was rolled out for the benefit of farmers. Relaxed collateral security norms for all agri loans upto Rs.1 lac was introduced.

- SBI loan scheme for Vocational Education & Training was launched while loan amount for studies abroad was raised to Rs. 30 lacs

- Technology upgrades

- SBI through CMP Centre was the first Bank to use NPCI Aadhar Payment Bridge System (APBS) for transferring LPG subsidy based on Aadhar Number.

- The Bank launched an Online Savings Bank Application facility and e-RD,TDR/STDR accounts which evoked enthusiastic response from the customers. Issuance of TDR/STDR through ATMs have been operationalised.

- Centralised printing and mailing of current account/oD/Cash credit statements, housing loan interest certificates, deposit accounts certificates to enhance customer convenience, were initiated during the year

- The Bank issued a series of new plastic cards for the convenience of their target groups, e.g State Bank Business debit card for corporate customers in two variants-Pride & Premium, Insta Deposit cards enabling traders & service providers to quickly deposit cash, State Bank Virtual Card for retail customers

- State Bank MobiCash Easy, a mobile wallet, was introduced during the year

- E-challan cum return for collection of Employees Provident fund, through branches and corporate internet, commenced during the year.

I.2. BUSINESS GROUPS

A. GLOBAL Markets OPERATIONS

Global Markets Unit manages the Banks rupee liquidity, compliance with reserve requirements and investment portfolio of the Bank besides offering a wide range of foreign exchange and hedging products to the customers. It also offers portfolio management services to large retirement funds. It constantly endeavors to keep liquidity at the optimum level while maximizing the returns.

During the year the Reserve Bank of India reduced Cash Reserve Ratio by 0.75% and Statutory Liquidity Ratio by 1%. The Bank therefore had ample liquidity during the year. This offered the Bank opportunities to invest in short term money market instruments like Commercial Papers (CPs) and Certificate of Deposits (CDs). Bank invested over Rs. 75,000 Crores in CDs and CPs at an average spread of 65 to 75 basis points (BPs) over applicable yield on Treasury Bills, thereby earning additional interest income.

The yield on Government securities declined during the year responding to the Repo rate cuts of 100 BPs by the RBI and moderation in inflation. Yield on the benchmark 10 year Central Government securities declined from 8.63% in April 2012 to 7.99% by 31st March 2013. This reduction in yield offered opportunities for churning the SLR portfolio of the Bank.

We booked more than Rs. 200 Crores from active management of the portfolio. Despite a fall of 64 BPs in yield on Government Securities, the return on SLR portfolio was only marginally lower by 5 basis points, because of dynamic rebalancing of the portfolio.

As the yields were in a declining trend, the Bank decided to increase duration of the portfolio. The Bank purchased long dated Securities of over Rs. 35,000 Crores of Central and State Governments. The Bank also invested in high yielding corporate bonds aggregating to more than Rs. 10,000 Crores during the year. The gross corpus of funds under the management of Global Markets was close to Rs. 4 lac Crores as on 31st March 2013.

Equities witnessed a turnaround this year led by improved economic situation in the USA, reduced stress in Eurozone, pro-reform measures of the Indian Government as well as rate cuts by the RBI. While the Bank remains invested in multiple strategic positions, Global Markets increased proprietary trading in Nifty stocks. The Bank also used Mutual fund schemes for liquidity management and higher returns. The Bank made a profit of about Rs. 600 Crores from Equity and Mutual Funds.

The Bank continued to explore opportunities in the area of private equity and venture capital fund investments. During the year, investments of Rs. 100 Crores were made in different venture capital funds. Bank also partially exited from one of the private equity investments during FY13 resulting in a profit in excess of Rs. 50 Crores at an IRR of more than 45.25%. Due to favorable valuations and market conditions, Bank also exited from another strategic investment resulting in a profit of Rs. 65 Crores. The Bank also participated in the primary market and disinvestment programme of the Government of India through Offer For Sale (OFS) route by investing about Rs. 1,300 Crores.

Global Markets provides foreign exchange solutions to the customers in all currencies for managing their currency flows and hedging risks through options, swaps, forwards and bullion services. Given the large presence across the country, the Bank provides a world class technology platform to seamlessly process currency flows between its customers through branches and the dealing room. This is part of our continuous endeavour to provide enhanced services to our customers. The Treasury Marketing outfits complement this by engaging with customers to provide them with inputs about markets and suggest products to suit their requirements. The Bank earned income of over Rs. 1600 Crores from covering the customer flows in foreign exchange, hedging, gold, and proprietary trading, registering an increase of 18%. Global Markets also manages FCNR(B) corpus of the Bank and provides funds for Export Finance in Foreign Currency and FCNR(B) loans.

The Bank was also ranked number one in the "Best for FX options" and "Best for FX Products and Services" categories and number two in the "Best for FX Research & Market Coverage" category in the same poll. These help us to consistently improve our service to our esteemed customers.

The Bank provides portfolio management services to an array of retirement funds in the country consistently giving better returns. The Portfolio Management Services section, with an AUM of over Rs. 2,38,000 Crores, has consistently outperformed private sector peers in generating returns for the EPFO funds. Last year, the bank was adjudged the best fund manager for EPFo.

B. CORPORATE BANKING GROUP (CBG)

The Banks Corporate Banking Group consists of three Strategic Business units viz. Corporate Accounts Group, Transaction Banking Unit and Project Finance & Leasing SBu.

B.1. Corporate Accounts Group (CAG)

CAG is the dedicated SBU for handling the large credit portfolio of the Bank. The SBU has Offices in 6 regional centers viz. Mumbai, Delhi, Chennai, Kolkata, Hyderabad and Ahmedabad headed by General Managers. The business model of CAG is centered around the Relationship Management concept and each client is mapped to a Relationship Manager who spear-heads a cross-functional Client Service Team. The Relationship strategy is anchored on delivering integrated and comprehensive solutions to the clients, including structured products, within a strict Turn- Around-Time. The principal objective of the strategy is to make SBI the first choice of the top corporates thereby deepening the wallet-share and improving the Return on Capital Employed. A sustained Account Planning exercise with rigorous review by senior management sets the pace for the Relationship Management in CAG.

Table 2: Business Performance of CAG (Rs. in cr)

Facility Mar-12 Mar-13 YoY Growth

Fund Based (O/s) 125286 175831 40%

Non Fund Based (Vol) 337486 409477 21%

While the Fund Based outstandings of CAG constitute 16% of total credit portfolio of the Bank, CAG also handles about 59% of the domestic forex business of the Bank. During the year, CAG handled several high value deals for clients such as Essar Oil, HDFC, Hindalco Industries, Essar Steel, Power Grid Corporation, DVC, JSW Energy etc.

In an environment of depreciating Rupee, several CAG clients prefer to borrow in foreign currency. Significant International business is thus originated from CAG clients like PSU Oil Majors and groups such as Tata, Reliance, Essar, Adani, JSW, etc. In the highly competitive area of Acquisition Funding also, CAG has registered a strong presence through deals such as Hindujas acquisition of Houton International Inc, USA and B C Jindal groups acquisition of Exxon Mobils global BOPP business.

The Asset quality of CAG remained well under control with the Gross NPAs at 0.57% of total advances. About 87% of CAGs portfolio is investment grade with 40% carrying the highest rating from the External Credit Rating Agencies.

In the backdrop of the robust growth of CAG, it is proposed to open additional Offices in major centres beginning with Mumbai and Delhi. All CAG Offices are now headed by General Managers in line with the rising business profile of the Group and to facilitate interaction at senior level with due regard to the high profile of the CAG clients. Keeping in view the critical importance of the delivery platform, the incumbency of the Chief Operating Officer has also been upgraded to the level of Dy. General Manager in all CAG units.

B.2. Transaction Banking Unit (TBU)

TBU oversees Cash Management Products, Trade Finance and Supply Chain (Dealer / Vendor) Finance and has expanded its activity during the last three years.

- Cash Management Product (CMP)

Collection services in the Bank are now offered through 1219 authorized branches located at 722 Centres. Besides usual cheque and cash collections, Doorstep Banking for cash / cheque pickup and collections for Public Issues (IPO/Bonds), are being handled by CMP. Payment services comprising Dividend Warrants, Multi City Cheques, IOIs and e-payment are extended through all branches. CMP Centre has integrated the State Government Payments Systems with the Core Banking Solution of the Bank providing Centralized Payment Solutions to the State Governments in their ambitious National e-Governance Project (NeGP). SBI was the first Bank to use NPCI Aadhar Payment Bridge System (APBS) for transferring LPG subsidy based on Aadhar Numbers.

- e-Trade SBI, a web-based portal, to enhance customer comfort and provide easy access to trade finance services, by enabling customers to lodge Letters of Credit, Bank Guarantees and Bills Collection/ negotiation requirements online from any corner of the world has been well received, with 1326 Corporates registered under e-Trade SBI as on 31.03.2013 and more than 11000 transactions per month through e-Trade platform.

- e-VFS ( Electronic Vendor Financing Scheme) & e-DFS ( Electronic Dealer Financing Scheme) are fully automated and secured products, designed to ensure efficient management of working capital cycle of the corporates and sustained growth and profitability of business partners.

- Financial Institutions Business Unit (FIBU), a dedicated vertical created for capturing potential business opportunities from financial institutions, has been able to bring on board 15 Insurance Companies, 26 Mutual Fund Companies, 45 NBFCs and 15 Banks.

B.3. Project Finance & Leasing SBU (PFSBU)

PFSBU deals with the approval and arrangement of funds for large projects in infrastructure sectors like power, telecom, roads, ports, airports, other urban infrastructure as also other non-infrastructure projects in sectors like metals, cement etc., with certain threshold on minmum project cost.

Table 3 : Business Performance of PFSBU (Rs. in cr.)

2011-12 2012-13

Project Cost 109293 166299

Project Debt 84858 88033

Sanctioned Amount 24976 24119

Syndication Amount 18160 33454

As on 31.03.2013, t he portfolio of infrastructure projects under implementation with PFSBU involves Power projects with aggregate capacity of 52,862 MW; Telecom Projects serving 303 million subscribers; Road projects covering 5,386 kms; new Ports to handle 40 MTPA multi-purpose cargo and 1.2 million TEU of container capacity; Metro project in Hyderabad besides a host of projects in steel, cement, Urban Infra, CRE etc. During the year, a total (FB + NFB) of Rs.12,884 crores (Rs.15,410 crores in FY 12) were disbursed to these projects.

Table 4: major deals during 2012-13:

Project Details

Tata Steel Odisha Integrated Steel Plant of 6 mio TPA capacity.

ONGC Greenfield Petro-Chemical Plant Petro-additions of 1100 KTPA of ethylene and 400 KTPA of propylene.

Jindal Power Setting up Thermal Power Plant of 1200 MW capacity.

Videocon Term loan refinance and SBLC Industries for Mozambique Oil operations. The deal won the Business World Magna best structured deal of the year award.

The Bank has constituted a panel of 21 eminent Consultants who are former CEOs/ Directors of leading PSUs with domain expertise in various important sectors. The expert panel has significantly enhanced the capability of PFSBU in evaluating the techno- economic feasibility of projects in critical sectors like Power, Oil Refining, Metals, Fertilizers, Telecom etc.

C. mid corporate group

Mid Corporate Group (MCG), through its 13 regional offices at Ahmedabad, Bangalore, Chandigarh, Chennai (2), Hyderabad, Indore, Kolkata, Mumbai (2), New Delhi (2) and Pune, has 60 branches as on 31.03.2013. During the year, the advances grew from Rs.1,70,442 crores to Rs.2,04,853 crores.

Looking to the expansion and growth in business, both in number and volumes, an additional Chief General Manager (CGM) was posted in October 2012 at the Mid Corporate Group, Corporate Centre. The distribution of work between the 2 CGMs is based on geographical lines, with one looking after Northern and Southern regions and the other Eastern and Western regions - assisting the DMD & Group Executive in handling the increased number of MCROs/MCG branches and the growing complexities of business. Similarly, an additional General Manager has been posted at Delhi, Mumbai and Chennai Regional Offices during 2012-13, with clear allocation of MCG branches and attendant responsibilities. The doubling of General Managers at these centres has provided customers with greater access to senior officials, and has also resulted in improved credit delivery - with greater thrust on attracting good quality new business. During the year, the incumbency of 16 Mid Corporate branches was upgraded from Assistant General Manager (AGM) to Deputy General Manger (DGM). With these branches now being headed by DGMs, instead of AGMs earlier, the customers would have more effective resolution of their credit and other related problems.

Account Management Team (AMT) Model, with manageable number of accounts in each team, has been implemented at all branches (214 AMTs), for better credit delivery and focused attention to individual accounts. In the AMT set-up, both pre and post-sanction formalities are handled by the same team - consisting of Relationship Manager, Credit Analyst and Service Officer, which helps in having a holistic view of the requirements of customers as also the underlying risks.

The MCG held several conclaves, essentially as brain- storming sessions with the key functionaries to understand and analyse the trends of business. The frank and detailed exchange of views between the top executives and the operating officials on the ground, in these conclaves, were extremely useful in planning business growth and asset management.

As a result of a concerted drive for selecting good quality assets by making pricing and other terms more attractive for top rated customers, the total percentage of assets above investment grade grew from 64.26% as on March 2012 to 68.31% as on March 2013.

The Group also assisted companies in India to acquire assets / companies overseas and provides support for such expansion plans, including by way of external loans to overseas subsidiaries/JVs (backed by LoCs) through the International Banking Group. Over the years, the Group has helped many such acquisitions by Indian companies in USA, Europe, Australia, Africa, etc. Simultaneously, a conscious attempt was made to improve the asset quality through intense engagement with promoters of weak/stressed accounts. Consequently, the Non Performing Assets (NPAs) of MCG declined from Rs.19,777 crores as on December 2012 to Rs.18,443 crores as on March 2013, and NPAs as a percentage of total advances were not only contained but also significantly brought down in the last quarter of 2012-13.

The Mid Corporates have been more severely affected by the down-turn in economy - leading to deterioration in asset quality. The processes of appraisal/sanction, follow-up and supervision were, therefore, significantly beefed up. An additional position of General Manager (Restructuring) has also been created in the Group at Corporate Centre, in view of the recent increase in restructuring cases - both CDR and non-CDR. With these additions, the DMD has greater support from senior officials to look after customer relationships.

D. NATIONAL BANKING GROUP

Table 5 : NBG Business Performance (Rs. In cr.)

As on 31.3.2011 31.03.2012 31.03.2013 YTD GROWTH Level Level Level Absolute (%)

Segmental 7,91,836 9,12,848* 10,48,136 1,35,288 14.82 Deposits

Segmental 3,75,037 4,29,509* 4,96,394 66,885 15.57 Advances (non-food)

(* This figure is excluding accounts transferred to MCG during FY 2012-13)

In terms of Business volumes, Branch Network, and Human Resources, the National Banking Group (NBG) is the largest Business Vertical of the Bank. The Group has five strategic Business Units, comprising of Rural Banking (RBU), Personal Banking (PBBU), Real Estate Habitat & Housing Development (RE, H & HD), Small & Medium Enterprises (SMEBU), and Government Business (GBU). National Banking Groups share in the total business of the Bank as on 31st March 2013 is 95.05% in total domestic Deposits, and 56.70% in total domestic Advances.

National Banking group, as on 31st March 2013, comprised of 14,733 branches out of 14,816 total domestic branches, which are controlled by 14 Local Head Offices.

With a view to enhance customer experiences at our branches, we have air-conditioned all our branches, and improved ambience of our branches. With the recruitment of a large number of Assistants, Branch expansion programme also got an impetus, and during the year we increased our Branch count by 719.

Table 6: Branch Expansion

As on Rural Semi- Urban Metro Total Urban

31.03.12 5382 3995 2502 2218 14097

Branches added during 304 170 122 123 719 FY 2012-13

31.03.13 5686 4165 2624 2341 14816

New branches were opened with very good ambience, air-conditioning, digital display facilities and with adequate staffing.

To improve operational efficiencies , we have added 2 more Networks, 7 more Administrative Offices and 81 Regional Business Offices during the FY 2012-13.

ATM Network: State Bank of India has the largest ATM network in the country, which we have expanded further during the year, to provide better ATM facilities to the customers. We have also improved upon uptime of ATMs.

Table 7: ATM Network

As on No. of ATMs ATM No. of Availability transactions at uptime ATMs (in lacs)

31.03.12 22141 95.15% 23811

31.03.13 27175 96.42% 29324

To further improve upon customer satisfaction and to minimize their hardship during bunched holidays, we have been suo-moto offering increased working hours/ additional working days.

D.1 RURAL BUSINESS UNIT

- FINANCIAL INCLUSION:

- Bank has set up 38,480 BC Customer Service Points, through alliances both at national and regional level.

- SBI is offering various technological-enabled products, through Business Correspondents (BC) channel, such as, Savings Bank, RD, STDR, remittances & OD facilities.

- Opened 2.03 crores small accounts with simplified KYC.

- Bank has covered 12,931 FI villages (population >2000) and 7,600 FIP villages (population <2000).

- Transactions volume through BC Channel has grown 2.4 times during FY12-13 at Rs.13,033 crores over FY 11-12.

- Direct Benefit Transfer (DBT) Scheme successfully rolled out. SBI has Lead responsibility in 28 out of 121 DBT pilot districts. SBI has successfully completed 1.31 lac transactions amounting to Rs. 8.77 crores as Sponsoring Bank, in addition to handling 0.41 lac transactions amounting to Rs. 7.08 crores as Receiving Bank.

- Around 99% households covered & 9.85 lac accounts linked with Aadhaar in 43 pilot districts.

- Under Urban Financial Inclusion, 5,629 BC outlets have been set up in Urban/Metro centres to cater to the requirements of migrant labourers, vendors, etc. 157 lac remittance transactions for Rs. 6,962 crores were registered during FY 13.

- 5.45 lac SHGs were credit linked with credit deployment of Rs. 5,600 crores. Our market share in SHGs is 23%.

Multiple IT enabled channels for Financial Inclusion include:

- Kiosk Banking - The Banks own technology initiative, operated at internet enabled PC (Kiosk) with bio-metric validation at 20,178 CSPs, covering 83 lac customer enrolments, has been rolled out in 31 states and 479 districts.

- SBI Tiny Card - About 14 lac customers have been enrolled during FY13 (cumulative more than 76 lac customers).

- Mobile Rural Banking - Banks own technology on mobile platform introduced. This technology works on even very inexpensive mobile handsets.

- Cell Phone Messaging Channel-This cost effective model, working on low-cost simple mobile phones and well secured through PIN / signature based security has been rolled out in 12 states across 50 districts and covered 2,025 CSP outlets.

Table 8: Business Performance of Agri-Advances

Rs. in cr.

Particulars Level

31.03.2012 31.03.2013

Number of farmers covered 99,80,156 1,11,69,524

Agri Priority Advances 1,07,256 1,24,834

Direct Agri Advances 86,281 1,08,584

Direct Agriculture Advances 12.99% 14.24% (%of ANBC) Benchmark 13.5%

Direct Agri Advances crossed Rs. 1,00,000 crores, the only Bank to have crossed this landmark, covering more than 1,11,00,000 farmers and surpassed the Benchmark of 13.5% of ANBC. The Bank has also achieved an all time high growth of Rs. 21,408 cr under Agri segmental advances during FY13. YOY growth works out to 25%.

- Bank has opened the largest number- 111 RSETIs for empowering rural youth to take up self- employment.

- Credit Flow to Agriculture

The Bank has disbursed loans aggregating Rs.63,936 crores in FY13 surpassing the annual GOI target of Rs.60,000 crores and 11.89 lakh new famers were brought into the banks fold during the year.

* New Products launched:

- The revised Kisan Credit Card scheme provides for comprehensive short term credit limit, assessed for 5 years with 10% step up every year, with inbuilt post harvest/household/consumption requirement, maintenance expenses of farm assets, Crop Insurance, Personal Accidental Insurance Scheme (PAIS), asset insurance and investment credit. In addition, loan account is operated through multi-delivery channels (PoS and ATMs)using the State Bank Kisan Cards.

- The new Tractor Loan Scheme was rolled out to cater to emerging needs with relaxations in eligibility norms, margin, security, coupled with competitive interest rates and EMI mode of repayment.

- Special campaigns were launched to accelerate agri-business growth:

Swarna Dhara Campaigns for agri-gold loans was continued, with quarterly competitions and garnered Rs. 14,345 crores business.

Tractor Carnival launched from 1st Sep 12 to regain the market share, resulted in a business growth of Rs. 328 crores (8083 tractor loans).

- Growth enablers:

- Corporate and Partnership Tie-ups: Bank has entered into 14 new corporate tie-ups for driving growth , major being PepsiCo (KCC), Rallis India (KCC), ITC Ltd (KCC) and National Bulk Handling Corporation (Warehousing receipt financing).

- Special interest concessions: Special interest concessions ranging from 1.5% to 3.5% were extended to promote loan growth in high value agriculture activities like horticulture, minor irrigation, seed processing, warehousing, rural godowns, fishery, dairy, poultry, dealers in agri inputs, farm machinery etc.

- Relaxed collateral security norms upto Rs.1.00 lac for all agri loans and Rs.3.00 lac for loans with recovery tie up arrangements have been leveraged to improve quality Agri-Business.

- Bonding with Farmers:

During the year 209 new villages were adopted under "SBI Ka Apna Gaon Scheme" for overall development taking the total to 1,272. 373 new Farmer Clubs were formed for fostering continued relationship with the farming community taking the total to 10,648.

- Regional Rural Banks:

Table 9: Overview of Regional Rural Banks

Particulars Level as on

31.03.2012 31.03.2013

No. of RRBs 18 15

States covered 16 15

Districts covered 129 138

Branches 3180 3380

Deposits (Rs.in crores) 29491 33379

Advances (Rs. in crores) 17833 20681

CD Ratio 60.47 61.95

Profit after tax (Rs. in crores) 320 386

As on 31.03.2013, SBI has 15 sponsored RRBs, which operate in 138 districts of 15 states and have a network of 3380 branches. During FY2012-13, four RRBs viz.,Sharda Gramin Bank, Rewa Sidhi Gramin Bank, Nainital Almora Kshetriya Gramin Bank &Rushikulya Gramin Bank, sponsored by other Commercial Banks, have amalgamated with SBI sponsored RRBs and three RRBs sponsored by the Bank viz; Parvatiya Gramin Bank, Samastipur Kshetriya Gramin Bank &Vidisha Bhopal Kshetriya Gramin Bank have amalgamated with RRBs, sponsored by other Banks. All the RRBs are operating on Core Banking platform and are leveraging technology in electronic banking services such as NEFT, RTGS, ATM linked KCC and ATM, to provide better customer service. The RRBs are endeavouring to increase the size and business volumes by implementing financial inclusion.

- Rural Self Employment Training Institutes (RSETIs) Table 10:

Performance of RSETIs Rs. in cr.

Particulars 31.03.2012 31.03.2013

Number of RSETIs 106 111

States/ UT covered 19 24

Persons trained 1,11,049 1,43,190

Persons settled 45,285 56,630

RSETIs offer free, unique and intensive short term residential self employment training programmes with free food and accommodation, designed specially to empower rural youth. Bank has set up 111 RSETIs as on 31.03.2013 across the country. The SBI- RSETIs in aggregate conducted 5371 training programmes, trained 1,43,190 candidates and 56,630 trainees are settled under self employment/wage employment.

- Other Highlights

- Under Prime Ministers Programme for the welfare of Minorities and implementation of Sachar Committee recommendations, against GOI stipulated target of 15% of the total priority sector lending (PSL) to Minority Communities, the Bank has achieved a level of 16.77% of the total PSL as on 31.03.2013.

- 169 Financial Literacy Centres (FLCs) were set up with the main objective of creating financial awareness, importance of savings, and advantage of savings with banks, other facilities provided by banks and benefits of borrowing from Banks

- The Bank has extended advances to the tune of Rs. 77,019 crores as on 31.03.2013 to the weaker sections, which is 10.14% of ANBC against the Benchmark of 10% set by Reserve Bank of India.

- The Bank has opened 172 new branches in under-banked/unbanked areas in Minority Community Districts ( MCDs) taking the total number of such branches to 3,438 as on 31.03.2013.

D. 2 Personal Banking Business Unit Table 11: Domestic Business performance of PBBU

(Rs. in cr)

Particulars 31.03.2012 31.03.2013 YTD Growth (%)

Deposits 5,99,313 6,94,033 15.80

Advances (Retail 79,688 90,227 13.23 excluding Housing Loans)

CASA 2,82,047 3,29,699 16.89

Domestic Deposits have grown by Rs. 94,720 crores with a growth of 15.8% and Advances by Rs. 10,539 crores with a growth rate of 13.23% as on 31 March 2013. CASA Deposit has grown by 16.89% and CASA Ratio as on 31.03.2013 is 47.5%.

Table 12: Growth in Savings Bank Accounts

31.03.2012 31.03.2013

No. of New Savings 227 lacs 286.60 lacs Bank Accounts opened

Other highlights include:

- Western Union transactions are being offered at all the branches and have contributed Rs. 8.11 crores to other income up to 31st March, 2013. During the year the Bank also commenced Money Gram transactions.

- Our Bank has been designated as the point of Presence (POP) for conducting business under the New Pension System (NPS), an initiative of the Government of India, and 3879 branches across all Circles have been registered for conducting business under the New Pension System. Our Bank has also developed a Corporate Model and has registered 08 Corporates including State Bank of India. Bank is also registered as an Aggregator for promotion of registrations under NPS Lite which is a variant of NPS.

- Our Bank is Self-Certified Syndicate Member for ASBA (Application Supported by Blocked Amount), as per SEBI guidelines, which is being offered through all our branches in India.

- SBI has enabled 3000 ATMs across the country for Visually Challenged Persons to carry out ATM transaction through voice guidance. These ATMs can be accessed by visually challenged custmomers of all banks.

- NRI Services:

- During the year 2012-13, NRI Deposits have grown by Rs. 13,922 crores (22%) and reached a level of Rs. 77,185 crores as on 31.03.2013. Advances to NRIs recorded a growth of Rs. 442 crores (25%) during the financial year 2012-13, the level reached being Rs. 2,240 crores as on 31.03.2013. NRIs have invested in the schemes of SBIMF and SBI Life to the tune of Rs. 696 crores during the year.

- SBI was the principal sponsor of Pravasi Bharatiya Divas, a flagship event for NRI Diaspora from all over the world, organized by the Ministry of Overseas Indian Affairs, which was held in Kochi (Kerala) from 7th- 9thJanuary 2013.

- To achieve the status of the preferred NRI Bank, we have opened 16 new NRI Branches in India during the current financial year, taking the number of NRI branches to 69. These branches have an excellent ambience along with dedicated team of officials to serve NRI customers.

- SBI has started offering FCNR (B) deposits in 4 additional currencies viz. Swiss Franc (CHF), New Zealand Dollar (NZD), Swedish Krona (SEK) and Danish Krone (DKK) since September 2012.

Table 13: Corporate & Institutional Tie-Ups:

Particulars 31.03.2012 31.03.2013 Growth during FY 2012-13 Absolute %

Defence Salary Package and 19,21,107 22,27,930 3,06,823 15.97 Para Military Salary Package accounts

Other Salary Package 42,54,397 48,51,168 5,96,771 14.03 Accounts

Total No of Salary Package 61,75,504 70,79,098 9,03,594 14.63 Accounts

CASA (in Rs. crores) 16,221 21,262 5,041 31.08

The various Salary packages together have resulted in taking the total salary account Customer base to 70.79 lacs, i.e. a growth of 9.03 lac new accounts during the period 01.04.2012 to 31.03.2013. CASA in these accounts has gone up from Rs. 16,221 crores to Rs. 21,262 crores during this period. The incremental CASA of Rs. 5,041 crores represents 11.58 % of the incremental Personal Banking CASA of the Bank.

* Auto Loans

SBI Auto Loans maintains its retail market leadership in car loan financing. The Auto Loan portfolio has grown by 35.48% during FY 2012- 13 in spite of near flat growth of passenger car market. The Bank has emerged as a clear market leader in Auto Loans with a market share of 22.25% amongst ASCB as on Mar2013.

The Bank is currently offering car finance on "On Road Price" of the car, with the longest repayment period of 7 years, no pre-payment penalty, no advance EMI and at competitive interest rates. A new product "SBI Combo Loan Scheme" has been launched during the year for financing a car and a two-wheeler together (combined limit).

SBI has taken up various joint promotional activities with major car manufacturers like Maruti, Hyundai, Tata Motors, Ford, Mahindra & Mahindra, Toyota, and Mercedes during the financial year 2012-13.

* Education Loans

SBI Education Loans has grown by 9.43% during FY 2012-13. SBI has a total exposure of Rs. 13,751 crores as on Mar 2013.

SBI Loan Scheme for Vocational Education and Training was launched in July 2012 and loans upto Rs. 1 lac are given under this scheme.

Maximum Loan Amount for Studies Abroad has also been increased to Rs. 30 lac from the previous limit of Rs. 20 lac.

In order to provide financial assistance to more students opting for higher education, the SBI Scholar Loan scheme has been extended to 114 institutes . The maximum loan amount under this scheme has also been enhanced to Rs. 30 lac.

* Personal Loans

The Personal Loans Portfolio, which is the second largest in the Personal Banking Segment, has grown by Rs. 2,860 crores during FY 2012-13. It includes Loan against Securities, Loans against Properties, Gold Loan, etc. Of these, Xpress Credit and Loan against Time Deposits are two major products and have grown by Rs. 1,002 crores and Rs. 1,217 crores during FY 2012-13 respectively. The most notable growth has been in Gold Loan portfolio of Rs. 480 crores (96.94%) during FY 2012- 13.In order to further increase our market share in the Loan against Deposit Scheme, we have reduced our rate of interest from 0.75% above the TD rate to 0.50% above the TD Rate, which is one of the lowest in the industry.

The Delivery Systems for loan products have been under constant focus. Retail Assets Centralized Processing Centres (RACPCs) have been opened up across the country, based on the volume, geographical spread and product focus to ensure uniformity in processing of all Retail loan proposals. This ensures smooth delivery to the customer and with the support of Loan Originating Software (LOS) that currently takes care of Credit- related risks, will enable customers, in future, the facility to track their application online. As on 31.03.2013, there were 60 RACPCs and 70 Retail Assets and Small & Medium Enterprises City Credit Centres (RASMECCs).

Some of the steps taken to reduce NPAs are:

- Risk Scoring Models have been developed for all P-Segment Loans on the basis of statistical models for objective assessment. Recently, the Auto Loan scoring model has been made tighter and more emphasis is now being given to Net Income of an individual. (For eg: The minimum income criterion for Auto Loans has been raised from Rs. 1 lac to Rs. 2.5 lac p.a.).

- Loan Origination Software (LOS) usage (100% usage at RACPCs), and its integration with the Risk Scoring Model (RSM) and CIBIL check to take care of many process related risks.

- In view of the rising NPAs in Education Loans, PAN card of the student and co-borrower/ guarantor has been made mandatory for all Education Loans. For existing Education Loans, a one-time exercise is planned to obtain the PAN card numbers. Instructions have been issued to all operating units to send Notices to borrower, co-borrowers and guarantors in case of default in Education Loans.

- Immediate action under SARFAESI, including seizure of cars for eligible cases.

- Instructions are in place for granting no further Retail Loans (except Education Loans) to the employees of those companies whose accounts are classified as NPAs.

D.3 Real Estate, Habitat & Housing Development (RE, H&HD)

State Bank of India, the Most Preferred Home Loan Provider with the largest Home Loan portfolio in the Banking Sector and market share of over 26% amongst All Scheduled Commercial Banks (ASCBs) :

Table 14: Performance in Home Loans

(Rs. in cr.)

