Facing Interview

Pramod Kumar M

ishra 2010

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This preparation guide for interview is a voluntary effort in the direction of collating past and general experiences of candidates who have appeared for interviews in our Bank in various scale & Grades. Coupled with this, an effort has also been made to capture the latest & significant happenings in various domains of Banking & Finance World. The Questions that have been compiled are only indicative and candidates can expect additional derivative questions based on these indicative questions. Here and there, indicative answers are also given and we suggest our esteemed aspirants to refer our SBLC’s promotion materials for details. In order to assist our readers in obtaining answers/information on the topics highlighted, information index of “what is available where” is also compiled. We are sure that all this will be very useful to our esteemed aspirants. WE wish the prospective candidates ALL THE BEST.

State Bank Of India SBLC Patna

09430856523 [0612‐ 2592849]

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Pramod Kumar Mishra, SBLC Patna Page 2 of 358

INDEX

SL. Topics Description Page No.

1 General Guidelines

Suggested readings, Study materials

04

2 Career Test

Career related questions

04

3 Personality/ Self

Personality related questions 06

4 General awareness

a. General questions relating to Economy & Financial System

08

5 Banking Scenario

General Banking related questions with special emphasis on Indian Banking

12

6 Our Bank

SBI specific questions , Citizen SBI, Vision, Mission & values, Awards & Recognition

14

7 Assignments / work

Current & previous assignments 16

8 Readings

Chairman’s statement & interviews. Important articles that have appeared in Bank’s official publications/Newspapers

27

9 Circulars

“e-Circulars” – Gist of Important Circulars

47

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10 Policy Guidelines

a. Chairman’s Policy guidelines 2010-11

b. Patna Circle Policy Guidelines 2010-11

(Hyperlinked)

207

11 Other Policies

Compensation policy, Customer Service, Grievance Redressal Policy, Branch authorization Policy etc.

211

12 SBI Data

Some key statistics of the Bank as at 31.03.10

211

13 Indian Economy Data

Indian Economy – Monetary Policy 213

14 Customer Service

Segmentation of customers on the basis of Net Worth

216

15 SBI in NEWS

In Last 3 Months

217

16 Misc

A few current national & international issues

297

17 Circle Specific

Patna Circle data 316

18 General Tips General tips & Misc. Issues, General Questions & answers.

335

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1 General Guidelines

Suggested readings, Study materials

1. Banking Brief 2010 2. Reading Materials & Quarterly Banking and Finance Newsletter Dec.09 & March’10 by SBLC Patna 3. Short Notes by SBLC Patna 4. Book Brief & Book Condensation by SBLC Patna, Other Books (eBooks in folder) 5. SBIRD weekly brief 6. Master Circulars ( SBI) 7. Master Circulars ( RBI) 8. Loan Policy 2009 (Modifications) 9. Gurukul Special issue 10. Lectures / Speeches (specially for higher level promotions) 11. Internal Magazines published by different ATIs/ Departments 12. Magazine & Reading Materials from IIBF

2 Career Test

Career related questions

1. List out 5 major accomplishments / highlights of your career.

2. List out your major accomplishments during the last 5 years? Especially if posted as BM then achievement during your tenure.

(Let it have some relation to Self-Appraisal Report or let it not contradict your report submitted earlier)

3. What are the difficult assignments handled by you in your Career? Why do

you think they were difficult? How did you handle it?

4. What skills have you developed over a period in the Bank?

5. Why do you think you deserve promotion?

6. Are you ready to work anywhere in India? Ready to be transferred anywhere? Ready to be posted in any assignments?

7. What do you think you will be in the Bank? a) 5 years from now

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b) 10 years from now c) Maximum grade you will reach in the Bank.

8. In case you become part of the Top Management today, list out your

priorities and concerns? Few reasons for your priorities.

9. What is your wish list for the Bank?

10. What kind of assignments would you like to deal within the Bank? According to you, which is the best assignment in the Bank? Reasons for your choice.

11. What traits do you think are required to become successful in one's

career? What is OLQ’s (Officer like qualities).

12. Do you feel Bank has given you due recognition till now? If yes, how? If not, why?

13. If you have a lucrative career option outside the Bank, what factors will

you take into consideration for continuing or switching?

14. How was your Branch Manager Assignments experience? What do you think are the ideal qualities of a Branch Manager? How independent were you in your discharging of duties? What were the pressures? In your opinion Branch manager’s assignment is easier than earlier or tougher? Give reason to your answer.

15. What do you think is your level of self-motivation? Do you think there is

an enabling environment in the Bank for you to realize your potential?

16. What is leadership? How many types of leaders are there? Which Leadership Style You like & follow? And why?

17. Can you recollect any humorous, important, prestigious episodes or

touching moments in your career / life?

18. SWOT Analysis- Self, Assignment, Circle, Region, Bank.

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19. You’re Concerns- Official, personal & others.

20. You’re Greatest Achievements – Job related achievements in your personal life.

3 Personality/ Self

Personality related questions

PERSONALITY RELATED QUESTIONS 1. What are the goals in your life?

2. Let us know something about yourself that we don’t know?

3. What is the significance of your name or surname?

4. Let us know something about your birthplace/place of living.

5. Let us something about your schooling and college.

6. What were your subjects in College? (Once this is asked, 2 or 3 subject

related questions may be expected)

7. In case you have specialization in fields not directly related to banking, say – electronics, physics, etc., then you can expect questions like how relevant was your specialization background helpful in your current banking career.

8. You’re Profile.

9. If you were to make a SWOT ANALYSIS of yourself, what do you think your assessment would be?

10. What are the most (3) important events in your life?

11. Who has / have influenced the most in your life? Why?

12. Have you changed over the years? If so, how & Why?

13. Do you consider yourself as a leader or a follower? What are the qualities

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required in a leader?

14. Who are your role models? Why are they role models?

15. What are your hobbies? (One or two questions relating to hobby(ies) may be expected)

16. How do you spend your leisure time?

a. Which magazines and newspapers do your read regularly?

What do you like about these magazines and newspapers? What columns or sections do you like in these magazines and newspapers? Who are the editors of the magazines? Any special feature attached to that newspaper?

b. What were the headlines of today’s newspapers?

c. Do you read books? Which are your favourite books? Who are your favourite authors?

(If you indicate that you like literature, you can expect related questions on recent happenings like Who is the winner for Nobel Prize for literature, booker prize etc. for this year? )

d. If you happen to say you enjoy watching cricket, you can expect questions like:

Why is Indian Cricket Team not playing well these days? Are we experimenting too much? What are the suggested measures to improve cricket? Why is cricket popular in India? About IPL & T-20.

e. If you happen to say you enjoy watching TV, you can expect questions like:

Which TV serial you like most? Why you like that TV serial? About TV reated awards. What is TRP? How to calculate TRP etc.

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17. Lady candidates can expect questions like - How do you balance your career and family needs?

- Are you ready to be transferred to remote places, different assignments? - List out the names of ladies who have made it to the top in the recent past? Two of RBI Deputy Governors - Ms. Usha Thorat and Ms. Shyamala Gopinath. Pepsico CEO Ms. Indra Nooyi ICICI Top executives- Ms. Chanda Kochar ( CMD) . Kiran Bedi for her reforms on prison , Social Work , Legal facilities to the deprived. Smt. Sonia Gandhi, Meera Kumar,Mamta Banerjee,Sheila Dixit, Mayawati, Ela R Bhatt, Kamla Prasad Bisesar (First Women PM of Trinidad & Tobago) etc.

4

General awareness

General questions relating to Economy & Financial System

Some of the highlights / recent developments during the last one year are listed below, and as bankers, we are expected to keep a close tab on these and related developments in the economy. So candidates can expect questions in these areas:

1. India’s success story in present financial crisis position of the world- Sustained growth rate and tasks ahead

2. GOI , RBI & Banks initiatives to overcome crisis

3. 11th Five Year Plan (2007-2012)

4. Economic & Financial Reforms, Technology, Market and Supervision related

reforms.

5. Special Economic Zones, SPZs

6. Comparison between China and India. BASIC Countries?

7. BPLR/Base Rate and its relation to Intt. Rate, Inflation & Economy.

8. Sub-prime Crisis , Global Recession , Greece Crisis, Dubai World Crisis, Retrenchments (Pink Slip, Blue Slip)

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9. World Trade Organisation, Negotiations.

10. Globalisation in Indian context.

11. Regional cooperation like SAFTA, Free Trade Areas, ASEAN, ACU

12. Financial Inclusion , financial literacy

13. National Rural Employment Guarantee Programme (NREGP), PMEGP, ISHUP

etc.

14. Special Regulatory treatment

15. Basel Norms and preparedness Questions that may be expected: i) What is the growth rate India has achieved in recent years? a) Overall b) Agriculture Sector c) Manufacturing Sector d) Services Sector e) Technology ii) What is the targeted growth rate during the next 5 year Plan? Last year revised estimate & this year projections? Do you think this is achievable in present scenario ? iii) India’s performance in World Economy ? iv) What are the roadblocks for achieving high-targeted growth rate? v) What do you think are the reasons behind India’s economic stability? vi) How does our growth story compared with that of China? vii) What are our strong points and weak points vis-à-vis China? viii) Foreign Trade Policy

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viii) What is Gross Domestic Product?

- What is Gross National Product? - What is the Difference between Gross Domestic Product and Gross National

Product? ix) What is Per Capita Income Growth Rate? Per Capita Income ? x) Literacy Rate ? xi) Poverty Line ? xii) India’s position in World in “PPP”, Country rating ? xiii) How are Inflation and Interest Rate Related? xiv) What is Revenue Deficit? xv) What is Fiscal Deficit? xvi) What are Ways and Means Advances? What is Market Stabilization Scheme ? xvii) What is the Concept of SEZ? From which country have we borrowed this model? xviii) What is Infrastructure Finance Company (IFC)? xix) What are the norms for funding IFCs? xx) What is LPG in the context of Economy? Ans: LPG stands for Liberalisation, Privatisation and Globalisation

- What is Liberalisation?

- What is Privatisation?

- What is Globalisation? xxi) What is Glocalisation? Indicative Answer: Thinking Globally and Acting Locally. xxii) What is BSE index, NSE, MCDEX, NASDAQ? How many shares does BSE index constitute of? What is Bankex ?

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xxiii) What is Demutualisation? Indicative Answer: It is the process of changing a mutual or cooperative association (say a Mutual Fund or Stock Exchange) into a Public Company by converting the interest of members into shareholding. Such shares can be traded like the shares of the company. Note: Bombay Stock Exchange demutualised itself for today’s structure. xxiv) What are the reasons behind the current share prices movement in the Market? xxv) What is Currency Future/ Interest rate future? xxvi) What is a Green Shoe Option? xxvii) What is a Red Herring Prospectus? xxviii) What is a Green Field Project? What is a Brown Field Project? xxix) What is Exchange Traded Fund? xxx) What is Book Building? xxxi) What is IRR ? xxxii) What is Price Earning Ratio? xxxiii) What is Yield? xxxiv) What is Yield to Maturity? xxxv) New Project of TATAs & impact on Indian Car market. xxxvi) Which company did Tatas acquire recently? What are the salient features of this Tatas deal?What does it signify to India Inc.? xxxvii) What is leveraged buyout? (This is how Tata’s acquisition of Corus was structured). It is a transaction where the cash flow or assets (or both) of the company that is

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being acquired is leveraged, i.e., money is borrowed against these – to take over the firm. LBOs can be done if the acquirer takes a major stake in the company, meaning over 51%. Consider a $500 million buyout. In a common LBO structure, the acquirer floats a Special Purpose Vehicle (SPV) overseas and chips in with, say, $150 million as equity and borrows the rest. The company being taken over is a subsidiary of the SPV. Later, the SPV or the holding company can be merged with the company that is being acquired, so that the SPV’s loans become the loans of the company. LBOs are thus on a non-recourse basis to the acquiring company. If the company that is being acquired goes bankrupt, the acquirer will not have to bear the liability. LBO financing could be between 3-9 times EBDITA (Earnings before Depreciation, Interest, Tax and Amortisation) depending of the sector and cash flow. Typically, it is between 3-5 times. xxxviii) How are oil prices affecting Global Economy? xxxix) What is Philips Curve? After the Second World War, practical economists noticed that as unemployment fell in many advanced economies, inflation tended to rise and vice versa. This relationship between inflation and unemployment became known as 'Philips Curve'. Edmund Phelps, however, argued that there is a natural rate of unemployment. That is some people would always be unemployed. This is because of structural rigidities in the labour market. For example, a 55-year-old machinist cannot become a computer wizard!! (The dilemma of Indian banks too!!)

5 Banking Scenario

General Banking related questions with special emphasis on Indian Banking

Some of the highlights / recent developments during last one year in the area of General Banking are listed below, and as bankers, we are expected to keep a close tab on these developments. Important Developments, Recommended Readings:

1. RBI’s Monetary Policy, Interest Rate changes , Interest Rate Concessions

2. Basel II and its implications, present state of preparedness for advance approaches.

3. Risk Management, Different type of Risks and its impact on working of

banks.

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4. Mergers & Acquisitions

5. Banking by Alliances, Collaboration (2 or 3 Banks coming together - Sort of

partial merger), merger of SBI associates

6. Financial Inclusion, Financial Education

7. Banking Codes and Standards Board of India (BCSBI)

8. Banking Ombudsman Scheme (2006)

9. Right to Information Act

10. Payment and Settlement System Act 2007

11. Recent budget proposals relating to Banking Industry

12. Restructuring/Rehabilitation of bank advances- its impact on performance of Banks & economy. What is right to recompense?

13. Banking reforms, Technology in Banks, Risk Management in Banks etc.

14. Public Sector Banks Vs Private Sector Bank & Foreign Banks

15. Performance of banks (yearly results have been announced)

16. Treasury Performance, Yield, concepts like Mark to Market ,HTM, HFT and

AFS

17. Islamic Banking

18. CIBIL , CCIL , Pension Reforms, Companies related new issues ( LLP) etc.

19. MCA-21 Project on e-Governance

20. Corporate Governance & SBI initiatives in Corporate Governance

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21. RBI Policy Guidelines - Branch Authorisation, Business Facilitator and Correspondent Model , Mobile Banking, Door-step banking, Pre-paid Instruments etc.

22. KYC & AML.

6 Our Bank

SBI specific questions , Vision, Mission & values

Some of the highlights / recent developments in the recent past in SBI are listed below, and as bankers, we are expected to keep a close tab on these developments:

1. Organisational changes.

2. Annual Report - Various parameters.

3. Chairman’s Policy Guidelines.

4. Augmenting Capital.

5. SBI Heritage.

6. BPR - New initiatives taken.

7. Technology Developments - New Products like MCC, Prepaid cards, CA+, Power jyoti +, Fixed rate Loans ( Rate of Intt. Fixed for certain period), Teaser Loans, Quarterly intt. Term Deposit, Yuva SB Account, Tiny SB A/c, ECKO Account etc.

8. Human Resources, Job family, Performance linked incentive schemes, Huge

Recruitment drive, Employees participation, HRMS, Silver Jubilee Award, the Alertness Award and Chairman Club etc.

9. New products introduced in Agriculture, PBBU and SMEBU segments.

10. Operations Risk Policy, Business Continuity Plan, Disaster Recovery Plan,

Outsourcing Policies, Acceptable Usage Policies, Compensation Policy etc.

11. Project SME Gyanshala

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12. SBI CITIZEN , Jagriti, Parivartan – I & II

13. What is “Banker to every Indian”? Give reasons for your answer. 14. STU? Communicate………….Collaborate ……………..Change……..

15. SBI Pension Fund Pvt. Ltd., SBI Custodial Services, General Insurance

business

16. Bank’s New Vision , Mission& Value statement VISION

My SBI.

My Customer first.

My SBI: First in customer satisfaction

MISSION

We will be prompt, polite and proactive with our customers.

We will speak the language of young India.

We will create products and services that help our customers achieve their goals.

We will go beyond the call of duty to make our customers feel valued.

We will be of service even in the remotest part of our country.

We will offer excellence in services to those abroad as much as we do to those in India.

We will imbibe state of the art technology to drive excellence.

VALUES

We will always be honest, transparent and ethical.

We will respect our customers and fellow associates.

We will be knowledge driven.

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We will learn and we will share our learning.

We will never take the easy way out.

We will do everything we can to contribute to the community we work in.

We will nurture pride in India

17. Bank Day Pledge 18. EVOLUTION OF SBI

19. Awards & Recognition

20. Today we have lots of achievements (Rewards& Recognitions). According to

you, which are the most important achievements of the Bank? Give reasons for your answer.

21. Is SBI a Learning organisation? If yes, how? If no, your strategy for making SBI a learning organisation.

22. Reasons for marginal growth in net profit of the Bank in FY2009-10. 23. Concerns of the Bank for FY2010-11. 24. Your strategy to control overheads?

7 Assignments / work

Current & previous assignments

This is your domain and, therefore, you are the best judge. Needless to say, the candidates are expected to be thorough, knowledgeable and presentable in this area. Sit quietly for two or three hours and jot down as many questions as possible in these and other related areas. For example, the candidate may be in a Forex branch and handling Exports seat. The expectation here would be that he knows everything about Foreign Exchange. Also, he will be expected to know what is happening at the macro level, though it may not have a direct bearing on his seat. Hence, develop quickly the domain related knowledge. Be very clear about your assignment, role, targets, constraints, challenges, opportunities and future plans. It is recommended that, everyone should go through the questions suggested for a particular assignment. Emphasis may be more on present assignment related questions but for complete view, it is required to have a look at all the questions. Go carefully through your copies of self-appraisal report. If you are in a Branch, go through MIS , P-Report, Branch Dossier, recent highlights of your Branch

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(Proposals handled, new business booked, etc.),Inspection & audit Reports , highlights of your city, town, etc. The interaction during interviews, mainly the focus ranges from job knowledge to attitudinal aspects, from potential to performance and from banking history to emerging banking scenario. Bankers are expected to be conversant with all the changes taking place in the financial services sector. Interview is an opportunity for you to present your personality consisting of your attitude, views and awareness level before interview board, so that the potential in “You” is appropriately judged by the members on the Interview Board, who are learned and experienced people in their own fields of specialization. In order to judge you’re potential, evaluation of your performance in the recent past, operating style, team building capabilities, effectiveness, neutral judgment level, transparency in dealings, initiatives, attitude, leadership qualities, your conflict management techniques, your pressure management techniques, your vision and ability to see beyond the boundaries, are some noteworthy attributes. For junior level promotions, knowledge about bank’s scheme and ability for future growth is a must, but for fairly higher grade promotions what is needed is your leadership qualities, your negotiation skills, your ability to handle difficult and conflicting situations, your visioning ability, your practical strategy for future development of the organization and also for the self is a pre-requisite. Assignment related important questions: A. If the candidate is from a Branch:

- Where is your Branch located?

- Make a SWOT analysis of the Branch.

- What has been the business performance of the Branch vis-à-vis budgets?

- Whether there is a positive growth or positive variance? Whether there is a negative variance or negative growth? What is the difference between Variance & growth?

- What are the special characteristics of your Branch?

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- What is the scope of business in your area of operations?

- What is your market share in the District? Is it improving or declining?

- Who are your competitors?

- Who are your top 5 depositors, borrowers & defaulters?

- What is the level of miscellaneous business in the Branch?

- Why fee based income assuming importance in recent years?

- Which are the 5 big proposals handled by your Branch?

- Do you have NPAs in the Branch? Name the big ones. Why did they turn bad? What efforts have been taken to upgrade them?

- Why are PPF accounts beneficial to the Bank?

- Why do we encourage opening accounts with nomination facilities?

- How do we involve staff in business development?

- What is meant by Money Laundering?

- What are KYC Guidelines? Is KYC a hindrance to business development?

What is AMLOCK?

- What are the instructions regarding obtention of photographs for opening of accounts?

- What are Form 15G and Form 15H? What are the latest instructions

regarding PAN.

- What is the significance of Form 61 and Form 61A?

- What is Four Eyes Concept? (Read BOD Circular on KYC Guidelines)

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- How is SWO system, BPR System working in your Branch? Whether it has been implemented in its true spirit?

- How is the Grahak Mitra / Grahak Dost initiative working in your Branch?

- What is meant by PPP in relation to P-Form? (Post Provision Performance)

- What are the efficiency ratios at the Branch level? Increase in which ratio

is considered as good & decrease in which ratio as good. Which is the most important ratio?

- What is GRR of your Branch?

- What are the norms regarding settlement of accounts of deceased

constituents? Settlement of accounts in case of missing persons?

- What are the norms regarding issue, duplicate and cancellation of IOI?

- What do you mean by Clean Note Policy?

- What are ‘star series’ of notes?

- What would you do if counterfeit notes are presented across the counter?

- What are the recent directives relating to reporting of Currency Chest transactions?

- What is the name of the software provided by RBI to Currency Chest

branches? (ICCOMS).

- What are the recent directives relating to remittances made to Currency

Chest?