Particulars March, 2012 March, 2013

Levels 1,02,739 1,19,467

YTD Growth 12,826 16,728

YTD Growth (%) 14.41 16.30

During FY 2012-13, several initiatives were taken by the Bank to give an additional thrust to its Home Loan portfolio. Some of the important initiatives in this regard are as under:-

- The Maximum Repayment Period permissible under NRI Home Loans Scheme has been increased from 25 years to 30 Years to align the same with the Maximum Repayment Period under domestic Home Loans Scheme, imparting it with greater flexibility.

- The ceiling on financing Home Interiors/ Furnishings, as part of the project cost, has been revised upwards from Rs.3 lac to Rs.6 lac subject to the amount expended towards Home Interiors/ Furnishings being restricted to 10% of the Project Cost and the Maximum Loan Amount adhering to the stipulated Loan to Value (LTV) Ratio.

- Home Loan Interest Rates were reduced substantially w.e.f. 7thAugust, 2012 by reducing the spread over the Base Rate. With subsequent downward revisions in the Base Rate itself, the effective Interest Rate on Home Loans ultimately stood reduced to 9.95% p.a. for loans upto Rs.30 lac and 10.10% p.a. for Home Loans above Rs.30 lac as on 4thFebruary, 2013 rendering them very competitive and the lowest in the market.

- The premium of 0.25% p.a. applicable on Interest Rates under Commercial Real Estate (CRE) Home Loans has been waived to align the same with the prevailing Interest Rates on normal Home Loans.

- With a view to extend the benefit of lower rates of interest (both Fixed and Floating Interest) to our existing Home Loan customers paying relatively higher interest rates, an option to switch-over their loans to the current lower interest rates was made available on payment of a fee of 0.56% of the outstanding w.e.f. 21stSeptember, 2012.

- A Special Takeover Campaign was launched from 1stSeptember, 2012, assuring prospective customers, of a fixed Processing Fee of Rs. 1000/- on Home Loan Takeovers, irrespective of the loan amount. The Campaign was extended till 31stMarch, 2013 and provided our Bank with a competitive edge in the overall pricing of our Home Loan products.

- Term Assurance (Loan Protection) Cover (optional) is available to our Home Loan customers from SBI Life Insurance Company Ltd through RiNnRaksha /Smart Shield/Saral Shield. The Bank provides additional loan for payment of the premium of the above policies on the same terms as those applicable to the underlying Home Loans.

D.4 SME BUSINESS UNIT (SMEBU)

During the financial year 2012-13, the advances under SME Business Unit has registered year on year growth of 12.45%. The advances figures of SME Business Unit as on 31..03.2013 are as under.

Table 15: Business Performance in SME

(Rs. in Cr.)

Particulars 31.03.2012 31.03.2013 Growth (% increase)

Advances 1,63,745 1,84,128 20,383

(12.45)

No of 12.84 12.97 0.13 accounts (in lakhs)

- Relationship Banking :

Under single window approach, the Bank is offering Relationship Banking to SME Entrepreneurs. The strength of Relationship Managers (Medium Enterprises) was augmented to 566 as on 31.03.2013 and mapped to ME units with credit limits Rs.1.00 crores and above across the country. The advances portfolio under Relationship banking as on 31.03.2013 is Rs. 1,03,619 crores. For units having credit limits between Rs. 10.00 lacs to Rs. 1.00 crores, Relationship Managers (SE) have been posted to improve credit flow to Micro and Small Enterprises.

- SME Credit City Centres (SMECCC):

SMECCCs, rolled out during 2004-05 as a part of BPR initiative, are centralized loan processing centres for sanction of SME loans upto credit limit of Rs. 1 crore. At present 78 SMECCCs and 58 RASMECCs across the country are functional. To further revamp the structure and process of SMECCCs to enable consolidation of the Banks position in the SME universe in the country a major exercise has been initiated in association with renowned consulting group. The revamped process will be in place by September 2013.

- Specialized SME Branches :

To provide specialized services to SME Entrepreneurs, 400 branches having predominant share of SME advances in their portfolio are being branded as "SME BRANCH" to define the identity of these branches with a common nomenclature and to develop these branches as centres of excellence for SME loan delivery.

- Credit Flow to Micro and Small Enterprises under CGTMSE:

Bank is extending collateral free lending up to Rs. 1.00 crores to MSE sector under guarantee of CGTMSE. Additionally, to provide relief to these units Bank has decided to absorb the guarantee charges payable to CGTMSE. The outstanding under the guarantee scheme of CGTMSE is as under:

Table 16: Performance in CGTMSE (Rs. in cr.)

Particulars As on As on Growth 31.03.2012 31.03.2013 (% Increase)

Outstandings 3,716 7,236 3,520 (% to (2.27) (3.92) (94.7) total SME advances)

No of 1.13 1.72 0.59 customers (52.2) (in lakhs)

- Project Uptech:

Bank is providing consultancy support to SMEs for catalyzing Technology Upgradation in SME clusters with the objective of making the clusters more competitive through increase in productivity and quality and reduction in costs. Since inception of the initiative 1600 units have benefitted in 28 clusters. Presently, three projects, Steel Structural Fabrication & Boiler Component (Trichy), Fabrication Engineering (Jamshedpur and Nagpur) are going on.

- Entrepreneurship Development programme :

Bank has formulated a scheme for conduct of EDPs on an ongoing basis, in association with reputed national level EDP training institutes. To begin with, 4 centres were identified for conduct of EDPs on pilot basis during the year, viz. Ahmedabad (in association with EDI), Hyderabad (in association with NI-MSME), New Delhi (in association with NIESBUD) and Bhubaneswar (in association with SBI-RSETI, Jharsuguda). The target groups for the EDPs were mainly final year students of engineering / management colleges and educated youth. The total number of participants was 120. It is proposed to have EDP programmes on regular basis in all the Circles across the country during FY 2013-14.

- Supply Chain Finance:

Leveraging its state-of-art technology, SBI is focusing on further strengthening its relationship with the Corporate World by financing their Supply Chain partners. Towards this SBI introduced Channel Financing Products with the following features:

- Web based platform, fully integrated worth Corporate Enterprise Resource Planning Software

- Real time online transfer of funds 4 Automated settlement of funds

- Customized MIS

- Centralized hassle free processing All the product offerings under Channel finance are designed to ensure efficient management of working capital cycle and sustained growth and profitability of business partners and the entire Supply chain is taken care under the scheme, which is fully automated, secured and robust. The products offered under channel financing are Electronic Dealer Financing Scheme (e-DFS) and Electronic Vendor Finance scheme (e-VFS). Under Supply Chain Finance bank has tied up with 65 Industry majors with across all Industry Verticals like Auto, Oil, steel, Power, fertilizer, FMCG and Textile.

Table 17: Performance in Supply Chain Finance

(Rs. in cr.)

Particulars As on As on Growth 31.03.2012 31.03.2013 (% Increase)

Outstandings 2,190 4,781 2,591

(118.3)

No of 813 1766 953 customers (117.2)

- Cash Management

The Bank has introduced cash deposit machines to facilitate deposit of cash into their account by customers themselves by swiping their SBI ATM cum Debit card. To enable SME customers also to deposit cash into their CA/CC account through CDMs, State Bank SME Insta Deposit Card was launched during the year. With Insta Deposit Card, SME customers like traders & service providers are able to quickly deposit their cash into their accounts without waiting in the queue. As on March 31, 2013, the Bank had issued 1,66,477 insta deposit cards to SME customers, showing the growing popularity of the facility. The number of CDMs installed was 665.Similarly,the cash pickup facility of collecting cash at customers doorsteps was introduced for SME customers in August 2011 Marketing campaigns were launched during the year to popularize the scheme among SME customers. The growth in usage of this facility has been as under:

Table18: Cash Pick up Facility (Rs. in cr.)

Particulars As on As on Growth 31.03.2012 31.03.2013 (% Increase)

No of 88 484 396 customers (450) availing the facility

Amount of 153.20 2,246.75 2,093.55 cash pick-up (1348)

Table 19: Performance in Government Business

Year Turnover Commission Market (in cr.) (in cr.) Share (%)

2011-12 2536900 2008.23 58.50

2012-13 2862053 1778.20 58.12

- While the Bank retained its leadership in Government Business ,there was a minor dip in Agency Commission due to downward revision in rates by RBI with effect from 1st July, 2012. The adverse impact on Agency Commission was contained by marketing of various products, customized to suit the requirements of the Government.

- The Bank brought more State Governments and taxes under the ambit of Cyber Treasury and paid special attention to opening Public Provident Fund Accounts and Pension Accounts.

- E- Governance Projects of Central and State Governments which are bringing a paradigm shift in the way Government business is conducted are being leveraged for customers convenience bringing about more efficiencies of processes.

- 2.83 Lakhs new Pension Accounts were opened, bringing the tally to 34.74 Lakhs Pension Accounts being serviced efficiently through 14 Centralized Pension Processing Cells set up in various parts of the country. Pension details are being sent to the pensioners on their mobile numbers. Besides this, pensioners can lodge their complaints online, on our website, or seek clarifications at our contact Centre.

- The Bank is ushering in the era of hassle free fee collection on behalf of various Departments, Union Ministries and state Governments. An income of Rs. 41 crores was generated from this product during the current financial year.

- The Bank is actively participating in the "SAAKSHAR BHARAT" Mission of the Union Government and has opened 1, 23,343 accounts for dispensation of funds upto Gram Panchayat level in 22 states across the country. The Bank has also sponsored the SAAKSHAR BHARAT celebrations at Red Fort, Delhi and Lucknow, the Capital city of Uttar Pradesh.

- State Bank of India is the exclusive Banker to the Ministry of External Affairs (MEA) and is collecting the Passport Fees from Passport Sewa Kendra (PSK) in the country.

- Bank is proud to be associated with Central Government Projects like Government e-Payment Gateway (GePG). By integrating with GePG portal, the Bank is now enabled to make electronic payments to employees/ vendors of Central Government across the country.

- Products like "Rail Shakti", "E-Auction" and "Imprest Cards" have been very well received by Railway Authorities and are expected to gain momentum during FY 13-14.

- The Bank has since been authorized to collect RTI fee online which will be helpful in generating substantial revenue as Agency Commission.

E INTERNATIONAL BANKING

Operation of Foreign Offices

The asset level of foreign branches rose by 18%, from USD 35.826 bn in March 2012 to USD 42.146 bn in March 2013. During FY13, net customer credit grew by 17% from USD 26.681 bn to USD 31.148 bn, customer deposits grew by 11%, from USD 12.075 bn to USD 13.374 bn. Net profit rose by 10% to USD 435.64 mn.

Table 20: Business Performance of Foreign Offices

(IN USD MIO)

Mar-12 Mar-13 YOY YOY Growth Increase in %

Net Assets 35826.46 42146.10 6319.65 17.64

Net Customer Credit 26681.23 31148.53 4467.31 16.74

Net profit 395.63 435.62 39.99 10.11

The number of foreign offices increased from 173 as on 31st March 2012 to 186 as on 31st March 2013 spread across 34 countries. The offices comprised of 51 branches, 7 Representative Offices, 107 offices of the six foreign banking subsidiaries and 21 other offices.

Table 21: Break -Up of Foreign Offices

FY-12 New Offices FY-13 opened during the year

Branches/SO/Other Offices 58 10 68

Subsidiaries/JV (6)

Offices 103 4 107

Rep Offices* 8 -1 7

Associates/ Managed 4 0 4 Exchange Cos/Investments

Total 1731 131 186

*Tianjin Representative office was Upgraded to full fledged Branch

Resource Management

Banks Foreign Offices maintained comfortable liquidity position during the fiscal, despite volatile market conditions. In July 2012, Bank successfully priced a USD 1.25 Bn Bond issue, 144A/ Reg S transaction maturing in August 2017. Bank received overwhelming response across investor classes for the Bond, despite very difficult market conditions. Bilateral loans of different maturities worth USD 540 Mn were also raised during the fiscal. At Singapore, where the Bank has 7 branches and 24 ATMS, including ATMs at Changi Airport terminals 1, 2 & 3, retail deposits saw a 21% growth year-on-year. Our UK operations also scaled up its retail presence to achieve a retail deposit growth of 41% in the fiscal.

Remittance

Inward remittances grew from Rs. 61,457 crores in FY12 to Rs. 69,812 crores in FY13, clocking a growth of 14%. The Bank had a tie-up with 27 exchange companies and five banks in Middle-East countries for routing remittances through SBI. During the year, new remittance product SBI Express Remit-Canada was launched exclusively for Canadian Dollar remittances. An Outward remittance product RemXout was launched for SBI Internet Banking customers.

E-2. Domestic Operations Merchant Banking

The Bank retained its premier position as Mandated Lead Arranger and Book Runner for syndicated loans in Asia Pacific (excluding Japan but including Australia) for the sixth consecutive calendar year, in FY13.

During FY-13, Bank acted as the Mandated Lead Arranger in 17 deals aggregating USD 6.442 Bn for several leading Indian corporates like IOCL, REC, NPCL, MRPL, Reliance Industries and Vedanta Resources Plc.

Table 22: Syndicated Loan Deals

No of Deals Amount (in USD bn)

FY-12 14 4.76

FY-13 17 6.29

Apart from this, foreign currency term loans aggregating USD 3.68 bn were extended to Indian corporates on a bilateral basis. Further, 10 loans amounting to USD 229.04 mn were acquired through secondary market.

Fee income of USD 89.88 mn was earned from foreign currency term loans concluded during the year through syndication / bilateral deals.

Global Link Services (GLS)

Global Link Services (GLS), a specialized outfit, caters to centralized processing of Export Bills collection, Cheque collection and online inward remittance transactions.

During the financial year 2012-13, GLS (on behalf of domestic branches) handled 104,262 export bills and 74,566 foreign currency cheque collections aggregating USD 15.27 bn. In addition, it handled 7,047,064 online inward remittance transactions amounting to USD 6.45 bn received from all over the world in 39 currencies

Correspondent Relations

The Bank maintains correspondent banking arrangement with 429 reputed International Banks to extend seamless services to varied clients. These correspondent Banks are located in 118 countries. The Bank also has 1,765 Relationship Management Application (RMA) arrangements with SWIFT, facilitating speedier flow of financial messages.

Country Risk and Bank Exposures

The Bank has in place a Country Risk Management Policy in tune with RBI guidelines. The policy outlines robust risk management model with prescriptions for Country, Bank, Product and Counter party exposure limits. Both Country-wise and Bank-wise exposure limits are monitored and reviewed on a regular basis. The exposure ceilings and classifications are moderated in line with the dynamics of their risk profiles. Periodical corrective steps are initiated to safeguard the Banks interests.

I.3. CORPORATE STRATEGY AND NEW BUSINESSES

Emerging business areas, including tech-based products, are developed and launched by a dedicated department headed by a Dy. Managing Director. Progress on some of their key initiatives is detailed hereunder:

- Debit Cards:

Debit Card spends of State Bank Group crossed Rs. 15,000 crores for FY 2012-13 which constitutes over 20% of total Debit Card spends in the industry. The Bank has been actively promoting Debit Card usage at Point of Sale/for e-Commerce. For the festive season from 16- Oct-2012 to 15-Nov-2012, the Bank ran a promotional Campaign called "Cracker of an Offer" where the Bank along with its subsidiary, SBI Card, tied up with a number of merchant partners to offer attractive discounts for State Bank Debit and Credit Card usage at their outlets/websites. With a view to increasing Debit Card activation, the Bank also ran special promotional offers for its Debit Cardholders with leading merchants of different merchant categories in the industry in co-ordination with SBI

Card.

The Bank launched "State Bank Business Debit Card" for its corporate customers in two variants "Pride" and "Premium" on the occasion of Banks Day 2012. Till 31-March-2013, more than 86,000 Business Debit Cards have been issued. This product is being launched in Associate Banks shortly.

- Prepaid Cards:

Banks range of products include popular Rupee Prepaid Cards like Gift Card, General Purpose Prepaid Card like eZ-Pay Card and Foreign Travel Card catering to various payment needs of the customers.

- Foreign Travel Card:

Foreign Travel Card, now a CHIP based EMV Compliant Card, is available in eight currencies, US Dollar (USD), Great Britain Pound (GBP), Euro, Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yan (JPY), Saudi Riyal (SAR) and Singapore Dollar (SGD), providing safety, security and convenience to overseas travellers. Corporate variants of SBFTC have been introduced to cater to the needs of Corporates. Sales for FY 2012-13 were to the tune of to USD 66.92 million.

- eZ-Pay Cards

eZ-Pay Cards are aligned with most of the social schemes of State and Central Governments in addition to salary payments by Corporate entities, thus reaching millions of households. Sales for FY 2012-13 were to the tune of to INR 931.92 crores. Co-branded Prepaid Cards for various Zones of Indian Railways and Federation of Freight Forwarders Association in Indian (FFFAI) were rolled out during FY 2012-13.

- Gift Cards

Gift Cards remain the preferred option to customers to gift the freedom of choice to their loved ones. Customers can create Gift Cards online. Sales registered during FY 2012-13 was INR 77.44 crores. State Bank Achiever Card, a re-loadable corporate incentive Card with a validity of 10 years for disbursement of incentives/awards was rolled out during March-2013.

- Green Channel Counter (GCC)

The Green Channel Counter facility is made available in 7052 branches. On an average, the daily transactions routed through GCC are more than 1,00,000.

- Self Service Kiosk (SSK)

As on 31.03.2013, SSKs have been installed in 965 branches. On an average, SSKs are recording more than 30,000 transactions on a daily basis.

- Green Remit Card (GRC)

GRC, a remittance card, was introduced on 02.01.2012 mainly to take care of the large number of non- home cash deposit transactions at our branches. A cardholder can swipe the card at Green Channel Counter or in Cash Deposit Machines and remit money to the beneficiary whose account number is mapped to the card. Once the transaction is complete, both the remitter and beneficiary get confirmation through SMS on their mobile phone. The Bank has issued 6,23,623 cards resulting into 8,08,830 cash deposit transactions as on 31.03.2013.

- Mobile Banking & Wallet

Presently, the Bank has a market share of around 65% in the transaction volume and over 36% in the transaction value . During the FY, financial transactions to the tune of Rs.1933 Crores were done through the service resulting in a total income of Rs.4.67 crores. As on February 2013 SBI is the market leader in terms of registered user base and number of transactions. Efforts are in place to maintain the leadership position in this space.

The Bank has launched a full KYC mobile wallet under the brand name "State Bank MobiCash". A variant of the same "State Bank MobiCash Easy", a wallet which does not require completion of KYC formalities was launched in Mumbai, Delhi and Chandigarh on the 31st December, 2012. So far, around 14,500 wallets have been issued.

- Merchant Acquiring Business (MAB)

In order to create a comprehensive electronic infrastructure in the country, activate our more than 136 million debit cards on POS terminals, increase visibility and to tap the huge potential available in the market, Merchant Acquiring business is being conducted by the bank. With around 70000 terminals in the market, Bank is already the largest player amongst the Public Sector Banks and 4th largest Acquirer in India. Bank has already entered into Corporate tie-ups with many prominent players including top educational institutions and hospitals.

- Private Equity

The Banks foray into the Private Equity space began in 2009 with a Joint Venture with the Macquarie Group of Australia. The Fund raised US $ 1.2 billion, making it one of the largest India focussed Private Equity Funds. The Fund has made 8 investments in sectors such as Airports, Telecom, Roads, Renewable and Thermal Energy. The Fund made investments to the extent of 90% of the Capital Committed.

The Joint Venture with State General Reserve Fund of the Sultanate of Oman, named the Oman India Joint Investment Fund, a US $ 100 million Fund has made three investments of Rs.202 crores, in sectors such as defense electronics and industrial explosives. With this, the Fund has made investments to the extent of 40% of the Capital Committed.

The Bank signed a preliminary non-binding MoU with Russian Sovereign Wealth Fund- Russian Direct Investment Fund (RDIF) for setting up US $ 2 billion Private Equity Fund to invest / facilitate investments into bilateral co-operation projects, bilateral trade related projects or companies, privatization or globalization opportunities, projects particularly with India-Russia context.

I.4. NPA MANAGEMENT

Credit Policy and Procedures

This year was characterized by sharp increase in non- performing assets in the first three quarters of the year, which abated only in the fourth quarter. While a major reason for such high NPA generation could be the overall slowdown in economic growth and other macro economic factors, it has also brought to attention the need for arranging our credit policy and practices to achieve the following objectives:

a. To analyse and address the reasons for relatively higher NPAs in comparison to the other banks,

b. Reasons for our relatively low share in better performing business segments.

The Credit Policy and Procedure Committee of the Bank, headed by Chairman, comprises of all heads of business groups/verticals like CFO, IBG, NBG, MCG, CAG and also Treasury. The forum of CPPC was activated and 17 meetings were held during the year and 72 policy changes were approved.

Details of the Credit Committees Structure are as below: At Corporate Centre:

a) Executive Committee of Central Board (ECCB)

b) Corporate Centre Credit Committee (CCCC)

c) Whole Banking Credit Committee (WBCC-I) International Division Credit Committee (IDCC)

d) Whole Banking Credit Committee (WBCC-II) International Division Credit Committee (IDCC-II)

At Local Head Office/Mid Corporate Group

a) Circle Credit Committee (CCC-I)/

Mid Corporate Credit Committee(MCCC)

b) Circle Credit Committee (CCC-II)

c) Zonal Credit Committee (ZCC)/

SME Credit Committee (Branch level Credit Committee in MCG)

d) Regional Credit Committee (RCC)

In order to downstream the credit sanction process, a Regional Credit Committee (RCC) at each Regional Office was created with discretionary powers of Rs.5 crores fund based and Rs.2.5 crores non-fund based for Corporates.

SAMG has also put in place a new Credit Committee.

The above structure has the benefit of being able to respond to the business opportunities in a quick manner and at the same time having adequate control and oversight. All the above Committees have periodic and regular meetings whenever there were enough proposals to be considered. The collective decision making process has been found to be effective in better risk assessment and quality decision making.

The analysis revealed the spreads in non-fund business in the Bank are much lower compared to the fund based even after adjusting for cost of capital. Accordingly, the Bank has decided to link the pricing for all non-fund based business to External Credit Ratings and also improve the security cover for these exposures. Simultaneously, the pricing for top rated companies viz. AAA, AA, A was made more aggressive in order to get higher share. The first half of the financial year was slack. The results of these strategies were noticeable in the second half and there was a robust growth of Rs.46,491 crores in advances from the last quarter and more than 80% of this came from companies rated investment grade.

The Bank has also fine tuned its policy for Corporates, which allows the Bank to refinance their high cost loans with other Banks. Corporate loan has twin advantage as it is extended for long term working capital requirements of the corporate and requires only a minimum Fixed Assets Coverage Ratio (FACR) of 1.25. It has proved to be quite popular with our constituents. Similarly, from time to time, the pricing and terms of various other loans like Home Loans, etc. have been adjusted to generate high growth with good quality.

The product of electronic platform for financing to dealers of reputed companies e-DFS was made strong and pricing was also made very attractive, which has led to phenomenal growth in the portfolio of e-DFS.

The Bank also continued with its policy of 100% ECGC cover for all export oriented units and premium thereof was borne by the Bank. During the year ECGC based on their understanding of global slowdown and default by several overseas buyers, made the rules stricter for packing and post shipment credit. Accordingly, Banks credit policy also envisages that packing credit can be sanctioned only when there are satisfactory credit reports available on the overseas buyers on a recent date and verification of Buyers Specific Approval list maintained by ECGC.

Similarly, credit scoring model for car loans was modified to make it more effective without significantly diluting credit standards. Further, the minimum threshold credit rating for takeover of advance has also been enhanced to SB6 and with External Rating of minimum BBB.

External rating: The Bank has to allocate capital on assets depending on the basis of credit rating. As per current regulations, credit rating is necessary / mandatory for all accounts of advances of Rs.5 crores and above. Out of 55,130 eligible accounts, 31,702 have already been rated. We are continuing our endeavours to encourage the remaining eligible accounts to obtain the required external credit rating.

In order to impart transparency and impartiality to the pricing process for all working capital advances, the pricing has been linked to external rating and the current matrix is:

Table 23: Pricing of Loans

External Rating WCDL Cash Credit

AAA / AA Base Rate Base Rate + 25 bps

A Base Rate + 25 bps Base Rate + 50 bps

BBB Base Rate + 0.65 bps Base Rate + 0.90 bps

With the pricing for loans being non-discriminatory, executive time is not required to be given for deciding on pricing for individual companies. Similarly, in other business areas like Home Loans, Education Loans, Car Loans, etc. the pricing was made non-discriminatory and uniform for similar categories.

STRESSED ASSETS MANAGEMENT GROUP

In the wake of the Global crisis of 2008 and the headwinds before the Indian economy today, asset quality of Indian Banks, including SBI, has been under pressure. Slippages have continued unabated and resolution of NPAs today poses a major challenge to Banks.

With a view to address this issue, we have, during 2004, set up the Stressed Assets Management Group (SAMG). SAMG is headed by a Deputy Managing Director supported by a team of 2 Chief General Managers and other senior officials. SAMG has been set up as a dedicated and specialised vertical to efficiently resolve high value NPAs which are transferred to the Group by other Strategic Business Units.

Today, SAMG has 15 branches across the country of which 2, one at Ernakulam and another at Mumbai (second branch) were opened during the year. The Bank also holds licenses for opening branches in three other Centres. Arrangements are on hand to open one of these in Coimbatore. The branches are staffed with officials with expertise in resolution of stressed assets, duly supported by Law officers.

As on date, 24.35% and 58.14% of the Banks NPAs and AUCA reside within SAMG. While SAMG is primarily responsible for resolution of NPAs in the Corporate segment, Stressed Assets Recovery Branches (SARBs) and Stressed Assets Recovery Cells (SARCs) have been set up within the National Banking Group to tackle retail NPAs. The recovery efforts of SARBs/SARCs are supplemented by efforts put in by ground level operating staff at our 14,816 branches across the country. Besides, Account Tracking & Monitoring (AT@M) Centres have been operationalised in all Circles to contact SMAs and NPAs in the retail segment. Business Correspondents, Business Facilitators and Self Help Group are also involved in recovery of Agricultural NPAs.

SAMG employs multi-pronged strategies to resolve stressed assets including, inter alia,

- Restructuring of both Standard assets and NPAs, either though the CDR mechanism or through a bilateral arrangement

- Recovery through auction of assets using the SARFAESI route

- Filing suits in Debt Recovery Tribunals and other Courts for recovery of our dues

- Identifying strategic investors and engaging with them for takeover of stressed assets

- Sale of NPAs to Asset Reconstruction Companies

- Entering into One Time Settlements with borrowers

- Using Resolution Agents to take possession of properties mortgaged to the Bank and arranging for their auction

- Using the e-auction platform to reach out to as many prospective bidders as possible

- Debt Asset swaps have been considered in some cases

- Engaging investigation agencies to trace out unencumbered assets of promoters and guarantors and obtaining Attachment Before Judgements over these properties

- Identifying Companies and promoters as Wilful Defaulters and arranging for display of their names on the websites of Credit Information Companies such as CIBIL. These names are also reported to the Reserve Bank of India.

- Publishing photographs of defaulters in newspapers where warranted.

The focussed and specialised attention that SAMG has been able to bring to the task has resulted in substantial recoveries in high value NPAs during the year. Besides, the concerted efforts of SAMG have resulted in recoveries of dues to the Bank this year, some of which are decades old.

The skills of officials posted in SAMG and other recovery units are constantly upgraded and honed by:

- Regular training programmes tailor made to the requirements of SAMG organized by the Banks Apex Training Institutes

- Arranging for Guest Lectures by acknowledged experts in the field (For e.g. Shri R. C. Kohli, an experienced banker and author of "Practical Approach to Recovery Management in Banks and Financial Institutions and Securitisation Act" has addressed our officials on several occasions)

- Regular conclaves are held where matters of topical relevance are discussed. Individual accounts are also reviewed and strategies decided to expedite recoveries in these accounts. Feedback from operating functionaries is regularly elicited on how the Group can further optimize operations.

- Top Management of the Bank, including the Chairman, regularly review all high value accounts and suggest ways and means to resolve these NPAs.

The Bank took an important initiative during the year to facilitate expeditious credit decisions, such as approving OTSs, fixing reserve prices for auction of seized properties, etc., within SAMG. Till recently, all matters requiring sanctions/approvals were routed through Credit Committees of other Business Groups. A Stressed Assets Management Credit Committee (SAMCC) has now been set up with the sole objective of considering proposals of SAMG for sanction or approval. This dedicated Credit Committee is a valuable resource for SAMG as credit decisions are taken immediately and communicated at once to operating functionaries resulting in swifter recoveries. During the year, the Bank had also announced a scheme where nominal incentives were paid to officials instrumental in recovering amounts written off over 5 years ago, which yielded significant results and the Bank was able to recover more than Rs. 1000 crores during this year from written off accounts.

Notwithstanding the harsh and challenging environment we have seen in the year gone by, the determined and focussed efforts of the SAMG and SAMBs/SARBs/SARCs has contributed to a deceleration in NPA accretion. This was particularly evident during Q4 of 2012-13 when Gross and Net NPA percentages were brought down to 4.75% and 2.10% respectively from the peak levels of 5.30% and 2.59% witnessed during the year. In fact, Q4 also saw a reduction in gross NPAs by Rs.2, 269 crores in absolute terms. More details are furnished below:

Table 24: Break -up of NPA (Rs. In cr.)

NPA FY 11-12 Q3 FY13 FY 12-131

Gross NPAs 39,676 53,458 51,189

Gross NPA% 4.44 5.30 4.75

Net NPA% 1.82 2.59 2.10

Fresh Slippages 24,712 26,126 31,993

Cash Recoveries/ Upgradations 9,618 9,167 14,885

Write Offs 744 3,176 5,594

Recoveries in Written Off Accounts 962 673 1,066

While asset quality is expected to be under pressure during FY 13-14 also, the SAMG and other recovery outfits of the Bank are fully geared up to meet the challenges of the future.

II SUPPORT & CONTROL OPERATIONS

II.1. INFORMATION TECHNOLOGY

- CORE BANKING PROJECT

The CBS environment is benchmarked to establish the capability to support one billion accounts, over 250 million transactions in a day, and delivering a throughput of over 17,000 transactions per second.

Several new features were rolled out in CBS during the year for making the system more user-friendly. Two new ATM cards on RUPAY platform. Password protected statements in PDF format of Savings Bank, Current Account, Cash Credit accounts are now being sent to the e-mail addresses of customers. Functionalities for issuance of TDR/ STDR through ATM, online capture of 16-digit Census Code have been developed in CBS. Biometric authentication as a second-factor authentication method is being implemented in branches for all CBS users.

The process for the systematic and proactive risk identification, assessment, measurement, monitoring and mitigation of various risks in the IT vertical has been initiated. Disaster Recovery Drills are conducted regularly as part of the implementation of the Business Continuity Management System (BCMS). The first comprehensive Integrated Business Continuity Exercise (IBCE) during the current financial year was tested on 8th & 9th December 2012 and the second on 17th & 18th February 2013.

- ATM

SBI has issued more than 11.00 crores Cards out of which around 8.54 crores Cards are transacting regularly on the ATMs. The State Bank Groups ATM operations run from two Switches. The BASE24 Switch has recently been upgraded and it can now handle close to 50,000 ATMs. The ATM footprint is being enlarged substantially through Brown Label ATMs which are being rolled out as totally outsourced initiative under the guidance of Ministry of Finance. A wide variety of ATMs and various types of cards have been deployed. 581 new Cash Deposit Machines have been installed to facilitate customers to deposit the cash.

- INTERNET BANKING

Internet Banking service is available through the Banks website "https://www.onlinesbi.com".

The Banks internet banking solution is a comprehensive product for both retail and corporate users. The following major new features have been added during current financial year 2012-13:

Personal Internet Banking:

IPO(Debt) AS BA facility, Multi- lingual image based keyboard for profile password, Voice OTP for J&K customers for doing Internet Banking transactions etc.

Corporate Internet Banking:

Rakhsha IRCTC - Ticket Booking by Paramilitary Forces, Central Plan Scheme Monitoring System (CPSMS) facility , EPF payments by Corporate customers, Second Factor authentication through Hardware token for login by corporate customers, Merchant pre-approved transactions for corporate, Foreign Currency Loan Application

- IT - FOREIGN OFFICES

145 Foreign Offices of the Bank in 25 countries use the Finacle suite of applications that include Finacle Core, Finacle Treasury and Finacle Internet Banking Applications. 134 ATMs and 2 Kiosks have been installed at Foreign Centres and 7.63 lakh Debit Cards have been issued. Around 1.43 lakh users have been registered for Internet Banking.

- ENTERPRISE DATA WAREHOUSE DEPARTMENT

Data Marts relating to the various areas like Risk Management, Customer Analytics, Assets and Liability Management etc. have been designed. Dashboards have been developed and deployed for use by the executives for decision making. Campaign Management Tool has been implemented and campaigns through emails/ SMS have been launched by the various Business Units targeting customers under various segments. "Customer One view" (COV) has been developed for Corporate Account Group, Mid Corporate Group and Small and Medium Enterprise Accounts for better monitoring. Data Mining and Analytics are being performed in the areas of business development, Control, Performance and Profitability.

- NETWORKING

The Bank has implemented a secured, robust WAN architecture network connecting branches/ offices and ATMs of State Bank Group through leased lines, VSATs and CDMA technology. While leased lines and VSATs have been procured for primary links for connectivity, ISDN lines or VSATs have been provided as backup. The bandwidth of primary VSATs has been upgraded from 32 Kbps to 64 Kbps at all locations. The Bank is in the process of upgrading leased lines at all locations with bandwidth of 64 Kbps to 128 Kbps.

II.2. RISK MANAGEMENT & INTERNAL CONTROLS

- Risk Management Structure in SBI: The Risk Governance structure in place in the Bank is as under: Table 25: Risk Governance structure in the Bank

An independent Risk Governance Structure, in line with international best practices, has been put in place, in the context of separation of duties and ensuring independence of Risk Measurement, Monitoring and Control functions. This framework visualizes empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.

As envisaged in the Risk Governance Structure, Credit Risk , Market Risk, Operational Risk, Group Risk and Enterprise Risk Management Departments alongwith Basel Implementation and Information Security Departments are placed under Chief General Manager (Risk Management) under the control of Deputy Managing Director and Chief Credit & Risk Officer to ensure Integrated Risk Management for various Risks

- Credit Risk Management:

- The Bank has strong credit appraisal and risk assessment practices in place. The Bank uses various internal Credit Risk Assessment Models for assessing credit risk under different exposure segments. Internal ratings of the bank are subject to comprehensive rating validation framework.

- The department tracked 36 industries during FY 2012-13 including sectors such as Telecom, Power, Coal, Aviation, NBFC, Textile Sector, Iron and Steel and disseminated the same to operating staff for informed decision making. Specific studies on Companies/Groups as directed by the Banks Board were also conducted.

- The Bank has filed Letter of Intent with RBI for migration to Internal Ratings Based (IRB) Approach for Credit Risk. For this purpose, new policies and governance structure related to credit risk management have been approved by the Risk Management Committee of the Board (RMCB). The governance structure has also been made more robust for effective implementation of the IRB.

- Models for estimation of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) have been developed.

- Bank regularly conducts stress test on its Credit portfolio and Stress Scenarios are regularly updated in line with Industry best practices and changes in Macro economic variables.

- Five meetings of Credit Risk management Committee (CRMC) and six meetings ofRisk Management committee of Board (RMCB) were conducted during the year to review various risk policies, industry guidance and exposure norms.

- Market Risk Management:

- Market Risk is the possibility of loss a Bank may suffer on account of changes in values of its trading portfolio due to change in market variables such as exchange rates, interest rates, equity price, etc. The Market Risk management process at the Bank consists of identification, and measurement of risks, control measures, monitoring and reporting systems.

- The Bank has Board approved policies pertaining to the said risks for Trading in Foreign Exchange, Derivatives, Interest Rate Securities, Equities and Mutual Fund. Market risks are controlled through various risk limits such as Net Overnight Open Position, Modified Duration, Stop Loss, Management Action Trigger, Cut Loss Trigger, Concentration & Exposure Limits etc mentioned in the respective policies.

- Presently, market risk capital is computed under Standardized Measurement Method (SMM). The Bank has decided to migrate to advanced approaches under Basel-II for market risk i.e. Internal Models Approach (IMA) and submitted its Letter of Intent to the Reserve Bank of India. The IMA is a Value at Risk (VaR) based tool for monitoring of Banks trading portfolio. The VaR methodology is supplemented by conducting stress testing of the trading portfolio at quarterly intervals. The Bank is currently conducting parallel run of SMM and IMA methodologies.

- The Market Risk at the Bank is monitored and reviewed by the Market Risk Management Committee (MRMC) and the Risk Management Committee of the Board (RMCB) which meet at least once at quarterly intervals.

- Operational Risk Management:

- Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

- The main objectives of the Banks Operational Risk Management are to continuously review systems and control mechanisms, create awareness of operational risk throughout the Bank, assign risk ownership, align risk management activities with business strategy and ensure compliance with regulatory requirements, which are the key elements of the Operational Risk Management Policy of the Bank.

- Important policies, manuals and framework documents in line with RBI guidelines on Operational Risk Management Framework (ORMF) and Operational Risk Measurement System (ORMS) for migration to Advanced Measurement Approach (AMA) are in place.

- The Bank has already submitted its Letter of Intent (LOI) to RBI for migration to Advanced Measurement Approach (AMA).

- The Bank-level Operational Risk Management Committee (ORMC), an executive committee, reviews the operational risk profile of the Bank at quarterly intervals and recommends suitable controls/mitigations for managing operational risk in the Bank. The Risk Management Committees at all the 14 Circles, Business and Support Groups (NBG, IBG, CBG, MCG, GMU & IT) are also in place.

- Committee of Executives on High Value Frauds (CEHVF), headed by the Chairman, has been set up during the current year to periodically monitor and control high value frauds (Rs.1 crores & above) and alsofor mitigation of the same.

- Other executive level Committees viz. Overall Product Committee (OPC) and Outsourcing Vetting Committee (OVC) are also in place.

- Group Risk Management:

- Group Risk Management aims to put in place standardised risk management processes in Group entities

- The Group Internal Capital Adequacy Assessment Process (Group ICAAP) assesses relevant risks and mitigation measures for capital assessment, including under stressed conditions. A Group ICAAP Policy to ensure uniformity in ICAAP exercises of Group entities is in place.

- A quarterly analysis of risk-based parameters for Credit Risk, Market Risk, Operational Risk, Concentration Risk, Liquidity Risk and Contagion Risk is presented to Group Risk Management Committee/Risk Management Committee of the Board.

- Exposure limits for Large Borrower Exposure and Capital Market Exposure as per RBI have been adopted for the Group. Also, limits for Unsecured Exposures, Real Estate and Intra-Group Exposures have been set by the Bank.

- In order to overhaul the Group Risk Management and adopt global best practices, the Bank has embarked upon a Group Risk Management Project recently.

- Basel Implementation:

- RBI Guidelines on Basel III Capital Regulations have been implemented from April 1, 2013. Bank has put in place appropriate mechanism to comply with these guidelines.

- India is one of the first few countries to implement the Basel-III guidelines while USA and EU Block, are not yet on board.

- Enterprise Risk Management:

- For assessment of Pillar I risks and Pillar 2 risks such as Liquidity Risk, Interest Rate Risk, Credit Concentration Risk, as well as adequacy of Capital and overall Risk Management practices under normal and stressed conditions, the Bank has comprehensive Internal Capital Adequacy Assessment Process (ICAAP) in place.

- As part of the Risk Management Project being undertaken by the Bank to transform its role into a Strategic function aligned with Business Objectives, Bank has initiated Enterprise Risk Management (ERM) framework.

- Global best practices like Risk Appetite, Risk Aggregation and Risk based Performance Management System including Economic Capital and Risk Adjusted Return on Capital (RAROC) will also be covered within the ERM project recently taken up.

- Information Security:

- Bank has implemented a robust IT policy and Information System Securitypolicy which are in line with the international best practices. These policies are reviewed periodically and suitably strengthened in order to address emerging threats.

- Regular security drills and employee awareness programs are conducted to ensure security and increase awareness among staff. Business Continuity Management Systems (BCMS) has been implemented at Global IT centre, Belapur. Bank is also among the forerunners in the process of implementing the new RBI guidelines for the Banking Sector in this area.

- Internal Controls

The Bank has in-built internal control systems with well-defined responsibilities at each level. It conducts internal audit through its Inspection & Management Audit Department. Audit Committee of the Board (ACB) exercises supervision and control over the functioning of the I&MA department. The inspection system plays an important and critical role in identification, control and management of risks through the internal audit function which is regarded as one of the most important components of Corporate Governance. The Bank carries out mainly two streams of audits - Risk Focused Internal Audit (RFIA) and Management Audit covering different facets of Internal Audit requirement. All accounting units of the Bank* are subjected to RFIA. Management Audit covers administrative offices and examines policies and procedures besides quality of execution thereof.

*Besides the above, the department conducts Credit Audit, Information Systems Audit (Centralised IT Establishments & Branches), Home Office Audit (audit of foreign offices) and Expenditure Audit (at administrative offices) and oversee policy and implementation of Concurrent Audit (domestic & foreign offices) and Circle Audit. To verify the level of rectification of irregularities by branches, audit of compliance at select branches is also undertaken. During the period 01.04.2012 to 31.03.2013 - 8895 domestic branches / BPR entities were audited under Risk Focussed Internal Audit.

- Risk Focussed Internal Audit:

I&MA Dept undertakes a critical review of the entire working of auditee units through RFIA an adjunct to risk based supervision as per RBI directives. All domestic branches have been segregated into three groups (Group I, II & III) on the basis of business profile and risk exposures. While audit of Group I branches is administrated by Central Audit Unit (CAU), audit of branches in Group II & III category and Business Process Re-engineering (BPR) entities are conducted by thirteen Zonal Inspection Offices, each of which is headed by a General Manager. During the period 01.04.2012 to 31.03.2013 - 8895 domestic branches / BPR entities were audited under Risk Focused Internal Audit.

- Management Audit:

With the introduction of RFIA, Management Audit has been reoriented to focus on the effectiveness of risk management in the processes and the procedures followed in the Bank. Management Audit universe comprises of Corporate Centre establishments / Circle Local Head Offices / Apex Training Institutions, Associate Banks and Regional Rural Banks sponsored by the Bank (RRB).

- Credit Audit:

Credit Audit aims at achieving continuous improvement in the quality of Commercial Credit portfolio of the Bank through critically examining individual large commercial loans with exposures of Rs. 10 Crs and above annually. Credit Audit System also provides feedback to the business unit by way of warning signals about the quality of advance portfolio in the unit and suggests remedial measures. Credit Audit also carries out a review (Loan Review Mechanism) of all the pre- sanction and sanction process of all individual advances above Rs. 5 Crs within 6 months of sanction / enhancement / renewal. During the period 01.04.2012 to 31.03.2013 - 7329 accounts have been subjected to Credit Audit on-site.

- Information System Audit:

All the Branches are being subjected to Information System (IS) Audit to assess the IT related risks as part of RFIA of the branch. Is Audit of centralized IT establishments is carried out by a team qualified officials. During the period from 01.04.2012 to 31.03.2013, IS audits of 13 centralised IT establishments were completed.

- Foreign Offices Audit:

During the period from 01.04.2012 to 31.03.2013, Home Office Audit was carried at 49 branches, Management Audit at 11 Representative offices / Country Head Offices & 4 Subsidiaries / Joint Ventures.

- Concurrent Audit System :

Concurrent Audit System is essentially a control process integral to the establishment of sound internal accounting functions effective controls and overseeing of operations on continuous basis. Concurrent Audit System is reviewed on an on-going basis as per the RBI directives so as to cover Banks Advances and other risk exposures as prescribed by RBI. I&MA department prescribes the processes, guidelines and formats for the conduct of concurrent audit at branches and BPR entities.

- Circle Audit:

Circle Audit which is a delegated audit covers low risk areas and is conducted between two RFIAs. This enables auditee unit to be better prepared better for the RFIA.

11.3. VIGILANCE

The essential function of Vigilance Administration in the Bank is not only to check against non- compliance of rules & regulations by initiating suitable disciplinary action for serious transgressions, but also to devise and implement various measures of preventive vigilance by reviewing the systems & processes to ensure a higher effectiveness and the least vulnerability. The concept of Vigilance as an investigative process and an exercise for punitive action has over time evolved to that of "Vigilance for Corporate Growth", the emphasis getting shifted from punitive vigilance to "Preventive and Proactive Vigilance" through an active participation of all concerned.

(i) Preventive Vigilance Committee (PVC) Meetings being held at the branches and the BPR outfits and (ii) Under Whistle Blower Scheme*, our staff members are expected to advise appropriate authorities about irregular and unethical practices, if any, being indulged in by colleagues and even seniors.

The number of vigilance cases brought to conclusion during the year 2012-13 is 1508, as compared to 1117 during 2011-12.

Fraud Prevention & Monitoring

- Monitoring of transactions is done with a view to submit critical reports to Financial Intelligence Unit - India, as mandated vide Prevention of Money laundering Act, 2002.

- Bank is observing 1st August every year as "KYC Compliance and Fraud Prevention Day" to maintain appropriate awareness across the Bank as also to create proper understanding of KYC issues among the members of Public.

- Bank has taken several measures with a view to strengthening internal control mechanism to prevent frauds.

11.4.HUMAN RESOURCES

Human Resources are a very important part because of the people intensive nature of the banking industry.

Table 26: Staff Strength

Officers Assistants Subordinate Total staff

As on 31.3.2012 80,404 95,715 39,362 2,15,481

Less: Retirements / Attrition 3,059 4,107 2,412 9,578

Add / Less (-) due to promotion of clerical staff to officers grade 2,604 (+) 2,604 (-) - -

Add: New Addition 847 20,682 864 22,393

As on 31.3.2013 80,7961 1,09,6861 37,814 2,28,296

In order to take full advantage of the expansion of the branch network and also to mitigate staff shortage, particularly at our rural and semi-urban branches, the Bank added 20,682 new Assistants. More than 30 lakhs candidates appeared for the test and the Bank chose the best and the brightest candidates. Many of the new assistants are holding good academic qualification including professional qualifications of computer engineering, MBA, etc. Apart from lowering the average age, the young recruits have brought a fresh attitude to the work. We welcome the new entrants and believe that they will ensure a strong future for the Bank.

The Bank also advertised for recruitment of 1500 Probationary Officers and an unprecedented 17 lakhs candidates applied for the same. This only shows that the Bank is now the employer of choice of the young and educated population of the country.

Improvement in employee productivity:

The large-scale recruitment of Gen-next employees in the officers as well as in the assistant grade have not only brought a far reaching attitudinal change among staff in their customer interface and services across the branches, it has also become a catalyst in enhancing / improving the productivity and efficiency of the employees, thereby resulting in increasing growth in business and profitability for the Bank. Consequently, both business per employee and also profit per employee went up significantly during the year.

The addition of new manpower in the Assistant category during the year happened only in January- March 2013 quarter and these employees are now inducted for full scale work in the bank after initial training and are ready to contribute towards further growth in business.

Improvement in work culture: The Management initiated administrative action against frivolous agitations by certain categories of officers. State Bank officers are on the best terms and conditions among all the banks in the public sector. It is ironic that still some categories of officers chose to conduct agitation only in SBI to the exclusion of other banks. The Bank is a caring and considerate employer. Therefore, in our view, there is no case for disruptive agitation exclusively in SBI, when issues are to be decided at the industry level. Consequent upon the above administrative action, the demonstrations within the Bank premises have stopped.

Periodic consultative meetings were held with the Officers Associations / Staff Unions and the SC-ST Staff Welfare Association as part of the constructive dialogue for understanding and addressing grievances of various categories of employees. These consultations are done both at Corporate Centre as also at Circles.

Table 28: Reservation in employment

Category Total SC ST PWD

Officers 80,796 13,824 5,215 485

(17.11%) (6.45%) (0.60%)

Assistants 1,09,686 18,226 8,745 1,724

(16.62%) (7.97%) (1.57%)

Sub-staff 37,814 11,500 2,804 193

(30.41%) (7.42%) (0.51%)

Total 2,28,296 43,550 16,764 2,402

(19.08%) (7.34%) (1.05%)

Bank provides reservation to SC, ST, & Persons with disabilities (PWDs) as per GOI directives. In order to deal with issues relating to reservation policy and effectively redress the grievances of the SC/ST employees, Liaison Officers have been designated at all Local Head Offices of the Bank as also at the Corporate Centre at Mumbai.

Other Initiatives

Several perquisites like leased accommodation, provision of mobile phones, Group Insurance etc. were significantly improved for all categories of staff during the year, which besides, being a great motivational factor in improving the employee productivity, were indicative of a healthy employer-employee relationship.

During the year, Inter-Circle Tournaments were also successfully arranged in the field of Hockey, Volleyball and Basketball at Bhopal, Chennai and Hyderabad respectively with the active participation by the employees representing all the 14 Circles.

II.5. Strategic Training Unit (STU)

The Banks training apparatus comprises of the following:

Apex Training Institutions (ATI): State Bank Staff College - Hyderabad, State Bank Academy - Gurgaon, State Bank Foundation Institute (Chetana) - Indore, State Bank Institute of Rural Development - Hyderabad, State Bank Institute of Information and Communication Management - Hyderabad State Bank Learning Centres: 47 Learning Centres spread across 19 states of the country.

Further, the Bank has acquired 10 acres of land in the prime institutional area at Rajarhat New Town, Kolkata from WBHIDCO (West Bengal Housing Infrastructure Development Corporation Limited) at a cost of Rs. 58 crores. The land is located close to the Kolkata Airport. Efforts are under way to construct a state of the art full scale residential apex training institute. This would help correct regional imbalances as participants from eastern and north eastern region would not have to travel long distance for undergoing training.

In order to raise the standards of training and also to familiarize the Bank officials in the new and sophisticated techniques of financial management like mergers, acquisitions overseas and also in-depth analysis of financial statements, the Bank has taken the help of outside experts, who along with our senior retired officials, are conducting advanced training courses for officials handling credit and faculty members, for imparting sophisticated learning. The aspiration is that our faculty at the training institute should progressively be able to customize these programs and conduct the in-house training.

Training Overseas:

Recognising the need for more advanced training and particularly in areas of strategic management, which may not be completely provided by the Banks in- house training apparatus, the Bank deputed its senior executives for training in short duration Executive Development Programmes to reputed institutes both in India and overseas.

Table 29: Senior Excutives Trained Overseas

Overseas Training Institutes training in India

MDs / DMDs 18 --

CGMs 37 --

GMs 29 62

DGMs 9 228

Total 93 290

In fact, the senior officials were given an opportunity of selecting both the training as also the university / institute they wanted to attend. The Institutions/ universities where officials were deputed include reputed names like Harvard, Stanford, Wharpon School of Management Studies, Indian Institute of Management etc. The Policy of the Bank is that every single employee in every grade must attend at least one training programme every year. 1.76 lakhs employees have been given institutional training during the year, covering 90% of the Officers and 60% of the Assistants.

Several articles have been published by our Research officers/faculty members in internal and reputed external journals such as Bancon compendium, Indian Banker, Financial Planning Journal etc.

Our efforts to inculcate a self learning culture in the Bank through an e-Learning portal which has over 280 lessons currently, has yielded good results and more than 70000 employees are using the portal while 94% have registered. State Bank Training Management System (SBTMS), a comprehensive database system in place, enables viewing of training calendars of any ATI/SBLC, programme timetable, individual training history, trainee feedback and self nomination on line. Knowledge Helpline, has been established to answer, knowledge related queries.

II.6. OFFICIAL LANGUAGE

Various efforts were made during the year for improving and increasing Official Language implementation at various levels in the Bank. After providing for the facility to work in Hindi on the Core Banking Solution (CBS), Standard Encoding Unicode facility was uploaded on all the computers of branches and offices of the Bank. Training on the usage of Hindi in Unicode has been given to majority of staff members during the year and thus the usage of Hindi on computers has now become much easier for staff members in the Bank. For encouraging the staff members to use Hindi in their day to day work, various Functional Hindi Training Programmes were also conducted for officers and employees during the period under review.

The work of bilingualisation of the Banks corporate and internet banking websites is in progress. Different information and procedural manuals in HRMS related to staff members have been provided in bilingual, i.e. in Hindi and English and thus the use of HRMS has become much easier for all the employees especially for the subordinate staff members. The service desk queries asked in Hindi are being replied in Hindi only. Similarly, now information at the Call Centers of the Bank is being provided in Hindi. This year the total number of ATM hits in Hindi was 66674049 as compared to 52063356 hits last year, thus recording an impressive increase of 28.04% which shows the rising interest of our customers in the usage of Hindi in alternative channels

II.7. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility:

1. The Bank keeps aside 1% of its net profit for corporate social responsibility and the endeavour is to have full achievement of the same.

2. The Bank CSR policy involves donation under the following major categories:

i) National donations to Prime Ministers and Chief Ministers Relief Funds for natural and other calamities,

ii) Contribution to organizations having exemption under 80G of the Income Tax Act largely for equipment and vehicles,

iii) Distribution of fans and water purifiers to neighbourhood schools.

During the year we are happy that the target of donating 1% of the net profits to CSR, which has eluded the Bank earlier, was not only fully achieved but was surpassed.

Table30: CSR spend (Rs. in cr.)

2012 2013

1% of net profit 82 117

CSR Spent 71 123

3. Other Flagship programmes:

Looking to the deep inconvenience and discomfort students faced in hot summer in classrooms without the fans, the Bank donated 1,40,000 fans to 14,000 schools. The methodology was that every branch of the Bank adopted a school in its neighbourhood attended by students from modest background and installed 10 fans and one water purifier. This strategy gave wide reach to the activity and every single region of the country having SBI branch had schools in the vicinity benefitting from donation of fans and a water purifier.

Table31: Donation of fans and water purifiers

No. of Water No. of Fans Purifiers

2012-13 1,40,000 43,161

The Bank prefers to support largely with community assets as the benefits of those are shared by all. These steps have created tremendous goodwill in the community and many of our branch managers have been invited to preside over the annual functions of neighbourhood schools. We consider this to be a constructive bond between the Bank and the community. We are happy to make the lives of our young citizens comfortable and healthier.

To help in delivering quality healthcare and transportation of patients and doctors which is a challenge especially in non metro areas, Bank has donated 313 ambulances and medical vans. To help children especially the physically handicapped children, Bank has distributed 51 school buses/vans.

Some of the notable beneficiaries of Banks support have been the following institutions like Aravind Eye Hospital, Chennai, Tata Medical Centre, Kolkata, N. Swain Memorial Trust, Hyderabad, Sankara Nethralaya, Chennai, St. Xaviers College, Mumbai etc.

Environment friendly initiatives:

The Bank has also supported several initiatives in installing solar lamps in many places largely in the rural areas not having dependable electricity supply.

III ASSOCIATES AND SUBSIDIARIES

State Bank Group, with a network of 20325 branches, including 5509 branches of its five Associate Banks, dominates the banking industry in India. In addition to banking, the Group, through its various subsidiaries, provides a whole range of financial services, which include Life Insurance, Merchant Banking, Mutual Funds, Credit Card, Factoring, Security trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

1 Associate Banks

The five Associate Banks of SBI had a market share of 6.16% in deposits and 6.32% in advances as on last Friday of March 2013.

Table32: Performance Highlights of Associate Banks (Overall):

(Rs. in cr.)

As on As on Change 31.03.2013 31.03.2012 (%)

Total Assets 5,04,556 4,34,947 16.00

Agg. Deposits 4,17,657 3,61,589 15.51

Total Advances 3,40,321 2,89,148 17.70

Operating Profit 8,803 8,214 7.17

Net Profit 3,678 3,626 1.43

Credit Deposit 81.48% 79.97% 151 bps Ratio

Capital Adequacy Ratio 11.85% 13.16%- 131 bps

Gross NPA 11,589 8,538 35.73

Net NPA 6,143 4,418 39.04

Return on Equity* 14.33% 15.64% -131 bps

*Annualised

Important Developments during the year in Associates, Subsidiaries and Joint Ventures:

- SBI Capital Markets Ltd has decided to invest in equity of its subsidiary, viz, SBICAP Securities Ltd, to the tune of Rs. 50 crores in in two tranches of Rs. 25 crores each. The amount of 1st tranche has been invested on 4th May 2012.

- Our JV Company, GE Capital Business Process Management Services (P) Ltd. has bought back a total of 33,98,996 shares of Rs.10/- each @ Rs.141/- per share, aggregating Rs.47.92 crores in January 2013. The share of SBI in the buy back is 13,59,598 shares worth Rs. 19.17 crores.

- An additional capital of Rs.5 crores each has been infused by SBI Funds Management (P) Ltd and SBI Capital Markets Ltd. (Total Rs.10 crores) in SBI Pension Fund Pvt Ltd (SBIPF) during Oct12. Consequently, the stake of SBI in SBI PF has come down from 90% to 60%.

2 SBI Capital Markets Limited (SBICAP)

SBICAP is Indias leading investment bank, offering financial advisory services to varied client base across three product groups - Infrastructure, Non- Infrastructure and Capital Markets (Equity and Debt). These services include Project Advisory, Loan Syndication, M&A, Private Equity and Restructuring Advisory.

SBICAP, on a standalone basis, posted a PBT of Rs.418.39 crores during the FY 13 as against Rs.364.84 crores earned in FY 12 and a PAT of Rs.296.00 crores in FY 13 as against a PAT of Rs.250.96 crores during FY 12.

SBICAP and its 4 subsidiaries together, posted a PBT of Rs. 444.37 crores during the FY 13 as against Rs. 385.87 crores earned in FY 12 and PAT of Rs. 313.96 crores in FY 13 as against Rs. 265.31 crores in FY 12.

As a leader in its space, SBICAP has attained recognition in the form of some of the most prestigious awards in the industry namely, IFR Asias India Loan House of the Year 2012 and Business World Award for the Deal of the Year 2012 for Videocon. SBICAP continues to attain the premier spot in industry rankings, the highlights being:

- Ranked No. 1 Global Mandated Lead Arranger in Project Finance Loans by Dealogic.

- Ranked No. 1 Global Project Finance Bookrunner by Thomson- Reuters.

- Ranked No. 1 in the number of issues handled for the public issue of debt in FY 2013 by PRIME

2.1 SBICAP Securities Limited (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Ltd., besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in Sales & Distribution of other financial products like Mutual Funds, etc. SSL has 100 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 3.18 lacs customers in their books. The Company has posted a PAT of Rs.2.42 crores during the FY 13 as against a PAT of Rs.4.03 crores during the FY 12. The profits are lower on account of subdued capital markets.

2.2 SBICAPS Ventures Limited (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Ltd. SVL earned a Net Profit of Rs.0.35 crores during FY 13 as against Rs. 0.23 crores earned during FY 12.

2.3 SBICAP (UK) Ltd. (SUL)

SUL is a wholly owned subsidiary of SBI Capital Markets Ltd. SUL has booked Total Revenue of Rs. 17.26 crores and has posted a Net Profit of Rs. 10.76 crores during FY 13 as against Total Revenue of Rs. 9.18 crores and Net Profit of Rs. 4.82 crores during FY 12 despite the global recessionary scenario.

SUL is positioning itself as a relationship outfit for SBI Capital Markets in UK and Europe. Relationships are being built with FIIs, Financial Institutions, Law Firms, Accounting Firms, etc to market the business products of SBICAP.

2.4 SBICAP TRUSTEE Co. Ltd. (STCL)

SBICAP Trustee Co Ltd (STCL), a wholly owned subsidiary of SBI Capital Markets Ltd., which commenced security trustee business with effect from 1st August 2008 has earned a gross income of Rs.14.93 crores and a Net Profit of Rs.7.51 crores during FY 13 as against Gross Income of Rs.11.63 crores and Net Profit of Rs. 5.86 crores during FY 12.

3 SBI DFHI Ltd. (SBI DFHI)

SBI DFHI Ltd is one of the largest standalone Primary Dealers (PD) with a pan India presence. Besides Government securities, it also deals in money market instruments, non G-Sec debt instruments etc. As a PD, its business activities are stipulated/ regulated by RBI.

SBI group holds 72.17 % share in the Company, which is a primary dealer to support the book building process in Primary Auctions and provide depth and liquidity to secondary markets in Gsecs. For the period ended 31st March 2013, the Companys PAT was Rs.80.28 crores as against Rs.43.50 crores earned during FY 12.

The market share of SBIDFHI amongst all market participants was 3.64% as on March 2013.

SBI DFHIs market share amongst Standalone PDs has increased from 16.45 % in March 2012 to 22.48 % in March 2013.

4 SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

- SBICPSL, the only stand-alone credit card issuing company in India, is a joint venture between State Bank of India and GE Capital Corporation, wherein SBI holds 60% stake.

- SBICPSL is 3rd largest in the industry in terms of Cards in Force.

- The "Cards in Force" (CIF) of the Company stood at 25.70 lacs as at 31st March 2013 The Average receivables stood at Rs.3,294 crores as at the end of March 2013 as against Rs.2,178 crores at the end of March 2012.

- The Company has posted a net profit of Rs.136.30 crores as on March 2013 as against Rs.37.90 crores earned during the year ended March 2012. This performance was primarily driven by asset based revenue growth, substantial reduction in credit losses and better collection performance.

- SBICPSL won "Gold Award" in the Readers Digest most trusted brand 2012 survey under the finance category.

- SBICPSL has crossed Rs. 1000 crores mark on monthly retail spends in current financial year, which is the highest since inception.

5 SBI Life Insurance Company Limited (SBILIFE)

- SBI Life is Joint Venture Company between SBI and BNP Paribas Cardiff in which SBI holds 74% stake.

- SBI Life has a unique multi-distribution model comprising Bancassurance, Retail Agency & Institutional Alliances and Group Corporate Channels for distribution of insurance products.

- SBI Life emerged as the private market leader in New Business Premium for FY 13.

- SBI Life has a market share of 16.85 % in respect of New Business Premium (NBP) amongst Private Life Insurers. Overall market share (including Life Insurance Corporation of India) of SBI Life in terms of NBP stood at 4.84 % as on 31st March, 2013.

- SBI Life launched Dynamic Insurance products catering to different customer segments, initiated online term plans with - "E-Shield" the first significant foray into online distribution and "Grameen Bima" catering to the micro insurance sector aimed at financial inclusion.

- SBI Life recorded a PAT of Rs.622.20 crores during FY 13 as against Rs.555.80 crores during FY 12, recording a YOY growth of 12 %.

- The Assets under Management of SBI Life recorded a growth of 11.50% YoY to reach Rs.51912 crores as on 31st March 2013.

- SBI Life expanded its branch network by adding 44 branches during the year bringing the total number of branches to 758.