- What are Note Refund Rules?

- Recently, in one of the cities, foreign currency & revolvers were found in some of the lockers, which were not operated for a long time. What is the

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correct procedure to be adopted to avoid situations like this?

- What is Spring Eve cleaning? Every year, on 1stJanuary, we are supposed to take inventory of old records and destroy those, which are not required to be retained, as per the retention of records policy. This is called Spring Eve cleaning.

- What are the recent guidelines relating to purchase of stationery? What is

meant by IOI?. - Strategy for overall development of the Branch? - Your focus area in the branch? - Your strategy to get “ER”(A+) in branch inspection? - Effect of Citizen SBI on branch operations? - Recent instructions regarding one eyed persons/visually impaired persons? - About newly created position SSA- Senior Special Asstt. , whether

effective or not? - What according to you would enable you to perform better? - Affect of ADWDR scheme on recovery scenario? - Budget should be the responsibility of CPC’s( SMECCC, RCPCs,

RACPCs)/branch or it should be the responsibility of the both. - Whether creation of CPCs helped branches? What are the coordination

issues? - Branch people have nothing to do now after creation of CPCs, your opinion? - Do you think, we have more products than required? - Biggest challenge / hurdle branches/ staff facing now a days? Your strategy

to deal with the issue? - Instruction for obtaining PDCs in home loan accounts? - Your strategy to get the maximum from new recruits? - In branches individuals are not working as a team. Your opinion and reasons

for it? - If utilization of BCs/BFs/MRT members is effective? Give reasons for your

answer. - How do you motivate your team members? - How to build committed teams? - How do you communicate to your staff? - Your strategy to improve and maintain harmonious inter-personal & intra-

personal relationship? - Customers are not always right. What to do in such a situation?

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B. If the candidate is from an Administrative Office/ Regional office:

- Considering the large-scale changes taking place in the Bank, what do you think should be the role of Administrative Offices? Do you feel present structure of Circle and Regions is good in comparison to the earlier structure? Give suitable reasons.

- Regional offices to be shifted to their area of operations- effective or creating problems? Elaborate your answer.

- Effect of Citizen SBI in your region? Your parameter for evaluation of its impact?

- What is “end to end e-Tendering”? – eCircular sl. No. 66/2009-10, 31/12/2009.

- Opening of new branches – beneficial or burden? Reasons for your answer. - Your comments on the working of different cells (SMECCC, RCPC, RACPC,

CPC etc). Coordination issues- your experience and strategies? - Utilisation of BCs/BFs/MRTs members, effective? Give reasons for your

answer. - Do you think growing NPA is a concern in your region? If so, reasons and

remedial measures, your strategy? If not, how you takled the issue? - Your strategy to reduce operating expenses and earning more misc. income? - Strategies for overall development of the region. - Biggest challenge your region is facing? Your strategy? - Affect of ADWDRS in your region? Recovery position in your region?

- Are we fulfilling the role we are undertaking?

- Do you think that Administrative Offices are over-staffed?

- What changes have taken place in our administrative set-up during the last

few years?

- Administrative offices are profit centres or cost centers?

- Do you think we are spending more time than required at our workplaces? What are the ways in which we can reduce our time at our workplace?

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- As a Controller, when you visit a Branch, what are the things you will give priorities to take care of the Branch? Is there any specific instruction regarding Branch Inspection?

- What is your strategy to take care of branches and how you derive maximum

output from the branch people? C. If the candidate is from BPR cell:

- Are we fulfilling this role?

- Do you feel satisfied with your work output/job conditions?

- Do you feel that BPR cells are working as per Bank’s need and as per the needs of the operations? If yes, please explain in brief. If no, suggest measures for improvement.

- Do you feel existence of knowledge gap at BPR cells, Branches?

- What measures will you undertake if you have the authority to increase

overall efficiency and working condition of the cell?

- What would you suggest for better performance of the operating units?

- Do you think on account of creation of various cells, customer ownership is missing?

- Do you feel there should be budget for CPCs also? If so, how? If not, why? Give reasons to substantiate your views.

- Your opinion and experience about the functioning of BCs/BFs/MRTs/MPST/HLST etc., reasons for your response?

- Do you think growing NPA is due to improper functioning of BPR cells?

- Coordination issues; intra-cell and inter-operations? Your practical strategies?

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- Do you think BPR cells are now well stabilized? Reasons for your opinion.

- Are you satisfied with the pace of development that is going on? D. If the candidate is from HR/ATIs/SBLCs: - Am I fulfilling the present role which I am undertaking? - Impact/Effect of Citizen SBI programme. Give reasons for your reply. Any

memorable event during Citizen SBI programme, please describe. - Difference between a Facilitator and a Trainer. - Various Concepts/terms used in Citizen SBI programme viz. Citizen-Non

Citizen, Being & Function, Tree of Fulfillment, Total Compensation (Transaction+Contribution +Fulfillment Compensation) etc.

- Is SBI a learning organisation? If yes, how? If no, furnish reasons and your practical strategy for making SBI a learning organisation.

- ATIs/SBLCs are profit centers or cost centers? Give reasons for your answer.

- ATIs/SBLCs should be converted into profit centres. If not, why? If yes, how?

- Specialization of SBLCs/Trainers is the need of the hour, justify. - Lateral recruitment of trainers, need of the hour, justify. - SBLCs are playing their role? Strategy for future. - Difference between Knowledge & Learning? - What do you mean by “UDAAN”? - Details about STU and its impact? New initiatives taken by STU? - Your strategy to assess & fulfill the needs of the operations/employees. - Credibility of the trainers and training system. - Integration of training system with operations- your practical strategy? - SWOT analysis of HR/Training System. - Difference between Parivartan & Citizen SBI? Your opinion and impact of

the two programmes? - Need for ‘Citizen SBI’ in SBI? - What is meant by enlightened self interest? - How to develop a caring organisation? - Attrition rate is higher in case of new entrants. Your strategy to retain the

talent and the challenges attached to it. - Extent of frauds & corruption in the Banking system. How to deal with the

situation, especially in the light of mass level recruitment, new branch openings and technological advancements.

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- Role of HR/ATIs/SBLCs in the present scenario. Your strategies in this regard?

- HRMS – boon or bane? Strategy? - Your strategy to groom new entrants as future leaders? - Mass recruitment- requirement or burden? How to get most from the young

generation? - Emotional & Career counseling of the employees, especially of the young

generation? - Integration of new entrants with the culture, ethics & environment of SBI?

Your practical strategy? - Work-life balance: your practical strategy. - Do you think training system is overburdened? If yes, why? How to improve

the situation? If no, justify with special works done by you.

E. Specially for TEGS / SMGS :-

- Operating expenses: position and your strategy to reduce them. What are latest instructions in this regard?

- Technology and Financial inclusion are the need of the hour. Your opinion and reasons for the same.

- Worst is yet to come. With instances like Dubai, Greece crises, it seems financial crisis era is not yet over.(Prolonged debt crisis in Europe could impact India)

- With mass level retirement in Banking sector and in SBI, what would be your strategy for the future?

- Going GREEN is the new mantra. Please discuss Bank’s strategy and your opinion in this regard.

- Corporate Social Responsibility: Statutory requirement, Social commitment or Voluntary effort? Bank’s strategy and your opinion.

- “BANCOM” Summit 2010. “The new Normal- different world for Banks”. - Small centres are performing better than the metros. Your opinion in

SBI’s context. - BPR cells are the reason for growing instances of NPAs. Your opinion and

reasons behind the opinion. - Monetary Policy highlights: 2010-11 - Roadmap for Access to Banking Facility in Every Village by 2011:

Committee’s report & your opinion.

Facing Interview?


- Economic Survey: 2009-10 - Chairman’s Policy Guidelines: 2010-11 - Deposit insurance : it should be linked with ‘Risk Profile’ of the Banks - Budget 2010-11 :highlights - What is “Direct Taxes Code”, “GST”? Difference between VAT & GST? What is

meant by eee & eet (Exempt-exempt-exempt & Exempt-exempt- Tax? - What is “Swavalamban”? What is “SEWA”? - Financial inclusion: Need of the hour or burden on banking system? - Infrastructure Finance Companies & their role, issues involved in Banks’

financing to IFCs? - Base Rate System for Bank loans: Effects on banks’ profitability. Opinion and

reasons for opinion. - Modification in “Lead Bank Scheme”: Effects on the Banking System.

- Cash Processing Centre’s?- - Trading of “Currency Future” in India: benefits and effects.

- Financial Stability Unit?- FINANCIAL STABILITY & DEVELOPMENT COUNCIL New apex level Financial Stability and Development Council proposed to be set up to strengthen and institutionalize the mechanism for maintaining financial stability. This Council would monitor macro-prudential supervision of the economy, including the functioning of large financial conglomerates, address inter-regulatory coordination issues.

- Fiscal Consolidation- Fiscal consolidation is a policy aimed at reducing government deficits and debt accumulation. As per the Prime Minister’s Economic Advisory Council (EAC) it is necessary to initiate measures towards fiscal consolidation to ensure fiscal sustainability, enable greater flexibility in monetary policy calibration, contain interest payments and to avoid upward pressure on interest rates. Without fiscal consolidation the growth which the economy has achieved will not be sustainable.

- G20 Working Group:Enhancing Sound Regulation and Strengthening Transparency - Report of “Working Group on CGT-MSE”. - SBI Amendment Bill 2010- salient features. - “UID” project- AADHAR? - Should SBI charge royalty from its associates/subsidiaries? - Nutrient based subsidy? - KYC guidelines: recent changes? - IFRS: impact & benefit. Also CFSA? - Need for “STU”?

Facing Interview?


- Revamp of training system in SBI: required? - Need for “Citizen SBI programme”? Purpose and impact? - Need for sequel of “Parivartan”? - Difference between “Parivartan” & “Citizen SBI”? - Enlightened self-interest? - Concerns of the Bank during 2010-11? - Training centers should be investment centres or profit centres? - Outsourcing of training activities: required? useful? - SBI extends teaser loan rates till June, your opinion and reason behind. - It is difficult to keep high morale of the employees, especially in the light of perceived

inadequate salary package. - Technology – enabler or a big challenge, in the context of SBI. - Is SBI a learning organisation? If yes, how? If not, reason and your strategy to make it. - Merger of Associate Banks with SBI- need of the hour or burden? Why unions are

opposing the move? - Infrastructure lending – responsible for ALM mismatch. Your view on employees’

knowledge & skill up-gradation for infrastructure lending. - STRIPS? - Separately Traded Registered Interest and Payment Securities.

“STRIPS IN GOVERNMENT SECURITIES”: RBI has operationalised Strips in Government Securities, a practice that converts periodic coupon payments of an existing government security into tradable zero-coupon securities. Zero-coupon bonds trade in the market at a discount and are redeemed at a pre-determined face value. Strips are usually preferred by market players who have a certain cash requirement at a fixed time. Buying the zero-coupon bonds can help them fulfil that requirement without worrying about the fluctuation in prices. Since there is no periodic interest payment, a bond holder does not have to worry about the need for reinvestment of intermediate cash flows. ADVANTAGES:

a) Strips are beneficial since they will lead to the development of a market-determined zero coupon yield curve (ZCYC).

b) Strips also provide institutional investors with an additional instrument for their asset-liability management.

c) Strips would also appeal to retail investors, given the simplicity of such securities. d) There will be a great appetite for Strips from life insurers because it’s a great tool for

asset liability management. Whenever life insurers face a liability in the form of a claim, a right security can be stripped to provide for cash flows. Stripping is to be carried out at RBI through an automated process within the Negotiated Dealing System (NDS) - the debt-trading platform. Requests for stripping is to be generated and approved by market participants on the NDS which will thereafter, flow to a chosen Primary Dealer (PD) for authorization. Initially, Strips are to be tradable only in the OTC market and reported on NDS.

Facing Interview?


8 Readings

Chairman’s statement & interviews. Important articles that have appeared in Bank’s official publications/Newspapers

Remaking a government-owned giant: An interview with the chairman of the State Bank of India

Om Prakash Bhatt discusses the transformation of one of India’s oldest banks and reveals how he managed to bring the company’s 200,000 employees on board.

Source: Organization Practice

Om Prakash Bhatt is intensely loyal to the State Bank of India (SBI). “This was a great bank, and it was seeing relatively bad days,” says Bhatt, who joined the bank in 1972 as a probationary officer and was named chairman in 2006. “They put me in the chairman’s seat, and it was up to me to do something. If not me, who would?” SBI—the country’s largest bank by assets—had fallen on tough times when Bhatt took charge of the state-owned institution. With roots stretching back to 1806, this stalwart of the Indian economy was losing market share to up-and-coming private banks and a growing list of foreign players reaching customers with new products and new technologies. State Bank, in which the government has a 60 percent interest, was languishing in inertia.

The prescription was innovation, but the challenge centered on getting 200,000 workers stretched across 10,000 branches to take their medicine. Communicating the need for change and shaking this huge corporate behemoth from its lethargy became the critical task ahead of Bhatt.

Bhatt, who spoke with McKinsey Quarterly editor Roger Malone in SBI’s corporate center, in downtown Mumbai, said it’s too early to be confident of success, although the bank is slowly regaining market share, posting robust profit growth, and recently became a Fortune Global 500 company. In this interview, Bhatt also describes the bank’s continuing efforts to improve performance.

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The Quarterly: What was the situation with State Bank when you were named chairman, in 2006?

Om Prakash Bhatt: The bank had been losing market share steadily for more than two decades. In the early 1970s, we had about a 35 percent market share, but that had fallen to about 15 percent. During the early years of this century, the decline was getting worse.

Also, when I joined 37 years ago, the bank had an influential voice in India—in the economic sphere, in the industry, in government circles. It was an opinion leader. But by 2006, the bank had become just another bank. Maybe it was the largest bank in India in terms of assets, branch network, customers, but so what? It had lost its voice and its influence significantly.

In addition, the bank’s employees were not energized anymore. They had lost their pride and sense of belonging. From the very top down through the branches, everybody was pulling in different directions. The people weren’t performing poorly as individuals; they just weren’t aligned along a common set of objectives—no goals, no vision, no commitment. I didn’t like what I saw.

The Quarterly: How did this come to pass?

Om Prakash Bhatt: Until the 1980s, the bank was doing fine. But toward the end of that decade, the dominance of the private sector began, and by the early 1990s, after liberalization, there was more competition from both private and foreign banks. They came with new technologies and new products, a hunger for the market, a sharp risk-and-reward strategy, and without any legacies. SBI carried the legacy of being state owned and having outdated technology, a suspicion of trade unions, and no competitive spirit.

Before liberalization, most bankers in India were administrators with little discretion around decision making. The Reserve Bank1 would decide whom to lend to, how much, and at what rate. Everything was predetermined. You did have some freedom, but it was limited. The public-sector banks were not really equipped to predict the future, much less to plan for it.

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The State Bank was conscious that things were slipping away, and it did try to respond. There was a reorganization effort, but all that did was add another layer of management, which added to the response time within the bank. Signals were getting a little confused, as they were translated from the corporate center down to the branches. Feedback from the branches to the center was weak. There was also an initiative to computerize the branches. It took a fair amount of time for the bank to get this initiative in place. Meanwhile, the market was moving away.

The Quarterly: What opportunities were you missing?

Om Prakash Bhatt: Two significant segments were slipping away from us. One was large and midsize corporations. We had always been the king of this business because there was a time when the main thing a corporation needed from a bank was a large chunk of money, and we were uniquely placed to provide that. We ran a huge distribution network and would mop up large sums of money from our depositors, which was always available to give to these customers. But suddenly these corporations didn’t need just money; they needed something else—for instance, fee-based services like treasury, trade finance, and cash management across multiple currencies and borders—that required technology we didn’t have. Naturally, these businesses started moving away from us.

The other segment was the young and affluent. They had never been a significant customer base for the bank, but eventually more opportunities surfaced for young Indians who were salaried workers or even self-employed. For these youngsters, State Bank was not the first bank of choice. When younger people started becoming more affluent, we didn’t notice. We didn’t offer, for example, personal loans for buying a car or a house, for furnishing a home, for taking a holiday, or for whatever reason. Psychologically, it was easy for these young customers to veer toward the more flashy private-sector and foreign banks, rather than the relatively dull and dowdy public sector. Today, these two segments represent significant business in India.

The Quarterly: How did you face these challenges?

Om Prakash Bhatt: Immediately, we did several things. We had a voluntary retirement scheme, which meant some of our best people, those confident of getting hired at private-sector or foreign banks, were leaving us in droves. Many of our talented workers were taking the retirement offer and then going to the competition. We needed these people, so I ended the program. I also stopped the

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rollout of the centralized computerization system. Problems with the system—poor connectivity and its complexity—meant that it was actually damaging our ability to serve customers. It could take two hours to open an account. We were losing business, and the staff was getting frustrated. I also shuffled a lot of portfolios in top management.

All this was primarily damage control.

The Quarterly: But these actions didn’t touch the doldrums that had settled over the bank. What did you do there?

Om Prakash Bhatt: If you look at any transformational effort at any institution across the world, most of the things people have done are common sense. There is no magic to it. The secret is how you do it, how you build a team, and how you build consensus around what you’re doing. Only then are you able to execute your plan. I had a vision for the bank, but I needed to communicate it.

I started by talking to senior executives in small groups, trying to get them both worried and excited: worried about what had happened to the bank and excited about how we could undo the damage. During my second month, when I thought I had a critical mass who understood the problems at the top level, I held a conclave where 25 of the bank’s senior leaders sat together for five days talking things over.

The Quarterly: How did this meeting help to bring about high-level alignment?

Om Prakash Bhatt: It was very different from anything in my experience, as well as theirs. I started by showing a movie, The Legend of Bagger Vance. It’s about a golfer who has lost his swing. A golfer’s swing is not an intellectual exercise. It demands harmony of your entire being: heart, mind, and body. If you lose your swing, it’s a challenge to find it again, but if you do, you can be as good or better than you were before.

I created a context for the movie, bringing in stories from the Bhagavad Gita,2 which teaches how karma and excellence can be their own reward, and other Indian stories. I would stop the movie just to make a point or to illustrate a theme: finding your swing, how different golfers have different styles, how others can help you. I tried to draw parallels between the movie, the Gita, the condition of State Bank of India, and the mind-set of its officers.

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Just showing the movie was so unusual that it created a different kind of psychology. Afterward, we had four days of structured discussions, which always returned to the themes that came out that first night. We talked about how to build a bank, what to do in the bank, what not to do, the problems we faced and how to solve them, and so on. All this took place in the context I set with the movie.

The next day, for about two hours, I discussed the status of the bank, a speech later dubbed my “state of the nation” address. Before, we were always told that everything was hunky-dory, but I wanted to be brutally honest. When a company tries to hoodwink itself, everybody becomes a partner to institutionalized hypocrisy, which is what had happened here. Feedback and dissent were suppressed, or at least not encouraged. And here I was, willing to sit there and expose my ignorance and lack of experience but also—despite it all—to show a burning desire to do the right thing and to take everybody along. I think it took everybody by surprise. The idea was to create an environment where people were free to voice their ideas, to criticize and to accept criticism, and in the end to build consensus and alignment.

The Quarterly: What practical measures came from the conclave?

Om Prakash Bhatt: We left with a 14-point agenda that fell into three broad groups. The first involved issues directly related to the business. What products and businesses are we missing out on? Where should we make our presence felt? Are there businesses we should abandon? What needed more energy and focus?

In the past, if there were ever discussions about how to take the bank forward, it would stop with a discussion around the business. But our agenda went beyond that. Our second group of ideas focused on how to facilitate these businesses. We looked at business processes, risk management, performance management, technology, incentives—all those things.

The third area, hitherto taboo in the bank, centered on people. What is it that demotivates the people? And what can we do to change that? We talked about training and recruitment, but we also discussed motivation and whether we needed a different organizational culture, role modeling, communications strategies, and leadership. Together, these measures became the grand strategy that encapsulated our new vision.

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The Quarterly: Once you had alignment within your top team, how did you reach out to your massive workforce?

Om Prakash Bhatt: That is one of the things we discussed early on. We were 25 people at the conclave, and we were feeling great about our new ideas. But we have 200,000 people in the bank. How do we communicate these ideas to them? We now knew what we wanted to do, but we wanted to create alignment in a natural way.

A first step was to edit the state of the nation address into a presentation that the deputy managing directors could make to all 10,000 branch managers. There was some hesitation, but the deputy managing directors eventually made the presentation across the country in groups of up to 80 branch managers. The chief general managers, who oversee these branches, were also there. People were very moved when they were told what had happened. Nobody had told them anything like this before.

In addition, this was the first time the chief general managers had met with all the branch managers under them. If you’re a chief general manager, you oversee 500 to 1,000 branch managers and have a tenure of about two or three years. In your tenure, you might meet 100, 200, 300 branch managers, but you don’t meet them all. For branch managers it signaled an entirely new approach, underlining the importance of individuals and the transformation process. It was also a great opportunity for the chief general managers to hear the issues from the front lines, establish rapport, and understand the pulse of the bank better.

And we weren’t done yet. The conclaves continued, bringing together senior managers again and also lower-level leaders. In groups of 50 to 100, I met with all the assistant general managers in closed-door, no-holds-barred conversations, where my primary role was to listen to their perceptions of the bank, its issues, and what they thought we should be doing.

The Quarterly: You also had to bring the message to the trade unions?

Om Prakash Bhatt: These are important stakeholders, and I brought senior representatives from the unions and officers’ associations together in a meeting similar to the management conclaves. I spent four days with 30 leaders from across the country. Some of my best advisers at the bank warned that the leaders weren’t trustworthy and could be disruptive, but by being different and asking them to a conclave—like monks in a cave—I built up huge curiosity. They wanted to

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know what I was doing and to be a part of it. I told them I’d sit with them, but only if they came as friends of the bank. I think what hooked them was not only the quality of the discussions and the revelations but that the chairman was willing to spend so much time with them, eating and drinking, even singing and dancing.

The results were fantastic. They had the good of the bank as much at heart as anybody else, and they came to realize the chairman cared about people as much as they did. Just as important, they had not understood how badly the bank had slipped but now saw they could do many things to reverse this shift. Pain and motivation came together.

The Quarterly: Beyond this massive communications effort, what changes have you brought to the bank?

Om Prakash Bhatt: Within my first few months as chairman, we created three new business groups. One was the treasury, which had always been a residual function of the bank. I wanted to convert it into a profit center under a deputy managing director, who would undertake all the tasks that treasuries in large banks normally do.

I also created the rural business group tasked with reaching out to 100,000 unbanked villagers in two years, in addition to our normal agriculture business. Rural areas require a different focus, product range, and strategy as well as an outsourced model led by technology and the lowest costs possible. Apart from our traditional focus on development banking, most of the future growth of India will come from prosperity in rural areas. We need to capture this space and position the bank for the future.

The third group, corporate strategy and new business, identifies financial-services opportunities in areas in which the bank isn’t active or is doing poorly and develops these new products or businesses. I explicitly tied the group to corporate strategy to show the strategic importance of new businesses and to make the group more powerful and more relevant. It has already improved our Internet offering, for example, launched wealth-management services, and helped set up a joint venture with Société Générale to offer custodial services.

The Quarterly: Overall, have your efforts been successful?

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Om Prakash Bhatt: We have stemmed the tide. We are no longer losing market share, and in fact we gain a few basis points each quarter. I used market share as a rallying cry within the bank because that is something everyone understands. They know what to do: get more business. If I told them that we have to improve profitability or market cap, that would be more difficult.

We’re also improving against other metrics. In January 2008, we became number one in India in terms of market cap, overtaking ICICI Bank.3 We became India’s most valuable bank the day I received CNN-IBN’s Indian of the Year award. State Bank is now the country’s 5th largest company in terms of market cap, from 14th in 2006. And internationally, we’ve entered the Fortune Global 500. Customer service is also improving. In 2007, we were rated the best bank in India in terms of customer service, brand loyalty, and branch strength.

In the past year, we’ve also raised $4 billion through rights issues—$1.5 billion from the public and $2.5 billion from the government. Normally, the government only gives capital to banks that are sick, but the fact that the government bought the story of SBI from me and subscribed to a rights issue from a healthy bank is huge. Looking back, the timing could not have been better. In today’s environment, banks badly need liquidity and capital, and almost premptively we secured these in fair measure through the rights issue.

The Quarterly: What are you doing to sustain these changes?

Om Prakash Bhatt: We’ve implemented a new program called parivartan, which means “transformation” in Hindi. It is a two-day program designed to build awareness. There is no preaching, no teaching involved. Rather, it’s a workshop designed to create awareness around the need for change and as a call to action or duty among all employees. We took about eight or ten months to build the program inside the bank. We trained the trainers carefully, and we practiced every nuance, every mannerism, so the quality of the program was uniform across the country.

The idea behind parivartan was to sensitize everyone at the bank to the need for ongoing change. We have 60 or 70 training centers across the country, and we stopped all other training to make room for this program. In 100 days, we covered everybody. Any slower, and the skeptics might have overwhelmed the conversation.

Parivartan brought new energy across the bank—more pride, more involvement, and more joy. There are people who participated in the program who confessed that

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they were driving the customers out of the bank. But now, they said, they’ll make amends. Across the bank, there’s a perceptible, qualitative change in the kind of customer service the bank renders. All the success—business, getting awards, raising our rankings—came only because we brought 200,000 employees on board through parivartan.

The Quarterly: Where would you like SBI to be at the end of this transformation?

Om Prakash Bhatt: I would like us to be among the top 20—if not the top 10—banks in the world. I’m encouraged by what has happened, but I know that the climb ahead is far steeper and more difficult. I would also like our balance sheet to be at least 25 percent international business, compared with around 10 percent today.

I also want to extend our reach within India. I want us to be a bank for every Indian, not necessarily through a branch network; technology and outsourcing should enable this. I want us to be available to every Indian, from the poorest of the poor to the richest of the rich, to both individuals and institutions. Whatever they need, the entire range of banking and financial services, we should be able to provide it.

And I want us to be where we can serve India Inc., whether it’s through acquiring resources, technology, products, or skills. We don’t need to build a footprint in the world just to be global; I want us to be able to serve our primary clientele—India and Indians. So wherever I go, I keep this in mind. How does it strengthen our ability to serve India?

And finally, I want to do all this by instilling in my people a sense of service and helping them realize their work in the bank is not only about excellence in the workforce but also about self-development, evolution, and excellence in life.

*************************************************************************

Banking system under strain, warns SBI chief

Jan 11 2010 , Mumbai

“Banks in India are under strain,” said the chief of the country’s biggest bank,

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State Bank of India, in Mumbai on Monday. The statement clouds official India’s claim of strength and resilience of the banking system that helped it weather the global financial crisis. The operating environment has caused bad loans to rise amid slow credit growth, thereby putting pressure on profits and interest margins, SBI chairman O P Bhatt told the annual bankers conference, giving reasons for his gloomy view. The increase in bad loans would outstrip credit growth for the next two quarters, he added. “Our non-performing assets (NPAs) are rising, profits and net interest margins are under strain, the cost- to- income ratio is going up and current account and savings account (Casa) balances are declining,” he said, chairing a session on the implications of the changing financial services landscape for Indian banks. “While credit growth will rise to 22-24 per cent, the NPA formation, particularly from the small and medium enterprises, will continue to rise,” he said. He spoke also of the slow pace of reforms in the banking industry. “The consolidation process has started at SBI, but is very slow. Most Indian banks do not have the size to meet the need of the corporate sector. There are 1,000 world- class companies in India. To meet their credit needs, Indian banks have to be much bigger in size. Reforms will happen, but very slowly,” he added. Analysts agreed that all wasn’t well with banks. The banking sector reported good growth in net profits in the last few quarters because of large gains in their treasury operations. “Minus the treasury gains, the growth would be flat,” said Naveen Tahilyani, partner at McKinsey and Co.

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The cost-to-income ratio too is rising amid a fall in the share of low-cost Casa deposits to almost 33 per cent from near 40 per cent about a year ago. The infrastructure sector has a financing requirement of $500 billion in the next five to seven years. The challenge, according to bankers, is to meet this growing demand for credit. “It is estimated that Indian banks will require a capital of Rs 1,00,000 crore to Rs 2,00,000 crore to fund the expansion in demand. All of this is going to put a huge strain on the banking system,” Bhatt said. In a 2009-10 third- quarter preview, Anand Rathi, a brokerage, said profit growth was likely to decline year on year. “We expect a 4.9 per cent year-on-year decline in bank profits in the third quarter, chiefly due to the slowing business growth, a subdued net interest income growth and likely treasury losses,” the brokerage said. “While credit growth will pick up for a while, the NPA formation in the system will outstrip it. NPAs are going to emerge from the small and medium- scale enterprises,” Bhatt said. NPAs had increased to Rs 68,972 crore at the end of March 2009 from Rs 56,435 crore as the economy suffered from the recession in the developed markets. Earlier, in the inaugural session, Bhatt said the constraints banks faced in stretching their exposure to infrastructure financing could be put under three major heads: asset-liability mismatch, exposure limitations and pricing. Banks have short-term resources but infrastructure projects have long gestation periods. This creates an asset-liability mismatch for banks. In the case of exposure norms, most banks are nearing the prudential

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exposure limits fixed by the Reserve Bank of India and sectoral caps set by bank boards from the risk management angle. Bank credit is poised to grow at 22-25 per cent in the next five years. SBI, for example, needs Rs 36,000 crore to Rs 50,000 crore over the next five years to support its growth. Since the number of established developers is limited, group exposure limits of even larger banks are becoming inadequate to fund new projects. The third constraint is on the pricing of bonds. Costs of raising resources, including the cost of pre-emption, make bank money costly to project owners. For banks to lend more to infrastructure projects, certain measures are needed. These include fiscal incentives to investors and issuers, exemptions from statutory pre-emption, and modification in the refinancing models. “At the government and regulatory levels these areas have to be reviewed and appropriate policy measures could be considered to support banks,” said M V Nair, chairman of the Indian Banks’ Association and managing director of Union Bank of India. “To meet credit demands from industry, particularly from the infrastructure sector, consolidation is very critical, but bankers are apprehensive about the pace of consolidation,” Bhatt said.

Thursday 13 May 2010

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Bringing About Change, Smartly

He has changed the DNA of SBI to that of a private sector one

By

Aristotle Onassis is reported to have said that if you slept three hours less each night, over a lifetime you would have an extra five years to succeed in (that’s assuming you started in your early 20s and retired at 60). Om Prakash Bhatt may be sleeping a lot less these days, given his management responsibilities, because he is not just head of India’s largest commercial bank — the State Bank of India (SBI) —but that of a financial conglomerate. If you put all of his organisational charges next to the door of his office, it would look like an office building directory. Consider this: apart from being chief executive officer of SBI, he is also the head of eight domestic and five international subsidiaries besides 10 non-bank subsidiaries and two joint ventures. And to top it all, he is on the board of several companies such as Exim Bank and General Insurance Corporation (GIC). Anyone who studies large institutions will tell you that bringing about change is far from an easy process: like trying to turn the world’s largest fully-loaded supertanker around, you do it very slowly to avoid accidents. SBI has over 130,000 employees and 11,500 branches, and a fairly cumbersome hierarchy. But with Parivartan (change), his personal initiative to transform his bank, Bhatt made a lumbering public sector bank behave like a much smaller, nimble private sector one. Apparently, he delegated powers to regional offices, or local head offices in SBI parlance, and empowered them by raising their approval limits to Rs 100 crore for a single borrower. That is the size of transaction that the chairman of a private sector bank can approve by himself. SBI also financed large transactions such as for Tata Steel in the Corus acquisition, or Tata Motors. At a time in 2008 when banks were shedding assets because of uncertainty, SBI

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was picking them up. “Size or ability and intent by themselves are not enough,” says one investment banker. “When you bring them together in the right combination, such as SBI, then things work.” In many ways, Bhatt has changed the DNA of his bank. What makes it more notable is that Bhatt has not gone about changing the bank by throwing caution to the winds. He has not sacrificed risk management for speed and growth. Within the group, Bhatt’s reputation is second only to that of R.K. Talwar, the former SBI chairman who stood up to Indira Gandhi during her powerful best. Now, he will have to start thinking about his legacy.

“……….Perception towards PSUs has changed”: O P Bhatt.

Excerpt of Chairman’s interview with The Economic Times

It's not easy being the banker to every Indian, at a time when the industry is caught in the whirlwind of

global financial crisis. For State Bank of India, however, the crisis was a God‐sent opportunity it used to

gain market share, while rivals were busy protecting their sails. Steadying his ship is Mr O P Bhatt ,

chairman, SBI and the banker of the year. Has the crisis changed the perception about PSUs? Hear it

from Mr Bhatt, in conversation with ET Intelligence Group.

Is it better being a public sector undertaking (PSU) in the current scenario than it was in the past

especially in your sector?

In some sense yes, definitely in financial sector. But if you look at airlines, be it Air India or Kingfisher,

everyone is facing problems. But in the banking sector, for reasons well known, PSU has been a good

label. But this is not necessarily true outside India like US or UK where lot of public funds were pumped

in to get financial institutions back on track. People were not happy about it. They would like to go back

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to the days when these institutions were privately owned and managed with little or no interference

from the government. Not surprisingly, some of them have already returned the equity government had

pumped in.

So in times of crisis, 'PSU' is a good label. This change in perception about government owned

companies is, however, not without justification. As you might be aware, last year, many private and

multinational banks in India reneged on their commitment to corporates. So banks and their services

were not available just when the corporate needed them most. In contrast, PSU banks not only

honoured their commitments but tried to their best to fill the vacuum created by the withdrawal of

private and foreign banks.

If this is true then it puts you in an advantageous position vis‐à‐vis your competitors.

Yeah, you can say that. The perception has shifted in the minds of corporates at least. Now a lot

depends on our ability to leverage upon this.

How has the market changed after the turmoil we witnessed in 2008?

If you look at India, there was no banking crisis. There were liquidity issues, which had greater impact on

mutual fund, non‐banking finance companies and retail banking. That too was only for two months and

save that there were no other issues. There were issues in real sector, when the global meltdown spilled

from financial to real sector in US and then across the world. In India the impact came through the real

sector ‐ the stock market and real estate prices came down.

Particularly, export related industries were hurt including both goods and services. So, the information

technology sector and the financial sector were affected. There was some collateral damage too as high

net worth individuals (HNIs), who were driving the consumption of high value goods faced the real heat

of slowdown. The real sector impact was mainly in these areas. The stock market crash stood out as a

sore thumb, as it became difficult to raise equity once the stock market started crashing.

Though, there was enough liquidity in the system, there was no equity. If you don't have liquidity, you

can't start a business. It was a strange situation. At the same time, FDI/FII too started withdrawing from

India. All non‐banking sources of funds dried up. The combined effect was that the economy started

slowing down; however, banks were flush with funds. Apart from it, banking sector did not face any

problem.

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How has the crisis affected the competitiveness of the banking industry?

At the moment, perception towards PSUs has changed. Going forward when the economy begins to

grow, the PSU banks may face the capital constraint. As credit growth recovers, many PSUs need to raise

fresh capital to meets needs of their clients. Other challenge can be with regards to managing high‐end

finance products like structured finance, treasury etc. In case, PSU banks are not able to provide such

value added services, then private and MNC banks would step in and gain the market share.

What is SBI doing to capture the opportunity you talked about?

Our treasury is proving roughly 25% of total profit. Our cash management product is rated as best in a

poll conducted among user of such products. We are beefing up in areas, such as, high‐end products

required by large corporates‐be it in domestic currency or foreign exchange.

There is a general perception that being conservative in nature, PSUs have limitations in attracting the

best talent.

If you see the way SBI has been functioning in last three years, this perception is misplaced. The talent

comes to a company for two things. One for the material perks, wherein we have benchmarked

compensation as per the industry standards. The other part is how challenging the job is. Today SBI is

the most exciting bank to work with. Being a universal bank, SBI has a major presence in all segments of

money & finance. Where else can a prospective candidate find such a wide canvass to realise his/her

potential. We regularly come out with new products and we are conquering new territories. What else

does a professional need?

Have you made any changes in the HR policy?

Human resources have been one of our top priorities in last few years. The objective has been to create

a system, which is able to attract and retain the best talent in the industry. The first area to achieve our

attention was the incentive structure. Now our compensation structure has fair amount of in‐built

incentives to spur employees to give their best as well as to reward top performers. Secondly, we are

investing lot of time and effort in employee training and developing. We now regularly send people to

top management schools like Indian School of Business (ISB), Hyderabad, Indian Institute of

Managements (IIMs) and various foreign universities. Besides, we have in‐house training infrastructure

consisting of 50 training centers across the country. These training centers have their resource pool

dedicated to provide training.

Facing Interview?


Banking is a service business where customer interface plays a crucial role in building and sustaining the

business. Mostly due to historical reasons, PSU banks' staff was not perceived to be customer friendly.

So we made our employees change their attitude towards customer service. We also tweaked the

feedback to turn it into a motivation tool by providing value based input to the employees.

But it must be a challenging task bringing change in a huge and old organisation like SBI:

But then this heritage is our strength also. Today SBI is one of the most recognised brand in the

country. Besides, this is one institution, which people trust blindly.

But does this trust come from the fact that SBI is a government owned institution?

I don't think it's because of government ownership. There are so many other government institutions,

but can they evoke this same feeling in the customers and the general public as we do. We derive our

strength from our people and processes and the way we have built relationships with our clients over

the years.

In last few years, we have been able to completely change the perception and mindset of internal staff.

There are numerous customer satisfaction surveys done by ACNielsen, Xavier Labour Relations Institute

(XLRI) and IIM, which say that our service standards are better than competing banks. We have been

given the award not once but many times for best customer service providing bank in the country. Our

clients are not oblivious of this.

In stock market, however, PSU's still trade at a discount to their private sector peers. Do you see that

changing?

These are matters of perception. The investors and analysts also have a mindset. We need to engage

with them, tell them about our vision, our initiatives and tell them our strengths. The change will come

but it will come out gradually. We have shown that we can be agile. We have shown we can be

competitive, we can be focussed and aggressive in the segment we operate. For instance, SBI is now the

market leader as far as the home loans are concerned. Recently, we topped the global league tables in

project finance. We are now the number bank for mergers and acquisitions from India. We have shown

that we can beat these guys (HSBC & Standard Chartered, ICICI Bank of the world) in their own game.

Now when we reach out the analysts, I think the perception will change.

Facing Interview?


Banking sector PSUs are putting a lot of time and effort in building brand and promotion. What is the

genesis of this exercise?

We have been doing it consciously in last three years. As we are bringing changes in the organisation,

we also have to communicate it to customers. It is simply that campaign has become different and is

making an impact in the marketplace. I believe we don't need to tell that we offer education loan and

car loan. Rather, we need to tell them that we are banker to everyone. Last year we had a campaign on

improving consumer's awareness on things like how to use ATM and etc.

Being the largest financial institution of country, it is our responsibility to educate customers. We may

not have plush sofas but we have the country's largest ATM network. This has changed perception. We

do have weaknesses but they don't make the bank weak. We have many strengths and it is important to

lay some of these ghosts to rests that SBI has so many weaknesses. So our brand building is a multi

pronged exercise, we had to improve ourselves and at the same time we had to tell the world that we

are a different institution.

How are you soliciting customers? For instance, HDFC goes and ties up with builders. Are you also

following a similar approach?

We do this and much more. In fact builders come to us. In auto finance, largest number of Maruti cars

are sold through us. We have tie‐ups with Hyundai and Tata Motors as well.

There is a perception that most PSUs are profitable not because of their efficiency, because they are

quasi‐monopoly players backed by the government. What's your take?

People say many things but facts are different. If this was true, then all PSUs would have been

profitable. But you know of the large PSUs, which make losses and or, have ceased to operate. And what

about inefficient players in private space, too. So just as there are unsuccessful oganisations in the

private sector, there are PSUs, which are inefficient and loss‐making. In banking and non‐banking

financial services sector there are PSUs, which are better than private sector companies. If government

ownership was the reason, then all PSU Banks should have been efficient, but that is not the case.

Every large company is known for an equally larger than life CEO, but most PSUs CEOs are hardly

known outside their industry circles. Is it because government owned companies are more systems

driven with little discretion for the top man...

Facing Interview?


Its true that CEOs of much smaller private sector companies are more visible than the chief executives of

large government owned companies. But it's not a reflection of their performance or responsibility. The

media is late in recognizing the economic and business importance of PSUs. And, we are not hungry for

publicity just for the sake of it.

However being discrete doesn't mean top management is less important in PSU than the private sector.

Infact, the top management especially plays a pivotal role orienting the organisation in the desired

direction. We have to follow systems and procedures, but it does not mean, they are difficult to handle

or bind our hand unnecessarily. At SBI, chairman has full powers to bring the changes that are necessary

to take the bank to the next level And in last few years, many of the changes and reforms that we talked

about is being driven from the top.

But can the Chairman's office change the compensation structure, which have to be aligned to the

government pay structure and pay commission awards..

I have the power to change everybody's salary in the organisation except for my own. If not for this, we

would not have been able to bring the radical changes in our compensation structure in last few years.

There is gripe from competitors that SBI is 'miusing' its branch network and low‐cost deposit base to

'cross‐subside' its retail operations and thus throttling competition.

This is utter nonsense. We are a commercial organisation and there's no question of cross subsidy. We

have low cost deposits. Why will we not use it to grow the business? This route is open to all banks and

SBI is not unique to this. Till few quarters ago, when they were aggressively pushing auto and home

loans, no one asked them this question.