- SBI Life has undertaken various CSR projects during the year. Tree plantation drive witnessed a plantation of 6,309 trees till date. "Gift a Smile" and "Project Scholar" are initiatives to contribute towards economically disadvantaged students. SBI Life took an initiative of enabling mentally challenged children of "Swayam Siddh". Donations have been made to Leprosy eradication centres.

The following are some of the awards / recognitions received by the Company during 2012-13:

- Best Employer Brand Award at IPE BFSI Awards

- Best Presented Annual Report Award by South Asian Federation of Accountants (SAFA).

- Dun & Bradstreet

- PSU Award

2012-Insurance Sector

- The Indian Insurance Awards 2012 for the categories -Under- served Market Penetration Award and Claims Service of the Year Award 2012.

- SBI Life has won Indian Merchant Chambers Ramakrishna Bajaj National Quality Award 2012 in Services category indicating its commitment towards quality and organizational excellence.

6. SBI Funds Management (P) Ltd. (SBIFMPL)

- SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 6th largest Fund House in terms of Average "Assets Under Management" and a leading player in the market with over 5 million investors.

- SBI Mutual Funds celebrated 25 Years of Investment Management in FY 13.

- SBIFMPL recorded a complete turnaround in investment performance with over 92% of equity scheme AUM in top 2 quartiles, and 41% were in top quartile.

- SBIFMPL posted a PAT of Rs.85.68 crores during FY 13 as against Rs.60.52 crores earned during FY 12.

- The average "Assets Under Management" (AUM) of the company during the quarter ended March 2013 quarter stood at Rs.54,905 crores as against Rs.42,042 crores during Mar 2012 quarter registering an YoY growth of 30.60%.

- SBIFMPL launched first Exchange Traded Fund- SBI Sensex Fund, this Fund also qualifies for availing benefits under Rajiv Gandhi Equity Savings Scheme during the FY 13.

- SBIFMPL launched SBI Edge Fund, a fund that gives benefit of 3 asset classes viz. Equity, Gold and Debt in one fund.

7 SBI Global Factors Ltd. (SBIGFL)

- SBIGFL is one of the leading factoring companies in India in both domestic as well as export & import factoring.

- The company registered a Profit of Rs. 3.63 crores during the FY 13 as against a loss of Rs.65.73 crores incurred during FY 12.

8 SBI Pension Funds Pvt. Ltd. (SBIPF)

- SBIPF is one of the three Pension Fund Managers (PFM) appointed by Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the National Pension System (NPS) for Central Government (except Armed Forces) and State Government Employees.

- SBIPF, a wholly owned subsidiary of the State Bank Group, commenced its operations from April 2008. The total "Assets Under Management" of the company as on 31st March 2013 were Rs. 11,788 crores (YoY growth of 96 %).

- The Company maintained lead position amongst Pension Fund Managers (6) in terms of AUM in both Government and Private sectors.

- The overall AUM market share in Private sector was 73 %, while in the Government sector it was 37 %.

- SBIPF has maintained lead in 7 asset categories in terms of returns since inception.

- SBIPF received the following awards during the FY 13:

- Pension Fund of the Year for excellence in performance and customer service to subscribers at the Indian Pension Fund Awards- 2012.

- Award for Financial Inclusion (Pension Category) in Skoch Financial Inclusion Awards, 2013.

9. SBI GENERAL INSURANCE COMPANY LTD (SBIGIC)

- SBIGIC is a joint venture between State Bank of India and IAG Australia in which SBI holds 74% stake.

- SBIGIC has completed its Third year of full operations during FY 13.

- Gross Direct Written Premium stood at Rs. 770.85 crores as at 31st March 2013.

- The Company recorded a net loss of Rs. 145.16 crores as against the estimated loss of Rs. 164.90 crores during FY 13 and a loss of Rs. 95.34 crores incurred during the FY 12. The Company is expected to turn around during 2014-15.

- SBIGIC has a multi-distribution model comprising Bancassurance, Agents, Broker and Direct Channels for distribution of insurance products.

10. SBI SG GLOBAL SECURITIES SERVICES PVT LTD (SBISG)

- SBISG, a joint venture between State Bank of India and Societe Generale, was set up to offer high quality custody and fund administration services to complete the bouquet of financial services on offer by a financial conglomerate.

- SBISG commenced commercial operations in Custody in May 2010 and Fund Accounting Services in Sept 2010.

- The Company recorded a net profit of Rs.38.43 lacs during the FY 13 as against Rs.24.71 lacs during the FY 12.

- The Assets Under Custody as on 31st March 2013 stood at Rs.51,629 crores, while the Assets Under Administration were at Rs.52,639 crores.

INFORMATION WITH REGARD TO SUBSIDIARIES & JOINT VENTURES AS ON 31.03.2013

Table 33:Performance Highlights of Domestic Banking Subsidiaries

(Rs. in cr.)

S. Name of SBI Share of Total Agg. Total No the Bank ownership Assets Deposits Advances Amt. %

State Bank 676.12 75.07 86023 71215 58474 1 of Bikaner & Jaipur State 367.55 100 139664 117270 92020 2 Bank of Hyderabad

3 State Bank 628.63 92.33 68739 56712 45980 of Mysore

State Bank 445.10 100 108551 88416 75460 4 of Patiala

State 120.85 75.01 101579 84046 68389 5 Bank of Travancore

Name of Op. Net CD CAR Gross Net Return the Bank Profit Profit Ratio % NPAs % NPA on Equity % %

State Bank of Bikaner & Jaipur 1713 730 82.11 12.16 3.62 2.27 15.33

State Bank of Hyderabad 2788 1250 78.77 12.36 3.46 1.61 17.70

State Bank of Mysore 1331 416 81.08 11.79 4.53 2.69 11.05

State Bank of Patiala 1619 667 85.35 11.12 3.25 1.62 12.48

State Bank of Travancore 1351 615 81.37 11.70 2.56 1.46 14.76

Table 34 : Performance of Non Banking Subsidiaries

S. Name of the Subsidiary Company Ownership (State % of Ownership Net Profit (Losses) No Bank interest) /Crs for the FY 2012-131

1 SBI Capital Markets Ltd. (Consolidated) 58.03 100 313.96

2 SBI DFHI Ltd. 139.15 63.78 80.28

3 SBI Payment Services Pvt. Ltd. 2.00 100 0.0381

4 SBI Mutual Fund Trustee Company Pvt Ltd. 0.10 100 4.20

5 SBI Global Factors Ltd. 137.79 86.18 3.63

6 SBI Pension Funds Pvt. Ltd. 18.001 60. (0.74)

Table 35: Performance of Joint Ventures

S. Name of the Subsidiary Company Ownership % of Net Profit No. (State Bank Ownership (Losses) interest) for the Rs. crores FY 2012-13

1 SBI Funds Management Pvt. Ltd. 31.50 63 85.68

2 SBI Funds Management (International) Pvt. Ltd.(USD) $ 50000 63 Loss USD 29854

3 SBI Cards & Payment Services Pvt. Ltd. 471.00 60 136.30

4 SBI Life Insurance Company Ltd. 740.00 74 622.20

5 SBI-SG Global Securities Services Pvt. Ltd. 52.00 65 0.38

6 SBI General Insurance Company Ltd. 111.00 74 (145.16)

7 C-Edge Technologies Ltd 4.90 49% 1.22

8 GE Capital Business Process Mgt. Services Pvt. Ltd. 9.44 40 21.65

9 Macquarie SBI Infrastructure Mgt. Pte. Ltd. 2.25 45 USD 5.41

10 Macquarie SBI Infrastructure Trustee Ltd. # USD 56,425

11 SBI Macquarie SBI Infrastructure Mgt. Pvt. Ltd. 18.57 45 8.03

12 SBI Macquarie SBI Infrastructure Trustee Pvt. Ltd. 0.025 45 0.007

13 Oman India Joint 50Investment Fund-Mgt. Co Pvt. Ltd. 2.30 50 2.53

14 Oman India Joint Investment Fund-Trustee Co Pvt. Ltd. 0.01 50 0.004

# 100 % subsidiary of Macquarie SBI Infrastructure Mgt. Pte. Ltd.

Responsibility Statement

The Board of Directors hereby states:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2013, and of the profit and loss of the bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and

iv. that they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

During the year, Shri G. D. Nadaf, Officer Employee Director, retired on attaining superannuation on 31st May 2012. Shri Rashpal Malhotra, Director nominated under section 19(d) by Govt. of India retired on 9th August 2012. Dr. Subir V. Gokarn, Dy. Governor, RBI Nominee, retired on completing his term on 31st December 2012. Shri Dileep C. Choksi, Director, elected by Shareholders under Section 19(c) resigned from the Board effective from the close of business on 31st December 2012. Shri D. K. Mittal, GOI Nominee Director retired on 31st January 2013 attaining superannuation.

Dr. Rajiv Kumar was re-nominated as Director under section 19(d) by GOI w.e.f. 6th August 2012. Shri Harichandra Bahadur Singh was nominated as Director under section 19(d) by GOI w.e.f. 24th September 2012. Shri S. K. Mukherjee, was nominated under section 19(cb) as Officer Employee Director w.e.f. 4th October 2012. Shri S. Vishvananthan was appointed as Managing Director under section 19(b) w.e.f. 9th October 2012. Shri Thomas Mathew, elected for the first time from 13th January 2013 to 24th June 2014 in place of Shri Dileep C. Choksi. Shri Rajiv Takru was nominated as Govt. Nominee Director vice Shri D. K. Mittal, under section 19(e) vide Notification dated 4th February 2013. Dr. Urjit R. Patel was nominated as RBI Nominee Director vice Dr. Subir V. Gokarn, under section 19(f), vide Notification dated 6th February 2013.

The Directors place on record their appreciation of the contributions made by the respective outgoing Directors, namely, Shri G. D. Nadaf, Shri Rashpal Malhotra, Dr. Subir V. Gokarn, Shri Dileep C. Choksi and Shri D. K. Mittal to the deliberations of the Board. The Directors welcome the new Directors Dr. Rajiv Kumar, Shri Harichandra Bahadur Singh, Shri S. K. Mukherjee, Shri S. Vishvananthan, Shri Thomas Mathew, Shri Rajiv Takru and Dr. Urjit R. Patel on the Board.

The Directors also express their gratitude for the guidance and co-operation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank.

For and on behalf of the

Central Board of Directors

Date : 23rd May 2013 Chairman

---

Mar 31, 2012

FINANCIAL PERFORMANCE

Profit

The Operating Profit of the Bank for 2011-12 stood at Rs31,573.54 crores as compared to Rs25,335.57 crores in 2010-11 registering a growth of 24.62%. The Bank has posted a Net Profit of Rs11,707.29 crores for 2011-12 as compared to Rs8,264.52 crores in 2010-11 registering a growth of 41.66%.

While Net Interest Income recorded a growth of 33.10%, the Other Income declined by 9.31%, Operating Expenses increased by 13.27% attributable to higher staff cost and other expenses.

Dividend

The Bank has declared dividend @ Rs35.00 per share (350%) as against @ Rs30.00 per share (300%) in the previous year.

Net Interest Income

The Net Interest Income of the Bank registered a growth of 33.10% from Rs32,526.41 crores in 2010-11 to Rs43,291.08 crores in 2011-12. This was due to higher growth in the advances and investment portfolios.

The gross interest income from global operations correspondingly rose from Rs81,394.36 crores to Rs1,06,521.45 crores during the year registering a growth of 30.87%.

Interest income on advances in India registered an increase from Rs56,960.97 crores in 2010-11 to Rs77,309.15 crores in 2011-12 due to higher volumes. The average yield on advances in India increased from 9.56% in 2010-11 to 11.05% in 2011-12. Interest income on advances at foreign offices has also grown by 24.99%.

Income from resources deployed in treasury operations in India increased by 22.05% mainly due to higher average resources deployed and increase in average yield. The average yield, which was 7.02% in 2010-11, has increased to 7.51% in 2011-12.

Total interest expenses of global operations increased from Rs48,867.96 crores in 2010-11 to Rs63,230.37 crores in 2011-12. Interest expenses on deposits in India during 2011-12 recorded an increase of 29.19% compared to the previous year, whereas the average level of deposits in India grew by 14.31%. The average cost of deposits has consequently increased from 5.26% in 2010-11 to 5.95% in 2011-12.

Non-Interest Income

Non-interest income stood at Rs14,351.45 crores in 2011-12 as against Rs15,824.59 crores in 2010-11 registering a decline of 9.31%.

During the year, the Bank received an income of Rs767.35 crores (Rs827.73 crores in the previous year) by way of dividends from Associate Banks/ subsidiaries and joint ventures in India and abroad.

Operating Expenses

There was an increase of 11.59% in the Staff Cost from Rs15,211.62 crores in 2010-11 to Rs16,974.04 crores in 2011-12. Other Operating expenses have also registered an increase of 16.54% mainly due to increase in expenses on rent, taxes and lighting, postage, telegrams & telephones, insurance and miscellaneous expenditure.

Operating Expenses, comprising both staff cost and other operating expenses, have registered an increase of 13.27% over the previous year.

Provisions and Contingencies

Major amounts of provisions made in 2011-12 were as under:

- Rs663.70 crores towards provision for depreciation on investments, excluding amortization of premium on Held to Maturity category (as against Rs646.75 crores towards depreciation on investments in 2010-11).

- Rs6,320.09 crores towards Provision for Tax, excluding deferred tax reversal of Rs455.93 crores (as against Rs5,712.89 crores in 2010-11 excluding deferred tax reversal of Rs976.82 crores).

- Rs11,545.85 crores (net of write-back) for non- performing assets (as against Rs8,792.09 crores in 2010-11).

- Rs978.81 crores towards Standard Assets (as against Rs976.60 crores in 2010-11). Including the current years provision, the total provision held on Standard Assets amounts to Rs4,296.03 crores.

Reserves and Surplus

- An amount of Rs3,516.98 crores (as against Rs2,479.36 crores in 2010-11) was transferred to Statutory Reserves.

- An amount of Rs14.38 crores (as against Rs9.61 crores in 2010-11) was transferred to Capital Reserve Fund.

- An amount of Rs5,536.50 crores (as against Rs2,729.86 crores in 2010-11) was transferred to Other Reserve Funds.

Table : Key Performance Indicators

Indicators SBI SBI Group 2010-11 2011-12 2010-11 2011-12

Return on Average Assets (%) 0.71 0.88 0.70 0.89

Return on Equity (%) 12.84 14.36 12.92 14.84

Expenses to Income (%) (Operating Expenses to Total Net Income) 47.60 45.23 58.32 53.42

Book Value per share (Rs) 1013.82 1214.78 1302.70 1540.64

Basic Earnings Per Share (Rs) 130.16 184.31 168.28 241.55

Diluted Earnings Per Share (Rs) 130.16 184.31 168.28 241.55

Capital Adequacy Ratio (%) (Basel-I) 10.69 12.05 11.02 11.84

Tier I 6.93 8.50 7.20 8.30

Tier II 3.76 3.55 3.82 3.54

Capital Adequacy Ratio (%) (Basel-II) 11.98 13.86 12.26 13.68

Tier I 7.77 9.79 8.02 9.65

Tier II 4.21 4.07 4.24 4.03

Net NPAs to Net Advances (%) 1.63 1.82 1.56 1.81

Assets

The total assets of the Bank increased by 9.13% from Rs12,23,736.20 crores at the end of March 2011 to Rs13,35,519.23 crores as at the end of March 2012. During the period, the loan portfolio increased by 14.65% from Rs7,56,719.45 crores to Rs8,67,578.89 crores. Investments increased by 5.61% from Rs2, 95,600.57 crores to Rs3,12,197.61 crores as at the end of March 2012. A major portion of the investment was in the domestic market in government securities and investment in Subsidiaries & Associates.

Liabilities

The Banks aggregate liabilities (excluding capital and reserves) rose by 8.01% from Rs11,58,750.16 crores on 31st March 2011 to Rs 12,51,568.03 crores on 31st March 2012. The increase in liabilities was mainly contributed by increase in deposits and borrowings. The Global deposits stood at Rs10, 43,647.36 crores as on 31st March 2012 against Rs9,33,932.81 crores as on 31st March 2011, representing an increase of 11.75 % over the level on 31st March 2011.

CORE OPERATIONS

1. BUSINESS GROUPS

A. GLOBAL MARKETS OPERATIONS

Global Markets department mainly handles the banks liquidity and provides foreign exchange services to customers. In addition, it also handles compliance with reserve requirements of RBI, provides products like derivatives, gold forwards and portfolio management services, and handles the banks proprietary trading and investment portfolio.

The liquidity management function and debt portfolios performance depend significantly on interest rate movements and system wide liquidity conditions. In fiscal year 2012, interest rates were volatile due to inflation and liquidity concerns. The second half of the fiscal saw liquidity in the banking system tighten significantly. Within this environment Global Markets continued to actively manage the liquidity and optimized returns on investment.

The equity markets continued to fall for the major part of the year prompting a strategic decision to reduce our exposure to equities for proprietary trading and rebalance the portfolio. We still continue to hold multiple strategic positions and remain on the lookout for good investment opportunities to enhance returns while maintaining a reduced risk appetite given the uncertain environment.

Being the biggest bank of the country and its role as a market maker, the bank endeavours to provide the best prices to corporates, ranging from the behemoths to emerging SMEs both in the Public and Private Sector. In addition, forex treasury facilitates liquidity in the inter-bank market.

In addition to these, the bank also provides Indian Rupee and Foreign Exchange Derivatives to corporates for hedging their interest rate and currency exposures, within the regulatory stipulations.

Treasury Marketing Group markets various treasury products offered by the Bank, to its customers to mitigate Exchange Rate Risk / Interest Rate Risk in their exposures. Dedicated Treasury Marketing Officers continuously engage with the customers bringing them various inputs about markets as part of advisory services offered by the Bank. The Banks forex volumes grew by 14% YoY for FY 2011-12.

Portfolio Management Services Section of Global Markets, one of the largest fund managers, is managing terminal benefit funds of various provident fund trusts since 1995. It also manages investments of funds of RRBs sponsored by SBI. As on 31st March 2012, Assets under management of Portfolio Management Section exceeded Rs2,00,000 crores.

B. CORPORATE BANKING GROUP

The Banks Corporate Banking Group consists of four Strategic Business Units viz., Corporate Accounts Group, Transaction Banking Unit, Project Finance & Leasing SBU and Financial Institutions Business Unit.

B.1. Corporate Accounts Group (CAG)

CAG was set up in 1995 as the first Strategic Business Unit to be created under Corporate Banking Group of the Bank. Over the years CAG has effectively met its strategic objectives of delivering best in class Corporate Banking services to the top most corporates in the country. Nearly five hundred such corporates deal with CAG and the client list includes industry leaders in every segment.

A highly skilled Relationship team and a strong delivery platform with enabling technology support lie at the core of each CAG unit. CAG has offices in all four metros, Hyderabad and Ahmedabad. The incumbency of Regional Head at each of the above centres has been upgraded to the level of General Manager in line with the rising business profile of the group and to facilitate interaction at senior level having regard to the high profile of the CAG clients.

The total Fund and Non-Fund limits of CAG accounts stand at Rs5,26,078 crores. The Fund based outstandings grew by 15% during FY12 from

High Value Deals

Rs10,000 crores to NTPC Ltd., Rs5,000 crores to Power Grid Corp. & Rs2,000 crores to Tata Steel Ltd.

Rs1,08,774 crores to Rs1,25,286 crores. It constitutes 16% of total domestic credit portfolio and 31% of the C & I (Non-Food) advances of the Bank.

The Non-Fund based outstandings at Rs1,87,062 crores also grew by 17% during the year. CAGs FOREX business at Rs8,73,416 crores constitutes 48% of the domestic FOREX business of the Bank. Trade Finance (LC and BG) volumes also registered a growth of 30% with the volumes standing at Rs3,37,486 crores for FY12. Despite slow pick up of credit and a tepid financial market that did not offer significant scope for structured products, CAGs operating profit grew by 31% from Rs9,808 crores to Rs12,875 crores during FY12.

About 36% of CAGs Fund based & Non-fund based outstandings carries the highest rating grades from the external rating agencies. The NPA level of CAG is well contained at 0.20% of total advances as on 31st March 2012.

During the year CAG handled several high value deals, a few of which are listed below excluding Term loans sanctioned through PFSBU:

- NTPC Ltd.-Term Loan of Rs10,000 crores with tenor of 12 years.

- Power Grid Corporation of India Ltd.- Term Loan of Rs5,000 crores with tenor of 15 years.

- Tata Steel Ltd - Corporate loan of Rs2,000 crores with tenor of 5 years.

- Bharti Airtel Ltd - Term loan of Rs2,000 crores with tenor of 6 years.

- Adani Power Ltd - Term loan of Rs1,200 crores with tenor of 8.5 years.

The Bank played a strategic role in global acquisition by major Indian Groups like, Adani, JSW, Tata etc.

B.2. Transaction Banking Unit (TBU)

TBU, with special focus on Cash Management Product, Trade Finance and Supply Chain (Dealer / Vendor) Finance has expanded its activity during the last two years.

(1) Cash Management Product (CMP)

CMP Cheque and cash collection services in the Bank are now offered through 1133 authorized branches located at 701 Centres, while payment services comprising Dividend Warrants, Multi City Cheques, lOIs and e-payment are extended through all branches. CMP Centre executed several prestigious dividend deals like Reliance Industries Ltd., TCS, Tata Motors Ltd., L&T, Coal India Ltd. ONGC etc., in 2011-12. It is the Sole Refund Banker for Income Tax Department and handled over 111 lakh refund records (Rs36,613 crores) in FY 2011-12. CMP has been selected as the authorized banker for handling all UMEA payments for 253 PAOs relating to 43 accredited Ministries & Departments and also did the pilot.

(2) Trade Finance

SBI has been awarded the "Best Trade Finance Bank in India" Award for 2012 by The Asian Banker.

e-Trade SBI, a web-based online portal, has been launched by our Bank in March 2011 to provide the means to customers access trade finance services with speed and efficiency by enabling them to lodge Letters of Credit, Bank Guarantees and Bills Collection/negotiation requirements online from any corner of the world. Presently, the e-trade platform has been introduced in all 6 CAG Branches and 63 MCG Branches and has been well received with 393 Corporates registered under e-Trade SBI as on 31.03.2012.

(3) Supply Chain Finance

e-VFS ( Electronic Vendor Financing Scheme) & e-DFS ( Electronic Dealer Financing Scheme)

The above products, which are fully on electronic platform, provide automated payment and settlement of supply chain transactions as also real time MIS to both Industrial Majors(IM) and their vendors and dealers. A total number of 64 IMs and 289 vendors and 1041 dealers across the country have been migrated to the electronic facility under the e-VFS/e-DFS platform as on 31.03.2012.

B.3. Project Finance & Leasing SBU (PFSBU)

Project Finance & Leasing SBU (PFSBU) focuses on funding large projects in infrastructure sectors like power, telecom, roads, ports, airports, other urban infrastructure as also other non-infrastructure projects in sectors like metals, cement etc., with certain threshold on minimum project cost.

In order to further strengthen this specialised outfit, Bank has engaged 19 former CEOs/ Directors of leading PSUs with domain expertise in Energy, Transport, Mining, Telecom, Metals and Fertilizer sectors to provide consultancy support in technical areas.

During 2011-12, PFSBU appraised and enabled funding of projects with outlay of Rs1,08,468 crores (Rs3,33,054 crores) involving debt of Rs84,408 crores (Rs2,36,607 crores). Sanctions accorded aggregated Rs24,976 crores (Rs59,209 crores), while PFSBU took up syndication of debt of Rs18,610 crores (Rs73,082 crores) with other banks.

Major sanctions with Project Finance during 2011-12 included Neyveli Lignite Corporation Limited (Rs2,500 crores) for setting up Power plant for 1000 MW, Meja Urja Nigam Limited (Rs2,000 crores) for 1320 MW and Tata Teleservices Ltd (Rs2500 crores) for expansion of their services.

As on 31st March 2012, the portfolio of infrastructure projects under implementation with Project Finance SBU involves Power projects to produce 57,788 MW including 399 MW from renewable sources; Telecom Projects serving 303 million subscribers; Road projects to lay 5185 kms. of 2-lane, 4-lane & 6-lane Roads; new Ports to handle 40 MTPA multi-purpose cargo and 1.2 million TEU of container capacity ; Metro projects in the cities of Bangalore and Hyderabad besides a host of projects in steel, cement, Urban Infra, CRE etc. During the year, a total (FB + NFB) of Rs15,410 crores (Rs9,670 crores in FY11) were disbursed to these projects.

Financial Year 2011-12, saw a general decline in new investments more particularly in the Infrastructure sector owing to higher interest rates and systemic issues. PFSBU plays an active role in various efforts being made by Government and other agencies to iron out the issues facing infrastructure finance.

Notwithstanding the slowdown, 43 proposals were in pipeline with aggregate Project Cost of Rs69,535 crores and debt component of Rs49,465 crores with SBIs Share likely to be Rs11,643 crores as on 31.03.2012. When completed, these projects will further add to the Infra story of our country. (Figures in brackets represent previous year figures)

B.4. Financial Institutions Business Unit (FIBU)

FIBU focuses on capturing potential business opportunities from financial institutions viz. Banks, Mutual Funds, Insurance companies, Brokerage Firms and NBFCs. Capital Market Branch, Mumbai (CMB), a specialized branch under FIBU, is a settlement bank for all major exchanges and CCIL. CMB has handled the settlement banking and transaction banking needs of brokers and mutual funds and has also acted as the Banker to the Issue and Escrow Collecting and Refund Banker to all major IPO/FPO/NFO/Bonds Issues including NHAI, HUDCO, REC, NBCC.

Some of the major initiatives undertaken and products launched for this segment include special current account product for brokers, special current account product for targeting housing societies / associations for mobilizing CASA, site to site integration facility for large stock brokers,

ATM sharing arrangement for RRBs and Co-operative Banks.

Products being developed by FIBU include collection of premium of Life Insurance Companies, new deposit and loan products for stock brokers, etc. FIBU is focusing on leveraging our vast network and technology to increase our market share of CASA by offering collection, payment and remittance solutions to FI clients pan India.

C. MID-CORPORATE

1. MCG exclusively caters to the banking needs of the units falling under the Mid-Corporate sector. The main purpose of creation of MCG was to improve the service levels to the Mid-Corporate customers through improvement of the Turnaround Time (TAT) for credit delivery and ensuring quality in credit appraisal, as well as extension of banks various products to the Mid- Corporate customers through Relationship Management model. As at the end of 31.03.2012, the Group has expanded to 62 branches under 10 MCROs at Ahmedabad, Bangalore, Chandigarh, Chennai, Hyderabad, Indore, Kolkata, Mumbai, New Delhi and Pune, with an asset base of Rs1,72,651 crores. All Companies / firms whose annual sales / Income exceed Rs50 crores or whose Fund Based and Non Fund Based requirements exceed Rs10 crores are covered by MCG. Facilities are extended to the customers in the form of Cash Credit, Term Loans, FCNRB Loans, ECBs (through our International Banking Group), Letters of credit, Bank Guarantees, Letters of Comfort, Buyers Credit, Vendor Finance, Supply Chain Finance, Cash Management Product etc., MCG encompasses the entire span of industrial activities in all sectors like textiles, iron, steel, food, sugar, engineering, pharmaceuticals gems & jewellery, infrastructure sector including construction, telecom, roads, ports, power etc. as well as trade and services sector. The aggregate business (Fund Based Assets and deposits) of the Group is Rs1,97,162 crores as on 31.03.2012.

2. During 2011-12 the Group sanctioned 397 loans by way of new connections aggregating an asset growth of Rs14,466 crores, thus increasing the level of Fund-based advances from Rs1,61,208 crores as on 31.03.2011 to Rs 1,72,651 crores as on 31.03.2012. The Group recorded y-o-y growth of 39.86% by way of Interest Income and 33.89% in operating profit. The average yield on advances of the group stood at 11.87% as at the end of March 2012 vis-a-vis 9.88% as on 31.3.2011.

3. The Group also extends export credit to the exporters through EPC, PCFC and EBR. The aggregate outstanding export credit as on 31.3.2012 of the Group was Rs19,324 crores. The aggregate Forex business (Sales & Purchases) of the Group as on 31.03.2012 stood at Rs4,52,816 crores vis-a-vis Rs4,07,901 crores as on 31.03.2011. The Group also assists its customers in imports through facilities like issue of LC / BG / LOC as well as extension of Buyers Credit facility. Apart from this, the Group also assists Companies in India to acquire assets / companies abroad and also funds the expansion plans of its customers abroad through issuance of LOCs through the Banks International Banking Group. Over the years, the Group has helped many such acquisitions by the companies in USA, Europe, Australia, Africa etc.

4. In addition, MCG has also extended Vendor Financing and Supply Chain Financing to the industrial units to facilitate smooth achievement of their Sales targets.

5. The Staff strength of MCG has increased marginally from 3,470 as on March 2005 to 3,806 as on 31.03.2012. The business per employee has increased over 4 times during the same period from Rs11.98 crores to Rs48.24 crores.

6. To enable the units to overcome the stress in their business, the Group has restructured 65 accounts aggregating Rs3,139 crores during the year.

7. The Group has also actively participated in 19 activities under Corporate Social Responsibility programmes encompassing donations of school buses, ambulances, cycles for orthopaedically challenged, vocational training equipments, etc., aggregating Rs42.28 lacs.

HIGHLIGHTS

(Rs in Crores) 31.03.2011 31.03.2012

Advances 1,61,208 1,72,651

Aggregate Business 1,87,236 1,97,162

Forex Remittances 3,97,587 4,42,957

Export Credit 19,452 19,324

Intt. Income 14,288 19,983

Other Income 2,345 2,482

Operating Profit 15,419 20,646

D. NATIONAL BANKING GROUP (NBG)

National Banking Group, as on 31st March 2012, comprised of 14,013 out of 14,097 domestic branches, controlled by 14 Local Head Offices. NBG has five strategic Business Units comprising of Small & Medium Enterprises (SMEBU), Personal Banking (PBBU), Real Estate Habitat & Housing Development (RE-H & HD), Rural Banking (RBU) and Government Business (GBU). NBGs share in the total business of the Bank as on 31.03.2012 is 94.71% in total domestic deposits(excluding Inter-Bank) and 58.08% in total domestic advances (excluding Food & Inter-Bank).

NBG Highlights

(Rs in Crores)

As on 31.03.2011 31.03.2012 YoY Growth Level Level Absolute (%)

Deposits (excl.Inter- bank) 7,94,836* 9,15,670 1,20,834 15.20

Advances (excl. Food & Inter-Bank) 3,72,797* 4,29,843 57,046 15.30

(*This figure is inclusive of RBU for the year 2011)

- During the year, PBBU deposits have grown by Rs93,056 crores with a growth of 18.38%.

- The CASA Ratio as on 31.03.2012 is 47.06%.

- 227 lac new Savings Bank Accounts were opened during the year ended 31st March 2012.

- During the year, the Bank launched a Personal Accident Insurance Policy on a pilot basis for our Savings Bank customers at a very competitive cost.

- The Bank entered into a tie-up with M/s Thomas Cook to provide Money Transfer Services Scheme (MTSS) of M/s Moneygram.

- The Bank has been designated as the Point of Presence (PoP) for conducting business under the New Pension Scheme (an initiative of the Government of India).

- The Bank is Self Certified Syndicate Member for ASBA (Application Supported by Blocked Amount) as per SEBI guidelines, which is being offered through 1,061 branches in India.

- The charges on non-maintenance of Average Quarterly Balance in Savings Bank Accounts have been waived.

- Only Multi-city Cheques are now being issued to all P-Segment customers with a uniform limit of Rs5 lacs.