Of course, we use our branches to sell insurance or mutual fund, but I can't force you to take policy from

SBI Life. Your decision is based on cost and quality of service and SBI has come on top on both

parameters. SBI Life is now country's largest private sector player while SBI Mutual Fund has 3 funds in

Lipper 100 index, which selects top 100 from 40,000 funds across the world.

Citizen SBI Project

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My dear Colleagues, As you are undoubtedly aware, our Bank has undergone a lot of changes over the last 2 years. The efforts put in by us over these 2 years have borne fruit in the form of building a better Bank; in many ways, a Bank that is a matter of pride for us and a matter of envy for our competitors. But I believe, and believe truly, that as yet, we have only scratched the surface of our potential. There is so much more that we can and must do. We should get more impetus, energy and joy by realizing the fact that crores of people in the country, our customers and others with whom we interact, our colleagues or the senior members of our family who are now retired, are becoming happy because of what we have done, and what we are doing. Moved and encouraged by this, I have been thinking about the next step that can help us carry forward this Change for more than 2 years. This has led to the conception of “Project Citizen-SBI”. The formulation of this Project has taken a very long time to build up – more than a year and a half. It is fairly well researched. We have gone to branches, we have talked to people, talked to customers, tried to understand the systems and processes of the Bank - what makes them tick, what are the pain points and where are the flash points I have interacted with a lot of people both inside and outside the Bank. I have talked to educationalists, consultants, and management experts. I have also talked to religious and spiritual leaders. This program is a result of all that effort, put together in a comprehensive form for assimilation by all of us, to help us discover new truths and insights and to give us joy and energy, as we go about our daily work.

There is enough empirical evidence to establish that in a higher state of realization, people perform differently. We can become better human beings. We work with more energy, our values shift, our focus shifts and our attitudes shift – all for the better. This happens when we operate from, what we are calling a ‘Citizen state of mind’. This ‘Citizen state of mind’ can be achieved by practising enlightened self interest (expansion of self) and consciously seeking deeper fulfillment through one’s duties and responsibilities. Marrying this ideal with the context of our roles in State Bank of India, which involves numerous interfaces with colleagues and customers alike, has led us to the concept of Project Citizen-SBI.

This programme is here not just because it is good for the Bank. It is primarily here because it is good for us, for all of us – it is good for me, for my colleagues, for my friends, for everybody I know. If it is good for me in shifting my consciousness and energising me, then it will automatically be beneficial for everyone I come in contact

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with. It will also be good for my work and family environment. It will also benefit the Bank. But that is secondary. The whole purpose is to draw from our own wisdom traditions, derived from our country, our culture and our families. This wisdom is available in abundance but is scattered here and there and it is upto us, to consciously use this wisdom for our own and collective good.

So the focus is not so much what will happen to the Bank as an entity. The focus of this Project is to transform the Bank into a platform that provides inner fulfillment to its employees and tries to transform the community around us by going beyond institutional and personal success.

I request all of you to actively participate in this initiative and help make it a resounding success.

Base Rate

Bancon Summit

KYC (Hyperlinked)

SBI MD

SBI DMD

(Hyperlinked)

9 Circulars

a. Rationales based on latest Circular Instructions b. Important Circular Instructions

a. Rationales based on latest Circular Instructions

1. Transaction Limit for Mobile Banking Services has been revised.

R- a. In view of RBI instructions notification dated 24.12.09.

b. For transacting per day Rs. 50,000/- within the calendar month limit of Rs. 2,50,000/-

c. To enhance popularity of MBS as the earlier limit was meagre.

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2. Bank has introduced Yuva SB Account for youth.

R- a. To entice the Youth segment and bring them in our fold.

b. To not only mobilize CASA deposit but also augment use of alternate channel products.

c. They are likely to branch out into demat services, mutual funds and insurance products with their higher disposable income.

3. Security features in other personalized Cheque Forms have been changed.

R- a. To enrich security features in cheque leaves for better public confidence.

b. To bring security features at par with those of Multi City Cheques.

c. To make them more secure in view of growing incidence of fake cheque related frauds in the banking circle.

4. Personal Loan Products (Easy Travel Loan, Mediplus, Big Buy Scheme, Computer Loan, Mahila Shakti/Career Plan, Personal Education Loan APTECH FL, Teacher Plus & Prashasan Plus) have been withdrawn.

R- a. Over a period these products have lost their relevance.

b.We have new generalized products like Xpress Credit or Saral which are general purpose loan and take care of specific target group.

c. To increase operational efficiency while handling P-Seg products.

5. SBI SME Collateral Free Loans (SMECFL) Scheme has been launched.

R- a. The new scheme will provide hassle free credit flow to Micro & Small enterprises both in mfg. and service sector upto rs. 1.00 crore.

b. To provide a thrust for loans under CGTMSE guarantee scheme.

c. To enable Bank to acquire sizeable business in SME sector keeping in view the present market scenario.

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6. ATM Complaints Registration process has been centralized.

R- a. To enable customer to monitor the progress of their complaint as earlier there was no tracking mechanism available to them.

b. To improve Bank’s efficiency in handling such complaints effectively.

c. As per RBI directives.

(RBI directed to resolve the ATM related complaint within 12 working days, else Bank has to compensate customer @ Rs. 100 per day.)

7. SJSRY scheme has been revised.

R- a. To address urban poverty through gainful employment to the urban unemployed or underemployed poor by encouraging them to setup self-employment ventures (individual or group) with support for their sustainability, or undertake wage employment;

b. To Supporting skill development through.

c. To empower the community to tackle the issues of urban poverty through suitable self managed community structures.

8. Testing for fugitive ink has been made compulsory for cheques of Rs. 25,000 & above.

R- a. To restrict frauds perpetrated through encashment of fake cheques.

b. Fakes could be well detected as fugitive ink gets smeared in contact with water or any liquid containing water.

c. To enhance Customer confidence in the banking system.

9. Acknowledgement of nomination is mandatory.

R- a. It enables relatives to know from the Pass Book/TDR/STDR Receipt/Statement regarding nominees’ details in case of death of depositor.

b. In pursuance to the compliance of RBI instructions.

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c. To improve customer satisfaction (recording the name of nominee in case the customer is agreeable to the same or putting legend “Nomination Registered”.)

10. Self Operated Cheque Book facility account for visually impaired person has now been permitted.

R- a.To mark compliance to the court order of Chief Commissioner for Persons with Disabilities in the case no. 2791/2003/3910.

c. This will make the visually impaired person feel empowered at par with other account holders.

11. Instruction related to tenure of non-operation in SB & CA for identifying them as ‘Inoperative’ has been revised. (2 yrs for inoperative 1yr for dormant for both the a/cs)

R- a. In order to bring uniformity across the Banks with regard to the tenure for identifying an account as ‘INOPERATIVE’.

b. To comply with the RBI Guidelines.

12. Error free R-Returns must be submitted as per Time Limit prescribed.

R- a. Inconsistent/ erroneous data in R-Return is treated as non submission of FETERS data.

b. (It should be submitted within 7 days from close of the reporting fortnight) Otherwise Bank is liable for penal interest as per RBI guidelines.

c. Adherence to the RBI instruction for maintaining data quality as also time norms for submission.

13. Name of the Nodal Officers appointed under the Banking Ombudsman Scheme,2006 should be displayed on Comprehensive Notice Board (CNB).

R- a. To enables proper & timely contact with the appropriate authority for grievance redressal.

b. To enhances the effectiveness of the grievance redressal machinery.

c. To ensure compliance of RBI instructions.

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14. Indian Co./Firms are allowed to hedge commodity price risk in the international Commercial Exchange/Markets.

R- a. with a view to provide greater flexibility to resident entities who have such payment obligations related to commodities Derivative contract.

b. To enable the Bank to augment business by issuing Standby Letter of Credit/ Bank Guarantee.

c. As per RBI directives.

15. Assessment Process for Traders Easy Loan has been simplified.

R- a. To make the product more friendly for customers as well as operating staff.

b. To brings uniformity in the assessment part of TEL appraisal.

c. To facilitates the calculation part of assessing the permissible limit.

16. Priority sector Lending- activity under services has been recategorised.

R- a. There will be no separate category for Retail Trade.

b. Retail Trade with credit limit upto 20 lacs will come under small(services) enterprises.

c. To provides opportunity to Retail Trade to obtain guarantee under CGTMSE.

17. SBI Mini Saving Bank account has been introduced,

R- a. To provide a new delivery platform for financial inclusion through Cell Phone.

b. It is cost effective; the channel provides services through a simple mobile phone operated by the customer at any retail outlet of Customer Service Points.

(The customer may transact at any CSP without any location limitation)

18. Now Pilot Training Courses are covered under SBI Student Loan Scheme.

Facing Interview?


R- a. To align our SBI student Loan scheme with IBA model loan scheme.

(We were already providing loan to degree/diploma courses approved by DGCA except Pilot Training Courses.)

c. To provide opportunity to enhance our Priority Sector portfolio as the scheme comes under Priority Sector Advance.

19. A new process for Reporting and control of the expenditures (Total Overheads) has now been devised.

R- a. To put in place a system of analyzing/ monitoring/ control over branch overheads by the controllers and higher officials.

b. To check the unusual growth of overheads (a cap of 5% has been fixed over budgeted level).

c. A uniform process has been devised for the branches that surpass the variance level of 5%.

20. It has been decided to introduce a format for giving acknowledgement to all loan application in SME segment.

R- a. In compliance with guidelines on Fair Practices Code for lenders.

b. To ensure disposal of loan application within the time frame prescribed thereby enhancing operational efficiency.

c. As per RBI instruction to Banks/FI’s.

21. Tiny Card for SHG has been launched.

R- a. It is a technology (biometric chip based Tiny Card) enabled initiative for providing banking services near the place of stay.

b. To decongest the branches, freeing our staff to do other productive work and mobilizing business for the bank.

c. To facilitates boost to our outreach among rural and semi urban masses.

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d. To enable the SHG customer and its members to deliver/repay money between SHG and members at their location in a cashless manner.

22. Branch visit by controller’s format & periodicity has been restructured.

R- a. Consequent upon the redesign of LHO, abolition of module, creation of RBO and implementation of different BPR outlet.

b. As area of concern were redrawn to check adherence to system & procedure at the branches, quality of assets, with an end to minimize operational & credit risk.

c. To mitigate the RBI’s adverse comments during their Annual Financial Inspection of the Bank.

23. Home Loan margin for ready possession dwelling unit has been relaxed (15% from 20-25%).

R- a. To boost our marketing efforts in residential resale property market which offers good business opportunity for Home Loan business.

b. The completed properties are less risky as compared to property under construction.

c. It is our business strategy in the present competing environment.

24. Bank has modified focus on Loan policy?

R- a. To align with the changes in the Vision & Mission statements of the Bank.

b. To make it customer centric.

c. To create products and services that help our Customers achieve their goals.

e. It will, inter-alia, facilitate service excellence to customers across the country as well as to those residing abroad.

25. Now Bank’s loan policy will be reviewed annually?

R- a. To align with Chairman’s Policy Guidelines.

b. To align with RBI instructions (as RBI used to issue fresh Master Circulars every Year).

c. To make it relevant and as per current trends/practices.

26. It is proposed to review all loan products once in a year?

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a. To align with Banks’ Board approved policy.

b. To make our products more meaningful and useful.

c. To make our Products, customer friendly and in tune with market trends.

27. Loan policy stipulates that Bank lending to NBFC sector should not exceed 20% of Bank’s total domestic fund based exposure?

R- a. To maintain uniformity in lending to NBFC sector.

b. As the exposure ceiling in respect of all other industries are expressed as a percentage of the Banks’ total Domestic fund based exposure instead of relating to the Bank’s capital funds.

28. In case of Compromise / One time settlement (OTS) with a borrower, an interest element will normally be built in and made applicable in case of delayed payment Vis-à-vis the approved schedule?

R- a. To bring about uniformity in pricing of OTS.

b. To make the scheme/ compromise transparent and easy to understand.

(It is proposed as a general rule that, the applicable rate will be the SBAR as prevailing on the date of sanction of compromise settlement & the interest applicable will be simple and be levied on reducing balance of compromise / OTS sum payable by the borrower).

29. Right of recompense should be incorporated in every rehabilitation proposal?

R- a. To safeguard the Bank’s interests.

b. In case of restructuring/ rehabilitation packages generally bank does some sacrifices such as concession in interest , rebate in other charges etc.

c. To enable the Bank realize the sacrificed amount as and when unit starts functioning profitably.

30. As per new rating model (CRA), SB9 is proposed as the hurdle rate for new connections and enhancements. Deviations may be permitted up to SB10 and no deviation for borrowers rated SB11 and below?

R- a. As the SB9 rating represents average risk.

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b. So, it (SB9) may be accepted as Hurdle Rate, as the slippage in rating of the account by one step to SB10 will continue to be within the ambit of acceptable risk.

31. DGM (Rural Business) at LHO or DGM- Operations & Credit (where DGM is not posted as Rural Business Head) are empowered to approve SOF up to double the limit fixed by DLTC for various crops.

R- a. District Level Technical Committee (DLTC) works out the scale of finance (SoF) for various Crops grown locally that is uniformly adopted by all commercial banks.

c. In order to extend the need based finance and to fix realistic scales of finance for different areas, depending on the level of technology adopted by the farmers, such a decision has been taken.

b. Important Circular Instructions HRD/Staff Matters:-

Sl. No.: 2/2009 – 10 : Cir No. : CDO/P&HRD-P/1/2009 – 10 dated 04.04.2009

PROJECT: HRMS:: CENTRALISED SALARY AND PENSION PROCESSING

Subsequent to successful implementation of Core Banking Solution across the Bank, it has now been decided to leverage technology to centralise and automate HR processes. To start with, it has been decided to centralize the processing and payment of Salary for all SBI employees (including those who are on deputation from outside organization and excluding those on overseas posting or being paid salary from deputee organizations) and pension/family pension for IBI/SBI retirees from April 2009 onwards. For this purpose a Centralised Salary and Pension Processing Centre (CSPPC) is being set up at GITC Belapur under HRMS, where Salary and Pension of all eligible employees and pensioners will be processed. All branches/ establishments (except foreign branches/offices), therefore, will stop processing salary/pension for the employees/pensioners at their units from April 2009 onwards, except for payment of arrears or under exceptional circumstances with specific approval/ instructions from their controlling offices. The CSPPC head will henceforth act as a centralized drawing and disbursing authority in respect of employee’s salary, other benefits and staff pension. Detailed guidelines for salary and pension processing are available in the circular.

Sl. No.: 654/2009 – 10 : Circular No. : CDO/P&HRD-PHRD/62/2009 – 10 dated 26.12.2009

PROJECT: HRMS :: ROLL-OUT OF NEW SERVICES

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It has now been decided to automate roll-out the following new services for all employees from 1st January 2010: a. Furniture & Fixture (New Scheme) : Reimbursement of expenses on account of repairs / maintenance, b. Annual Medical Aid for Award Staff (Reimbursement of annual medical expenses on certificate basis), c. Application of monthly reimbursements of conveyance, entertainment and newspaper for Award Staff and d. Application of conveyance reimbursements to all staff – quarterly carry over.

Sl. No.: 544/2009 – 10 : Cir No. : CDO/P&HRD-PHRD/51/2009 – 10 dated 30.10.2009

PROJECT: HRMS ::: ROLL-OUT OF NEW SERVICESIt has now been decided to roll-out the following new services for all employees on HRMS: A. REIMBURSEMENT OF MONTHLY EXPENSES: The process of reimbursement of monthly expenses viz. Conveyance, Newspaper/Magazine, Casual Labour and Cleansing Material (also known as 4in1 reimbursement) shall be automated and centralized effective from 1st November 2009 for all officers and from 1st December 2009 for all Award Staff. B. PF STATEMENT:From 2nd week of November 2009, all employees shall be able to view their PF account on-line through the link (PF&Gratuity) in HRMS portal. The account will automatically get updated each month. C. SALARY SLIPS THROUGH E-MAIL: Starting from December 2009 salary slip of all employees will also be sent to their e-mail inbox through enterprise messaging system. Miscellaneous: A. SECURE SITE FOR SUBMISSION OF DATA CHANGES: For the purpose of submitting requests for data changes in HRMS in respect of the employees posted at branches/offices, a secure site (http://10.0.224.59) has been developed by the HRMS Team. A secure ID and Password, which needs to be retained as part of branch document, for accessing the site has been dispatched to all the branches. Branch Managers need to observe caution in inputting and submitting data through this site as all changes submitted through this ID and Password shall be taken as authentic and changes will be carried out in HRMS without any verification/re-check. B. SUBMISSION OF INVESTMENT DECLARATION: All employees are required to submit their proposed investment before 15th November 2009 through portal http://www.sbihrms.com/irj/portal. The voluntary deduction facility will be stopped from November 2009 and actual tax as calculated through HRMS will be deducted proportionately each month starting from November 2009. Employees would be required to submit the actual investment details before 15th February 2010 in the portal and submit their actual investment proof to the respective Branch Heads/ OAD authorities alongwith

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the printout of the investment declaration form. Employees may note that during March 2010 no modification in investment data would be permitted. C. SALARY REGISTER: While the details of salary expenses are being posted to the respective branch ftp site each month, a printed copy of ‘Salary Register’ is also being dispatched to all branches/offices. From April 2010 onwards, the salary register will be sent only through electronic mode and practice of dispatching printed copy to branches will be stopped. D. BOOKING OF SALARY EXPENSES TO “CHARGES- SALARY CONSOLIDATED ACCOUNT”: Since details of employees salary related expenses shall now be available through HRMS, post centralization of salary processing and payment salary expenses relating to staff is being debited to a new account titled “Charges- Consolidated Account” at each branch/office. This account has been opened exclusively for debit by HRMS only and branches should not manually post any transaction in this account.

Sl. No.: 15/2009 – 10 : Cir No. : CDO/P&HRD-LANDD/3/2009 – 10 dated 08.04.2009

REWARD AND RECOGNITION OF THE BRANCH MANAGERS (CHAIRMAN’S CLUB SCHEME) :: MODIFICATIONS IN THE SCHEME W.E.F. 2008-09 AS A RESULT OF DELAYERING EXERCISE AT CIRCLES

Please refer to e-circular no.332/2008-09 dated 12.09.2008. As a result of restructuring exercise in Circles, the post of DGM of module has been abolished. Consequent upon the change, the under mentioned modifications in the scheme have been made, the details of which are furnished below:

a. In the earlier scheme, there was provision for DGM’s Club Award. The Branch Manager ranked highest in a Region qualified for the DGM’s Club Award. DGM’s Club members received a cash award of Rs. 10,000 each. From the year 2008-09 onwards, the Branch Manager scoring the highest marks in each Region, irrespective of the category of the branch will qualify for the General Manager’s Club (i.e. General Manager Network I/ General Manager Network II). There may be cases of Regions, where one or more Branch Manager will qualify for the Chairman’s Club/CGM’s Club. In such cases, the Branch

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Manager who is ranked next best will qualify for the General Manager’s Club. The General Manager’s Club Members shall receive a cash award of Rs. 25,000/- each.

b. With effect from the year 2008-09, there will be no DGM’s Club. Thus the modified award structure will be as under:

- Chairman’s Club Member (Unchanged,i.e.one from each Circle).

- CGM’s Club Members (Unchanged,i.e.two from each Circle).

- GM’s Club Members (Will depend on the number of Regions in each Circle. If there are 15 Regions, there will be fifteen awardees).

- DGM’s Club stands abolished.

Sl. No.: 572/2009 – 10 : Cir No. : CDO/P&HRD-IR/55/2009 – 10 dated 16.11.2009

REWARD AND RECOGNITION :: CHAIRMAN’S CLUB AWARD SCHEME FOR NBG & RBG BRANCHES :: MODIFICATIONS IN THE SCHEME W.E.F. FY 2009-10

The competent authority has accorded approval for modification in the Chairman’s Club Scheme for Branch Managers in National Banking Group and Rural Banking Group. The revised scheme shall be effective from the financial year 2009-10. The details of the modified scheme are available in the circular. For the purpose of administration of the scheme, branches shall be categorized into two categories: (i) BPR Centre branches, (ii) Non BPR Centre branches. As such, the parameters will be different for these two types of branches. TIME SCHEDULE : The time schedule for the exercise every year will be :

Recommendations from circles to reach Corporate Centre, Mumbai latest by : 15th May

Declaration of awards by Corporate Centre : 1st July


STAFF WELFARE ACTIVITIES : GROUP INSURANCE SCHEME FOR EMPLOYEES IN STATE BANK OF INDIA

A group insurance scheme for all permanent employees of the Bank was introduced w.e.f. 7th February, 2007. The scheme gives an insurance cover of Rs.2.00 lacs to each of the

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eligible employees. The group insurance policy of SBI Life has since been renewed by us for the period from 7th of February, 2009 to 6th of February, 2010 on the same terms and conditions. In this connection, SBI Life has pointed out that settlement of claims at their end is delayed because the branches/offices concerned do not send the following original documents to them : (i) Original death certificate of the employee, (ii) Original claim form. As such, it is reiterated that all claims in proper forms under the group insurance policy must be sent to the SBI Life Insurance Co. Ltd., Claims Department, 2nd Floor, Plot No.3A, Sector No.10, CBD, Belapur, Navi Mumbai – 400614 alongwith the original death certificate for prompt settlement.

Further, it has been decided to cover all the Officers (Marketing and Recovery) appointed on contract basis as per the list furnished by the circles and are in service as on the date of renewal of the policy i.e. 07.02.2009 under the group insurance policy. This additional facility has been extended to them keeping in view of their duties of recovery carried out by them in different circumstances. In this context, please arrange to obtain a nomination cum declaration form (specimen enclosed to the circular) from them and keep it properly in their individual service file for future reference in case of facing any eventuality in this regard.


REVIEW OF PROMOTION POLICY FOR JMGS-I UNDER NORMAL-CUM-SENIORTY CHANNEL: RELAXATION IN UPPER AGE LIMIT

It has been decided to relax the upper age limit for general candidates for promotion to JMGS-I under Normal cum Seniority channel from 52 years to 55 years from the current promotional year 2009-10. For SC/ST candidates there is no change in the existing age limit of 57 years. Employees on promotion will be liable for transfer anywhere in the Circle and no request will be entertained in this regard.


STAFF : MISCELLANEOUS :: INDIVIDUAL HOUSING LOAN SCHEME FOR STAFF :

CONVERSION OF PERSONAL LOAN

In terms of the extant instructions, employees were allowed to avail the enhanced limit of IHLS by way of conversion of outstandings in housing loan availed on commercial terms as well as loans availed from outside sources (verifiable institutional sources) including

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personal loans availed by way of demand loan. In this connection a doubt has arisen as to whether the amount withdrawn from the personal loan (overdraft account) of the employees for construction/renovation of housing project is also eligible for conversion to housing loan under IHLS or not. Now, it is clarified that conversion of outstanding in the Personal Loan raised by way of overdraft upto the shortfall mentioned in the housing loan application may be permitted to be converted into individual housing loan account subject to the following conditions:-

(i) The amount should have been withdrawn/disbursed during the period of construction/purchase of housing project. (ii) The maximum permissible limit for such conversion (within the overall eligibility) will be limited to the shortfall mentioned in the housing loan application or the minimum debit balance in the overdraft account (personal loan) from the date of completion of project till the date of conversion which ever is lower.

It is reiterated that any loan availed of from approved sources not advised in the original loan application or raised subsequent to completion of construction/purchase of the house/flat with the Bank’s loan will not qualify for the facility or for the purpose of fulfillment of other terms and conditions in this regard.

Sl. No.: 139/2009 – 10 : Cir No. : CDO/P&HRD-CM/16/2009 – 10 dated 03.06.2009

STAFF OFFICER: ACQUISITION OF STATE BANK OF SAURASHTRA BY SBI

COMPUTATION OF “INTER-SE SENIORITY” OF OFFICERS

It is clarified that the reduction of inter-se seniority in respect of officers, in Senior Management and Middle/Junior Management Grade, of erstwhile State Bank Of Saurashtra in their present scale as on the 13th August, 2008 as a one-time measure, (advised earlier) is applicable to the Specialist (non banking) cadre officials as well.


SBI STUDENT LOAN & SBI SCHOLAR LOAN : LOANS TO WARDS OF STAFF

As an incentive to pursue higher education by the wards of our employees, it has been decided to lower the rate of interest on student loans as well as on SBI scholar loans to their wards in the existing as well as the new loans at 8% p.a. with effect from 01.07.2009. Moreover, interest rate concession of 0.50% offered to girl students in terms of the direction of the Ministry of Finance, Govt of India will continue to be available as

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hitherto. However, the incentive of 1% reduction in rates for regular servicing of interest during the moratorium period as available hitherto will not be available to wards of staff w.e.f. 01.07.2009 due to reduction in rates significantly.

Sl. No.: 195/2009 – 10 : Cir No. : CDO/P&HRD-PM/25/2009 – 10 dated 29.06.2009

STAFF: SUPERVISING :: REIMBURSEMENT OF ENTERTAINMENT EXPENSES

It has been decided to revise the existing ceilings of reimbursement of entertainment expenses and expenses incurred on tea/coffee/cold drinks/snacks as from the financial year 2008-09, the details of which are available in the circular. Those Officers who have claimed reimbursement of entertainment expenses as well as expenses on tea/coffee/cod drinks/snacks etc. in FY 2008-09 at the then prevailing rates, will be entitled to claim the differential amount within FY 2009-10.

Sl. No.: 791/2009 – 10 : Circular No. : CDO/P&HRD-PM/71/2009 – 10 dated 23.02.2010

STAFF SUPERVISING : RESIDENTIAL TELEPHONES

It has been decided as under: (i) Officers of MMGS II grade and above, irrespective of their positions, may be allowed the facility of official telephone at their residences. However, the eligibility for availing telephone facility from the Bank for officers in JMGS I will remain unchanged.

(ii) The existing ceilings of monthly telephone calls on official telephones provided to officers at their residences have been revised with effect from 1st February 2010, as under:

Officers Revised limit on no. of calls per month

Officers Revised limit on no. of calls per month

JMGS I 300 MMGS II & III

450

SMGS IV & V

1200 TEGS VI 2100

TEGS VII 2800 TEGSS I 4200

TEGSS II 5600

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(iii) The officers will now be allowed to carryover of unused calls in a particular month up to the end of each calendar quarter. (iv) It has been decided that for reimbursement purpose to Officers, MTNL/BSNL rates may be treated as base rates. (v) It has been decided that within the total entitlement of telephone reimbursement (plus rental and taxes), the internet/broadband charges may be included.

Sl. No. : 45/2010 – 11 Circular No. : CDO/P&HRD-PM/6/2010 – 11 April 28, 2010.

STAFF : SUPERVISING: PROVISION OF FURNITURE AND FIXTURE: MODIFICATIONS -

OFFICERS SCALE TEGS-VI & VII - It has been decided to enhance the limit of the cost of furniture to carry on transfer from the existing Rs.1.00 lac to Rs.3.00 lac. It is proposed that if any officer in scale TEGS-VI & above proposes to purchase items of furniture and fixture, which is not in the prescribed list, the same may be permitted by the competent authority, provided the item is in the nature of furniture and fixture.

OFFICERS IN SCALE-V AND BELOW- It is proposed that an officer may purchase an item without restriction on quantity from the list of prescribed items applicable as per his scale within his overall entitlement. It has been decided to include the following electronic items in the prescribed list of furniture and fixtures:

1. LCD TV any size 2. AC any size 3. Laptop/Notebook 4. Fully Automatic Washing Machines

5. Refrigerator any size 6. RO Systems

It has been decided to include the under noted fitness items in the prescribed list of furniture and fixtures: 1. Morning Walker 2. Foot Massager

The officer will have to utilize 50% of overall entitlement on furniture items.

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The life span of electronic consumer items has been fixed as 5 years. The life span of mattresses has been fixed as 3 years. The life span of curtains and inverter battery shall continue to be 3 years as hitherto.

It has been decided that the depreciation of the furniture and fixtures will be calculated on the actual age of the items as on the date of retirement of the officer, by calculating the depreciation on monthly basis for the period over and above the age completed on yearly basis.


STAFF : MISCELLANEOUS :: HOUSING LOANS TO STAFF ON COMMERCIAL TERMS : RATE OF INTEREST W.E.F. 29.06.2009

It has been decided to revise the rate of interest on housing loans to staff members on commercial terms with effect from 29th June 2009 by removing the ‘minimum’ clause while quoting the rate of interest as under :-

Sanctioned limit (existing and new loans)

Effective rate w.e.f. 29.06.2009

i. Limit upto and including Rs.30 lacs 7.00 % p.a.

ii. Limit above Rs.30 lacs 7.50 % p.a.


STAFF: MISCELLANEOUS :: INDIVIDUAL HOUSING LOAN SCHEME (IHLS) FOR EMPLOYEES : SANCTION OF HOUSING LOAN AFTER ATTAINING 55 YEARS OF AGE

Certain modifications were made in the captioned scheme, the details of which are available in the circular.

Sl. No.: 294/2009 – 10 : Cir No. : MCG/PMD-GOLDCOIN/3/2009 – 10 dated 04.08.2009

RETAIL SALE : GOLD COINS :: DISCOUNT ON PURCHASES MADE BY STAFF MEMBERS

There has been a growing demand for offering some discount to members of our staff if they want to purchase State Bank of India gold coins. Our staff members can be a good

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segment to target our gold coin products. Consequently it has been decided by the appropriate authority to permit a discount of 1.5% on card rate of gold coins across all denominations. However, the discount is permissible for purchases made by debit to his/ her own account. This discount is not to be clubbed with any other discount/ concession. The branch heads of the selling branches can authorize the above mentioned discount at the time of the purchase by staff members. The facility is available with immediate effect.

Sl. No.: 719/2009 – 10 : Circular No. : CDO/P&HRD-PM/64/2009 – 10 dated 29.01.2010

STAFF :SUPERVISING :: DISCIPLINARY PROCEEDINGS :--: DELEGATION OF ADMINISTRATIVE POWERS :: RECONSTITUTION OF REVIEWING COMMITTEE

It has been decided by the appropriate authority to reconstitute the Reviewing Committee as under :

REVIEWING COMMITTEE MEMBER ALTERNATE MEMBER

CGM (Human Resources) CGM (Risk Management)

CGM (RBG) CGM (IBG)

CGM (SME Business Unit) CGM (Personal Business Unit)

The number of members for the purpose of quorum for the Reviewing Committee is two.


SCHEME FOR GRANT OF SILVER JUBILEE AWARD TO EMPLOYEES : GIFT CARDS

According to extant instructions, Silver Jubilee Award may be presented to eligible employees in the form of a gold coin of an intrinsic value of Rs.5000/- or in the form of gift vouchers worth Rs.5000/- of some prominent store with a wide range of choice of gift items. The choice of the item may be left to the employee. It has now been decided that SBI Gift Cards shall also be one of the options in the form of which the Silver Jubilee Award can be presented to eligible employees.


EMPOWERMENT OF STAFF : REVIEW OF CAREER PROGRESSION SCHEME

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Bank has approved the review of career progression scheme and the details are available in the circular. The provisions include : (i) Review of career progression scheme including empowerment of clerical staff by assigning additional duties/higher passing powers. (ii) Outsourcing of Bank’s maintenance work at all the branches/offices/establishment/residential complexes etc. (iii) Outsourcing of cash replenishment in ATMs and also introduction of total outsourced model of ATMs. (iv) Increase in working hours from 39 hours (as per provisions of Sastry Award) to 45 hours (minimum one hour every day) in a week for Senior-Special Assistants to facilitate completion of entire work including closure of cash. The Senior-Special Assistants shall not be entitled for payment of over time for the extended working hour and will be required to complete the work with in their working hours. Thus the working hours for the Senior-Special Assistants on week days (excluding Saturdays) exclusive of recess period shall be 7 ½ hours and 5 hours on Saturday.

The details of the review of career progression scheme and additional duties to be assigned to clerical staff are placed in Annexure ‘A’ and A-1 to A-5 to the circular.

It has also been decided to extend certain facilities/benefits like reimbursement of cost of petrol, entertainment expenses etc to the award staff as per details given in the Annexure ‘B’ w.e.f. 01.08.2009 in their existing positions. However, the special pay/allowance and other monetary benefits to the employees who are due for in cadre higher appointment during the current year will only be payable from the date of their reporting at new place of posting as being done hitherto.

Sl. No.: 642/2009 – 10 : Circular No. : CDO/P&HRD-IR/59/2009 – 10 dated 18.12.2009

EMPOWERMENT OF STAFF : REVIEW OF CAREER PROGRESSION SCHEME

Global IT Centre have created settings required for the new position of Senior-Special Assistant in the CBS system effective from 22nd November, 2009. As such Senior-Special Assistants may given following rights in the system for their effective utilization:-

Capability level Group User Type

For Role of Cash in-charge with user administration and passing

5 7 60

For passing with user administration 5 7 45

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Sl. No.: 540/2009 – 10 : Cir No. : CDO/P&HRD-PM/49/2009 – 10 dated 28.10.2009

(i) APPOINTMENT OF OUR OFFICERS (ON CONTRACT AND COST TO COMPANY BASIS) BY OUR SUBSIDIARIES/ JOINT VENTURES (ii) APPLICATION FOR OTHER POSTS IN THE BANK BY OUR OFFICERS (ON CONTRACT AND COST TO COMPANY BASIS)

A need has been felt to lay down specific guidelines/ instructions regarding the contract officers, who want to resign and seek some other employment in the Bank as also in the Bank’s and Subsidiaries and Joint Venture Companies. The guidelines/ instructions formed in this regard with the approval of Central Human Resource Committee are furnished in the circular.

Sl. No.: 317/2009 – 10 : Cir No. : CDO/P&HRD-CM/34/2009 – 10 dated 17.08.2009

STAFF : SUPERVISING :: DEPUTATION TO INSPECTION & MANAGEMENT AUDIT DEPTT. : REDUCTION IN THE NORMAL TENURE OF DEPUTATION FROM 5 YEARS TO 4 YEARS

In order to ensure that the annual repatriation exercise of the I&MA Deptt. is done in a smooth manner and the Department has adequate number of officers at its disposal, it has been decided by the competent authority that the normal tenure of officers for deputation to the I&MA Deptt. be henceforth reduced to 4 years from 5 years at present. The above instructions will come into force with immediate effect.


Essay Competition :::: Subject : ‘Transfer Policy of the Bank’…. Striking a balance between the organizational and personal priorities of the officers and still keeping all the officers happy

Modalities of the Competition are as under :

‘Periodical Transfers’ is an inseparable aspect of the life of Bank Employees / Officials. This is one such aspect where the organizational priorities may not always match with the personal priorities of employees / officials leading to inconvenience and ultimately dissatisfaction for them. Bank’s objective always is to make the employees/officials happy

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even within the various compulsions. Bank is inviting the views, ideas and suggestion of the staff members through this essay competition.

Scope – The essay will encompass following essential aspects

1. Bank being a commercial organization has to keep all the branches / offices of the Bank functioning continuously. No branch / office can be closed. 2. Bank being a public sector organization has to adhere to the Government guidelines as regards rural / semi-urban assignment etc. 3. All the branches / offices need to function efficiently.

Eligibility - All members of staff, under the categories of award staff, supervising staff (Scale I & II), supervising staff (Scale III), supervising staff (Scale IV/V) AND Top Executive Grade (DGM & above), are eligible to participate in the competition. The Corporate Office staff including those on mobile duty working in the Circle will be attached to the LHO concerned. The entries may be either in English or Hindi. The entries should be neatly typed on one side of the paper and the total length should not exceed 1000 words. The Circle Development Officer in all the Circles will be the nodal officer for the competition.

Evaluation Parameters (Total Marks – 100) a) Depth of thoughts (20 marks) b) New ideas/innovations suggested (30 Marks) c) The practicability of the ideas / innovations/ suggestions (40 Marks) and d) Clarity of thought and expression (10 Marks).

Prize scheme and other details are available in the circular.

Time Schedule: The last date for the entries reaching the Circle Development officers’ department at LHO will be 15th October 2009 so that the best entries can reach the office of Learning & Development Department, Corporate Centre, Mumbai latest by 15th November 2009. The endeavor is to declare the result by yearend.

Sl. No.: 745/2009 – 10 : Circular No. : CDO/P&HRD-LANDD/69/2009 – 10 dated 11.02.2010

ESSAY COMPETITION – 2010

It has been decided to conduct essay competition this year also on the following topics: - For Officers of all grades: World Class Customer Service- the real cutting edge in today’s competitive environment. For Award Staff: In what ways can Information Technology change work practices in SBI in the next five years? Time Schedule: The last date for submission of entries at the LHO level is 10th April, 2010.

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Sl. No.: 767/2009 – 10 : Circular No. : NBG/S&P-SP/28/2009 – 10 dated 16.02.2010

STAFF SUGGESTION SCHEME-MODIFICATIONS

The undernoted changes/ modifications have been made in the Scheme.

a. Staff Suggestion Scheme screen in State Bank Times has provided for one more mandatory field where the employee may incorporate his/her account number, so that the amount of reward is credited to the account of the suggestor, if found suitable for reward. b. Since the suggestors are giving the same suggestion multiple times and /the one already in the banking system, another mandatory field is provided in the system wherein the suggestor will have to give an undertaking/certification that the suggestion is original, not given earlier since the introduction of the Staff Suggestion Scheme and is not already implemented in the bank, to the best of his/her knowledge. c. The screens for the user in SBI Times have been redesigned to make them more aesthetic and user friendly. d. Further, suggestions for correcting an obvious error or lacuna in the existing arrangement/ form/register, cosmetic changes in CBS screens etc. will be considered only for an initial reward of Rs.500/- and will not be categorized for further evaluation/implementation. The evaluation parameter for the suggestions received under the scheme and to be forwarded by the department concerned to the ‘Staff Suggestion Screening Committee’ for their reviewal as regards its implementability will be as under: a) Suggestion should be innovative and reflecting originality in idea, b) Suggestion should be practicable and capable of being implemented, c) It should bring in benefit to the Bank in the listed core concerns / subject matter listed in the scheme and d) Suggestion should have clarity of thought and easy to understand.

Sl. No.: 66/2010 – 11 : Circular No. : NBG/ABU/BP-GREEN CHA/4/2010 – 11 dated 07.05.2010

AGRICULTURE BANKING : GREEN CHANNEL PROGRAMME FOR EXCELLENCE (GCPE) :: REVIEW OF SCHEME

Please refer to extant instructions on the captioned scheme. The “Green Channel Programme for Excellence” is a special initiative introduced by the Bank in the area of Agri Business during the year 2002-03 to recognize, motivate and reward, every financial year, those officers who have excelled in Agri Business. This unique effort on the part of the Bank to recognize, motivate and reward performers in Agriculture segment has yielded considerable results and motivated the operating level branch functionaries to achieve various targets, particularly 18% Benchmark under Agri Priority Sector advances for the third consecutive year. A workshop on revised guidelines of GCPE, was recently organized

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to review the scheme. Based upon the feed back received from the participants, few changes in the revised scheme are accepted by the appropriate authority and are as under:

i. The process of nomination may be started in April / May so that programme at SBLCs can be commenced from September / October, positively. ii. Duration of programme is increased from seven to eight days i.e. Sunday to Sunday (both days inclusive). The field visit will be for five days and class room sessions will be rearranged with more pre dinner talks, sharing the course contents and success stories with a focus on expanding & exploring the business opportunities. iii. A memento costing Rs.7000/- may be presented to the participant and other items bags etc. should be dispensed with. iv. The services of branch / division staff may be recognized by hosting a dinner for entire branch / division staff by the Branch Manager. v. Spouse/ family members of the participants of GCPE may be felicitated for their support. A dinner for Circle GCPE participants with their family members may be arranged and the CMC members are requested to join this dinner. vi. GCPE nominees, in case of non-participation at identified SBLCs may be accommodated in the subsequent GCPE at other SBLCs or subsequent year, so that they do not miss the opportunity for recognition / reward.

All other existing instructions on GCPE shall remain unchanged.

The revised guidelines are effective from 2010-11 onwards.

Sl. No. : 38/2010 – 11 Circular No. : CDO/P&HRD-IR/4/2010 – 11, April 22, 2010.

INDUSTRIAL DISPUTES ACT, 1947: DECLARATION OF BANKING INDUSTRY AS A PUBLIC UTILITY SERVICE - we have to advise that in exercise of the powers conferred by the proviso to sub-clause (vi) of clause (n) of section 2 of the Industrial Disputes Act, 1947, (14 of 1947), the Government of India, vide its Gazette Notification No.S- 11017/5/97-IR(PL) dated 6th April 2010, has declared the banking industry to be a “public utility service” for the purpose of the said Act for a further period of six months with effect from the 17th April 2010.

Sl. No. : 39/2010 – 11 Circular No. : CDO/P&HRD-IR/5/2010 – 11April 22, 2010.

STAFF: AWARD: REDEPLOYMENT/TRANSFER POLICY – AUTHORITY FOR

EXEMPTION FROM TRANSFER OUTSIDE THE CENTRE: ON MEDICAL GROUNDS - It has been decided with the approval of competent authority that the powers for exemption of employees from transfer out-of-centre who are suffering from serious

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ailments as specified under para (ix)(b) of letter No.CDO/IR/SPL/369 dated 28.12.2004 may be vested with General Manager of the respective Network.