NRI Services

- NRI Deposits grew by Rs11,486 crores (22%) during the year and reached a level of Rs 63,263 crores in March 2012. NRIs have invested in the schemes of SBIMF and SBILIFE to the tune of Rs2,058 crores during the year. FCNB Premium Account which was launched last year booked business to the tune of USD 42 mn, GBP 12 mn, Euro 8 mn against USD 15 mn, GBP 2 mn and Euro 3 mn.

Corporate & Institutional Tie-Ups

The Bank now has customized Special Salary Packages for employees of Corporates, Defence, Para Military, Railways, Central Government, State Governments as well as Police, which enable a focused marketing approach. The growth in Salary Package Accounts has generated a high level of CASA accounts.

Corporate & Institutional Tie-Ups Salary Package Particulars 31.03.2011 31.03.2012

YoY Growth % in account growth

Defence and Para Military accounts 14,82,336 20,18,470 5,36,134 36.17

Other Accounts 31,25,129 41,57,034 10,31,905 33.02

Total 46,07,465 61,75,504 15,68,039 34.03

CASA (Rs in Crores) 12,655 16,221 3,566 28.17

Education Loans

SBI Education Loans have grown at 13.2% YoY (as on March 2012). SBI has a total exposure of Rs12,566 crores as on March 2012 and is the market leader with a market share of approximately 25% amongst ASCB.

Personal Loans

The Personal Loans Portfolio, grew by Rs3,691 crores in FY 12. The most notable growth was seen in Gold Loan which grew by 51.06% in FY 12. Auto Loans

SBI Auto Loans maintains its market leadership in retail car loan financing and enjoys a market share of 17.51% as on March 2012.

D2. Real Estate Habitat and Housing Development (RE, H&HD)

Home Loan portfolio of the Bank grew by Rs12,826 Crores during FY 2011-12 to Rs1,02,739 Crores.

About 2 lacs new Home Loan customers were added to the portfolio during the same period. Total Home Loan limits sanctioned during FY 2011-12 were Rs28,036 Crores. State Bank of India continues to be the No.1 Home Loan player in terms of size of the Individual Home Loan portfolio - amongst all players in the Home Loan market. State Bank of India had a market share of over 26% in Home Loan levels achieved by Scheduled Commercial Banks as of 31st March 2012.

FY 2011-12 saw an uptrend in the interest rate cycle, keeping this in view the following steps were taken to minimise the possibility of stress arising from rise in Home Loan rates -

- Maximum repayment tenure for new Home Loan borrowers increased from 25 to 30 years.

- Extension of repayment tenure up to 5 years keeping EMI unchanged, subject to maximum tenure of 35 years.

- Existing borrowers on floating rate loans have been given a one time option to switchover to current interest rates by paying a 1% switchover fee.

A new Home Equity product has been launched to provide existing home loan customers an option to leverage their equity in the house to raise additional loans at low interest rates for meeting their liquidity requirements. Furthermore, modifications have been carried out in the Yuva Home Loan and Maxgain products to extend their coverage, so that more customers are able to get benefitted by the schemes.

Optional Life Insurance cover is available to Home Loan customers under SBI Suraksha. The customer has option for selecting a suitable product from SBI Life namely, RiNn Raksha or Smart Shield policy at payment of nominal premium. Bank provides additional loan for payment of premium at similar terms as applicable to the underlying Home Loan. Technology initiatives like dashboards for monitoring of slippages, account tracking centres etc. have been undertaken towards management of collections and prevention of fresh slippages. In order to strengthen Banks affordable housing initiatives, consultations are underway with consultants for arriving at a suitable methodology for delivering finance for affordable housing.

D3. SME Business Unit (SMEBU)

During the financial year 2011-12, the advances under SME Business Unit has registered YoY growth of 17.40%. The business figures of SME Business Unit as on 31.03.2012 have remained as under:

(Rs in Crores)

Particulars As on As on Growth 31.03.2011 31.03.2012

Advances 139470 163745 24274

(17.40%)

Highlights and Initiatives:

- Relationship Banking :

Under single window approach, the Bank is offering relationship banking to SME entrepreneurs. The strength of Relationship Managers (Medium Enterprises) was augmented to 510 as on 31.03.2012 and mapped to ME units with credit limits Rs1.00 crore and above across the country. Further, to improve credit flow to Micro and Small Enterprises a new channel of Relationship Managers (SE), was introduced for MSE units having Credit limits between Rs10.00 lacs to Rs1.00 crore.

- Specialized SME Branches :

To provide specialized services to SME Entrepreneurs, 400 branches having predominant share of SME advances in their portfolio were identified for rebranding as "SME BRANCH".

- Credit Flow to Micro and Small Enterprises

i. Bank is extending collateral free lending upto Rs1.00 crore to MSE sector under guarantee of CGTMSE. Additionally, to provide relief to these units, the Bank decided to absorb the guarantee charges payable to CGTMSE. To ramp up collateral free lending to Micro and Small Enterprises, a special campaign "SME BONANZA" was launched for a period of three months from January-March 2012.

ii. A new product Weavers Credit Card launched for weavers.

- Project Uptech and Cluster Financing :

The Bank is providing consultancy services to SMEs to enable them to increase productivity and reduce costs. Since inception of the initiative, 1600 units have benefitted in 28 clusters. During the year, a project for engineering and fabrication was launched in Nagpur along with two ongoing projects at Jamshedpur and Trichy. Under cluster approach 13 clusters were taken up for financing by the Circles.

- Supply Chain Finance:

Under e-DFS and e-VFS, the Bank has tied up with 60 Industry Majors(IMs) with aggregate business of over Rs3,325 crores across all Industry Verticals like Auto, Oil, Steel, Power, Fertilizer, FMCG & Textiles.

- Liability & Transaction Products:

- unFIXED Deposit: The Bank launched a new scheme for short term deposits for 7 days to less than 1 year with an attractive feature of waiver of prepayment penalty. It met with success and we plan to take it forward next year.

- New process for deposit of contributions to Employees Provident Fund Organisation (EPFO) was implemented across the country in our 7000 plus branches. Deposit of such contributions through CINB was also put in place.

- Service charge on payment of Multi City Cheques was waived for SME customers.

- Cash Pick up facility was launched across the country for cash collection of SME customers at their door steps.

- An Internet banking transaction product- CINB SARAL with single user interface was launched for micro & small entrepreneurs.

- The process of implementation of Loan Origination Software was started for better monitoring of SME advances.

- During the year our Bank has been conferred with the Second Award under National Awards for Excellence in MSE Lending by Government of India for the financial year 2010-11.

D.4 Government Business Unit (GBU)

- With 58.50% market share in Government Business, the Bank has not only retained its leadership but also increased its market share by 70 basis points over previous year.

- Bank earned a commission income of Rs2,008 crores as against Rs1,939 crores during the previous year.

- E-Governance Project of Central & State Governments have brought a paradigm shift in the way Government Business will be conducted in the days to come. Integration of these projects with the Banks robust Core Banking Solutions/Internet Banking platform has enabled us to conduct Government Business efficiently and seamlessly throughout the country.

- Bank is handling pension payment to 32.72 lacs pensioners through its 14 Centralized Pension Processing Cells (CPPCs), established across the country. These cells provide efficient services & timely payment of pension & arrears to the pensioners, leading to a steady growth in pension accounts. From this year, pension details are being sent to the pensioners on their registered mobile number through SMS.

- "THIRD PARTY E-TAX", a new product enables all our branches to pay taxes online, on behalf of all customers/ non customers who either do not have access to Internet Banking or are not comfortable using it.

- E-AUCTION Project of Indian Railways for Payment/ Registration Fee/EMD/Auction Money was successfully implemented on 06.03.2012.

- Electronic Data Integration (EDI) Model of Fee Collection of UPSC/SSC etc. was launched with relevant details of the customers being auto uploaded in CBS. The Product is also being used for collecting fee for Recruitment Boards, Examination Fee for Colleges, Schools, State Public Service Commissions etc.

- Fund cum Authorization Model for Social Sector Flagship Schemes like National Literacy Mission (NLM) has been successfully implemented by the Bank in coordination with MoHRD. Out of the 26 States identified for implementation of the NLM Scheme, SBI is a partner in 22 States.

- The Bank is proud to be associated with Central Government Projects like Government e Payment Gateway (GePG). By integrating with GePG portal, the Bank has been enabled to make electronic payments to employees/vendors of Central Government, across the country.

- Bank has partnered in all 77 Passport Seva Kendra (PSK) opened by the Ministry of External Affairs (MEA).

- Bank is providing the facility of online payment of various taxes in most of the States and Union Territories and is expected to become operational throughout the country in 2012-13.

D.5 RURAL BUSINESS UNIT (RBU)

AGRI BUSINESS

- The Bank has crossed the milestone (Agri Priority level) of Rs1,00,000 crores (Rs1,16,910 crores) by covering more than 1,00,00,000 farmers, taking Agri Priority Advances to 17.60% of Adjusted Net Bank Credit (ANBC) as against 16.59% last year.

- Direct Agri Advances have grown from 12.09% to 13.10% to ANBC.

- The Bank achieved highest ever growth of Rs18,348 crores (27%) under Direct Agri against the last years growth of Rs5,911 crores (9%) and also achieved highest growth of Rs22,084 crores under Total Agri Priority advances against last years growth of Rs10,675 crores.

- The Bank has disbursed credits aggregating to Rs53,214 crores in FY 12 and financed 13.31 lacs new farmers during this year.

Position of Agri Advances and Agri institutional Deposits:

(Rs in Crores)

Particulars As on As on Growth % 31.03.2011 31.03.2012

a) Direct Agri Advances 68,663 87,011 27%

b) Indirect Agri Advances 26,163 29,899 14%

Agri Priority Advances (a+b) 94,826 1,16,910 23%

Agri Institutional Deposits 19,724 24,309 23%

Other Highlights

- The Bank has extended advances to the tune of Rs71,382 crores as on 31.03.2012 to the weaker sections, which is 10.75% of ANBC against the benchmark of 10 % set by Reserve Bank of India.

- Against GoI stipulated target of 15% of the total Priority Sector Lending (PSL) to Minority Communities, the Bank has achieved a level of 16.17% as on 31.03.2012.

- Special focus has been given for creation of efficient Warehouses and Cold Storages in line with GoIs policy for augmenting storage capacity.

- During the year 199 villages were adopted under "SBI Ka Apna Gaon Scheme" taking the total to 1,063 villages & 220 Farmers Clubs were formed taking the total to 10,047 Farmers Club.

- Under the guidance of Ministry of Rural Development (MoRD), GoI, the Bank has set up 106 Rural Self Employment Training Institutes (RSETIs) as on 31.03.2012 in the allotted districts across the country; conducted 4,186 training programmes, trained 1,11,049 candidates and helped to settle 45,285 trainees.

- The Bank has opened 133 new branches in under-banked/unbanked areas in Minority Community Districts(MCDs) taking the total number of such branches to 3,266 as on 31.03.2012.

- The Bank has infused additional capital amounting to Rs125.64 crores to 9 identified RRBs to enable them to achieve Capital to Risk Weighted Assets Ratio (CRAR) of at least 9% by March 2012 on a sustainable basis.

- All the 2,960 branches of SBI sponsored RRBs have migrated to CBS platform in order to provide better customer service.

Micro Finance:

- The Bank is the market leader (market share around 25.55%) in SHG-Bank Credit Linkage programme having credit linked so far 20.73 lac SHGs (1.79 lac SHGs credit linked during FY 11-12) and disbursed loans to the extent of Rs17,837 crores (cumulative) up to 31.03.2012. Under the scheme for financing NGOs / MFIs for on-lending to SHGs, the Bank has covered 174 units with outstanding of Rs927 crores as on 31st March 2012. Micro Insurance product - Grameen Shakti has been introduced & 1.14 million lives have been covered.

KYC/AML/CFT Measures

The Bank has put in place the Board approved revised policy on Know Your Customer (KYC) / Anti Money Laundering (AML) / Combating Financing of the Terrorism (CFT) measures in line with Master Circular issued by Reserve Bank of India on the subject.

Monitoring of Transactions is done with a view to submit various reports to Financial Intelligence Unit-India mandated by rules of Prevention of Money Laundering Act, 2002.

The Bank has decided to observe 1st August every year as "KYC Compliance and Fraud Prevention day" to maintain appropriate awareness and involvement levels across the Bank as also to create proper understanding of KYC issues among the members of public.

E. INTERNATIONAL BANKING

E-1. Operation of Foreign Offices

The asset level of foreign branches rose by 12%, from USD 32.04 bn in March 2011 to USD 35.826 bn in March 2012. During FY12, net customer credit grew by 9% from USD 24.525 bn to USD 26.681 bn, customer deposits grew by 15%, from USD 10.490 bn to USD 12.075 bn and net profit rose by 21%, to USD 396 mn.

Overseas Expansion

The number of foreign offices increased from 156 as on 31st March 2011 to 173 as on 31st March 2012 spread across 34 countries. The offices comprised 50 branches, 8 Representative Offices, 103 offices of the six foreign banking subsidiaries and 12 other offices.

Resource Management

Despite widespread risk aversion and volatile market conditions, the Banks foreign offices maintained comfortable liquidity position. The Bank has a USD 10 bn Medium Term Note (MTN) programme in place under which the outstanding at the close of FY-2012 was USD 4.43 bn. Under the MTN programme USD 200 mn (Rs1,017.50 crores) was raised by way of reverse inquiries. The Bank was able to redeem bonds worth USD 800 mn (Rs4,070 crores) without having any impact on the liquidity at its foreign offices.

The Bank raised USD 460 mn funds through Syndication Arrangement for three years at a competitive pricing of 145 basis points over 3 months LIBOR in June 2011. During the fiscal the Bank also raised a sum of USD 367.08 mn (Rs1,867.52 crores) by way of bilateral loans of different maturities.

Remittance

Remittances grew from Rs46,396 crores in FY11 to Rs61,457 crores in FY12, clocking a growth of 32%. The Bank had a tie-up with 26 exchange companies and four banks in Middle-East countries for routing remittances through SBI. During the year, new remittance products like SBI Rupee Instant, SBI Express WorldWide were launched to boost remittances business.

E-2. Domestic Operations Merchant Banking

The Bank retained the leadership as Mandated Lead Arranger and Book Runner for syndicated loans in Asia Pacific (excluding Japan but including Australia) for the year ended March 2012.

During the year, fourteen high value transactions for financing ECB requirements of Indian Corporates, as well as their acquisition related financing requirements aggregating USD 4758 mn, were syndicated successfully with a participation of USD 1423 mn. Apart from this, a large number of bilateral deals aggregating USD 2190 mn were also concluded with Indian Corporates.

A fee income of USD 86 mn was earned from syndications and bilateral deals concluded during the year.

Global Link Services (GLS)

In the year 2011-12, GLS on behalf of domestic branches, handled 1,09,413 export bills and 1,09,086 foreign currency cheque collections aggregating USD 13.36 billion. In addition, it handled 58,53,632 inward remittances transactions amounting to USD 5.89 billion from various centres in the Middle East, UK and USA.

Correspondent Relations

The Bank maintains correspondent banking arrangement with 476 reputed International Banks to extend seamless services to varied clients. These correspondent Banks are located in 118 countries. The Bank also has 1,871 Relationship Management Application (RMA) arrangements with SWIFT, facilitating speedier flow of financial messages.

Country Risk and Bank Exposures

The Bank has in place Country Risk Management Policy in tune with RBI guidelines. The policy outlines robust risk management model with prescriptions for Country, Bank, Product and Counter party exposure limits. Both Country- wise and Bank-wise exposure limits are monitored and reviewed on a regular basis. The exposure ceilings and classifications are moderated in line with the dynamics of their risk profiles. Periodical corrective steps are initiated to safeguard the Banks interests.

2. CUSTOMER SERVICE QUALITY INITIATIVES

- The Grievance Redressal Policy of the Bank is based on the Model Policy Framed by Indian Banks Association and provisions of the revised Code of Commitments to Customers released by Banking Codes and Standards Board of India. The Bank has been able to redress majority of the customer grievances within a maximum period of three weeks of receipt as against the time limit of 30 days. Bank has also been able to resolve almost all ATM related complaints within the RBI stipulated period of 7 days.

- The Standing Committee on Customer Service constituted at the Local Head Offices with representatives from customers including Senior Citizens review the overall position of Customer Service in the Circle. Analysis of the consolidated data for Customer Grievances for all Circles is being put up to the Customer Service Committee of the Central Board every quarter to identify common systemic issues that require rectification, and also review the remedial measures taken by the Bank for improving the Customer Service.

- The web based Complaint Management System (CMS), launched in December 2009 for early resolution of ATM related complaints, has since been extended to accept all types of complaints. The customers can register their complaints at the Toll Free number of Contact Centre or online at www.sbi.co.in and obtain a unique complaint number which helps them to trace the status of complaints thereafter through Contact Centre.

- The Bank also has a mobile and web based service for customer grievance redressal - SMS Unhappy Service with resolution within 48 hours.

DAMODARAN COMMITTEE REPORT ON CUSTOMER SERVICE, 2010

Keeping in view the far reaching impact the Report would have on Customer Service in the Banking Industry, the Bank has constituted a High Level Committee which has deliberated on each of the recommendations. Over 50% of the recommendations have already been implemented.

3. NPA MANAGEMENT

The position of NPA reduction as on 31.03.2012 is given hereunder:

Asset Quality (Rs in crores)

1 Gross NPAs 39,676

Gross NPA percentage 4.44%

2 Net NPAs 15,819

Net NPA percentage 1.82%

3 Cash Recovery in NPA 4,159

4 Up gradation to Standard Assets 5,459

5 Write offs 744

6 Gross reduction in NPAs (3+4+5) 10,362

7 Fresh Slippages of Standard Assets 24,712 to NPA category

8 Recovery in written off accounts 962

Stressed Assets Management Group (SAMG) :

In order to give focussed attention to high value NPAs in SME and Corporates, Stressed Assets Management Group (SAMG) was created in April 2011 headed by a Deputy Managing Director.

SAMG has 14 Stressed Assets Management Branches (SAMBs) and 1 Resident Office under its wings. The Group opened two new branches in March 2012 (one each at Ludhiana and Ernakulam). These branches handle NPAs and AUCAs with outstandings in excess of Rs1 crore. Each branch has dedicated, trained staff including a legal expert for expeditious resolution and is able to effect significant recoveries by resorting to action under SARFAESI Act, DRT Act, sale to ARCs and negotiated settlements.

In addition, 115 Stressed Assets Resolution Branches/ Centres (SARB/SARCs) have also been functioning under NBG across the country in Metro/ Urban centres for quicker resolution of NPAs with outstandings upto Rs1 crore in MSME and Personal segments.

The performance of SAMG for the period 2011-12 is given below:

(Amount in crores)

1 Cash Recovery in NPA 826

2 Upgradations in Standard Assets 154

3 Write - Offs 9

4 Gross reduction in NPAs (1+2+3) 989

5 Recovery in written off accounts 216

Total Resolution 1205

- Restructured assets

Adequate importance is being given to restructuring of standard assets under stress, as well as viable non-performing assets. This is done under the Banks own guidelines as well as through CDR mechanism, for arresting additions to NPAs and reducing existing level of NPAs.

48 cases with the Banks aggregate exposure of Rs9,131 crores were referred to CDR mechanism during 2011-12, out of which 24 cases aggregating Rs3,782 crores have been approved and 24 cases aggregating Rs5,349 crores are under process. In these cases, timely intervention has given the Corporates an opportunity to recover from the stress.

Initiatives for NPA Management

To give thrust to recovery efforts and to prevent slippages, various measures were undertaken, which included, timely identification of SMAs and dissemination of information to operating units, etc., brief details of which are as under:

Tightening of appraisal norms / loan eligibility criteria (e.g: The minimum income criteria for Auto Loans has been raised from Rs 1 lac to Rs2.5 lacs p.a.).

Risk Scoring Models have been developed for all P-Segment Loans on the basis of statistical models for objective assessment.

Account Tracking & Monitoring online (AT@M) launched for updation of account wise follow up in P-Segment.

NPA Dashboard is being utilised as a data tool for real time monitoring of NPAs.

To provide relief to stressed MSME sector, Bank has launched non-discretionary and non- discriminatory scheme named "SBIOTS-MSME- 2012", for one time settlement of loan outstanding with liberal terms.

ATCs have been operationalised in all Circles to contact borrowers with outstanding up to Rs25 lacs in SMAs and soft NPA accounts in SME.

4. CORPORATE STRATEGY AND NEW BUSINESSES

A. Merchant Acquiring Business

In order to tap huge potential available in the market and also to create a comprehensive electronic payment infrastructure to activate our more than 108 million debit cards, Bank has entered into Merchant Acquiring Business (MAB). Bank has, so far, approved deployment of more than 28,000 PoS terminals. Bank has already entered into several corporate tie-ups with prominent players in different segments.

B. Financial Planning & Advisory Services

It is strategising to provide financial solutions driven by customer segmentation and offer relationship banking to high end customers.

C. Private Equity

The Banks maiden Private equity foray, the SBI Macquarie Infrastructure Fund, set up in collaboration with Macquarie Group of Australia and International Finance Corporation, Washington closed for subscription and raised a corpus of Rs5,265 crores. The Fund has made five investments worth Rs3,092 crores in Key infrastructure sectors such as airports, telecom towers, thermal power and hydro power. Since its inception, the fund has been rated as the Number one Private Equity Fund in 2010 and adjudged as the "Most Admired Infrastructure Equity F inancier 2011".

The Joint venture with State General Reserve Fund of Sultanate of Oman, the largest sovereign fund of Oman, named Oman India Joint Investment Fund has been operationalised with an initial corpus of USD 100 million.

D. Debit Cards

State Bank Group continues to lead the Debit Card market with over 110 million

Debit Cards as on 31st March 2012 which constitutes about 40% of the total Debit Cards in the country. Debit Card spends of State Bank Group crossed Rs11,000 crores which constitutes around 20.5% of total Debit Card spends in the industry. State Bank Group has also switched over to issuance of 16-digit variants with a view to making its Debit Cards more Point of Sale/ e-Commerce friendly. State Bank of India also introduced State Bank Virtual Card, an e-Card that can be created by Banks Internet Banking customers and used online, to provide a fillip to e-Commerce.

E. Prepaid Cards

i. Vishwa Yatra Foreign Travel Cards (VYFTC)

Vishwa Yatra Foreign Travel Cards (VYFTC) is now a CHIP based EMV Compliant Card and is available in eight currencies, viz. US Dollar (USD), Great Britain Pound (GBP), Euro, Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yan (JPY), Saudi Riyal (SAR) and Singapore Dollar (SGD). Sales for FY 2011-12 were to the tune of USD 59.93 million.

ii. eZ-Pay Cards are aligned with most of the Government social schemes in addition to salary payments by Corporate entities, thus reaching millions of households. Sales for FY 2011-12 were to the tune of Rs860.87 crores.

iii. Gift Cards

Customers can create Gift Cards online. Sales registered for FY 2011-12 was Rs106.44 crores.

F. The Green Channel Counter

The Green Channel Counter launched in 2010 is available at 5,660 branches.

i. Self Service Kiosk (SSK)

SSK launched on 1st July, 2011 through which a customer can make various financial and non-financial transactions by using his Debit Card has been completed in 59 branches across India. Currently, 20 types of transactions including Pass Book Printing are enabled.

ii. Cash Deposit Machine (CDM)

CDM is a machine wherein customer can deposit cash by using his Debit Card. During the year, Bank had deployed 35 CDMs across the country. On each day, average 50 Cash Deposits are being made through each CDM.

iii. Green Remit Cards (GRC)

In order to facilitate Non-Home Cash deposits, Bank introduced Green Remit Cards on 3rd January, 2012 to the remitters who need not be the account holders of the Bank. This facility does not require filling up pay-in-slips by the remitter. All Branches with Green Channel Counters are enabled to offer this facility.

5. FINANCIAL INCLUSION

Bank has achieved 100% coverage of allotted 12,931 villages under Financial Inclusion Plan (FIP) 2011-12 and has opened 40 lacs accounts in FIP villages during the FY 12.

- 1.36 crores No Frills accounts have been opened in 400 districts of 32 States/UTs.

- Bank has set up around 30,000 BC Customer Service Points through alliances both at national and regional level. Also, 113 Financial Inclusion Centres to support the Business Correspondent (BCs) have been set up across the country.

- All products offered through Business Correspondent (BC) channel are technology enabled. Savings Bank, RD, remittance & SB-OD facilities are the products offered through BC channel.

- SBI is one of the Registrars of UIDAI. After State Governments, SBI is the top enroller with more than 252 lac enrollments. Aadhaar enabled Account opening started from data received from UIDAI.

- To facilitate Electronic Benefit Transfer to the rural poor / low income group populace under the MGNREGS, Social Security Pension payments, etc. the Bank has opened more than 27 lac accounts so far and disbursed Rs310 crores during FY 2011- 12 (Rs167 crores disbursed during FY 2010-11).

Multiple IT enabled channels for Financial Inclusion:

The Bank has gone beyond the usual domains of technology in terms of platform, solution, operational details and service contents in a very aggressive manner to serve the excluded common citizen with minimal costs. Some of these channels are:

SBI Tiny Card - About 10 lac customers have been enrolled during the Financial Year (cumulative more than 62 lac customers). Tiny Cards now support Savings Bank, Recurring Deposit, SB-Cum- Overdraft and Remittance products.

Kiosk Banking - The Banks own Technology Initiative, operated at internet enabled PC (Kiosk) with bio-metric validation at 9,211 CSPs, covering 29 lac customer enrollments, has been rolled out in 30 states and 412 districts.

Mobile Rural Banking - The Banks own technology on mobile platform, operable also in low cost mobile introduced and covered 70 CSP outlets.

Cell Phone Messaging Channel - This cost effective model, working on low - cost simple mobile phones and well secured through PIN / signature based security has been rolled out in

7 states across 14 districts and covered 1803 CSP outlets.

Urban Financial Inclusion - To cater to Urban excluded populace, more than 3,600 BC outlets have been set up in Urban/Metro centers. 88 lac remittance transactions for Rs3,888 crores were registered during FY 12.

SUPPORT & CONTROL OPERATIONS

1. INFORMATION TECHNOLOGY

A. Core Banking:

A major infrastructure upgrade of hardware and data storage system has been undertaken for the Primary and the Disaster Recovery set up to ensure uninterrupted and efficient operations, reduce processing time and make provision for scalability for future requirements. Milestones of managing 307 million accounts, 56 million transactions in a day and 2,067 transactions per second have been achieved.

A centralized functionality to generate and provide statements of accounts to all Current Account customers, Home Loan interest/installment payments certificates and TDR/STDR interest paid during the year with TDS particulars have been rolled out. Similar customer service initiatives are on the anvil. A centralized Credit Data Processing (CCDP) functionality fully integrated with CBS has been implemented to collate data for annual closing activities.

B. Expanding foot prints through Alternate Channels:

March 11 March 12 ATMs No. of ATMs of the Group 25,005 27,286

No. of ATMs of SBI 20,084 22,141

Average hits per day 285 285

Debit Cards (in lakh) 728 910

Internet No. of Customers Banking (in lakh) 62.57 89.63

No. of transactions during the Financial year (in lakh) 1,437.46 2,610.32

Mobile Registered Mobile Banking users (in lakh) 10.13 36.45

No. of successful financial transactions (in lakh) 49.30 190.65

No. of Non financial transactions (in lakh) 95.23 317.72

Contact No. of registered Centre customers (in lakh) 9.96 15.31

(i) ATM

State Bank Group has in its stable, variants of ATMs namely Bunch Note Acceptors, Bio metric ATMs, Low Cost Rural ATMs, Solar Powered ATMs, Multi function Kiosks - for printing passbooks, statement of accounts, bar code readers for utility bill payments, internet banking etc. While cash deposit facility has been activated at some of the ATMs, we are now going to deploy a large number of Cash Deposit Machines (Bunch Note Acceptors) at ATM locations which customers can use 24x7 to deposit cash. 50 such machines have already been deployed and we plan to deploy another 600 Cash Deposit Machines this year.

Cash out incidents in ATMs have been eliminated.

(ii) Mobile Banking:

As on 31st March 2012, there were 3.65 Million customers using the Service with more than 1.20 lacs daily transactions, around 46% of which are financial transactions amounting to Rs2.45 crores.

SBI is the market leader in this space, both in the number and value of the financial transactions with 83.70% market share in number of transactions and 49% share in transaction value (source: RBI data on mobile banking transactions - Feb 2012).

StateBank Freedom Premium, the new GPRS based mobile banking service has been rolled out.

SBI has launched mobile technology based prepaid payment services under the brand name of StateBank MobiCash on pilot basis in Delhi and Mumbai Circles of the bank.

(iii) Internet Banking:

Internet banking service is available through www.onlinesbi.co.in for both retail and corporate customers of the bank. Retail Internet Banking: SBI Instapay for utility bills payment, Corporate Internet Banking: CINB Saral- a simplified single user Corporate Internet Banking facility for small entrepreneurs etc. have been added during the year.

C. Foreign Offices:

137 branches in 24 countries, including 2 OBUs in India, run their operations on a common banking applications software, with their databases connected to a Central Data Centre backed up by a synchronized Disaster Recovery Site. All foreign offices use Internet Banking channel and 130 ATMs at various locations abroad cater to the Banks overseas customers with most of the ATMs connected to the centralized ATM Switch in India

D. Enterprise Data Warehouse:

The second phase of Enterprise Data Warehouse Project is under implementation. Dashboards have been developed and deployed to facilitate decision making by top executives of the Bank. Campaign Management tool has been implemented and campaigns through emails/ SMS have been launched by various Business Units targeting customers under various segments.

E. Payment System Group:

NEFT and RTGS continue to remain the most cost-effective and efficient modes for remittance. Our Bank has maintained 2nd position as on 31st March 2012 with market share of 13.70% in NEFT and continues to be the market leader in RTGS with a share of 13.85 % as on 31st March 2012. Cheque Truncation System (CTS) has been implemented in Chennai which will become part of the southern Grid for CTS. Swift Gateway has been centralized by shifting UK, US and Frankfurt operations to Swift Operation Centre, Mumbai.

F. Networking:

The Bank has implemented a secured, robust WAN architecture network built with equipment owned by SBI, connecting branches/offices and ATMs of State Bank Group through leased lines, VSATs and CDMA technology. While leased lines have been procured for the primary link for connectivity, ISDN lines or VSATs have been provided as backup. Wherever leased lines have not been found feasible, VSATs have been provided to the branches for connecting to Banks network. The bandwidth for VSATs is being upgraded from 32 kbps to 64 kbps at all locations. The Bank is also exploring alternate technologies like 3G, CDMA- EVDO, etc. to provide alternate connectivity. The Bank proactively monitors the bandwidth utilization and upgrades wherever warranted.

The Bank has in operation a state of the art video conferencing facility connecting all administrative offices and important branches.

2. RISK MANAGEMENT & INTERNAL CONTROLS Risk Management in SBI Risk Management Structure

- An independent Risk Governance Structure is in place for Integrated Risk Management covering Enterprise, Credit, Market, Operational and Group Risks. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.

Basel Implementation

- In accordance with RBI guidelines, the Bank has migrated to the Basel II framework, with the Standardised Approach for Credit Risk and Basic Indicator approach for Operational Risk w.e.f. March 31, 2008, having already implemented the Standardised Measurement Method for Market Risk w.e.f. March 31, 2006.

- RBI has issued Guidelines on Implementation of Basel III Capital Regulations in India on 2nd May, 2012. These Guidelines will become effective from January 1, 2013. Bank is in the process of putting in place appropriate mechanism to comply with these guidelines.

Enterprise Risk Management

- During the year, the Bank has set in motion the due process required for filing of application/letter of intent to RBI for implementing Advanced Approaches under Basel II, comprising of the three Pillar I Risks viz. Internal Rating Based (IRB) approach for Credit Risk, Internal Model Approach for Market Risk and Advanced Measurement Approach for Operational Risk.

- The Bank has in place the Internal Capital Adequacy Assessment Process (ICAAP) Document as required by Pillar II of New Capital Adequacy Framework under Basel II as prescribed by RBI.

- The ICAAP process covers identification, measurement, management, capital assessment and stress testing of material risks and also detailed additional capital requirements on account of such risks. Besides the aforesaid three Pillar I Risks, the ICAAP also covers Pillar II Risks such as Liquidity Risk, Interest Rate Risk in the Banking Book, Credit Concentration Risk, Reputation Risk, Strategic Risk etc.

Credit Risk Management (CRM)

- In addition to implementing the Standarised Approach, well defined credit risk practices such as use of Credit Risk Assessment (CRA) Models, Industry Exposure Norms, Counterparty Exposure Limits, Substantial Exposure Norms, Macro Economic Stress Tests etc., have also been put in place to improve credit risk management

- The Bank has now set in process a project to migrate to Internal Rating Based (IRB) Approach.

* Models for estimation of Probability of Default (PD), Loss Given Default (LGD), and Exposure At Default (EAD) are being developed.

* Credit risk data mart is being set up.

* Retail scoring and behavioural scoring models are being implemented.

Market Risk Management (MRM)

In accordance with RBI guidelines, Market Risk Management is governed by the Board approved policies covering Investment, Trading, Foreign Exchange, Derivatives, Value at Risk & Stress Testing which stipulate limits for various products and risk types in the portfolio. These limits along with Management Action Triggers & Stop Loss Triggers are monitored on a daily basis and in case of breaches; appropriate actions are initiated by the business units as per the policy prescriptions.

Operational Risk Management(ORM)

- The main objectives of the Banks ORM are to continuously review systems and control mechanisms, create awareness of operational risk throughout the Bank, assign risk ownership, alignment of risk management activities with business strategy and ensuring compliance with regulatory requirements.

- The Operational Risk Management Policy of the Bank establishes a consistent framework for systematic and proactive identification, assessment, measurement, monitoring and mitigation of operational risk & applies to all business and functional areas within the Bank, and is supplemented by operational systems, procedures and guidelines which are periodically updated.

Group Risk Management (GRM)

- A Group Risk Management policy is in place which applies to all Associate Banks, Banking and Non- banking Subsidiaries and Joint Ventures of the State Bank Group under the jurisdiction of specified regulators and complying with the relevant Accounting Standards, where SBI has investment in equity shares of 30% and more with control over management of the entity.

- All Group entities are encouraged to align their policies and practices with the Group, follow Basel prescriptions, guidelines of their regulators besides international best practices.

- The Group ICAAP Document for the State Bank Group is also prepared and submitted to RBI as required by Pillar II of New Capital Adequacy Framework.

- Chief Information Security Officer [CISO]

Bank has implemented a robust IT policy and Information System Security policy which are in line with the international best practices. These policies are reviewed periodically and suitably strengthened in order to address emerging threats. Regular security drills and employee awareness programs are conducted to ensure security and increase awareness among staff. Business Continuity Management System (BCMS) has been implemented at Global IT centre, Belapur. Bank is also among the forerunners in the process of implementing the new RBI Guidelines for the Banking Sector in this area.

INTERNAL CONTROLS

The Bank has in-built internal control systems with well- defined responsibilities at each level and conducts internal audit through its Inspection & Management Audit Department. Audit Committee of the Board (ACB) exercises supervision and control over the functioning of the department. The inspection system plays an important and critical role in identification, control and management of risks by using international best practices in the internal audit function which is regarded as one of the most important components of Corporate Governance. The Bank carries out mainly two streams of audits - Risk Focussed Internal Audit (RFIA) and Management Audit covering different facets of Internal Audit requirement. All accounting units of the Bank like branches, Business Process Reengineering (BPR) entities, major critical corporate centre departments like Foreign Account Office, Treasury operations, Central Accounts Office etc., are subjected to RFIA. Management Audit covers administrative offices and examines policies and procedures besides quality of execution thereof.

Besides the above, the department conducts Credit Audit, Concurrent Audit, Information Systems Audit, Home Office Audit (audit of foreign offices) and Expenditure Audit. Risk Focussed Internal Audit (RFIA) helps in appropriately capturing all types of risks residing in operating units. Credit Audit is conducted for units with large credit limits and Concurrent Audit is carried out at branches including BPR outfits having large deposits, advances & other risk exposures. Expenditure Audit, involving scrutiny of accounts and correctness of expenditure incurred, is conducted at administrative offices including Corporate Centre Establishments and Lead Bank Offices, etc. To verify the level of rectification of irregularities by branches, audit of compliance at select branches is also undertaken. The Information System Audit (IS Audit) of the centralised IT establishments is also being conducted.During the year, 8416 domestic branches/ BPR entities were audited covering more than 99% of branches falling due for audit. No branch remained due for audit beyond the periodicity prescribed by RBI.

VIGILANCE

The concept of Vigilance as an investigative process and an exercise for punitive action has evolved to that of "Vigilance for Corporate Growth", the emphasis getting shifted from punitive vigilance to "Preventive and Proactive Vigilance" through an active participation of all concerned.

In this context, two important issues deserve a special mention viz. (i) Preventive Vigilance Committee (PVC) Meetings being held at the branches and the BPR outfits and (ii) Whistle Blower Scheme. Through PVC meetings every employee can share his views on preventive vigilance, suggest and implement various measures specifically suited to his workplace and participate in a collective exercise of ensuring watchfulness and alertness in his official functions. Under "Whistle Blower Scheme" the staff members are expected to advise appropriate authorities about irregular and unethical practices, if any, being indulged in by colleagues and even seniors.

While Vigilance Administration seeks, as one of its functions, to suitably punish the delinquent employees, it also protects the legitimate and bona fide decisions taken in the interest of the organization. The number of vigilance case brought to conclusion during the year 2011-12 is 1447, in which 1307 employees have been inflicted with various penalties for their proven misconducts.

The number of officers retired under Rule-19(3) of SBI Officers Service Rules has substantially come down from 54 to 11 during the year. All efforts are made to conclude such cases in the shortest possible time.

Considering the size of our Bank, we have set up Vigilance Departments at each of the 14 Circles, headed by Deputy General Managers. The apex Vigilance Department at Corporate Centre is headed by the Chief Vigilance Officer of the rank of Chief General Manager. The Department reports to the Chairman directly and conducts its affairs in an independent manner. The guidelines of the Central Vigilance Commission (CVC) are followed by the vigilance set-up in its functioning.

Fraud Prevention & Monitoring

The measures taken for prevention of frauds are as under:

- The KYC Compliance and Fraud Prevention day was observed on 1st August every year.

- The Preventive Vigilance Committees are formed at the branches having staff strength of 10 or more (including SAM branches) and at CPCs/Cells irrespective of their staff strength, as per the revised scheme approved by the Vigilance Department at Corporate Centre.

- To encourage/popularize Whistle Blower Policy, DGM (Vigilance) at Corporate Centre and DGM (Vigilance) at LHO have been made the Designated Officers for the purpose.

- Biometric authentication by users is being implemented in 100 sensitive Branches shortly and remaining branches by September 2012 in phases.

- Fraud Analysis Cell (FAC) has been created at Jaipur to monitor transactions through alerts being thrown by the software

3. BUSINESS PROCESS RE-ENGINEERING (BPR)

BPR initiatives have been undertaken by the Bank with the objective to "transform the Bank into a world class financial institution by proactively reaching out to acquire new high net worth customers, building deep and lasting relationships with existing customers and providing all customers with the best quality of service across multiple channels". The usage of Multi City Cheques has been popularised & these instruments can be paid at all the branches of the Bank across the country. The BPR initiatives have resulted in handling increased volume with deriving the benefits of standardisation, skill pooling, economies of scale, improved ambience, significantly increased and proper customer space. Under future initiatives, the BPR would be focussing on new processes & technology upgrades in order to create and sustain market - leading practices so as to retain leadership position in the Indian Banking Industry.

14 Liability Centralised Processing Centres (LCPSs) have been opened across the country as against 4 previously, in order to handle increased volume of account opening and faster delivery of personalised cheque books & ATM cards to the customers. They have also contributed in improving the quality of scrutiny of the Account Opening Forms in terms of KYC compliance.

Drop Boxes at onsite ATMs

6660 Drop Boxes have been installed at all onsite ATMs for providing 24x7 facility to the customers to deposit cheques / collection instruments.

4. HUMAN RESOURCES (HR)

NEW HR INITIATIVES:

A number of key initiatives have been taken by the Bank during the current year to motivate the employees and increase productivity so as to achieve the Banks growth plans.

PERSONNEL MANAGEMENT

A Whistle Blower Policy has been put in place for reporting any unethical practices or behaviour by the employees for violation of their service rules with a provision for protection of interest/identity of the whistleblower.

Investment of the Pension Fund, Provident Fund, Gratuity Fund

a) After persistent efforts of many years, Rule 10 of the SBI Employees Pension Fund could be amended to permit additional contributions to the Pension Fund Corpus as per the actuarial valuation. The Corpus has now been invested in market securities. This has led to insulating the funds from the solvency risk of the Bank.

b) The Pension, Provident and Gratuity Fund Corpus, which were held as deposits with the Bank, have been separated from the Banks balance sheet and are invested in market determined securities through our Portfolio Managers, as per the approved investment pattern of GOI/IT Rules. This was made in the larger interests of the stakeholders by making an amendment in Rule 13 of the SBI Employees Provident Fund Rules in FY 2011-12.

CADRE MANAGEMENT

a) The Performance Management System (PMS) has been rationalized -a feedback system-on the performances of the officers in Scale V and above.

b) To meet requirement of the skilled manpower and to tap the emerging business opportunities, 166 Specialist Management Executives with qualification of CA/ICWA/ MBA (Finance, Marketing) were recruited during the year.

c) 7 Special Technical Executives with B.E./ B.Tech qualification in the fields of Chemical, Mechanical, Electrical, Metallurgical Engineering appointed for manning consultancy cells in Circles.

d) Further, 917 Probationary Officers and 118 other Specialist Officers have been recruited during FY 2011-12. This will take care of the Banks requirements of officers in operations and specialised areas.

e) Besides successfully holding online examination for promotion from JMGS I to MMGS II, all promotion exercises in respect of officers up to the grade of Deputy Managing Director were completed in time during the year.

INDUSTRIAL RELATIONS

Cordial industrial relations were maintained with both Officers and Staff Federation through meaningful dialogue / discussions with them during the year. However, there was a strike call from the Officers Federation on 8th and 9th November 2011 which would have closed the Bank for public transactions for a continuous period of 5 days. The Management took appropriate steps and the strike did not materialise. Meanwhile, issues raised by both the Federations were duly examined and addressed.

HUMAN RESOURCES MANAGEMENT SOLUTIONS (HRMS)

1. Processing and payment of salary of all the employees of SBI, SBP, SBM & SBH is being done through a centralised platform.

2. Automation of centralised PF related services has facilitated faster settlement of terminal benefits.

STRATEGIC TRAINING UNIT (STU)

The Strategic Training Unit (STU), operationalized on 5th April 2010, has undertaken a number of initiatives during the year to increase the efficiency and effectiveness of the Banks training system. Some of the major initiatives in this regard are as follows:

1. Over 2 lacs ( 96.7% of Banks staff strength ) employees were trained at 5 ATIs and 47 SBLCs.

2. State Bank Training Management System has been operationalised for creating a comprehensive database and tracking of training of all employees.

3. E-learning through HRMS portal has been expanded to over 213 courses and about 83% of the staff are now registered on the portal.

4. Leadership Development Programmes were organised for Top Executives and Senior Management.

5. Research studies by the Bank officials were recognised by various outside publications / agencies like Bancon, ICRIER, IBFA.

STAFF STRENGTH

The Bank had a total permanent staff strength of 2,15,481 on the 31st March, 2012. Of this, 80,404 (37.32%) are officers, 95,715 (44.42%) clerical staff and the remaining 39,362 (18.26%) were sub-staff.

It has been decided to recruit 9500 new clerical staff during the FY 2012-13 to meet the growing business needs of the Bank.

5 YEARS COMPARISION OF STAFF STRENGTH

The category wise staff strength of the Bank for the year ended March 2008, 2009, 2010, 2011 and 2012 was as under :

31.03.08 31.03.09 31.03.10 31.03.11 31.03.12

officers 57765 64685 70622 79728 80404

Assistants 76818 96974 87356 102701 95715

subordinate 44622 44237 42321 40504 39362

Total 179205 205896 200299 222933 215481

Addition during the 6183(-) 26691 5597(-) 22634 7452(-) year

INTELLECTUAL CAPITAL

Out of a total staff strength of 2,15,481 as on 31.03.2012, the academic qualifications of the employees are as under:

Graduate - 1,14,943 (53.34 % ), Post - Graduate - 37,263 ( 17.30 % ) MBA - 3,239 ( 1.50 % ), Engg / Technical - 165 ( 0.08 % ) Doctorate - 166 ( 0.08 % )

IMPLEMENTATION OF PERSONS WITH DISABILITIES (PWD) ACT 1995

Our Bank provides reservation to persons with disabilities (PWDs) as per the guidelines of the Government of India and section 33 of the PWD Act 1995. The Bank undertook the work of identifying roles that could be handled by challenged employees, so as to ensure their better integration and productivity through suitable training. The total number of persons with disabilities who were employed as on 31.03.2012 was 2,332 (details given as under).

Category Total No. of Persons With Disabilities

Officers 80,404 554

Assistants 95,715 1,557

Sub-staff 39,362 221

TOTAL 2,15,481 2,332

REPRESENTATION OF SCHEDULED CASTES AND SCHEDULED TRIBES VIS-A-VIS OTHER EMPLOYEES

As on the 31st March, 2012, 41,019 ( 19.03 %) of the Banks total staff strength belonged to Scheduled Caste, 15,267 (7.08 % ) belonged to Scheduled Tribes and 1,59,195(73.89%) belonged to other categories.

In order to discuss issues relating to reservation policy and effectively redress the grievances of the SC/ST employees, Liaison Officers have been designated at all Local Head Offices of the Bank as also at the Corporate Centre at Mumbai.

The Bank has been conducting workshops on reservation policy for SCs/STs/OBCs to impart up-to-date knowledge/latest operative instructions about the reservation policy and related areas to the SC/ST cell officers, representatives of SC/ST welfare Association and the Liaison officers.

Government of India representatives, inspected the reservation roasters for SCs/STs/OBCs/PWDs at all the 14 Circles and found this maintained satisfactorily.

Pre-recruitment and pre-promotion training programmes are being conducted to enable SC/ST candidates to achieve the prescribed standards to effectively compete with other candidates.

5. OFFICIAL LANGUAGE

Efforts have been made by the Bank during the year for meeting various requirements and targets fixed by GOI with regard to the implementation of Official Language policy in the Bank. The task of providing facility of Hindi in Core Banking System (CBS) has been completed with all earnestness and provision of facility to work in Hindi in CBS have been successfully activated in all the branches of the bank. ATM hits through Hindi medium were 52063356 this year, as compared to 48811432 hits recorded last year reporting an increase of about 6.70%. To augment the usage of Hindi by staff in office correspondence, the provisions of Official Language Policy of the Government have been uploaded in the Banks Intranet Site. Further, the Banks in-house Hindi Magazine "Prayas" bagged 1st prize in the Hindi In-house Magazine Competition organised by RBI for the year 2010-11. This is the sixth time that our magazine touches this glorious adornment.

6. COMPENSATION POLICY FOR DEFICIENCY IN SERVICE

As a premier Bank of the nation, SBI always strives to create and maintain highest standards of customer service and in any unlikely event of any slippage in services extended to customers, the Bank has put in place a Board approved Compensation Policy to compensate for such slippages. The policy ensures that appropriate financial compensation is provided to the recipients to these services, without requesting for it.

7. BANKS OUTSOURCING POLICY

RBI have permitted banks to outsource non-core functions and the Bank has accordingly put in place a Board approved Outsourcing Policy.

8. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility has always been a part of the State Bank of India covering various social, environmental and welfare activities.

In SBI, we believe that we owe a solemn duty to the less fortunate and underprivileged members of the society to make a sustainable social change in their development.

The Executive Committee of the Central Board has approved in August 2011 a comprehensive policy for Corporate Social Responsibility.

Focus areas for our CSR activities are:

- Supporting Education

- Supporting Healthcare

- Supporting Girl Children & Child development.

- Assistance to poor & underprivileged.

- Environment protection.

- Clean Energy.

- Entrepreneur development programme.

- Help in National calamities.

State Bank wins Golden Peacock Award for Corporate Social Responsibility-2012

The year 2011-12 saw the CSR activities of the Bank scaling new heights of achievement and glory with our Bank winning the prestigious Golden Peacock Award for Corporate Social Responsibility in 2012.

As per the Reserve Bank of India instructions, our Bank earmarks 1% of previous years net profit, as CSR spend budget for the year. In terms of CSR policy of the Bank, CSR donations are given to only those organizations that enjoy IT exemption under Sec 80. This ensures that the Banks support is extended to deserving cases only.

The comparative chart of CSR spends for the last three years is as under:

Rs in crores

2009-10 2010-11 2011-12 Actual Actual Actual

National Donations 5.15 2.00 5.50

(To provide succor to victims of natural calamities)

Normal Donations & other direct activities 14.57 22.44 65.68

Total CSR spend 19.72 24.44 71.18

For the first time in the last decade, the budget for CSR spend (normal donations and other direct activities) has been surpassed even though the allocation was much higher than the previous years.

Sector wise Deployment:

The breakup of sectoral deployment of our CSR spends during the year has been as under:

Amount (Rs in crores)

National Donations 5.50

Supporting Education 38.33

Supporting Healthcare 15.03

Assistance to underprivileged 5.37

Research & Development 3.75

Supporting Culture 1.15

Environment Protection 0.67

Other projects 1.38

Total 71.18

Supporting Education:

- To support school education and to bring happiness to millions of school children specially the underprivileged children, Bank provided 1,20,000 electric fans to 12,000 schools across India.

- During the year, the Bank also provided large number of buses/vans to needy schools. Preference has been given to schools for physically/mentally challenged children, and children belonging to economically weaker sections etc. We also assisted them with computers, furniture and other accessories.

- To transform and upgrade the efficacy of education in schools run by Municipal Corporation of Greater Mumbai, we are extending funding support.

Supporting Healthcare:

The focus of the Bank has been to help provide the basic infrastructure support to ameliorate the condition of the common man. Ambulances, medical vans to enable medical camps in remote areas and mobile blood collection vans and host of other medical equipments were donated to needy organizations/hospitals by our 14 Circles for speedy transportation of critical patients as well as to provide medical services to the remotest parts of the country.

The Bank has donated 95 such vehicles with an expenditure of Rs7.40 crores during the year. Medical equipments costing Rs6.10 crores were donated to needy hospitals/healthcare institutions.

- Healthcare to Children- Providing safe drinking water has always been a challenge for schools. Recently we took up the project, and installed 13,600 water purifiers in as many schools, ensuring clean & safe drinking water to millions of children in schools.

Responsibility to the Nation:

- Girl Child adoption- Our branches have adopted girl children from underprivileged class and assist them financially for their education. Bank has adopted 17627 girl children.

- Assistance for Natural Calamities: SBI has always been at forefront to help the States affected by natural calamities. During the current fiscal, the Bank has lent its helping hand to the following states, with donations of Rs 5.50 Crores to the Chief Ministers Relief Fund of the respective states to provide help to the people affected by natural calamities.

State Calamity Amount (Rs in Crores)

Odisha Flood 1.00

Puducherry Cyclone 0.50

Sikkim Earthquake 1.00

Tamil Nadu Cyclone 2.00

West Bengal Earthquake 1.00

Total 5.50

- Our branches across the country made special drives to plant fruit bearing trees to improve green coverage. Fruits will also help birds.

- Our offices/branches undertake various other social welfare activities like blood donation camps, medical camps, tree plantations, adult literacy classes, imparting skills to local community.

Green Banking:

- We effectively propagate and implement sustainable usage of resources including renewable energy.

- Adopted energy efficient measures.

- Our Bank is the largest deployer of solar ATMs in the World. Saving more than 2000 tons of CO2 per year.

- Paperless Banking transaction- Green Channel Banking.

- The Bank has installed windmills with capacity of

15 MW in three states for internal energy needs.

- The Bank extends project loans on concessionary interest rates to encourage customers to reduce Green House gases by adopting efficient manufacturing practices.

Internal CSR

- We are an equal opportunity organization.

- We provide best of the facilities and healthcare to our employees. A large number of Employee Welfare schemes are in place as motivational incentive.

- Extensive in-house training facilities.

- Motivational incentives, Freedom of Association.

R & D Fund:

The Bank supports research work relevant broadly to the activities of the Bank from its Research & Development Fund. The Bank makes an annual contribution of GBP 100,000 towards a Chair set up by the Bank jointly with RBI at the Asia Research Centre at London School of Economics.

SBI Childrens Welfare Fund:

The Bank constituted SBI Childrens Welfare Fund as a Trust in 1983. The Corpus of the Fund is made up of contributions by staff members and matching contribution provided by the Bank. Grants are extended to institutions engaged in the welfare of underprivileged/downtrodden children like orphans, destitute, challenged and deprived, etc. During the FY 2011-12, 8 projects were assisted with Rs7.26 lacs.

SBI Youth for India:

- SBI Youth for India Fellowship- Bank has granted fellowship to educated youth and deployed them to rural areas to undertake innovative projects to address local problems of rural poor.

- This touched upon many projects like Rural Employment Guarantee Schemes, IVRS helpline for farmers & fishermen, career guidance, Enhancing marketability of farm produce, Education of rural youth through ICT, Environment protection, and many others.

Looking ahead:

We will continue with our multi pronged efforts to meaningfully contribute towards more sustainable development of the society and Green Planet.

9. ASSOCIATES AND SUBSIDIARIES

The State Bank Group with a network of 20193 branches including 5096 branches of its five Associate Banks dominates the banking industry in India. In addition to banking, the Group, through its various subsidiaries, provides a whole range of financial services, which include Life Insurance, Merchant Banking, Mutual Funds, Credit Card, Factoring, Security trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

CROSS SELLING

The large network of branches of the State Bank Group is being leveraged to deliver products of SBI Life Insurance Co., SBI Mutual Fund, SBI Card, SBICap Securities Ltd., SBI General and other third party companies having tie-up arrangements with the Bank, thereby offering a wider range of financial products to our customers.

During the year, the Bank covered 5.93 lac lives under various schemes of SBI Life Insurance. Rinn Raksha, a Group insurance product was made available for all retail borrowers. Also, for encouraging investment among small investors, the Bank distributed the SIP (Systematic Investment Plan) product by which middle income group customers can invest regularly in the Mutual Funds. A total of 1.99 lac customers were covered in the year under the scheme. SBI General, the Banks non-life insurance JV, rolled out 46 products designed to meet various needs of SME and Retail clients. The Personal Accident Insurance cover for savings bank account holders of the Bank has been rolled out by SBI General, as a pilot, in Mumbai and Ahmedabad Circles. An over the counter payment option has been extended to SBI Card customers, thus making the company the industry leader in payment options.

1 Associate Banks

SBIs five Associate Banks had a market share of 6.02% in deposits and 6.05% in advances as on the last Friday of March 2012.

Table: Performance Highlights of Associate Banks (ABs) together :

(Rs in Crores)

As on 31.03.2011 As on 31.03.2012 Change (%)

Total Assets 3,73,963 4,34,947 16.31

Agg. Deposits 3,11,645 3,61,589 16.03

Total Advances 2,40,423 2,89,149 20.27

Operating Profit 7,568.68 8,213.91 8.53

Net Profit 3,598.43 3,626.35 0.78

Credit Deposit Ratio 77.29% 79.97% 268 bps

Capital Adequacy Ratio 13.25 13.16 -0.09 bps

Gross NPA 5,066.50 8,537.95 68.52

Net NPA 2,443.69 4,417.76 80.78

Return on Equity 19.08% 15.64% -344 bps

Important Developments during the year in Associates & Subsidiaries:

- A total of 10,20,670 equity shares of SBI Global Factors Ltd. were sold by SBI to SIDBI on 30.11.2011 at a consideration of Rs32/- per share (FV Rs10/- and premium Rs22/-) bringing down the stake of SBI from 86.82% to 86.18%. This was part of the Rights Issue of SBIGFL which was subscribed by SBI, pending SIDBI receiving approval for this investment.

- SBICAP Ventures Ltd bought back 9,38,000 (18.39% of total shares) at Rs12.26 per share- Rs1,14,99,880/-

- An amount of Rs585 crore, as equity, was infused in SBBJ by SBI in April, 2011, representing its 75% share in the Rights Issue.

- SBICI Bank Ltd. was acquired by SBI on 29.07.2011. As a result, the shareholding of SBI in SBBJ went up from 75% to 75.07%, as the stake of SBICI Ltd. in SBBJ has now come into the books of SBI.

2 SBI Capital Markets Limited (SBICAP)

SBICAP is a full service investment banking outfit offering Project Advisory Services, arrangements for Structured Finance, Capital Market Services like Equity Issuances, Mergers & Acquisitions and arrangement for Private Equity, etc. SBICAP is a leader in India in Project Finance, with over 40% market share.

The following are some of the many awards / recognitions won by the Company during the year:

- Ranked No 1 Mandated Lead Arranger for Project Finance Loans for Global Asia Pacific by Project Finance International (PFI).

- Ranked No 1 Mandated Lead Arranger for Project Finance Loans for Global by Dealogic.

- Ranked No 1 Financial Advisor for Loans for Asia Pacific by Dealogic.

- Ranked No1 Loans Mandated Arranger for Asia Pacific Ex- Japan by Bloomberg.

- Ranked No 1 Loans Book Runner for Asia Pacific Ex-Japan by Bloomberg.

- Ranked No 1 Qualified Institutional Placements in India by Bloomberg.

- Ranked No1 in Rights Issues in India by PRIME.

- Ranked No 1 in Public Issues of Bonds in India by PRIME.

SBICAP on standalone basis posted a PBT of Rs492.66 crores (before fee sharing) during the FY 2011-12 as against Rs579.35 crores earned in FY 2010-11 and a PAT of Rs250.98 crores in FY 2011-12 as against a PAT of Rs374.72 crores for FY 2010-11.

SBICAP and its 4 subsidiaries posted a PBT of Rs513.68 crores (before fee sharing) during the FY 2011-12 as against Rs593.89 crores earned during FY 2010-11, and a PAT of Rs265 .30 crores in FY 2011-12 as against Rs384.56 crores in FY 2010-11. The profits are lower due to the dampened activity in Capital Markets.

2.1 SBICAP Securities Limited (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Ltd., besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in Sales and Distribution of other financial products like Mutual Funds, etc. SSL has 89 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 2.52 lac customers on their books. The Company posted a profit of Rs4.03 crores during the FY 2011-12 as against a PAT of Rs4.59 crores during the FY 2010-11. The profits are lower on account of subdued Capital Markets.

2.2 SBICAPS Ventures Limited (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Ltd. SVL earned a net profit of Rs0.23 crore during 2011-12 as against Rs0.56 crore in 2010-11.

2.3 SBICAP (UK) Ltd. (SUL)

SUL is a wholly owned subsidiary of SBI Capital Markets Ltd. During the year, SUL booked a revenue of Rs9.29 crores and posted a net profit of Rs4.82 crores during FY 2011-12, as against Rs0.20 crore during FY 2010-11, despite the global recessionary scenario.

SUL is positioning itself as a Relationship outfit for SBI Capital Markets in UK and Europe. Relationships are being built with FIIs, Financial Institutions, Law Firms, Accounting Firms, etc to market the business products of SBICAP.

2.4 SBICAP Trustee Co. Ltd. (STCL)

STCL, a wholly owned subsidiary of SBI Capital Markets Ltd., which commenced security trustee business with effect from 1st August 2008, has earned a Gross Income of Rs11.62 crores and a Net Profit of Rs5.86 crores during 2011-12, as against Gross Income of Rs8.31 crores and Net Profit of Rs4.43 crores during 2010-11.

3 SBI DFHI Ltd. (SBI DFHI)

- SBI group holds a 71.56% share in the Company, which is a primary dealer to support the book building process in Primary Auctions and to provide depth and liquidity to secondary markets in G-Secs.

- For the period ended 31st March 2012, the Companys PAT was Rs43.50 crores as against Rs56.94 crores earned during FY 2010-11. The profit is lower because of the high interest regime leading to higher MTM provisions.

- The market share of SBIDFHI amongst market participants has increased from 3.41% as on 31.03.2011 to 4.34 % as on 31.03.2012.

- The secondary market turnover during the year was Rs1,51,680 crores as against Rs97,885 crores during the corresponding period in 2011 (YoY growth of 55%).

4 SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

- SBICPSL, the only stand-alone credit card issuing company in India, is a joint venture between State Bank of India and GE Capital Corporation, wherein SBI holds a 60% stake.

- The "Cards in Force" (CIF) of the Company stood at 22.25 lacs as at 31st March 2012. The average receivables stood at Rs2,178 crores as at the end of March 2012, as against Rs1,795 crores at the end of March 2011.

- The Company posted a net profit of Rs37.90 crores as on March 2012 as against Rs7.10 crores earned during the year ended March 2011.

5 SBI Life Insurance Company Limited (SBILIFE)

- SBI Life is Joint Venture Company between SBI and BNP Paribas Cardiff, in which SBI holds a 74% stake.

- SBI Life has a unique multi-distribution model comprising Bancassurance, Retail Agency and Institutional Alliances and Group Corporate Channels for distribution of insurance products.

- The Gross Premium of the Company crossed Rs13,000 crores.

- SBI Life has a market share of 19.9% in respect of New Business Premium (NBP) amongst Private Life Insurers . The overall market share (including Life Insurance Corporation of India) of SBI Life in terms of NBP stood at 5.7% as on 31st March 2012.

- In NBP, SBI Lifes ranking improved to the FIRST position amongst Private Life Insurers during FY 2011-12 from the Second position during FY 2010-11.

- SBI Life recorded a PAT of Rs555.80 crores as on 31.03.2012 as against Rs366.30 crores as on 31.03.2011 recording a YoY growth of 51.73%.

- The Assets under Management of SBI Life recorded a growth of 16% YoY to reach Rs46,576 crores as on 31st March 2012.

- SBI Life expanded its branch network by adding 85 branches during the year bringing the total number of branches to 714.

- ICRA has reaffirmed its iAAA rating to the company indicating highest claim paying ability.

- CRISIL has reaffirmed its highest financial rating of AAA/ Stable.

The following are some of the awards / recognitions received by the Company during 2011-12:

- Winner of NDTV Profit Business Leadership Award twice in a row, 2011 and 2010.

- Awarded the Most Trusted Private Life Insurance Brand 2011 by The Economic Times, Brand Equity Most Trusted Brand Survey.

- Won IMC Ramkrishna Bajaj National Quality Awards 2011 - Certificate of Merit.

- Winner of ICAI Award for Excellence in Financial Reporting for FY 10 - 11.

- Winner of Best Presented Accounts Award by SAFA.

- SBI Life leads globally at Million Dollar Round Table (MDRT) 2011.

6. SBI Funds Management (P) Ltd. (SBIFMPL)

- SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 6th largest Fund House in terms of average "Assets Under Management" and is a leading player in the market with 6 million investors.