Sl. No.: 5/2010 – 11 : Circular No. : CDO/P&HRD-IR/1/2010 – 11 dated 05.04.2010

STAFF WELFARE ACTIVITIES : GROUP INSURANCE SCHEME FOR EMPLOYEES

SAMPOORN SURAKSHA TERM PLAN

The group insurance policy of SBI Life has since been renewed for the period from 7th of February, 2010 to 6th of February, 2011 on the same terms and conditions and the policy covers all confirmed employees in terms of data available in HRMS. Further, it has been decided to cover all the Officers (Marketing and Recovery) as per data available in HRMS appointed on contract basis and are in service as on the date of renewal of the policy i.e. 07.02.2010 under the group insurance policy. This additional facility has been extended to them keeping in view of their duties of recovery carried out by them in different circumstances.

Rural Business:-

Sl. No.: 110/2009 – 10 : Cir No. : NBG/ABU/PDM-CS/2/2009 – 10 dated 15.05.2009

Agri Business: Produce Marketing loan :: Exposure ceiling for loans against pledge of warehouse receipts issued by Private Warehouses

As per extant instructions, approval will be accorded by the respective Circle Management Committee for specific Private Warehouses (on case to case basis), whose receipts are to be accepted by the branches for granting demand loan. Individual limits will have to be decided based on, interalia, capacity of the warehouse, local demand and opinion compiled. The approval will be granted by the CMC for one year and is subject to renewal annually. The modules will have to compile a detailed opinion report on the warehouse owner before recommending for a private warehouse and the report will have to be updated at the time of renewal. These opinion reports should contain, interalia, the branch comments on the condition of the warehouse for which yearly inspection will have to be carried out by the branch concerned.

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Due to delayering of Zonal Offices, now DGM (Rural Business) at the Circle and wherever the position is yet to be headed by the DGM in the respective circles, the DGM (Operations and Credit) for the respective area, will compile the detailed opinion report Region wise, based on the recommendation received from the Regions and submit the same to CMC along with his / her recommendations for fixing the exposure cap per private warehouse / cold storage units.

Sl. No.: 289/2009 – 10 : Cir No. : NBG/ABU/PDM-KUY/10/2009 – 10 dated 03.08.2009

AGRI BUSINESS : FINANCING TO TENANT FARMERS, SHARE CROPPERS AND LESSEE FARMERS

Please refer extant instructions where in financing to the captioned categories of the farmers have been advised. The Govt. of India has also directed to finance 2.5% of Crop loans to these categories. While financing to these categories of farmers, the operating staff should consider / record the following points in appraising such proposals.

i) Written / Oral arrangement for tenant amount, crop share, lessee amount with landlords to be ascertained and recorded in the appraisal form. ii) Period of lessee, tenancy and share cropping. iii) While calculating economic viability, the expected ability of the farmer to produce i.e. yield / acre, average sale price of produce for last 3 years and amount to be paid to the landlord on account of tenancy / lessee/ crop share and other liabilities in connection with the crop production.

Sl. No.: 674/2009 – 10 : Circular No. : RABG/RBNFMCFI-MICROFI/3/2009 – 10 dated 05.01.2010

Scheme for financial assistance to banks for rating of Micro Finance Institutions

NABARD has reviewed and revised the captioned scheme. The revised terms and conditions of the scheme are as under:

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I. The purpose of the scheme: The basic purpose of the scheme is to facilitate the banks to identify appropriate MFIs for providing funds on the one hand and at the same time, to encourage proper standards, systems and safeguards, efficiency and transparency in MFIs on the other hand.

II. Rating agencies: Banks can avail the services of credit rating agencies, viz., CRISIL, M-CRIL, ICRA, CARE and Planet Finance or any other agency approved by NABARD from time to time, for rating of MFIs.

III. Eligible Grant Assistance: The banks can avail of 100% reimbursement of expenses towards cost of rating of MFIs up to Rs.3 lakh by way of grant only for first rating of MFI. MFIs with the minimum loan outstanding of Rs.50.00 lakh and maximum loan outstanding of Rs.10.00 crore would be eligible for support under the scheme. The grant assistance for meeting the cost of rating of MFIs would be only for professional fee of the rating agency subject to a ceiling of Rs.3 lakh. All other costs, e.g., the cost of local hospitality including boarding & lodging, field visits of the Credit Rating Agency team under the rating exercise, etc., will not be covered under the grant assistance, which would be borne by MFI concerned.

IV. Submission of Rating Report: Banks / MFIs may furnish a copy of the rating report to NABARD and NABARD would have the right to publish the information, if it desires to do so. Branches should obtain an undertaking from MFI concerned to that effect.

V. Procedure for claiming grant assistance: Branches / Circles may submit claim to concerned Regional Office of NABARD for reimbursement of the cost of rating of MFI within three months of receipt of the rating report from the agency, on the format enclosed as annexure to the circular. The claim may include the following documents / particulars:

(a) The rating report of the MFI duly signed by Credit Rating Agency.

(b) The total cost of rating of MFI and the amount of NABARD’s support required, and

(c) The details of the bank credit sought by the MFI, if any.

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Regional Office of NABARD would be sanctioning and releasing grant assistance under the scheme.

VI. Operation of the Scheme: The scheme of grant assistance to banks for rating of MFIs will be operational, on an ongoing basis.

In the light of the above, NABARD has requested all banks to encourage rating exercise of MFIs for proper assessment of their performance and also facilitate improvement in their systems, processes, internal checks and control, asset quality, operational efficiency, governance, social & financial performance standard, through funding and developmental support, for furtherance of micro finance for the poor and disadvantaged.

Sl. No.: 689/2009 – 10 : Circular No. : RABG/RB-AC-AC/5/2009 – 10 dated 14.01.2010

OFFICERS MARKETING AND RECOVERY-RURAL (OMRs) ::: CASH RECOVERY-ENHANCEMENT IN CEILING FROM Rs. 5000/- TO Rs. 20,000/- FOR RECOVERY

In view of the challenging targets being given to OMRs and RRTs, and the feedback received from OMRs, Circle functionaries and through a study from SBIRD, for enhancing the cash recovery limit for OMRs from present level of Rs. 5000, it has been decided to enhance the cash recovery limit to Rs.20,000 per visit per OMR in MRTs and RRTs. The other terms and conditions stipulated would remain unchanged.

Sl. No. : 740/2009 – 10 Circular No. : RABG/RB-AC-AC/7/2009 - 10

OFFICERS MARKETING AND RECOVERY-RURAL (OMRs)- PAYMENT OF VARIABLE PAY

As per terms and conditions of appointment of OMRs the revised salary structure is composed of 70%, Fixed Pay and 30%, Variable Pay. Thus the composition of newly recruited OMRs would be- Fixed Pay: Rs.1,40,000 (70%), Variable Pay: Rs.60,000 (30%), Total package: Rs. 2,00,000 (100%), Further, the amount of

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variable pay would depend on the extent to which the OMR achieves his/her target in the respective business category as follows.

Achievement of Targets Quantum of variable pay to be sanctioned Up to 50% NIL 51%-60% 50% 61%-90% 75% 91%-100% 100% Above 100% Additional performance incentive will be paid in

addition to 100% variable pay. The following factors would need to be considered while arriving at the variable pay-

1) Whether the OMR is Agri focused or Non-Agri focused.

2) The NPA cluster of the OMR (high, medium & low)

3) Variable to be paid on quarterly basis.

4) Only growth in business to be considered (both from new business and enhanced existing business)

5) The weightage to each category of business for variable is given in the annexure to the cir.

6) Variable to be paid quarterly on cumulative basis.

7) Variable once paid for any quarter need not be recovered, if for the succeeding

quarter or for the cumulative quarter, the official is not found eligible.

8) The quarterly targets could be evenly spread out or could be uneven, depending

on potential/ seasonal variation/other external factors etc.


RURAL CENTRAL RURAL PROCESSING CENTRES (RCPCs)

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PROVISION OF OVERDRAFT FOR RCPC EXPENSES AND PETTY CASH

It was suggested by some of the Circles that for managing day to day affairs of the RCPC, they should be permitted to maintain an overdraft account and a petty cash account to meet various expenses like payment of various bills of staff like travelling, cleansing material, entertainment etc and also other petty cash expenses relating to purchase of items like stationery, local conveyance etc. by the Chief Manager/Manager and other staff posted in RCPCs. Accordingly, it it has been decided to permit RCPCs to maintain an overdraft and petty cash account as under:-

1) RCPCs will be allowed to maintain an overdraft account with a revolving limit of Rs.1.00 lac at one of the link Branches to which the expenses incurred by RCPCs and other staff expenses bills on day to day basis can be debited and finally entries will be adjusted at the month end by debiting charges account of the administrative office to which RCPC is linked.

2) Besides, the RCPC may be permitted to draw an amount not exceeding Rs.2500.00 from the overdraft account and used for daily petty cash expenses like stationery, Xerox, local conveyance and other related expenses. The limit will be decided by the AGM of the Region for each RCPC.

For more details, please refer the circular.


RURAL CENTRAL PROCESSING CENTRES (RCPCs) : Amendment in operating guidelines

With a view to taking avoidable workload out of the RCPCs and simplifying the loan sanctioning process it has been decided to restore the sanctioning powers of the branches in respect of a few category of loans. The operating instructions in this regard have been amended as under with immediate effect.

Loan Category Revised Instructions

Personal loans including X- To be appraised, processed and sanctioned at the

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press Credit and loans to Pensioners

Branch level, subject to discretionary powers of the incumbents.

Renewal/Review of Cash Credit Limits (SME) at existing level

Renewal of all SME accounts to be continued with RCPCs. However, the review of loan accounts under SME (card) are recommended at Branch level, as the cards are issued for 3 years and the periodic annual review is based mainly on turnover.

Renewal of crop loan a)Renewal of crop loans at existing level will continue to be processed / sanctioned at Branches. b) Renewal of crop loans with enhancement of limit due to increase in scale of finance can also be done by Branches. c) Renewal with enhancement are done at RCPCs.

Small loans up to Rs.50,000 The small ticket loans be processed and sanctioned at Branches itself subject to discretionary powers of the incumbent, up to Rs.50,000. The other existing instructions will continue.

Government sponsored loans

Govt. Sponsored loans above Rs. 5 lacs will be processed and sanctioned at RCPCs instead of Branches.

SHG Loans SHG loans may be processed at Branch level.

Commodity backed warehouse receipt financing – tie up with (NBHC)

Branches are authorised to sanction such loans.

The revision in the process of processing and sanction of loan as advised above would, however, be subject to the discretion of the AGM of the Region. The AGM of the Region would be the final authority to decide on implementation of the above revised sanctioning power depending on the processing capacity of the RCPCs

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and Branches in the Region. The AGM of the Region may decide to implement one, some or all of the suggestions after considering the pros and cons of each suggestion, suitable to the Region.

Sl. No.: 94/2010 – 11 : Circular No. : RABG/ RB-AC-AC/2/2010 – 11 dated 17.05.2010

OPENING OF RURAL CENTRAL PROCESSING CENTRES : Format for recommendation / approval

Sl. No.: 556/2009 – 10 : Cir No. : RABG/RB-IT-IT/5/2009 – 10 dated 07.11.2009

FINANCIAL INCLUSION THROUGH TECHNOLOGY ::: NEW OUTREACH CHANNEL: CELL PHONE BASED BANKING ::: PRODUCT: SBI MINI SAVINGS BANK ACCOUNT

IT-enabled Financial Inclusion started in our Bank with the PoS based biometrically enabled Smart Card combination technology. The Bank also started a PC-Kiosk based model which was rolled out to all the Circles. A new delivery platform for Financial Inclusion through Cell phone has been initiated in Delhi Circle during Feb, 2009 on pilot basis and on successful implementation further expended to Patna Circle. Under the new channel, the customer having a mobile phone can avail the banking services in conjunction with a service delivery agent / BC and a technology provider for mobile operations. Bank has engaged the services of M/s EKO Aspire Foundation as BC who will operate on the technology platform of M/s EKO India Financial Services Pvt Ltd., a technology provider of the channel. The channel provides services through a simple mobile phone operated by the customer at retail outlets of CSPs. The new delivery channel will benefit the Bank and the customer in many ways detailed as under:-

1. The model is cost effective as it avoids cost of Point of Sale device (PoS) and Smart card.

2. Avoid cost of PC-kiosk infrastructure and finger print capturing device.

3. Real-time transactions with instant update and supported by USSD based messages initiated by customer/ CSP using mobile.

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4. Three level security i.e. customer’s mobile no, one time usable PIN book and PIN created by the customer himself, provide sufficient security in the channel.

5. The customer may transact at any CSP without any location limitation.

The Business Process flow for Cell Phone based channel and the product details are enclosed to the circular.

Sl. No.: 564/2009 – 10 : Cir No. : RABG/RB-AC-AC/2/2009 – 10 dated 11.11.2009

FINANCIAL INCLUSION BY EXTENSION OF BANKING SERVICES ::: USE OF BUSINESS FACILITATORS (BFs) AND BUSINESS CORRESPONDENTS (BCs)

RBI has decided to increase the maximum distance criterion (distance between the place of business of a BC and the base branch) for operation of Business Correspondent (BC) for rural, semi-urban and urban areas from the existing 15 kms to 30 kms. Circles may re-align the business plans and increase the area of operation and outreach of the CSPs of the BCs engaged.


Rural Business Strategy : Engagement of Business Facilitators (BFs) -

including AMFI Certified Individuals in the list of Eligibility

It has been decided to approve AMFI Certificate holders for engagement as individual Business Facilitators (BFs). However, while engaging AMFI Certificate holders as BFs, kindly ensure to carry out proper due diligence.


ENGAGEMENT OF BUSINESS CORRESPONDENTS (BCs)/BUSINESS FACILITATORS (BFs) :: RENEWAL OF AGREEMENTS

As per extant instructions, renewal of agreements entered into with the BCs/BFs at periodic intervals (yearly/ half yearly) is stipulated. Many of the agreements would have now fallen due and require to be renewed, subject to satisfactory

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conduct and performance. Since execution of fresh agreements would entail expenses on account of stamp duty and also would be time taking, for convenience, a simple letter of continuance is drafted in consultation with the Law Dept. at Corporate Centre, which can be exchanged with the BC/BF and would serve the purpose of continuation and renewal of the agreement. A copy of the draft format of the letter of continuity is enclosed to the circular.

Sl. No.: 587/2009 – 10 : Cir No. : NBG/ABU/BP-INTT. SUB/10/2009 – 10 dated 20.11.2009

Agri Business :: Provision of Short term crop loans to farmers up to Rs.3 lacs per farmer at 7% -- 1. Interest Subvention Scheme @ 2%, 2. Additional Interest Subvention of 1% to prompt paying farmers

Based on GOI guidelines, RBI advised Banks to continue the Interest Subvention Scheme at 2% for the year 2009-10 for short term crop loans (effective ROI will be 7%) and an additional interest subvention of 1 % as an incentive to those farmers who avail short term crop loans in 2009-10 and repay on schedule (i.e., for prompt repayment (effective ROI will be @ 6%).

Gist of the instructions contained in RBI letter for the year 2009-10 is as follows:

a. Interest subvention at 2% (reduced from 3% provided during 2008-09):

i) GOI will provide interest subvention of 2% to PSBs in respect of short-term production credit provided up to Rs.3.00 lacs per farmer.

ii) This amount of subvention will be calculated on the short term crop loan amount from the date of disbursal/drawal up to the date of payment or up to the date beyond which the outstanding loan becomes overdue i.e. March 31,2010 for kharif and June 30, 2010 for Rabi, respectively, whichever is earlier, subject to a maximum period of one year. This subvention will be available to PSBs on the condition that they make available short term credit at ground level at 7% p.a.

iii) Interest Subvention claims are to be submitted on half yearly basis as at September 30, 2009 & March 31, 2010 and for the quarter ending June 30, 2010 (for Rabi) within one month from the end of the respective dates.

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iv) The claim for the year ending March 31, 2010 and quarter ending June 30, 2010 (for Rabi) should be accompanied with a Statutory Auditor’s certificate certifying that the claim (claimed for each half year to be mentioned separately) for the entire year ended March 31, 2010 as true and correct. Final settlement of the claims will be done on receipt of this certificate.

b. Additional Interest subvention of 1%

i) GOI will also provide additional interest subvention of 1% p.a. to PSBs in respect of those prompt paying farmers who repay their short-term production credit within one year of disbursement of such loans.

ii) This subvention will be available to such farmers on the short-term production credit availed by the farmers during the year for a maximum amount of Rs.3 lacs and the amount of subvention will be calculated from the date of disbursement / drawal up to the date of repayment subject to a maximum period of up to one year per farmer account. This subvention will be available to PSBs on the condition that the effective interest rate charged to the prompt paying farmers is 6% p.a. up to Rs.3 lacs.

iii) Banks may credit the additional interest subvention of 1% to the farmers’ account, only after their prompt repayments as stated above and seek reimbursement subsequently.

iv) Banks may submit their one-time consolidated claims for the entire year, incorporating the claims pertaining to both Kharif and Rabi disbursements for the year 2009-10, latest by July 31, 2010 (in the prescribed format).

v) The claim should be accompanied by a Statutory Auditors’ certificate certifying that the claims for subvention for the entire year ended March 31, 2010 as true and correct.

It is advised to implement the above measures announced by the RBI and ensure that short term production credit with limit up to Rs.3 lacs per farmer is provided at 7% during 2009-10. Please also ensure that interest subvention claims @ 2% and additional interest subvention claims @1% are submitted as stipulated above.

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Needless to mention, any delay in this regard results in to loss of opportunity cost on Capital. Other important aspects like Accounting procedure, Adjustment of claim amount, Parking the outstanding claim amount in adjusting account at the time of annual closing (March 2010), mentioning of interest rate in the documents etc. will remain unchanged.

Sl. No.: 67/2010 – 11 : Circular No. : NBG/ABU/BP-INTT. SUB/5/2010 – 11 dated 10.05.2010

Agri Business : Implementation of “Additional Interest subvention Scheme to prompt paying farmers” :: New Accounting Procedure: Opening of New BGL Account

New accounting procedure for payment of “Additional interest subvention to prompt paying farmers” is explained in the circular.

A. Scheme of providing interest subvention @ 2%, up to Rs.3.00 lacs per farmer

Branches will continue to charge interest @ 7% at ground level, for short term crop loans up to Rs.3.00 lacs per farmer during the period of eligibility. Thus, the benefit of 2% interest subvention is passed on to farmers by branches effectively as per the Scheme of providing interest subvention @ 2%, up to Rs.3.00 lacs per farmer. Hence, no separate accounting system is required for 2% interest subvention scheme.

B. Additional Interest Subvention (incentive) to prompt paying farmers:

i. As per modified guidelines from RBI, 1% additional interest subvention will be available only to the prompt paying farmers, from the date of disbursement of the crop loan up to the actual date of repayment by farmers OR up to the due date fixed by the bank for repayment of crop loan, whichever is earlier, subject to a maximum period of one year from the date of disbursement.

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ii. It is now proposed to introduce a new uniform accounting procedure to be followed at branches for flawless implementation of the Scheme of ‘additional Interest subvention @ 1%’ (as the actual repayment of the loan could not be centrally evolved by IT Dept, Belapur)

iii. Accordingly, separate BGL accounts will be opened every year starting from Scheme year 2009-2010, to account for & maintain the ‘Additional interest subvention claim receivable’ separately for each Scheme year, to ensure easy & trouble-free reconciliation.

For accounting system, please refer the circular.

Sl. No. : 608/2009 – 10 Circular No. : RABG/RB-IT-IT/7/2009 – 10

FINANCIAL INCLUSION-CELL PHONE BASED CHANNEL THROUGH M/S EKO PLATFORM - NEW PRODUCT - SBI MINI REMITTANCE- “SBI MINI Savings Bank accounts” are operated through Cell phone based technology provided by M/s EKO India Financial Services Pvt Ltd. We have further permitted M/s EKO to provide remittance facility through Cell phone based channel. The Business Process for remittance through the Channel is enclosed to this e-cir. The concerned officials at LHO are instructed for identifying the pockets / places where the remittance product can be launched in big way.

Sl. No.: 628/2009 – 10 : Circular No. : NBG/RRBLBCSB-LB/6/2009 – 10 dated 09.12.2009

SWARNA JAYANTI SHAHARI ROZGAR YOJANA (SJSRY) : REVISED GUIDELINES – 2009

Please refer to RBI’s Master Circular RPCD/SP.BC.No.3/09.16.01/2009-10 dated July 1, 2009, containing instructions on operationalisation of Swarna Jayanti Shahari Rozgar Yojana. In this connection, RBI has now advised that the Ministry of Housing & Urban Poverty Alleviation has revamped the SJSRY scheme (revised guidelines are enclosed to the circular). The revised guidelines focus on providing assistance (Loan & Subsidy) under (a) Urban Self Employment Programme (USEP) to individual urban poor beneficiaries for setting up gainful self

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employment ventures – micro enterprises and (b) Urban Women Self-Help Programme (UWSP) to groups of urban poor women for setting up gainful self-employment ventures. The brief details of financing pattern under USEP and UWSP are as under :

Financing pattern details

USEP UWSP

Maximum allowable unit

project cost

Rs.2,00,000/- No maximum limit

Maximum allowable subsidy

25% of the Project cost

subject to a maximum of

Rs.50,000/-

35% of the project cost subject to a ceiling of Rs.3.00 lakhs or Rs.60,000/-

per beneficiary

Beneficiary contribution

5% of the project cost as

margin money

5% of the project cost as margin money

Collateral No collateral required No collateral required


FINANCIAL INCLUSION PROJECT : NEW PRODUCT– SBI TINY SB-cum-OD ACCOUNT

In view of the demand to provide a loan product on the tiny card which will provide hassle free credit to low income group / underprivileged populace to meet their contingencies, the Bank has designed a new product i.e. SB Tiny SB-cum–OD to be operated on the Tiny Cards. The Product features and Business Process flow

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of “SBI Tiny SB- cum – OD” are furnished in the annexure to the circular. The product features already covered in the last Weekly Brief.