- The Annual Rankings have improved for almost all Equity Schemes.

- The schemes of the Fund House have performed consistently over the years, and have emerged as the preferred investment for investors.

- The company has posted a PAT of Rs60.52 crores during FY 2011-12.

- The average "Assets Under Management" (AUM) of the company for Jan-Mar 2012 quarter stood at Rs42,042 crores as against Rs41,672 crores during Jan-Mar 2011 quarter.

The following are some of the awards / recognitions received by the Company during 2011-12:

- Nominated for Best Fund House of the Year in Fixed Income Category - Bloomberg UTV Awards.

- Nominated amongst 3 Best Funds in Ultra Short Term Fund and Liquid Fund Category- CRISIL CNBC Award.

- Won 5 awards at ICRA Award Ceremony.

7. SBI Global Factors Ltd. (SBIGFL)

- SBIGFL is one of the leading factoring companies in India which has the highest market share in domestic as well as export & import factoring.

- During the year ended 31st March 2012, the turnover of the company increased to Rs9,014 crores from Rs7,605 crores as on 31st March 2011, registering a YoY growth of 18.53%.

- The company incurred a loss of Rs66.78 crores during the year ended 31.03.2012 as against a loss of Rs125.62 crores incurred during the year ended 31.03.2011. The Company has turned around and has started making operating profits since Sept 2011.

8. SBI Pension Funds Pvt. Ltd. (SBIPF)

- SBIPF is one of the three Pension Fund Managers (PFM) appointed by Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the National Pension System (NPS) for Central Government (except Armed Forces) and State Government Employees.

- PFRDA has appointed 4 more PFMs for the informal sector under the NPS.

- SBIPF, a wholly owned subsidiary of the State Bank Group, commenced operations from April 2008. The total "Assets Under Management" of the company as on 31st March 2012 were Rs6,022 crores (YoY growth of 60 %).

- The Company maintained its lead position amongst the 7 Pension Fund Managers in terms of AUM, for both the organized and Informal sectors.

- The overall AUM market share in the Informal sector was 52.31%, while in the organized sector it was 39.41%.

- The Company recorded a net loss of Rs33.45 lacs during the FY 2011-12 mainly on account of lower interest management of fee (0.0009% of AUM).

9. SBI General Insurance Company Ltd. (SBIGIC)

- SBIGIC is a joint venture between State Bank of India and IAG Australia, in which SBI holds a 74% stake.

- SBIGIC has completed its second year of full operations during FY 2011-12.

- Gross Written Premium stood at Rs250 crores (including Rs10.94 crores of re-insurance) as at 31st March 2012.

- The Company recorded a net loss of Rs95.35 crores as against the estimated loss of Rs135.20 crores during the FY 2011-12 and a loss of Rs26.82 crores was incurred during the FY 2010-11.

- SBIGIC has a multi-distribution model comprising Bancassurance, Agents, Broker and Direct Channels for distribution of insurance products.

10. SBI SG Global Securities Services Pvt. Ltd. (SBISG)

- SBISG, a joint venture between State Bank of India and Societe Generale of France, was set up to offer high quality custody and fund administration services to complete the bouquet of financial services on offer by a financial conglomerate.

- SBISG commenced commercial operations in Custody in May 2010 and Fund Accounting Services in Sept 2010.

- The Company recorded a net profit of Rs24.71 lacs during the FY 2011-12 as against a net loss of Rs137.47 lacs during the FY 2010-11.

- The Assets Under Custody as on 31st March 2012 stood at Rs28,659.47 crores, while the Assets Under Administration were at Rs42,671.35 crores.

INFORMATION WITH REGARD TO SUBSIDIARIES & JOINT VENTURES AS ON 31.03.2012

A. Domestic Banking Subsidiaries

(Amount in crores)

S. Name of SBI Share of Total Agg. Total Op. No the Bank ownership Assets Deposits Adva- Profit nces Amt. %

1 State Bank of Bikaner 676.12 75.07 72528 61255 49986 1490 & Jaipur

2 State Bank of Hyderabad 367.55 100 117568 100552 78336 2653

3 State Bank 628.63 92.33 60404 49663 40652 1060 of Mysore

4 State Bank of Patiala 445.10 100 98498 79154 64140 1763

5 State Bank of Travancore 120.85 75.01 85949 70965 56034 1249

Name Net CD CAR Gross Net Return the Bank Profit Ratio % NPAs NPA on % % Equity %

State Bank 652 81.60 13.76 3.30 1.92 15.66 of Bikaner & jaiput

State Bank of Hyderabad 1298 78.08 13.56 2.56 1.30 19.98

State Bank of mysore 369 81.86 12.55 3.70 1.93 9.26

State Bank of patiala 796 81.03 12.30 2.94 1.35 16.66

State Bank of Travancore 511 78.96 13.55 2.66 1.54 13.62

B. Non Banking Subsidiaries (Amount in crores)

S. Ownership % of Net Profit No Name of the Subsidiary Company (State Bank Ownership (Loss) for the interest) FY 2011-12

1 SBI Capital Markets Ltd. (Consolidated) 58.03 100 265.30

2 SBI DFHI Ltd. 139.15 63.78 43.50

3 SBI Payment Services Pvt. Ltd. 2.00 100 (0.76)

4 SBI Mutual Fund Trustee Company Pvt Ltd. 0.10 100 3.21

5 SBI Global Factors Ltd. 137.79 86.18 (66.78)

6 SBI Pension Funds Pvt. Ltd. 18.00 90 (0.33)

7 SBI Funds Management Pvt. Ltd. 31.50 63 60.52

8 SBI Cards & Payment Services Pvt. Ltd. 471.00 60 37.90

9 SBI Life Insurance Company Ltd. 740.00 74 555.80

10 SBI-SG Global Securities Services Pvt. Ltd. 52.00 65 0.25

11 SBI General Insurance Company Ltd. 111.00 74 (95.35)

C. Joint Ventures (Amount in crores)

S. Ownership % of Net Profit No Name of the Subsidiary Company (State Bank Ownership (Loss) for the interest) FY 2011-12

1 C-Edge Technologies Ltd. 4.90 49 18.96

2 GE Capital Business Process Mgt. Services Pvt. Ltd. 10.80 40 (0.40)

3 Macquarie SBI Infrastructure Mgt. Pte. Ltd. 2.25 45 20.60

4 SBI Macquarie Infrastructure Mgt. Pvt. Ltd. 18.57 45 8.81

5 SBI Macquarie Infrastructure Trustee Pvt. Ltd. 0.025 45 (0.0157) 6 Oman India Joint Investment Fund- Mgt. Co Pvt. Ltd. 2.30 50 3.32

7 Oman India Joint Investment Fund- Trustee Co Pvt. Ltd. 0.01 50 0.003

D. Foreign Banking Subsidiaries (Amount in crores)

S. Ownership % of Net Profit No Name of the Subsidiary Company (State Bank Ownership (Loss) for the interest) FY 2011-12

1 State Bank of India (California) 420.27 100 3.08

2 State Bank of India (Canada) 567.17 100 8.49

3 Commercial Bank of India Llc, Moscow 54.94 60 18.19

4 SBI (Mauritius) Ltd. 412.74 93.40 74.93

5 PT Bank SBI Indonesia 67.84 76 11.47

6 Nepal SBI Bank Ltd. 75.74 55.05 28.23

10. RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005)

Suitable structure has been put in place at Branches/Administrative Offices/Regional Business Offices/Local Head Offices for handling requests and appeals under RTI Act 2005. For convenience of the public, the bank has also created an RTI link on its website http://www.statebankofindia.com and http://www.sbi.co.in

Responsibility Statement

The Board of Directors hereby states:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2012, and of the profit and loss of the bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and

iv. that they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

During the year, Shri R. Sridharan, Managing Director [under Section 19(b)of SBI Act 1955], retired on attaining superannuation on 30th June 2011. Smt. Shymala Gopinath, Dy. Governor, Reserve Bank of India Nominee Director, retired on attaining superannuation, as on 20th June 2011. Dr. Ashok Jhunjhunwala, Director, elected by shareholders under Section 19(c), retired from the Board on 23rd June 2011 consequent upon completion of his second term. Dr. Rajiv Kumar, Director nominated under Section 19(d) by Govt. of India, retired from the Board on 7th September 2011 consequent upon completion of his term of three years.

Shri Dileep C. Choksi, Shri S.Venkatachalam and Shri D. Sundaram retired from the Central Board on 23rd June 2011 consequent upon completion of term of three years and were re-elected as Directors, alongwith Shri Parthasarathy Iyengar, elected for the first time, for a period of three years w.e.f. 25th June 2011, by the shareholders at the General Meeting held on 24th June 2011.

Shri D.K. Mittal was nominated as Govt. Nominee Director, vice Shri Shashi Kant Sharma, under Section 19(e), vide Notification dated 3rd August 2011. Dr. Subir V. Gokarn was nominated as RBI Nominee Director, vice Smt. Shyamala Gopinath, under Section 19(f), vide Notification dated 4th August 2011. Shri Jyoti Bhushan Mohapatra was nominated as Workmen Employee Director, under Section 19(ca), w.e.f. 21st November 2011. Shri Deepak Ishwarbhai Amin, was nominated as Director, under Section 19(d), by Govt. of India, w.e.f. 24th January 2012.

The Directors place on record their appreciation for the contribution made by Shri R. Sridharan, Smt. Shyamala Gopinath, Dr. Ashok Jhunjhunwala, Dr. Rajiv Kumar and Shri Shashi Kant Sharma to the deliberations of the Board and welcome Shri Parthasarathy Iyengar, Shri D.K.Mittal, Dr. Subir V. Gokarn, Shri Jyoti Bhushan Mohapatra and Shri Deepak I. Amin, who joined the Board, as Directors, for the first time.

The Directors express their gratitude for the guidance and cooperation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank.



For and on behalf of the

Central Board of Directors

Date : 18th May 2012 Chairman

---

Mar 31, 2011

J.2 Associate Banks

SBIs five Associate Banks had a market share of 5.88% in deposits and 6.00% in advances as on last Friday of March 2011.

Table : Performance Highlights of Associate Banks (ABs)

(Rs. in Crs)

As on As on Change 31.03.2010 31.03.2011 (%)

Total Assets 3,18,580 3,68,283 15.60

Agg. Deposits 2,72,790 3,11,645 14.24

Total Advances 2,04,573 2,40,423 17.52

Operating Profit 5,841.90 7,568.68 29.56

Net Profit 2,958.80 3,598.43 21.62

Credit Deposit Ratio 74.15% 77.29% 4.23

Capital Adequacy Ratio 13.66 13.25 -0.41

Gross NPA 3,504.68 5,066.50 44.56

Net NPA 1,692.96 2,443.69 44.34

Return on Equity 18.97% 19.08% 0.11

J.3 SBI Commercial & International Bank Ltd. (SBICI)

As at the end of March 2011, the aggregate Deposits and total Advances of SBICI stood at Rs. 453.27 crores and Rs. 271.43 crores respectively. The Bank recorded an operating and net profit of Rs. 5.25 crores and Rs. 4.21 crores respectively. The net NPA as at the end of March 2011 was NIL.

J.4 SBI Capital Markets Limited (SBICAP)

SBICAP is a full service investment banking outfit offering Project Advisory Services, arrangement of Structured Finance, Capital Market Services like Equity Issuances, Mergers & Acquisitions and arrangement of Private Equity, etc. SBICAP is a leader in India in Project Finance with over 40% market share.

The following are some of the many awards / recognitions won by the Company during the year:

- Bank of the year award 2010 for Asia Pacific Region for the 3rd consecutive year by Thomson Reuters.

- Loan House of the Year Award for the 2nd consecutive year by IFR Asia.

- Euromoney Project Finance Indian Deals awards –

- Indian Petrochemical Deal of the Year 2010- ONGC Mangalore Petrochemicals

- Indian Industrial Deal of the Year 2010 – Dungsam Cement

- Indian Oil & Gas Deal of the Year 2010- GSPC KG Offshore

- Ranked No 1 Global Mandated Lead Arrangers for 2010 by PFI ( Thomson Reuters) for the second successive year.

- Ranked No 1 Global Lead Arrangers for the second successive year by Dealogic.

- Ranked 1st with an impressive market share of 13.3% for the 1st quarter of calendar 2011 on the Asia Ex-Japan Syndicated Loans Table as per Bloomberg.

- Ranked 2nd in terms of issues handled and 3rd in terms of amount raised during the financial year 2010-11.

- Ranked 1st in Rights Issues- both in terms of number of issues and amount raised

- Ranked 1st in number of PSU Divestment Issues.

The company has posted PAT of Rs. 374.72 crores as on 31.03.2011 as against Rs. 137.12 crores as on 31.03.2010 thus recording YoY growth of 173%. Also declared an interim dividend of 400%.

J.4.1 SBICAP Securities Limited (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Ltd., besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in Sales & Distribution of other financial products like Mutual Funds, etc. SSL has 100 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 1.89 lac customers in their books. The Company has posted a profit of Rs.4.59 crores as on 31.03.2011 during the current year.

J.4.2 SBICAPS Ventures Limited (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Ltd. SVL earned a net profit of Rs. 0.59 crore during 2010-11.

SVL sold its stake in SS Ventures Services Ltd., a venture capital fund set up jointly by SVL and SBI Holdings Inc (Softbank), Japan and its stake in India Japan Fund to SBI Holdings Inc and Knowledge Investments (Mauritius) Ltd at a total consideration of Rs. 3.47 crores and Rs. 2.60 lac respectively.

J.4.3 SBICAP (UK) Ltd. ( SUL)

SUL is a wholly owned subsidiary of SBI Capital Markets Ltd. During the year SUL has booked a revenue of Rs. 2.16 crores and has posted a net profit of Rs. 0.20 crore despite the global recessionary scenario.

SUL is positioning itself as a Relationship outfit for SBI Capital Markets in UK and Europe. Relationships are being built with FIIs, Financial Institutions, Law Firms, Accounting Firms, etc to market the business products of SBICAP.

J.4.4 SBICAP TRUSTEE Co. Ltd. (STCL)

SBICAP TRUSTEE Co Ltd (STCL), a wholly owned subsidiary of SBI Capital Markets Ltd., which has commenced security trustee business with effect from 1st August 2008 has earned a gross income of 8.31 Rs.crores and a Net Profit of Rs. 4.43 crores during 2010-11 as against Gross Income of Rs. 3.78 crores and Net Profit of Rs. 1.94 crores during 2009-10.

J.5 SBI DFHI Ltd. (SBI DFHI)

- SBI acquired Asian Development Banks and Industrial Investment Bank of Indias stake (4.69% and 0.47% respectively) in SBI DFHI during the course of the year.

- SBI group holds 72.17 % share in the Company, which is a primary dealer.

- For the period ended 31st March 2011, the Companys PAT was Rs. 56.94 crores as against Rs. 89.23 crores during March 2010. The lower profit is mainly attributed to the impact of hikes in Repo rates by RBI and yield on investments remaining stagnant.

- The market share of SBIDFHI has increased from 2.71% as on 31.03.2010 to 3.41% as on 31.03.2011.

- The secondary market turnover during the year was Rs. 97,885 crores as against Rs. 78,911 crores during the corresponding period in 2010 (YoY growth of 24%).

J.6 SBI Cards & Payments Services Pvt. Ltd. (SBICSPL)

- SBI Cards, the only stand-alone credit card issuing company in India, is a joint venture between State Bank of India and GE Capital Corporation, wherein SBI holds 60% stake.

- The "Cards in Force" (CIF) of the Company stands at 23 lac and the receivables are at Rs. 1,795 crores at the end of March 2011.

- The Company has posted a net profit of Rs. 7.10 crores as on March 2011 as against a loss of Rs. 152.4 crores as on 31.03.2010.

- SBI Card has emerged as the most trusted brand by being the undisputed Gold Award winner in Readers Digest Trusted Brands Survey 2010 for the third year in a row.

Table : The Performance Highlights of the Associate Banks as on 31.03.2011 are as under:

(Rs. in Crs)

Name of the Bank SBIs share Deposits Advances Operating Net in the Profit Profit capital (%)

State Bank of

Bikaner & Jaipur 75.00 53319 41744 1140.25 550.88

Hyderabad 100.00 90178 65437 2319.47 1166.24

Mysore 92.33 42779 34440 1173.75 500.62

Patiala 100.00 67771 52331 1759.24 652.96

Travancore 75.00 57598 46471 1175.97 727.73

All 5 Banks 311645 240423 7568.68 3598.43

- SBI Card has won the CNBC Awaaz Consumer Awards 2010.

J.7 SBI Life Insurance Company Limited (SBILIFE)

- SBI Life is Joint Venture Company between SBI and BNP Paribas in which SBI holds 74% stake.

- SBI Life has a unique multi-distribution model comprising Bancassurance, Retail Agency & Institutional Alliances and Group Corporate Channels for distribution of insurance products.

- Gross Premium of the Company Crossed Rs. 12,000 crores with YoY growth of 28%.

- SBI Life has a market share of 19.22% of the total market share of private insurers which stood at 31.30% as on 31.03.2011. Overall market share (including Life Insurance Corporation of India) of SBI Life stood at 6.02% as at 31st March 2011.

- Recorded a PAT of Rs. 366.30 crores as on 31.03.2011 as against Rs. 276.46 crores as on 31.03.2010.

- The ‘Assets under Management of SBI Life recorded a growth of 40% YoY to reach Rs. 40,162 crores as on 31st March 2011.

- SBI Life expanded its branch network by adding 135 branches during the year bringing the total number of branches to 629.

- ICRA has reaffirmed iAAA rating to the company indicating highest claim paying ability.

- CRISIL has reaffirmed its highest financial rating AAA/ Stable.

The following are some of the awards / recognitions achieved by the Company during 2010-11:

- NDTV Profit business leadership 2010-11 award for organizational excellence.

- Bloomberg UTV Award for Financial Excellence 2010-11.

- Outlook Money Award Runner Up for the Best Life Insurance Company 2010-11.

- ICS Quality Champion Award 2010-11.

- IS0 9001:2000 certification for superior claim process.

J.8 SBI Funds Management (P) Ltd. (SBIFMPL)

- SBIFMPL, the Mutual Fund arm of SBI, is the 6th largest Fund House in terms of "Assets Under Management" and a leading player in the market with 6 million investors.

- The schemes of the Fund House have performed consistently over the years and have emerged as the preferred investment for investors.

- The company has posted a PAT of Rs. 78.85 crores as on 31.03.2011 registering a YoY growth of 4%.

- The average "Assets Under Management" (AUM) of the company stood at Rs. 41,672 crores as against Rs. 37,417 crores as on March 2010 achieving a YoY growth of 11% as against the growth of 6% for the Mutual Fund Industry.

J.9 SBI Global Factors Ltd. (SBIGFL)

- SBIGFL is one of the leading factoring companies in India which has the highest market share (over 90%) in export & import factoring.

- During the year ended 31st March 2011, the turnover of the company decreased to Rs. 7,605 crores from Rs. 12,978 crores as on 31st March 2010 due to the sluggish growth in industrial production during the year impacting the top line growth.

- The company incurred a loss of Rs. 125.62 crores during the year ended 31.03.2011 as against a profit of Rs. 6.58 crores earned on 31.03.2010 mainly on account of slow down in economy and due to higher provisioning for NPAs and Write-offs.

J.10 SBI Pension Funds Pvt. Ltd. (SBIPF)

SBIPF is one of the three Fund Managers appointed by Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the New Pension System for Central Government (except

Armed Forces) and State Government Employees. SBIPF, a wholly owned subsidiary of the State Bank Group, commenced its operations from April 2008. The total "Assets Under Management" of the company as on 31st March 2011 were Rs. 3,764.11 crores (YoY growth of 65%). As at 31st March 2011, SBIPF was managing 44% of the corpus under the Central Govt Scheme, 39 % under State Govt scheme and 64% under the informal sector. The Company recorded a net profit of Rs. 0.32 lac.

Important Developments during the year in Associates & Subsidiaries:

- State Bank of Indore, one of the Associate Banks, was acquired on 26th August 2010 after the final approval from RBI and GoI.

- State Bank of Mysore raised Rs. 583.20 crores equity through a Rights Issue during the year.

- State Bank of Bikaner & Jaipurs Rights Issue for raising Rs. 780 crores was open from 28th March to 11th April 2011.

Support & Control Operations

K Information Technology

L Risk Management & Internal Controls

M Customer Service & Corporate Social Responsibility

N Corporate Communication & Change

O Right to Information Act

P Human Resources

Q Business Process Re-engineering

R Official Language

S KYC/AML/CFT Measures

T Fraud Prevention & Monitoring

U Compensation Policy for deficiency in Service

V Banks Outsourcing Policy

W Super Circle of Excellence

X Green Banking Initiatives

K. INFORMATION TECHNOLOGY

Networking: The Bank has implemented a secure, robust scalable WAN architecture network built with equipments owned by SBI, connecting 19,347 Branches/Offices and 25,005 ATMs of State Bank Group through leased lines, VSATs and CDMA technology.

Core Banking: CBS roll out across the domestic branches is supported with a state-of-the-art centralized infrastructural setup and a robust Primary / DR setup, providing uninterrupted continuity of Banks operations. It facilitates the scalability for future growth, interfacing with multiple alternate channels, reduction in transaction costs, improved operating efficiency. Milestones of 52 millions peak transactions in a day, 1,861 Transactions per second and managing 258 million accounts have been achieved in recent months. Operatives have been provided with tools for on-line real time transaction verification. E-Trade – internet based front end application has been rolled out for corporate customers for processing various trade finance transactions.

ATM: State Bank Group crossed an important milestone of rolling out 25,000th ATM during the year. Apart from Cash Withdrawal, Balance enquiry, Mini statement and Card to Card transfer, several value added services such as Utility Bill Payment, Temple/Trust Donations, Fee Payment, Mobile top up, Cash/ Cheque deposit (at select ATMs), Cheque book request, Payment of Insurance premium, SBI Credit Card Bill Payment etc. are also being offered at 25,005 ATMs of the State Bank Group. Usage of debit cards at PoS terminal has increased significantly. Bunch Note Acceptor (for direct acceptance of cash), Multifunction kiosks (for offering non-cash ATM transactions, Internet Banking transaction, passbook printing etc.),

low cost rural ATMs and solar powered ATMs have also been rolled out.

Internet Banking: The Banks Internet Banking solution is a comprehensive suite of products for both Retail and Corporate users. Some of the new features enabled during the year include online nomination and closure of e-TDR/STDR, opening closing of e-RD, viewing of Form 26 (Annual statement 26 for income tax credits), stop payment of cheques, request for multicity cheque book, registration of mobile number in Core Banking account for SMS alerts of core transactions, online issuance of gift cards and top up, online validation of PAN while making tax payment, display of notional interest in housing loan account etc.

Payment Systems Group: The volume of RTGS and NEFT transactions has increased significantly.

Contact Centre operates on 24x7 basis from two locations Bengaluru and Vadodara. Contact Centre is currently providing the following services: Complaint Management System, Pension Management System, Lead Management System, Account Enquiry Services, Payment Tracking System, Card Tracking Services, Hotlisting of Cards, ATM PIN Regeneration, Providing MMID (Mobile Money Identifier) information under IMPS (Interbank Mobile Payment Services), Balance and Statement on mobile.

In respect of Prepaid Cards, the facility of placing request and funding for procurement of Gift Card has been enabled through Internet Banking portal (www.onlinesbi.com).

Mobile Banking: A host of Mobile Banking services, such as Fund Transfers, Enquiry

Services, Demat Account Enquiry, Cheque book request, Bill payment, Mobile top up, DTH recharge, SBI Life Premium Payment, E-tag recharge to pay toll tax, Merchant payments and Inter Bank Mobile Payment Services (IMPS) are currently being offered. IMPS has been added during the year.

Mobile Banking Services are currently offered under five channels viz. SMS, GPRS, WAP, USSD and SMS banking. SMS Banking has been introduced during the last quarter of the year. The Mobile Banking user base has crossed one million by the end of the year.

Enterprise Data Warehouse: The Phase II of the Enterprise Data Warehouse Project (EDWP) has commenced. While a few business critical reports are already provided by EDWP, the end users will have access to all regular and ad hoc reports required for operational and decision making requirements through a web portal in a phased manner.

Information Security: Bank has implemented a robust IT Policy and Information System Security Policy which is in line with the international best practices. These policies are reviewed periodically and suitably strengthened in order to address emerging threats. Regular security drills and employee awareness programs are conducted to ensure security and increase awareness among staff. Business Continuity Management System (BCMS) has been implemented at Global IT centre, Belapur.

Foreign Offices: 131 branches in 23 countries, including 2 OBUs in India, run their operations on common banking application software Finacle, with their databases connected to a central Data Centre backed up by a

synchronized Disaster Recovery site. The Rupee remittances from foreign centres are routed through the central Payment Hub for credit to accounts maintained with State Bank Group. The NEFT mechanism is used for credits to accounts with other banks. The foreign offices also use the centralized SWIFT infrastructure for their financial messages. All foreign offices use Internet Banking channel, and 113 ATMs at various locations abroad cater to the Banks overseas customers with most of the ATMs connected to centralized ATM Switch in India.

RRB Computerisation:

Out of 18 RRBs sponsored by the Bank, 10 RRBs have been computerised on CBS platform using BaNCS application software through the ASP model.

Awards & Accolades:

During the year, The Bank has received the following national and international awards in recognition of its technology implementation:

- The Banker – Innovation in Banking Technology Awards 2010 – State Bank of India was declared Winner in ‘Innovation in Eco-IT category for its GREEN ATM installation.

- The NASSCOM CNBC IT User Award 2010 – in the Banking Vertical for its various IT initiatives.

- IDRBT Banking Technology Excellence Awards 2009: The Bank won two awards in ‘Best Use of Technology for Financial Inclusion and ‘Mobile Banking and Payment Applications.

- Best IT Implementation Awards 2010 by PC Quest: SBIs Project ‘Green IT @ SBI was rated as the Best Green IT Project for its GREEN ATM installation.

- Skoch Award 2010- in the "Virtual Corporation Award" category for its project – ‘E-Payment Solution which covers all our E-Governance initiatives on Corporate Internet Banking Platform.

- Silver EDGE Award – for its "Data Centre Consolidation Project" of Foreign Offices Department.

- Amaron Quanta Express Uptime Champion Awards 2010 (Banking and Finance Category) – the award recognizes organizations who have implemented solutions that guarantee an optimal infrastructure uptime 24x7.

- VISA 2009 Global Service Award-the Banks ATM cum debit card was declared to have the lowest transaction response time.

- IBA Technology Award: Best Customer Initiative, Counter, Best Online Banking, Best Risk Management (Runner up).

L. RISK MANAGEMENT & INTERNAL CONTROLS Risk Management in SBI

L.1 Risk Management Structure

- An independent Risk Governance Structure is in place for Integrated Risk Management covering Credit, Market, Operational and Group Risks. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.

- The Risk Management Committee of the

Board (RMCB) has the overall responsibility to monitor and manage Enterprise Wide Risk. The Credit Risk Management Committee (CRMC), Market Risk Management Committee (MRMC), Operational Risk Management Committee (ORMC), Group Risk Management Committee (GRMC) and Asset Liability Management Committee (ALCO) support RMCB.

- MD & Group Executive (Associates & Subsidiaries) and MD & Group Executive (International Banking) are the members of RMCB, while MD & Group Executive (National Banking) and MD & Chief Financial Officer are invited to attend all the meetings of the Committee. The Deputy Managing Director & Chief Credit and Risk Officer head CRMC, MRMC, ORMC and GRMC. ALCO is headed by the Managing Director & Chief Financial Officer.

- Risk Management is perceived as an enabler for business growth and in strategic business planning, by aligning business strategy to the underlying risks. This is achieved by constantly re-assessing the inter-dependencies / interfaces amongst each silo of Risk and business functions.

- Bank is in the process of implementing Enterprise Risk Management (ERM) that will integrate all the Risk Management functions of the Bank, explore inter-dependencies amongst various risk types and act as a support system to strategic decision-making process.

L.2 Basel II Implementation

- In accordance with RBI guidelines, the Bank has migrated to the Basel II framework, with the Standardised Approach for Credit Risk and Basic Indicator approach for Operational Risk w.e.f. March 31, 2008, having already implemented the Standardised Duration Method for Market Risk w.e.f. March 31, 2006.

- Simultaneously, the Bank is updating and fine- tuning its Systems and Procedures, Information Technology (IT) capabilities, Risk Assessment and Risk Governance structure to meet the requirements of the Advanced Approaches under Basel II.

- Various initiatives such as new Credit Risk Assessment Models, independent validation of Internal Ratings, loss data collection and computation of market risk Value at Risk (VaR) and improvement in Loan Data Quality would facilitate efficient use of Capital as well as smooth transition to Advanced Approaches.

- Risk Awareness exercises are being conducted across the Bank to enhance the degree of awareness at the Operating levels, in alignment with better risk management practices, Basel II requirements and over-arching aim of conservation and optimum use of capital.

- Keeping in view the changes that the Banks portfolios may undergo in stressed situations, the Bank has in place a policy, which provides a

framework for conducting the Stress Tests at periodic intervals and initiating remedial measures wherever warranted. The scope of the tests is constantly reviewed to include more stringent and new scenarios.

L.3 Credit Risk Management

- Credit Risk Management process encompasses identification, assessment, measurement, monitoring and control of the Credit Exposures. Well-defined basic risk measures such as CRA (Credit Risk Assessment) models, Industry Exposure norms, Counter-party Exposure limits, Substantial Exposure limits, etc., have been put in place.

- Credit Risk components such as Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) are being computed.

- Frequency of Stress Tests in respect of Credit Risk has been increased from Annual to Half-yearly, to identify Credit Risk at an early stage and to initiate appropriate measures to contain/ mitigate Credit Risk.

L.4 Market Risk Management

- Market Risk Management is governed by the Board approved policies for investment, Private Equity & Venture Capital, trading in Bonds, Equities, Foreign Exchange and Derivatives.

- Exposure, Stop Loss, Modified Duration, PV01 and Value at Risk (VaR) limits have been prescribed. These limits, along with other Management Action Triggers, are tracked daily and necessary action initiated, as required, to keep Market Risk within approved limits.

L.5 Operational Risk Management

- The Bank manages operational risks by having in place and maintaining a comprehensive system of internal controls and policies.

- The main objectives of the Banks Operational Risk Management are to continuously review systems and control mechanisms, create awareness of operational risk throughout the Bank, assign risk ownership, alignment of risk management activities with business strategy and ensuring compliance with regulatory requirements.

- The Operational Risk Management policy of the Bank establishes a consistent framework for systematic and pro-active identification, assessment, measurement, monitoring and mitigation of operational risk. The Policy applies to all business and functional areas within the Bank, and is supplemented by operational systems, procedures and guidelines which are periodically updated.

L.6 Group Risk Management

- The State Bank Group is recognised as a major Financial Conglomerate and as a systemically important financial intermediary, with significant presence in various financial markets.

- Accordingly, it is imperative, both from the regulatory point of view as well as from the Groups own internal control and risk management point of view, to oversee the functioning of individual entities in the Group and periodically assess the overall level of risk in the Group. This facilitates optimal utilization of capital resources and adoption of a uniform set of risk practices across the Group Entities.

- The Group Risk Management Policy applies to all Associate Banks, Banking and Non-banking Subsidiaries and Joint Ventures of the State Bank Group under the jurisdiction of specified regulators and complying with the relevant Accounting Standards, where the SBI has

investment in equity shares of 30% and more with control over management.

- With a view to enabling the Group Entities to assess their material risks and adequacy of the risk management processes and capital, all Group members, including Non-banking Subsidiaries are encouraged to align their policies and practices with the Group, follow Basel prescriptions and international best practices.