SB TINY CARD PROJECT : SELF HELP GROUP’S INCLUSION ON TINY CARD

Our Bank has been in the forefront of SHG Bank credit Linkage and has so far credit linked more than 1.3 million SHGs. These SHGs are availing the banking services at the Branches leading to congestion at the Branches, spending time on travelling to the branch. Benefits of technology enabled initiatives taken by the Bank for delivery of banking services near the place of stay, without having Bank’s Branch was not available to the SHGs although this group may evolve to a higher level of commercial enterprise in future.

In view of the above, the Bank has developed and launched biometric enabled, chip based Tiny Card to SHGs, as a group, while its members individually will be using existing SBI Tiny cards, in collaboration with tech providers M/s ALW and M/s FINO. Product features and business process flow are furnished in annexure -1 to the circular. This product will benefit the Bank as well as the customers as under: - (i) Operable at BC / CSP, near to place of work / stay service to the SHG / members, with Biometric (finger Print) Validation of authorized signatories (2). (ii) Decongest the branches, freeing our staff to do other productive and mobilizing business for the Bank. (iii) Enable the SHG customer and its members to deliver/ repay money between SHG and members at their locations in a cashless manner. (iv) Facilitate to boost our outreach among rural and semi-urban masses.

Presently Saving Bank account facility is provided through the Cards. On credit linkages and sanction of loan by the Branches, amount will be disbursed to group through group SB account available on the Tiny Card. Group can further distribute to members in their Tiny Cards in ‘card to card remittances’ and members can repay to the group in the same way.

Bank has a plan to issue SHG cards to 500000 SHGs as also individual SBI Tiny Cards to members of the groups for providing Banking services at BC/ CSP outlets. Branches are requested to arrange presentation to various SHGs operating in the

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area on the new technology initiative taken by the Bank and issue Tiny cards to SHG groups and Tiny cards to their members through the channel.

Sl.No.: 437/2009 – 10 : Cir No. : RABG/RB-IT-IT/1/2009 – 10 dated 25.09.2009

FINANCIAL INCLUSION PROJECT : NEW PRODUCT – SBI TINY REMITTANCE

With a view to achieving the objective of Financial Inclusion, SB Tiny Smart Card based new products viz. Savings Bank and Recurring Deposit were launched by the Bank. To popularize the Smart Card based products and meet the huge demand from migrant labour / low income group for remitting funds securely to their native places at an affordable cost, Remittance product has been designed, tested and added to the Tiny Card based accounts. The Business Process flow, in brief, is enclosed to the circular. As of now, functionality for transferring the funds from a Tiny Card account to Tiny Card account and Tiny Card account to a Core account will be available to the Card holders. The functionality for transfer of funds from any CBS account to a Tiny Card account will be released subsequently.


FINANCIAL INCLUSION BY EXTENSION OF BANKING SERVICES- USE OF BUSINESS CORRESPONDENTS (BCs) - APPOINTMENT OF ADDNL. INDIVIDUALS - OPERATING GUIDELINES – The Bank has finalized the categories of eligible individuals for engagement of BCs. The salient features of the guidelines are as under:-

Six additional categories of individuals are eligible for engagement as BCs. The selection committee will be constituted at the Regional Office level, as is

presently done for existing categories of individual BCs. The Branch Manager of one of the Link Branches is to be included in the Committee to ensure greater involvement of the Branches in the selection process.

BC should be a permanent resident of the area. The minimum educational qualification of Xth passes.

The estimated turnover at the CSP (deposits, payments & remittances) for average 2 days may be considered for arriving at the amount of security

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deposit to be obtained. The minimum amount is reduced from Rs.5.00 lac to Rs.0.50 lacs.

The distance between the place of business of the BC and the base (link/branch) should not exceed 30 kms. in rural/semi urban areas.

The cash management would be the responsibility of the BCs. They would arrange to obtain transit insurance cover. If requested, overdraft limit to be made available to BCs.

The individual BCs engaged will be given the choice of using any one of the following technologies. 1. Smart Card, available through tech- vendors like ALW or FINO, or any other vendor approved by the Bank. 2. SBI Kiosk banking. 3. Cell phone based messaging system. Preference to be given for use of SBI Kiosk banking technology.

For Risk Mitigating Measures and other details please refer to the e-Cir.


ENGAGEMENT OF (BFs)/(BCs) :CONDUCTING CIRCLE AUDITS AT BRANCHES/RBO

To ensure that the various risks are detected and mitigated by complying with the laid down instructions by the RBOs/Branches/BC/BF/CSP etc., suitable Audit Report formats have been devised in the consultation with the I&A Dept., Hyderabad. A copy of the format is enclosed to this cir. The evaluation of compliance process at the RBOs/Branches/CSPs where the services of Business Facilitators (BFs)/Business Correspondents (BCs) are engaged need to be entrusted to Circle Auditors. Any score below 75% calls for caution and correction of the deviation immediately to avoid loss on account of reputation to the Bank.


RURAL BUSINESS : ENGAGEMENT OF BUSINESS FACILITATORS (BFs) / BUSINESS CORRESPONDENTS (BCs) ::: CONDUCTING CIRCLE AUDITS AT BRANCHES/ RBOs/ CUSTOMER SERVICE POINTS (CSPs) OF BCs

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1. Periodicity of Audit : The periodicity of audit of Branches where services of BFs/ BCs are engaged would be alongwith the Circle Audit as per the laid down periodicity of Circle Audit. The Audit of BC/BF channel would be supplementary to the Branch Audit. The audit of RBO/ Regional office where the BCs/ BFs are engaged is to be carried out at the periodicity of 12 months. 2. Audit Process : The Circle Auditor would examine the compliance of instructions and guidelines by the Branch/RBO/BC/BF/CSPs and depending on the observations, complete the supplementary ARF for the channel and submit the same alongwith his observations. 3. Time Norms for Submission Of Compliance Remarks : The existing time norms applicable for Circle Audit report would also be applicable for submission of compliance remarks, for the supplementary Audit of BC/BF channel.

Man days: If the CSPs of BCs/ BFs linked to a branch are less than 5, the Circle auditors may be given one day to carry out the Audit, and in case of CSPs being more than 5, one additional day for every multiple of 5 CSPs to be given.

Sl. No. : 743/2009 – 10 Circular No. : NBG/ABU/PDM-KCC/21/2009 - 10

AGRI BUSINESS: A new product Farmers Easy Empowered Loan {FEEL }-“KRISHI KALYAN” is being introduced to reduce the multiple process of separate application, documentation & EM creation for availing KCC and PML, thereby reduce the time for delivery of credit. Total credit limit to be sanctioned, comprises of Annual Production Credit needs, Contingency credit (maximum of 20 % of the Production credit) and Produce Marketing loan (Maximum of Rs 10 lacs per borrower). Interest subvention is limited to the crop period. For product details, accounting procedure and operational guidelines please refer to the e-Circular.

Sl. No.: 769/2009 – 10 : Circular No. : NBG/ABU/PDM-ACAB/23/2009 – 10 dated 17.02.2010

AGRICLINIC AND AGRI BUSINESS CENTRES SCHEME

INCLUSION OF THE NEW CATEGORIES OF CANDIDATES

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NABARD advised that GOI decided to consider the following categories of candidates also eligible for providing benefits under the scheme for broadening the scope and outreach of the scheme: i. Graduates in Agriculture and allied subject from State Agriculture Universities (SAUs)/Central Agricultural Universities/Universities recognized by ICAR/UGC, ii. Diploma in Agriculture and allied subjects from State Agricultural Universities, and iii. Science graduates with Post graduation in Agriculture and allied subjects.

Sl. No.: 59/2010 – 11 : Circular No. : NBG/ABU/BP-SPE. RELI/3/2010 – 11 dated 05.05.2010

Agri Business: Special Concessionary Interest Rates for Minor Irrigation Loans Upto Rs.25 Lacs & Crop Loans Above Rs.3 Lacs and Upto Rs.25 Lacs - Extension

The competent authority has accorded approval for extension of the undernoted concessions for Minor Irrigation loans with limits upto Rs.25 lacs and Crop Loans with limits above Rs.3 lacs and upto Rs.25 lacs sanctioned and disbursed from 1st April, 2010 to 31st March, 2011.

A) Interest concessions

Category of Loans New Concessionary Interest Rates Extended from 01.04.2010 to 31.03.2011 **

Minor Irrigation loans with

limits upto Rs.25 lacs

i) 3.25% below SBAR i.e. 8.50% p.a. (fixed) in the first year.

ii) 2.25% below SBAR i.e. 9.50% p.a. (fixed) in the second & third years.

iii) Normal interest rate (card rate) from 4th year onwards.

Crop Loans with limits above Rs.3 lacs and

i) 1.75% below SBAR i.e. 10% p.a. (fixed) for one year from the date of disbursement.

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upto Rs.25 lacs

ii) 1% extra concession to the borrowers who pay their loans within the stipulated repayment period i.e. 9% p.a. fixed upto one year from the date of disbursement.

** (i) The interest concessions are applicable for new loans sanctioned and disbursed from 01.04.2010 to 31.03.2011. (ii) Crop loans up to Rs.3 lacs – GoI’s interest subvention scheme will continue. (iii) Loans above Rs.25 lacs have not been included since the interest rates are linked to CRA rating.

B) Concessions in Margins (Minor Irrigation Loans upto Rs.25 lacs) : The margin requirement for Minor Irrigation loans be reduced to flat 10% from the existing margin of 15% to 25% of the Project Cost.

C) Concessions by Extending Moratorium Period (Minor Irrigation Loans upto Rs.25 lacs) : The prescribed moratorium period for Minor Irrigation loans be extended by one year, as detailed hereunder:

Scheme Existing Moratorium Period

Additional Period

Dug Wells, Lift Irrigation etc. 23 months 12 months

Pumpsets, Pipeline, Micro Irrigation

(drip and sprinkler systems) etc.

11 months 12 months

D) Concessions in Repayment Period (Minor Irrigation Loans upto Rs.25 lacs) : By extending moratorium period by 12 months, the repayment period will also get extended by twelve months.

E) Loan Processing Charges and Upfront Fee : Earlier concession of 50% reduction in loans processing charges and upfront fee has been withdrawn. Thus, there is no concession in loan processing charges and upfront fee.

Period for which the concessions are applicable

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a. The interest concessions are applicable for the new loans sanctioned and disbursed from 1st April, 2010 to 31st March, 2011.

b. Other concessions viz. Margin money, Moratorium period and Repayment period are applicable for the new Minor Irrigations loans sanctioned and disbursed from the date of the Circular i.e. 30th April, 2010 to 31st March, 2011.

Considering the vast scope available in the above two categories of loans, kindly draw specific action plan by allotting monitorable targets to each branch / FO / OMR to book new business. Regular review of the progress achieved at all levels will support your strategies to achieve Agri goals.

Sl. No. : 31/2010 – 11 Circular No. : RABG/RB-IT-IT/1/2010 – 11, April 21,2010.

IT ENABLED FINANCIAL INCLUSION PROJECT: BC / CSP – OUTLETS: As of now, about 16,000 BC / CSP outlets riding on different technologies / Channels are operative in Circles. Proper signage, checklist, Dos & Don’ts list, helpline numbers have not been displayed in many CSP outlets though the same is of paramount importance to create trust and acceptability of these channels in the public. The list of pre-requisites to be made available / installed at BC / CSP outlets for different channels is enclosed as annexure to the circular.

Pre-requisite at BC / CSP outlet for Tiny Card Operations (Annex – i).

Pre-requisite at BC / CSP (Kiosk Operator) outlet for Kiosk Banking Operations (Annex – ii).

Pre-requisite at BC / CSP outlet for Cell phone Messaging based Banking Operations (Anx-iii)


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SB TINY CARD PROJECT – ALW PLATFORM: SBI TINY REMITTANCE SERVICES- A new facility of remittance from any CBS account to a Card account enrolled and opened on ALW platform is now available in CBS. The process for transferring the funds from a Core account to Tiny Card account in details is enclosed (Annex – i). All branches / offices are instructed to initiate steps for popularizing the facility among the rural / low income group migrant people.

CC letter No.ABU/CIR/126/9 dated 13.04.2010

AGRI BUSINESS: CONCESSIONARY RATE OF INTEREST 8% (fixed): FINANCING FARMERS AGAINST WAREHOUSE / COLD STORAGE RECEIPTS UNDER PRODUCE MARKETING LOANS (PML)

Please refer to letter No. ABU/CIR/126/84 dated 29.09.2009 conveying extension of concessionary rate of interest of 8% (fixed) for the captioned loans sanctioned and disbursed upto 31.03.2010, for direct lending to farmers upto Rs.10 lacs only. In view of opportunities available for financing under the scheme, the competent authority has again extended the last date for availing of the concessionary interest rate from 31st March, 2010 to 30th June, 2010, on same terms and conditions as detailed in above referred circular letter of 20.02.2009. It is reiterated that the said concession is not available for on-lending to farmers by Cold Storages / Warehouses.

Sl. No.: 6/2010 – 11 : Circular No. : NBG/ABU/BP-SUPERVISI/1/2010 – 11 dated 05.04.2010

AGRI BUSINESS: AGRICULTURAL TERM LOAN:OBTENTION OF POST DATED CHEQUES (PDCs)

With a view to improve recovery performance for loans beyond Rs.2 lacs sanctioned under Agricultural Term Loans and Government Sponsored Schemes, it has been decided to obtain Post Dated Cheques each being equal to the installment fixed and approximate amount of interest. The detailed procedure with regard to obtention and custody of the PDCs is furnished in the circular.

C.C.Lr. No.ABU/BP&M/DMG/ 627 dated 31.03.2010

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AGRI BUSINESS: ADW&DR Scheme, 2008 – Remaining ‘Debt Relief’ eligible Accounts

Prudential Norms on Income Recognition, Asset Classification, Provisioning and Capital Adequacy

RBI conveyed the decision of GOI (a) extending the OTS Scheme applicable to ‘Other Farmers’ (Debt Relief Farmers) under ADW&DR Scheme, 2008 for another six months from 01.01.2010 to 30.06.2010 and (b) allowing the banks to continue to treat the relevant eligible accounts under Debt relief as ‘STANDARD ASSETS’ till 30.06.2010 (as hitherto applicable upto 31.12.09, now extended up to 30.06.2010).

Sl. No.: 87/2010 – 11 : Circular No. : NBG/ABU/BP-ADWRS/6/2010 – 11 dated 15.05.2010

AGRI BUSINESS: AGRICULTURAL DEBT WAIVER AND DEBT RELIEF SCHEME, 2008

Extension of ‘Modified OTS within OTS’

Considering the extension of ADW&DR Scheme, 2008 up to 30.06.2010 and receipt of grievance up to 31.07.2010 for eligible ‘Other Farmers’ by GOI / RBI, to maximize the recoveries, the “Modified OTS within OTS” Scheme has been extended upto 30.06.10 for covering the remaining eligible ‘Other Farmers’ and for grievance received from ‘Other Farmers’ up to 31.07.10.

All remaining a/cs (eligible but not covered upto 30.06.2010) shall be treated as NPA after the closure of the Scheme. The asset classification of such accounts shall be determined with reference to the original data of NPA (as if the account had not been treated as performing in the interregnum). On such down-gradation of the assets, additional provisions as per the extant prudential norms will required to be made. It is requested to focus more on covering the remaining eligible ‘Other Farmers’ by adopting various strategies including among others, contacting each farmer

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frequently and counselling them to avail the last opportunity available to them and to come into the fold of regular banking channel.


IT ENABLED FINANCIAL INCLUSION PROJECT: BC / CSP – OUTLETS: As of now, about 16,000 BC / CSP outlets riding on different technologies / Channels are operative in Circles. Proper signage, checklist, Dos & Don’ts list, helpline numbers have not been displayed in many CSP outlets though the same is of paramount importance to create trust and acceptability of these channels in the public. The list of pre-requisites to be made available / installed at BC / CSP outlets for different channels is enclosed as annexure to the circular.

Pre-requisite at BC / CSP outlet for Tiny Card Operations (Annex – i).

Pre-requisite at BC / CSP (Kiosk Operator) outlet for Kiosk Banking Operations (Annex – ii).

Pre-requisite at BC / CSP outlet for Cell phone Messaging based Banking Operations (Anx-iii)


SB TINY CARD PROJECT – ALW PLATFORM: SBI TINY REMITTANCE SERVICES- A new facility of remittance from any CBS account to a Card account enrolled and opened on ALW platform is now available in CBS. The process for transferring the funds from a Core account to Tiny Card account in details is enclosed (Annex – i). All branches / offices are instructed to initiate steps for popularizing the facility among the rural / low income group migrant people.

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Sl. No.: 99/2010 – 11 : Circular No. : CCO/CPPD-PRIORITY SE/11/2010 – 11 dated 18.05.2010

Priority Sector Lending : Export Credit for Agriculture and allied activities

On clarification sought from the RBI by few Banks, whether working capital limits granted to units engaged in agricultural and allied activities and to food and agro-based processing units by way of export credit are to be classified under priority sector advances, RBI has clarified that “loans granted by commercial banks for agricultural and allied activities are eligible for classification under priority sector, irrespective of whether the borrowing entity is engaged in export or otherwise”. Further, such export credit granted for agricultural and allied activities may be reported separately under the heading “Export credit to agricultural sector”.

Sl. No.: 58/2010 – 11 : Circular No. : NBG/ABU/BP-NAIS/2/2010 – 11 dated 05.05.2010

Agri Business : National Agricultural Insurance Scheme (NAIS) : Implementation for Kharif 2010

RBI has advised the administrative approval of GOI for continuation of the captioned scheme during Kharif 2010 on the existing terms and conditions as were applicable during Rabi 2009-10.

Credit:-

e-Cir Sl. No.: 25/2009 – 10: Cir No. : CCO/CPPD-TAKE OVERN/3/2009 – 10 dated 11.04.2009

TAKE OVER NORMS

Advances under SSI or C&I segments (including T&S Sector)

(i) The advance to be taken over should be rated SB3/SBTL3 (New CRA Model SB7) or above.

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(ii) The unit should score the minimum scores as prescribed, under the various risk segments, in the revised model for Credit Risk Assessment.

(iii) The account should have been a standard asset in the books of the other bank/FI during the preceding 3 years. However, if a unit is not having a track record for 3 years, because it has been in existence for a shorter duration, takeover can be considered based on the track record for the available period, which should normally be for at least one year. Where a minimum history of at least 1 year is not available and where for specific reasons it is still considered appropriate to take over, the authority structure provided for permitting deviations would be used.

(iv) The unit should have earned net profits (post tax) in each of the immediately preceding 3 years. However, if the unit has been in existence for a lesser period, it should have earned net profit (post tax) in the preceding year of operation.

(v) The Term Loan proposed to be taken-over should not have been rephased, generally, by the existing FI / Bank after commencement of commercial production. However, if a rephasement was necessitated due to external factors and viability of the unit is not in doubt, such proposals may also be considered for sanction on a case-to-case basis.

(vi) When only TLs are taken over, the remaining period of scheduled repayment of the term loan should be atleast 2 years. For takeover of existing TLs, while the original time frame for repayment will be generally adhered to, flexibility may be allowed in the quantum of periodical repayments. If sanction of fresh term loan is proposed along with the takeover, the schedule of repayment for the existing term loans, if necessary, may be permitted to extend up to 8 years.

(vii) Take over of units from Associate Banks is not permitted. Term loans from State Financial Corporations may be taken over selectively.

(viii) Increasing our share in either a consortium or as Multiple Banking Arrangement of which we are already a part, or where we join a consortium either as an additional member or when another Banks exits, such sanctions are not considered as take over of advances from another Bank. However, when we join a

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Multiple Banking Arrangement in order to replace an existing member of such an arrangement either in whole or in part all the norms relating to take over of advances will apply.

(ix) Administrative Clearance (AC) : Prior administrative approval is required to be obtained in cases of take over proposals as under:

a) For takeover of units complying with all the norms prescribed

b) For take over of units not complying with any one or more of the norms prescribed.