L.7 Asset Liability Management

- The Asset Liability Management Committee (ALCO) of the Bank is entrusted with the evolvement of appropriate systems and procedures in order to identify and analyse balance sheet risks and setting of benchmark parameters for efficient management of these risks.

- ALM Department, being the support group to ALCO, monitors the Banks market risk such as liquidity risk, interest rate risk etc., by analysing various ALM reports / returns. The ALM department reviews the ALM Policy and complies with the Banks / RBIs policy guidelines on an ongoing basis.

- The Market Related Fund Transfer Pricing Mechanism has been implemented for evaluating the business performance of the branches of the Bank.

L.8 Internal Controls

The Bank has in-built internal control systems with well-defined responsibilities at each level. The Bank carries out mainly two streams of audits - Inspection & Audit and Management Audit covering different facets of Internal Audit requirement. Apart from these, Credit Audit is conducted for units with large credit limits and Concurrent Audit is carried out at branches having

large deposits, advances and other risk exposures and selected BPR Outfits. Expenditure Audit, involving scrutiny of accounts and correctness of expenditure incurred, is conducted at Corporate Centre Establishments, Local Head Offices, Zonal Offices, On Locale Regional Offices, Regional Business Offices, Lead Bank Offices, etc. To verify the level of rectification of irregularities by branches, audit of compliance at select branches is also undertaken. The Information System Audit (IS Audit) of the centralised IT establishments is being conducted.

L.8.1 Risk Focussed Internal Audit (RFIA)

The inspection system plays an important and critical role of introducing international best practices in the internal audit function which is regarded as a critical component of Corporate Governance. Inspection & Management Audit Department undertakes a critical review of the entire working of auditee units. Risk Focussed Internal Audit, an adjunct to risk based supervision as per RBI directives, is in vogue in the Banks audit system.

L.8.2 Inspection & Audit of branches

All domestic branches have been segregated into 3 groups on the basis of business profile and risk exposures. While audit of Group I branches and credit oriented BPR entities (excepting SARC) is administered by Central Audit Unit (CAU) at Inspection & Management Audit Department headed by a General Manager (CAU), audit of branches in Group II & Group III category and other BPR entities are conducted by ten Zonal Inspection Offices, located at various Centres, each of which is headed by a General Manager (I&A). The audit of branches and BPR entities is conducted as per the periodicity approved by Audit Committee of the Board (ACB) which is well within RBI norms. During the period from

01.04.2010 to 31.03.2011, 7,871 domestic branches (Group I: 86 Group II: 1,421; & Group III: 6,364) were audited.

L.8.3 Audit of BPR entities

In the wake of introducing various BPR initiatives, audit process for the BPR entities has been developed and introduced. Taking into account the processes involved in each of the entities, exclusive Audit Report Formats, with appropriate audit queries, have been introduced. These entities are being evaluated on risk parameters. During the period from 01.04.2010 to 31.03.2011, 323 BPR entities (Group I: 138 & Group II: 185) were audited.

L.8.4 Cluster Audit

A number of Centres have been brought under the gamut of BPR and several branches are linked with BPR entities. To be able to identify and mitigate the risk at such branches, where the process is still underway, the department has introduced an initiative called ‘Cluster Audit wherein a simultaneous audit of BPR entities and identified branches linked to the BPR in a particular centre is taken up . During the period from 01.04.2010 to 31.03.2011, Cluster Audit was conducted in 46 Centres covering 1,188 Branches & 125 BPR entities. This brought to light the audit health of the centre.

L.8.5 Management Audit

With the introduction of Risk Focussed Internal Audit, Management Audit has been reoriented to focus on the effectiveness of risk management in the processes and the procedures followed in the Bank. Management Audit universe comprises of Corporate Centre Establishments; Circles / Apex Training Institutions, Associate Banks; Subsidiaries (Domestic / Foreign); Joint Ventures

(Domestic / Foreign), Regional Rural Banks sponsored by the Bank (RRBs). During the period from 01.04.2010 to 31.03.2011, Management Audit of 45 domestic offices/establishments was carried out.

L.8.6 Credit Audit

Credit Audit aims at achieving continuous improvement in the quality of Commercial Credit portfolio of the Bank through critically examining individual large commercial loans with exposures of Rs. 5 crores and above. Credit Audit System (CAS), which has been aligned with Risk Focussed Internal Audit, assesses whether the Banks laid down policies in the area of credit appraisal, sanction of loans and credit administration are meticulously complied with. CAS also provides feedback to the business unit by way of warning signals about the quality of advance portfolio in the unit and suggests remedial measures. It also comments on the risk rating awarded and whether it is in order. Credit Audit carries out a review of all individual advances above the cut off limit within 6 months of sanction/enhancement/ renewal as off-site audit and a post sanction audit once in 12 months as on-site. During the period 01.04.2010 to 31.03.2011, Credit Audit (on-site) was conducted in 456 Branches, covering 5,733 accounts with aggregate exposures of Rs. 5,72,958 crores. Credit Audit (Off-site) was conducted in 14 Circles (including MCROs/CAG functioning in the geographical area of the respective Circles) during the same period, covering 6,875 proposals (domestic) with aggregate exposure of Rs. 8,43,864 crores.

L.8.7 Information System Audit:

Since April 2006, all the Branches are being subjected to Information Systems (IS) audit to

assess the IT related risks as part of audit of the branch. A ‘Handbook on Self Audit of Information Systems was introduced to facilitate branches for evaluating the efficiency level of IT systems. IS Audit of centralised IT establishments has commenced in January 2007. During the period from 01.04.2010 to 31.03.2011, IS Audit of 40 centralised IT establishments was completed.

L.8.8 Foreign Offices Audit:

Home Office Audit was carried out at 40 Branches / offices during 01.04.2010 to 31.03.2011, which included Inspection and Audit of 31 Branches, Management Audit of 4 Representative offices, 1 Subsidiary and 4 Regional Offices.

L.8.9 CONCURRENT AUDIT SYSTEM:

Concurrent Audit system is essentially a control process integral to the establishment of sound internal accounting functions, effective controls and overseeing of operations. It works as a tool for the Controllers of operations for scrutiny of day-to-day operations. Concurrent Audit System is reviewed on an on-going basis as per the RBI directives so as to cover 30-40% of the Banks Deposits and 60-70% of the Banks Advances and other risk exposures. Inspection & Audit department prescribes the processes, guidelines and formats for the conduct of concurrent audit at branches and BPR entities. As on 31.03.2011, the system covers 30.15 % of deposits and 75.21 % of advances and other risk exposures of the Bank.

L.9 Vigilance

The main objective of vigilance activity in the Bank is not to reduce but enhance the level of managerial efficiency and effectiveness in the organization. Risk taking is integral part of the

banking business. Therefore, every loss does not necessarily become subject matter of vigilance enquiry. Motivated or reckless decisions that cause damage to the Bank are essentially dealt as vigilance ones. While vigilance aims at punishing the delinquent employees, it also protects the legitimate and bonafide business decisions taken by them and any other action devoid of malafides. The Vigilance Department in the Bank functions on these principles.

Based on the principle "Prevention is Better Than Cure", the Vigilance Department is actively involved in the preventive measures, which aim at taking steps, which are essential for avoiding recurrence of similar nature of frauds in the Bank. At the same time, Vigilance department is taking proactive measures to prevent the incidences of frauds arising in CBS environment.

Considering the size of the Organization, we have set up vigilance departments at each of the 14 Circles, headed by Deputy General Managers. At Corporate Centre, Vigilance set up is headed by Chief Vigilance Officer of the rank of Chief General Manager. The department reports to the Chairman directly and conducts its affairs independently. The guidelines of the Central Vigilance Commission (CVC) are followed in letter and spirit in its functioning.

M. CUSTOMER SERVICE & CORPORATE SOCIAL RESPONSIBILITY

M.1. CUSTOMER SERVICE

- Several transformation exercises for different categories of employees were conducted such as ‘Parivartan, ‘SBI Citizen, ‘Udan, ‘Jagruti etc. towards better understanding of interpersonal relationships mainly with the customers.

- The Grievance Redressal Policy of the Bank is formulated on the basis of the Model Policy

Framed by Indian Banks Association and provisions of the revised Code of Commitments to Customers released by Banking Codes and Standards Board of India in August 2009. Branches are required to redress customer grievances within three weeks of receipt against the time limit of 30 days prescribed in the Code.

- The Standing Committee on Customer Service constituted at the Local Head Offices with representatives from customers including Senior Citizens review the overall position of Customer Service in the Circle. Analysis of the consolidated data for Customer Grievances for all Circles is being put up to the Customer Service Committee of the Central Board every quarter to identify common systemic issues that require rectification, and also review the remedial measures taken by the Bank for improving the Customer Service.

- The Contact Centre of the Bank has been enhanced to provide wholesome help to customers including

- Enquiries on products and services,

- Account related information, balance enquiry,

- ATM card related information including blocking of cards,

- Income tax refund related queries,

- Demat account information,

- Pension related information to pensioners.

- A web based Complaint Management System (CMS) launched in December 2009 helps customers to register their ATM related complaints at the Toll Free number of Contact Centre. The complaints are resolved by the ATM Switch Centre and branches within RBI stipulated time limit of 12 days. As pension

related complaints continue to be the major area of complaints, CMS facility has now also been extended for acceptance of complaints relating to pensions, deceased accounts, Lockers and NRI accounts.

- The Bank has launched a mobile and web based service for customer grievance redressal - ‘SMS Unhappy Service. Any customer, who wants to lodge a complaint, sends an SMS "UNHAPPY" to a specified number. The Bank responds to the SMS by calling back to the customer on the same mobile number and records the details of the complaint and sends to respective Branches who are required to advise resolution within 48 hours.

M.2. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility has been a part of the State Bank of India since 1973 under the name of Community Service Banking covering various social, environmental and welfare activities.

The stated CSR Philosophy is as follows:

- The Bank is a corporate citizen, with resources at its command and benefits which it derives from operating in society in general. It, therefore, owes a solemn duty to the less fortunate and under-privileged members of the same society.

- Staff members are encouraged to make their contribution by understanding the aspirations of the public around them and by endeavouring to evolve measures to remove indisputable social and developmental lacunae. This will lead to their self-development and improvement of the Banks image besides development of the Community.

During the financial year 2010-2011, numerous welfare and social activities were implemented

both in Banking and Non-Banking areas with the basic aim of raising the quality of life in the community, especially in and around the area of operation of the branches. Particular attention was given to ameliorating the condition of the downtrodden and under- privileged common man.

Currently, the focus areas under Community Service Banking are:

- Health

- Education

- Adoption of the Girl Child

- Womens empowerment

- Child development

- Welfare and rehabilitation of poor and handicapped

- Assistance to poor and under privileged

- Entrepreneur development programmes

- Vocational guidance

- Thrust for assistance to IT education in Rural/Tribal/unreached areas

- Environment Protection

- Assistance during natural calamities

Projects during 2010-11

a) Natural Calamities

Donations amounting to Rs. 2 crores were made to UP Chief Ministers Relief Fund for providing relief and rehabilitation to victims of Natural Calamities.

b) Community Service Banking

2,547 projects have been assisted with Rs. 25.95 crores covering the areas of Health, Education, Assistance for Sports, Handicapped, Environment and Assistance to tribals & other underprivileged members of society.

c) Adoption of the Girl Child

Societys preference for the boy child has resulted in a large number of instances when the girl child is deprived of familial attention, education, affection, healthcare and in extreme cases, even food. In order to supplement the efforts of the Govt., to change this concept, branches adopt Girl Children in the age group of 6 to 14 years, who are orphans / destitute / physically handicapped / belong to poor families.

This initiative started in 2008 with 8,338 children has in its role 17,627 girl children at present with an assistance of Rs. 3.49 crores extended during the year 2010-11 under Community Service Banking.

Apart from financial assistance, individual employees from the Bank / spouses of employees adopt one or two children for care, mentoring, counselling, to try and fulfil the role of a guide. This includes periodic visits to the schools by Staff Members, talking to the girl child to understand her difficulties, academic or otherwise, and offering solutions. A close liaison is also maintained with the teachers and the academic progress of the girl child is monitored. If felt necessary, timely corrective action is suggested.

While gradually increasing the coverage, the Bank has emphasised that individual care and attention to the adopted children as originally envisaged, should not be diluted.

d) Research & Development Fund

The Bank set up the Research & Development Fund in 1977 with the primary objective of supporting research work relevant broadly to the activities of the Bank.

In the year 2010, State Bank of India Chair on Energy and Environment has been instituted for

Rs. 50 lac in IIT Kanpur with particular emphasis towards innovations in the field of solar energy. This step demonstrates Banks concern for energy and environmental issues.

Besides, the Bank has also made an annual contribution of GBP 100,000 towards a Chair set up by the Bank jointly with RBI at the Asia Research Centre at London School of Economics. An amount of Rs. 2 crores has been earmarked for ‘SBI Chair for Public Leadership set up in Indian School of Business, Hyderabad.

M.3. SBI CHILDRENS WELFARE FUND

The Fund was set up with donations from the employees of SBI with matching contributions from the Bank to assist underprivileged and poor children in their overall development. During the year 2010-11, 6 projects were assisted with Rs. 5.62 lac.

M.4. EDUCATION PARTNERING WITH MCGM

The Municipal Corporation of Greater Mumbai (MCGM) has launched a project to transform and upgrade the outcome of education in schools run by the Municipal Corporation. The Bank has agreed to support this project as a partner for a period of 2 years as this project may evolve as a model for replication across the country. Contribution to the tune of Rs. 3.97 crores has been made by the Bank towards this project in 2010-11.

M.5. SBI YOUTH FOR INDIA

(Harnessing Youth Power for Rural Development)

SBI Youth for India is a fellowship programme initiated, funded and managed by the State Bank of India in partnership with reputed NGOs.

The Programme seeks to help India secure an equitable and sustainable growth path by:

- Providing educated Indian youth with an opportunity to touch lives and create positive change at the grass root level in rural India.

- Providing NGOs working on development projects in rural India with educated manpower whose skill sets can be used to catalyze rural development.

- Promoting a forum for the Programme alumni to share ideas and contribute to rural development throughout their professional life.

Project Work

- The selected candidates are assigned a project according to their interest/skill and as per the need of the respective NGO.

- Throughout the project, they will be provided a mentor from the partner NGO who will help them to address the challenges in the project assigned.

- In consultation with their mentor, they will have to define an outcome that they intend to achieve at the end of the project and will then have to work towards it.

The programme offers the candidates a wide variety of projects to choose from. The project will cover a whole gamut of areas like Cluster Development, Watershed Development, Environment Protection, Biotechnology, Computer Literacy, Womens Empowerment, Dairy Husbandry, Bio-Diversity,

Eco-Technology, Insurance, Coastal Research Systems etc.

The Bank seeks to make a lasting impact in the rural scenario through this program.

N. CORPORATE COMMUNICATION & CHANGE

- Following the earlier Parivaritan initiatives, Intervention II & III under Citizen SBI, were implemented during the year. While Intervention II emphasized on the collective fulfillment, Intervention III was about identifying opportunities, thereby paving the way for business development and lasting relationships.

- The Intervention IV was conceived as a Senior Management Citizenship Vision Programme to bring about recognition of the critical changes required in SBI by way of policies/processes.

O. RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005)

Suitable structure has been put in place at Branches/ Administrative Offices/ Regional Business Offices/Local Head Offices for handling requests and appeals under RTI Act 2005. Further, an exclusive ‘RTI Department has been created in Corporate Centre to handle and co-ordinate various issues under the Act. For convenience of the public, the Bank has also created an RTI link on its website http://www.statebankofindia.com and http://www.sbi.co.in.

P. HUMAN RESOURCES (HR)

HR INITIATIVES

A number of key initiatives have been taken by the Bank during the current year to motivate the employees to perform better so as to achieve the Banks growth plans.

PERSONNEL MANAGEMENT

- Defined Contribution Pension Scheme (DCPS) was introduced for all categories of employees recruited w.e.f 01.08.2010.

- Pursuant to Industry-wise settlement / Joint Note dated 27.04.2010, pension benefits will be extended to the Retirees of e-SBS and e- SBIN, who opt for pension as the second option.

- Revision made in Terms & Conditions of Contractual officers-Management Trainees, Chartered Accountants, Credit Analysts (WB/CAG) and Customer Relationship Executives (WB/MCG).

CADRE MANAGEMENT

- Policy for recruitment of Probationary Officers (POs) reviewed and methodology of one-tier written examination in respect of POs for SBI & Associate Banks was made applicable to reduce the cycle of recruitment.

- 3,746 Probationary Officers were recruited during the year, out of which 2,294 POs have joined the Bank till 31.03.2011.

- Contractual employees viz. CRE(PB), CRE(ME), OMRs etc. were absorbed in the Bank as permanent officers in Junior Management Grade as one time measure.

- 487 Management Executives recruited directly in MMGS-II grade to meet the specialized needs of the Bank.

Recruitment

- 25,327 clerical staff were recruited during the year out of which 18,628 have joined the Bank till 31.03.2011. This is the largest recruitment exercise undertaken in the Banking sector and will further augment the staff strength in tandem with the Banks branch expansion drive and manpower requirement on account of promotion and retirement etc. This will not only help in reducing the age profile of staff but will also provide an opportunity for greater mobility and marketing thrust across the Bank to achieve its growth plans.

Industrial Relations

- Excellence in Industrial Relations was maintained with both the Officers and Staff Federations by maintaining healthy dialogue / discussions with them during the year. Issues raised by the Federations were properly examined and adequately responded to.

HRMS

- Salary processing for 2.05 lac employees across SBI and pension processing of 1.12 lac IBI/SBI Pensioners have been centralised.

- The Training Management System, Centralised PF accounting & processing, leave and attendance management, fixed assets management etc. will improve the employee management and also make the HR processes more efficient.

STRATEGIC TRAINING UNIT

The Strategic Training Unit (STU), operationalized on 5th April 2010, has taken a number of initiatives towards giving a new dimension to the training philosophy of the Bank. Some of the major initiatives in this regard are as follows:

- A website of STU has been launched to which the entire training system has been linked.

- Under the leadership Pipeline, Jagriti Programme was launched covering all AGMs having more than 2 years of residual service.

- E-learning through HRMS portal has been expanded over 158 courses currently.

- A new initiative in Distance Learning has been taken by SBSC by introducing Mobile Learning.

STAFF STRENGTH AS ON 31.03.2011

Category Total %

Officers 79,728 35.77

Clerical 1,02,701 46.07

Sub-staff 40,504 18.16

TOTAL 2,22,933 100.00

IMPLEMENTATION OF PERSONS WITH DISABILITIES (PWD) ACT 1995

Our Bank provides reservation to persons with disabilities (PWDs) as per the guidelines of the Government of India and section 33 of the PWD Act 1995. The total number of persons with

disabilities who were employed as on 31.03.2011 was 2,525, consisting of 530 officers, 1,754 clerical and 241 sub-staff.

REPRESENTATION OF SCHEDULED CASTES AND SCHEDULED TRIBES

As on the 31st March 2011, 43,657 (19.58%) of the Banks total staff strength, belonged to Scheduled Caste and 15,812 (7.09%) belonged to Scheduled Tribes.

In order to discuss issues relating to reservation policy and effectively redress the grievances of the SC/ST employees, Liaison Officers have been designated at all Local Head Offices of the Bank as also at the Corporate Centre at Mumbai.

Senior officials of the Bank hold regular meetings at periodic intervals with the representatives of National Federation of SBI SC/ST Employees at Corporate Centre as also with the representatives of Circle level SC/ST Welfare Associations at the Local Head Offices and Administrative Offices where issues pertaining to implementation of reservation policies are discussed. This has ensured redressal of grievances to a large extent.

Government of India representative inspected the reservation roasters for SCs/STs/OBCs/ PWDs at all the 14 Circles and found this maintained satisfactorily.

The Bank has been conducting workshops on reservation policy for SCs/STs/OBCs to impart up-to-date knowledge/ latest operatives about the reservation policy and related areas to the SC/ST cell officers, representatives of SC/ST welfare Association and the Liaison officers.

Pre-recruitment and pre-promotion training programmes are being conducted to enable SC/ST candidates to achieve the prescribed standards to effectively compete with other candidates.

Q. BUSINESS PROCESS RE-ENGINEERING (BPR)

Following various BPR initiatives carried out during the last few years, the Bank was able to improve performance in key business areas and quality of customer service. Many of the large sized branches have been split into smaller branches to enable them to offer focused service to specific segment of customers.

The endeavour of BPR initiatives in the Bank is to continuously usher in changes / uniform business processes to ensure prompt, efficient delivery of products and services to our customers. All these initiatives have helped the Bank in creating a new operating architecture capable of meeting global competition.

R. OFFICIAL LANGUAGE

The implementation of official language policy in the Bank is not only a statutory requirement but also a business need. The Bank made all possible efforts to comply with the statutory provisions relating to the official language policy of the Govt. of India during the year and took several initiatives to provide benefit of Banks different schemes to the masses through Hindi and other Indian languages.

Many special workshops were conducted for newly recruited clerical staff and Probationary Officers to equip them with functional knowledge of the official language Hindi. In order to encourage the staff to use Hindi in their day to day work, Quarterly Shabdavali

Smaran and many more competitions were organised during the year.

Bank has enhanced the amount of honorarium paid to staff members on passing different Hindi exams. Many staff members have taken advantage of these incentive schemes which will help in encouraging the use of Hindi in the Bank.

Bank hosted quarterly meetings of the Ministry of Finance and Reserve Bank of India and an Annual Conference of all the public sector banks and financial institutions successfully during the year which received lavish appreciation from these two regulatory authorities.

On the other hand, the Bank took various initiatives in its endeavour to deliver its products and services to the masses in Hindi and other Indian languages. These include advertisements through Newspapers/ Magazines, pamphlets (Print Media) through Electronic Medium (TV/Films etc.) and also by way of Exhibition (Banner, Hoardings etc.) in Hindi and other Indian regional languages.

The Committee of Parliament on Official Language also appreciated the efforts being made by the Bank for promoting the use of Hindi.

Banks In-House Hindi magazine ‘Prayas has once again bagged first prize for the year 2009-10. Banks Hindi House Journal ‘Prayas has bagged first prize in this competition for the fifth time in recent years.

S. KYC/AML/CFT MEASURES

- The Bank has put in place the Board approved revised policy on Know Your Customer (KYC) / Anti Money Laundering (AML) / Combating Financing of the Terrorism (CFT) measures in line with Master Circular issued by Reserve

Bank of India on the subject. The main components of the Policy are as follows:

- Customer Acceptance

- Customer Identification

- Monitoring of Transactions

- Training of personnel

- Preservation of Records

- Procedural Guidelines to facilitate implementation of the Policy have also been circulated after approval of the Central Board.

- Monitoring of Transactions is done with a view to submit undernoted reports to Financial Intelligence Unit-India mandated by rules of Prevention of Money Laundering Act, 2002.

- Cash Transaction Reports (CTRs)

- Counterfeit Currency Reports (CCRs)

- Suspicious Transaction Reports (STRs)

- Training on KYC/AML is being imparted on an ongoing basis in the Bank. In addition to exclusive KYC/AML programmes, all training programmes/seminars/workshops, have a KYC/AML session included in the programme. Further, the Bank has decided to observe 1st August every year as "KYC Compliance and Fraud Prevention day" to maintain appropriate awareness and involvement levels across the Bank as also to create proper understanding of KYC issues among the members of public.

T. FRAUD PREVENTION AND MONITORING

The measures taken for prevention of frauds are as under :

- The KYC Compliance and Fraud Prevention day was observed on 2nd August 2010, as 1st August was Sunday.

- The Bank has introduced detailed process of tallying Admin Cash Balance with Physical Cash balance in ATM.

- SBIMF Warrants are being paid through ‘Dividend Warrant Payment Module on CBS and not by purchasing Warrants as DDP

- The Preventive Vigilance Committees are formed at the branches having staff strength of 10 or more (including SAM branches) and at CPCs/Cells irrespective of their staff strength, as per the revised scheme approved by the Vigilance Department at Corporate Centre.

- Encourage/popularize ‘Whistle Blower concept.

- Advise Controllers to ensure that secrecy of passwords is not compromised.

- Fraud Analysis Cell (FAC) has been created at Jaipur to monitor transactions through alerts being thrown by the software.

- Ensure swift conclusion of staff accountability exercise, especially in cases with insider involvement.

U. COMPENSATION POLICY FOR DEFICIENCY IN SERVICE

As a premier Bank of the nation, SBI always strives to create and maintain highest standards of customer service and in any unlikely event of any slippage in services extended to customers, the Bank has put in place a Board approved Compensation Policy to compensate for such slippages. The policy ensures that appropriate financial compensation is provided to the recipients to these services, without requesting for it.

V. BANKS OUTSOURCING POLICY

RBI have permitted banks to outsource non-core functions and the Bank has accordingly put in place a Board approved Outsourcing Policy.

W. SUPER CIRCLE OF EXCELLENCE (SCE)

The concept of Super Circle of Excellence (SCE) has been conceived to impart focus on a subset of branches to deliver high growth, improve efficiency, ensure high quality of customer service and also act as a forum for sharing of best practices.

As on 31.03.2011, there were 703 branches in Super Circle of Excellence, which include 592 NBG branches (339 Metro branches + 253 Urban branches) and 111 RBG branches (27 Rural + 84 Semi Urban).

The SCE branches focus mainly on Retail business and the performance in all focus areas is benchmarked with the performance of non-SCE branches of the Bank as well as competitor banks. The focus of this subset is also on marketing and promotion of technological products, increasing cross selling and other income, containment of overheads & NPAs, providing customer service of the highest order, strengthening HNI customer base, pushing for Financial Planning & Advisory Services and devising strategies to improve the Banks Market Share. The performance of SCE branches is measured every month on a multi dimensional efficiency matrix.

While the share of SCE branches in terms of number of branches has come down from 5.64% in March 2010 to 5.22% in March 2011, the contribution to overall Bank business has increased from 12.34% to 12.41% in PER Domestic deposits, 16.44% to 17.98% in PER advances and 13.11% to 16.11% in cross selling income.

X. GREEN BANKING INITIATIVES

- As part of the Banks on going Green Banking initiatives, windmill project has been successfully commissioned and power thus generated is being consumed by our branches/offices in the States of Maharashtra, Gujarat and Tamilnadu. This reduces dependence on polluting thermal power to the extent of renewable power generated by the Banks windmills.

- The imperatives of sustainable usage of resources, including energy and efficient disposal of wastes have been effectively propagated amongst the stakeholders, in the form of adopting energy efficiency measures, efficient usage of paper and water, installation of Solar ATMs, introduction of Green Channel Banking (Paperless Banking).

- The Bank has been encouraging customers by extending project loans on concessionary interest rates to reduce Green House gases (GHGs) emissions; by adopting efficient manufacturing practices through acquisition of latest technology. The Bank also arranges consultancy services by roping in the services of empanelled CDM consultants in CDM (Clean Development Mechanism) registration process. The Bank has also launched a loan product to facilitate upfront finance to the project developers by way of securitisation of Carbon Emission Reduction (CER) receivables.

- The Bank has initiated a pilot project to determine its Carbon footprint levels, which will help in determining the Banks resource consumption pattern and enable the Bank to take effective steps to implement various measures for sustainable usage in a cost effective way.

- Special drive for fruit bearing tree plantation during monsoons was taken up across all Circles, which has been very successful and sustained efforts are being made to ensure the survival of the plants as well.

RESPONSIBILITY STATEMENT

The Board of Directors hereby states :

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2011, and of the profit and loss of the Bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and

iv. that they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

During the year, Shri S.K. Bhattacharyya, Managing Director, (under section 19(b)) ceased to be a director on the Banks Board consequent to his superannuation on 31st October 2010. Further, consequent to the amendment to Section 20(3A) of SBI Act, 1955 restricting the term of office of Directors nominated under section 19(d) by Govt. of India to three years coming into force with effect from 15th September 2010, Dr. Deva Nand Balodhi and Prof. Md. Salahuddin Ansari ceased to be directors from the Central Board as on that date. Shri Ashok Chawla, Govt. Nominee, ceased to be a director on the Banks Central Board consequent to his superannuation on 31st January 2011.

Dr. (Mrs.) Vasantha Bharuchas term of three years, as Director on the Central Board, ended on 24th February 2011. Shri O.P Bhatt, Chairman, retired on attaining superannuation, as at the close of business on 31.03.2011.

Shri G.D. Nadaf was nominated to the Board under Section 19 (cb) with effect from 4th November 2010 as Officer Employee Director. Shri Shashi Kant Sharma was nominated as Govt. Nominee Director, under Section 19(e), vide Notification dated 18th February 2011 vice Shri Ashok Chawla. Shri Rashpal Malhotra was nominated to the Board under Section 19(d) with effect from 10th May 2011 by Central Govt.

The Directors place on record their appreciation of the contribution made by Shri O.P. Bhatt, Shri S.K. Bhattacharyya, Dr. Deva Nand Balodhi, Prof. Md. Salahuddin Ansari, Shri Ashok Chawla & Dr. (Mrs.) Vasantha Bharucha to the deliberations of the Board and welcome Shri G.D. Nadaf, Shri Shashi Kant Sharma and Shri Rashpal Malhotra on the Board.

The Directors also express their gratitude for the guidance and cooperation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank.

For and on behalf of the Central Board of Directors

Pratip Chaudhuri Chairman

Date : 17th May, 2011

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Mar 31, 2010

V. CREDIT POLICY AND PROCEDURES DEPARTMENT (CPPD)

PERFORMANCE HIGHLIGHTS :

- Loan Policy of the Bank, has been reviewed and current RBI guidelines have been incorporated.

- Increase in the Term Loan exposure limit to Infrastructure sector to 15% from 10%. .

- Appointment of Nominee Directors Review and Authority Structure.

- Prudential Norms on Unsecured Advances.

- Guidelines on Restructuring of Advances by Banks.

- Review of Grievances redressal mechanism under Guidelines on Fair Practice Codes for Lending.

- Accounting procedures for sale of NPAs / Securitisatibn Companies / Asset Reconstruction Companies.

- Operational guidelines on Forward Exchange Contracts and Derivatives.

- Competitive Pricing - Review.

- CP linked rates for discounting of Bills under LCs.

- Policy for financing Corporates on Unsecured basis to attract new business.

- As part of the Banks Green Banking Policy, initiatives like plantation of fruit bearing trees across the Banks premises, implementation of energy saving measures, encouraging customers on reduction of Green House gases by way of extending project loans on concessionary interest rates, assisting in CDM Registration and securitization of CER receivables etc. were undertaken.

- Under the captive windmill project, the Bank has gone in for 10 windmills (1.5 MW each) which have been set up in three States viz. Maharashtra, Gujarat and Tamilnadu. Power generated from the windmills shall be set-off against the power consumption of identified offices / branches of those States. State Bank of India is the first Bank in India to have conceived the idea of Green Power generation for captive use in the Banking Industry.

NEW PRODUCT :

- Financing to Shipbreaking Units.

Responsibility Statement

The Board of Directors hereby states :

i, that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii>. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2010, and of the profit and loss of the Bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and

iv. that they have prepared the annual accounts on a going concern basis.

Acknowledgement

During the year, Shri Ashok Chawla, Finance Secretary, Govt, of India was nominated to the Board under Section 19 (e) with effect from 13th May 2009, in place of Shri Arun Ramanathan, who retired on 30th April 2009.

The Directors express their gratitude for the guidance and cooperation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank.

For and on behalf of the Central Board of Directors

O.P. Bhatt

Date : 14th May, 2010 Chairman