Sanctions by AC by

CCC-II & below CCC-I

SMECC & below MCCC

CCC-I / MCCC / WBCC WBCC

Sanctions by AC by

Officials in the grade of Scale IV and below

AGM of the Region / AGM / DGM of branch in case of branches with divisions

Officials in the grade of Scale V DGM (Branch) / DGM(NCM) / DGM (Sales Hub - Region)

DGM & above No AC is required

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CCCC / ECCB CCCC

Advances under Agriculture segment

In respect of Agri segment, all agricultural Term loans and agricultural cash credits with other Banks and Agricultural Credit Societies, Cooperatives are eligible for take over, subject to the fulfillment of the following terms and conditions of take over:

i) The minimum amount eligible for takeover would be as under:

a. ACC : Rs. 1.00 lakh

b. ATL – for Allied Activities : Rs.10.00 lakhs

c. ATL for other than allied activities : Rs. 2.00 lakhs

ii) Only Standard Assets and regular accounts are eligible for takeover. The account should have been a standard account in the books of the other banks/Financial Institution (FI) during the preceding 2 years.

iii) The term loans of incomplete nature are not eligible for takeover.

iv) ATLs with a minimum 2 years repayment programme left are only eligible.

v) Advances of the borrowers falling outside the Service Area of the branch are also permitted for takeover, subject to observance of the other instructions.

vi) Crop loan converted to Term Loans and Term Loans, which are rephased, are not eligible for take over irrespective of their quantum.

vii) Take over from our Associate Banks is not permitted.

viii) No dilution in the security in takeover proposals is permitted.

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ix) The maximum amount eligible for takeover would be Rs.50.00 lakhs. However, administrative clearance should be obtained from the Local Head Office in case, loans above Rs.50.00 lakhs are required to be taken over.

x) Wherever prescribed norms for takeover are met, no administrative clearance is needed for takeover. Otherwise administrative clearance should be obtained as under:

Sanctions by AC by Sanctions by AC by

Officials in the grade of Scale IV and below

One step higher than the loan sanctioning authority

Scale V – AGM (including AGM of a Region)

DGM-NCM

DGM (Branch) / NCM CCC-II CCC-II/CCC-I CCC-I

WBCC WBCC CCCC/ECCB CCCC

xi) Additional norms for takeover of Loans above Rs.25 lacs

• The advances to be taken over should be rated SB3/SBTL3 (New CRA Model SB7) or above (the unit should score at least 60% in the financial parameters).

• The unit should have earned net profits post tax in each of the immediately preceding 2 years.

Advances under ‘P’ segment

While takeover of 'P' segment advances is not generally encouraged, in consideration of larger business interests / valuable connections, takeover of housing loans is considered selectively after due diligence and precautions, in cases where possession of the house / flat has been taken, repayment of existing loan has already commenced and installments have been paid as per terms of sanction. Takeover of car loans is also considered selectively.

Sl. No.: 28/2009 – 10 : Cir No. : CCO/CPPD-ADV/4/2009 – 10 dated 11.04.2009

Prudential Guidelines on Restructuring of Advances by Banks

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Based on representations received from Banks, RBI has advised modifications in the formula for computation of diminution in fair value of a restructured loan. Accordingly, the erosion in the fair value of the advance should be computed as the difference between the fair value of the loan before and after restructuring. Fair value of the loan before restructuring will be computed as the present value of cash flows representing the interest at the existing rate charged on the advance before restructuring and the principal, discounted at a rate equal to the bank’s BPLR as on the date of restructuring plus the appropriate term premium and credit risk premium for the borrower category on the date of restructuring". Fair value of the loan after restructuring will be computed as the present value of cash flows representing the interest at the rate charged on the advance on restructuring and the principal, discounted at a rate equal to the bank’s BPLR as on the date of restructuring plus the appropriate term premium and credit risk premium for the borrower category on the date of restructuring".

Sl. No.: 63/2009 – 10 : Cir No. : CCO/CPPD-PRUDENTIAL/8/2009 – 10 dated 23.04.2009

Prudential Norms on Unsecured Advances

RBI’s prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances have defined ‘Unsecured Exposure’ and ‘Security’ as under:

• ‘Unsecured exposure’ is defined as an exposure where the realisable value of the security, as assessed by the bank/approved valuers/Reserve Bank’s inspecting officers, is not more than 10 percent, ab-initio, of the outstanding exposure. ‘Exposure’ shall include all funded and non-funded exposures (including underwriting and similar commitments).

• ‘Security’ will mean tangible security properly discharged to the bank and will not include intangible securities like guarantees (including State government guarantees), comfort letters etc.

Now, in order to enhance transparency and ensure correct reflection of the unsecured advances in Schedule 9 of the banks’ balance sheet, RBI has advised as under

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a) For determining the amount of unsecured advances for reflecting in schedule 9 of the published balance sheet, the rights, licenses, authorizations, etc., charged to the banks as collateral in respect of projects (including infrastructure projects) financed by them, should not be reckoned as tangible security. Hence such advances shall be reckoned as unsecured

b) Banks should also disclose the total amount of advances for which intangible securities such as charge over the rights, licenses, authority, etc. has been taken as also the estimated value of such intangible collateral. The disclosure may be made under a separate head in “Notes to Accounts”. This would differentiate such loans from other entirely unsecured loans.

This guideline would be applicable from the financial year 2009-10 onwards.

Sl. No.: 61/2010 – 11 : Circular No. : CCO/CPPD-PRUDENTIAL/9/2010 – 11 dated 05.05.2010


Recognising the need to encourage banks, take up infrastructure financing in a big way and considering the fact that the beneficial rights to the lenders through annuities and toll collection in respect of funding to road/highway projects on BOT basis are tangible in nature, RBI has made the following two modifications:

a. Banks may henceforth treat the advances to the infrastructure sector for construction of road/highway projects under the Build Operate Transfer (BOT) model collaterally secured by annuities and toll collection rights and where there are provisions to compensate the project sponsor if a certain level of traffic is not achieved, as tangible securities subject to the condition that Bank’s right to receive annuities and toll collection rights is legally enforceable and irrevocable.

b. Review the provision norms for unsecured advances to the infrastructure sector as under : Unsecured exposures in respect of infrastructure lending identified as sub-standard will attract a provision of 15% instead of 20%.

To avail the benefit of lower provisioning in respect of lending to the infrastructure sector, the operating units/branches should put in place an

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appropriate mechanism to escrow the cash flows and also ensure they have a clear and legal claim on these cash flows.

Sl. No.: 102/2010 – 11 : Circular No. : NBG/SMEBU-COLLFREE/16/2010 – 11 dated 19.05.2010

COLLATERAL FREE LOANS -- MICRO AND SMALL ENTERPRISES (MSEs)

COMPLIANCE WITH RESERVE BANK OF INDIA DIRECTIVES

As per the new guidelines of RBI, Banks are mandated not to accept collateral security in the case of loans upto Rs. 10 Lakh extended to units in the MSE sector (both Manufacturing and Service enterprises) as defined under MSMED Act, 2006. Incidentally, all such loans that are eligible for guarantee cover under credit guarantee scheme of CGTMSE should be invariably covered under the scheme. The loans sanctioned under the credit guarantee scheme should immediately be lodged on CGTMSE website and the guarantee fee should be recovered from the respective loan accounts after generation of Demand Advisory Note (DAN) by CGTMSE.

Sl. No.: 107/2010 – 11 : Circular No. : NBG/SMEBU-COLL FREE/18/2010 – 11 dated 20.05.2010

SME - COLLATERAL FREE LOAN SCHEME (SMECFL) : MODIFICATION IN THE SCHEME : MERGER OF ERSTWHILE SBI MICRO LOAN FOR MICRO ENTERPRISES

Bank has launched scheme “SME Collateral Free Loan” (SMECFL) for loan requirement above Rs.5.00 lacs to Rs.1.00 crores, bundled under the guarantee cover of CGTMSE with certain concessions in interest rates and processing fee to penetrate SME business upto Rs. 1.00 crore in January 2010. The scheme is receiving good response in all circles. Bank launched another scheme in July 09 called “SBI Micro Loan” for loans upto Rs.5.00 lacs under CGTMSE Guarantee coverage with interest @ 8% p.a. was in vogue which was valid upto 31.03.2010. On a review, it has been decided not to continue with the SBI Micro Loan. However, to ensure hassle free finance with simplified process to Micro Entrepreneurs

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under CGTMSE guarantee cover, the competent authority has accorded approval for modification in SME-Collateral Free Loan Scheme by eliminating the rider of minimum eligible loan amount of Rs. 5.00 lacs. Accordingly, the Collateral Free Loan Scheme will hence forth be available to Micro and Small Enterprises upto Rs. 1.00 cr without stipulation of any minimum loan amount. All other terms and conditions for SMECFL will remain unchanged except minimum loan amount of Rs. 5.00 lacs.

Sl. No.: 87/2009 – 10 : Cir No. : NBG/PBU/AL-CARLOANS/11/2009 – 10 dated 06.05.2009

PERSONAL BANKING: CAR LOAN SCHEME :: TAKE OVER NORMS

The extant takeover norms in respect of Car Loans are reiterated as under, to enable our branches and sales teams to market the loans to customers effectively.

i. Takeover of car loans may be considered selectively where: a. the vehicle is not more than 2 years old, b. it is a single ownership vehicle, c. no insurance claim has been availed and d. the account of the borrower with the other bank is a Standard Asset i.e. all repayments have been made as per terms of sanction of the original financier. ii. The loan should be repaid within 7 years from the date of the original purchase of the vehicle. iii. Reimbursement of costs of unencumbered vehicles can also be given under the above take over norms and other terms of financing old vehicles up to 2 years of age. iv. In case of take over of car loan from other banks, the rate of interest for new car loan will be applicable, if no change in ownership is envisaged. The branches should make use of the above instructions to increase the car loan portfolio.

Sl. No.: 104/2009 – 10 : Cir No. : CCO/CPPD-CP/11/2009 – 10 dated 14.05.2009

Competitive Pricing

It has been decided to modify the extant instructions as under:

Discretionary powers vested with DMD&GE(RB) and DMD&GE(NB) to delegate authority for improvement in pricing to Circle functionaries, in respect of specific products/specific category of borrowers (including sub-PLR pricing) in the unrated

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AGRI/SME/PER business segments be increased from 75 bps below the rate to 225 bps below the rate approved for the scheme with a floor rate of 10.00% p.a.

The discretionary powers vested as above with DMD&GE(RB) and DMD&GE(NB) shall be valid only up to 30th September 2009 and should only be given for working capital loans. However, the discretion may also be exercised in case of term loans with a specific clause incorporated in the documents that interest rates will be subject to reset after one year.

Please also note that where card rate in respect of specific products/specific category of borrowers (including sub-PLR pricing) in the unrated AGRI/SME/PER business segments is 10.00% p.a. or below, no discretionary power for improvement in pricing is available to Circle functionaries.

Sl. No.: 134/2009 – 10 : Cir No. : NBG/PBU/AL-CARLOANS/12/2009 – 10 dated 03.06.2009

Personal Banking:Car Loan::Online Sourcing of Applications through SBI Website

An online car application system has been provided on the SBI website as an additional means of sourcing Car Loan applications from customers. This facility has been made available for select cities where the Bank has set up MPSTs. The online facility provides for filling the application form online and eligible loan amount is automatically calculated by the system on the basis of information provided by the applicant. On submission the online application form is forwarded to the respective MPSTs email id mapped to the centre. The CME, MPST should ensure that all online applications received in his email are dealt on the same day, by calling the customers over phone or by SMS or by sending a suitable communication through e-mail, advising the customers of the documents required for processing the Auto Loan.

Applications pertaining to loans required at areas outside the service areas of the MPSTs should be forwarded to the nearest branches/MPSTs concerned under advice to the customer. A record of all applications received through this channel, percentage of sanctions including TAT so as to measure the efficacy of this

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initiative, may be maintained by MPSTs on an ongoing basis and advised to Corporate Centre on monthly basis. As more than 100 applications are being received through the SBI website on a daily basis, please arrange to sensitize the MPSTs and the other operating units to act swiftly and follow up the leads generated on priority and convert maximum leads into car loans as per the extant scheme.

Sl. No.: 136/2009 – 10 : Cir No. : CCO/CPPD-DB/16/2009 – 10 dated 03.06.2009

Discounting of Bills under LCs

In view of RBI instructions as well as the observations of Statutory Central Auditors, it has been reiterated to ensure that

(i) The facility for opening of Letters of Credits (LCs) and purchase/discount/ negotiation of bills under LCs should be extended only in respect of genuine commercial and trade transactions of the borrower constituents who have been sanctioned credit facilities by the Bank.

(ii) In cases where our Bank has issued LC, operating offices may discount bills drawn by beneficiary only if the bank has sanctioned fund-based credit facilities to the beneficiary.

Sl. No.: 143/2009 – 10 : Cir No. : CCO/CPPD-NPA/17/2009 – 10 dated 05.06.2009

NPA Management : Outsourcing of Recovery Efforts

In view of the latest instructions of the RBI, it is to be noted that all existing Recovery Agents appointed by the Bank will have to undergo 100 hours training and acquire certification from Indian Institute of Banking & Finance (IIBF) as stipulated by Reserve Bank of India latest by April 2010 (extended from 30th April 2009).

Sl. No.: 144/2009 – 10 : Cir No. : CCO/CPPD-INT/18/2009 – 10 dated 05.06.2009

Interest Rate Structure : Mapping of New CRA Ratings with Old Ratings

Applicability of interests to Revised Risk Ratings Only

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As per extant instructions, it was advised that the mapping of ratings of borrowers as per the new CRA Model vis-à-vis the old Model will be as under:-

New CRA Model

Old CRA Model

New CRA Model

Old CRA Model New CRA Model

Old CRA Model

SB1 SB1 SB6 SB3 SB11 SB6

SB2 SB7 SB12

SB3

SB2

SB8 SB4 SB13 SB7

SB4 SB9 SB14

SB5 SB10 SB5 SB15 SB8

SB16 -

It is observed that the operating units while allocating credit ratings based on the revised CRA Model, continue to apply interest rates relevant to old ratings, resulting in discrepancies. In view of the above, it is advised that henceforth all borrowal accounts with aggregate credit exposure (Fund Based + Non Fund-Based) of Rs. 25 lacs and above will be rated and priced as per the new Rating Scheme. The new CRA Model will also determine interest rates on term loans.

Interest rates of term loans that were sanctioned prior to the switchover to the new model need also be appropriately revised based on the new scheme and be incorporated in the Core Banking Solution so that interest rate as contracted will only be applied by the system.

The above instructions should be implemented with immediate effect.


Review of Exposure Ceiling- Infrastructure Projects

In terms of Para 2.14 of the Loan Policy, the Bank shall at any point of time restrict its funded exposure by way of term loans to the infrastructure projects

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to 10% of the Bank’s total domestic advances. On a review of the policy, to provide support for sustained growth in the infrastructure sector, it has been decided to enhance the term loan exposure limit from the present 10% of the Bank’s domestic advances to 15% of the Bank’s domestic advances.

Sl. No.: 151/2009 – 10 : Cir No. : CCO/CPPD-PRUDENTIAL/20/2009 – 10 dated 09.06.2009

Prudential Credit Exposure Limits by Banks

Please refer to extant instructions on the exposure limits pertaining to single / group Borrowers. As per the published accounts of the Bank as on 31.03.2009, the total capital funds stood at Rs. 85392.78 Cr. and Net Worth stood at Rs.56,372.86 Cr. Accordingly, the prudential exposure limits for different category of borrowers will be as under:

Category of Borrowers Prudential Exposure Limit as per RBI norms

(%) of capital funds

Total Exposure permitted as per the balance sheet as on 31.03.2009 (Rs. in Cr.)

Single Borrowers 15 12808.91

Group Borrowers 40 34157.11

Single borrowers including additional exposure of 5% for infrastructure financing

20 17078.55

Group borrowers including additional exposure of 10% for infrastructure financing

50 42696.39

Oil Companies (having issued Oil Bonds without SLR status)

25 21348.19

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NBFC 40* 22549.14

*40% of Net Worth

In exceptional circumstances, RBI has permitted banks to consider enhancement of the exposure to a borrower up to a further 5 per cent of capital funds with the approval of the Bank’s Board. Before approaching the Board for approval, please note that a consent letter from the borrower that he is agreeable to the Bank making appropriate disclosure in its Annual Reports, must be obtained.

Sl. No.: 152/2009 – 10 : Cir No. : NBG/SMEBU-RICE MILLS/12/2009 – 10 dated 09.06.2009

SMALL & MEDIUM ENTERPRISES

RICE MILLS PLUS SCHEME : MODIFICATIONS IN THE SCHEME

It has been decided by the appropriate authority to revise the interest rates and collateral security coverage norms in respect of the captioned scheme. The revised interest rates and collateral coverage norms will be applicable uniformly to all circles with immediate effect.

a. Collateral Coverage : Revised norms

a. For Loans upto 5 lacs : Nil

b. Loan over 5.00 lacs :

i. Units have credit rating SB-7 and above: Equitable mortgage of property / tangible security belonging to borrower /guarantor valued not less than 50% of the loan amount.

ii. Units having credit rating of SB-8 and SB-9 : Equitable mortgage of property / tangible security belonging to borrower /guarantor valued not less than 60% of the loan amount.

b. Interest Rates : Please refer the circular for detailed tables.

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All other exiting terms and conditions of the schemes would remain unchanged. Any specific approval regarding interest rate/collateral security under Rice Mill Plus Scheme granted earlier to circles stands withdrawn. No further improvement in pricing under the scheme will be allowed by the circles functionaries within the discretionary powers vested with them.

Sl. No.: 153/2009 – 10 : Cir No. : NBG/SMEBUCGTSI/13/2009 – 10 dated 09.06.2009

CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES (CGTMSE) : Coverage of loan accounts under credit guarantee scheme of CGTMSE

Please refer to the e-Circular No. 34/2009-10 dated the 16th April 2009. The existing instructions on CGTMSE are reiterated in the circular. CGTMSE is providing guarantee cover in respect of eligible loan accounts with credit limits upto Rs. 1 crore. As per RBI guidelines, Banks need to extend collateral free loans upto Rs.5 lakhs to the MSE sector (both manufacturing and service enterprises). It is, therefore, necessary, as a measure of risk mitigation, to cover under the guarantee scheme of CGTMSE, all eligible advance accounts in the category of loans upto Rs.5 lakhs, where 85% of the amount in default is available under such cover. Further, in case of loan accounts with credit limits above Rs.5 lakhs and upto Rs. 50 lakhs CGTMSE provides guarantee covers up to a minimum of 75% of the amount in default (80% in case of women entrepreneurs and for units located in North Eastern Region including Sikkim). In case of loan accounts with credit limits above Rs.50 lakhs and upto Rs.100 lakhs guarantee cover is available for Rs.37.50 lakhs plus 50% of the amount in default above Rs.50 lakhs subject to overall ceiling of Rs.62.50lakhs.

Further, to ensure hassle free flow of the much needed credit to the SME sector, our bank is also providing interest concessions to collateral free SME advances which are covered under CGTMSE. Interest rates for loans upto Rs. 5.00 lacs are fixed at 8.00% p.a and for loans within the limit of Rs.5.00 lacs to Rs. 25.00 lacs at 10% p.a for two years effective from 1st May 2009. Besides, guarantee cover under CGTMSE without insisting upon any collateral security offers a more effective

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mechanism of risk mitigation as against the protracted and expensive procedure of enforcement of collateral security in the event of any loan default. Hence, coverage of the eligible advance accounts with credit limit of Rs. 5.00 lacs to Rs. 25.00 lacs under the scheme, without insisting on collateral security, need to be increased significantly.

In this connection, during the course of interactions in various fora, it has transpired that the awareness regarding the special thrust including concessionary interest rates offered by the bank under the scheme is very low at the operating levels. As such, it is required to sensitise the RBOs/SMECCs/RASMECCs and SME intensive branches regarding the scheme.

CGTMSE GURANTEE FEE / ANNUAL SERVICE FEE

Credit Limits One Time GF Annual Service Fee

N.East including Sikkim

Others

Upto 5.00lacs 0.75% 1.00% 0.50% p.a @

>5.00 lacs to 100.00 lacs

0.75% 1.50% 0.75% p.a @

@ ASF in excess of 0.25% p.a will be absorbed by the bank for all eligible borrowers in North-East including Sikkim.

Sl. No.: 871/2009 – 10 : Circular No. : NBG/SMEBU-CGTSI/85/2009 – 10 dated 31.03.2010

CREDIT GUARANTEE SCHEME (CGS)—MODIFICATION IN PROCEDURE FOR PAYMENT OF ANNUAL SERVICE FEE (ASF)

CGTMSE has modified the procedure for payment of Annual Service Fee (ASF) from this year onwards. As per the new procedure, ASF for the whole bank branches will be paid to CGTMSE through a single payment from the Corporate Office, Mumbai based on demand raised by CGTMSE. Concerned Circles will be

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debited with their respective demand of ASF. Discrepancies, if any, in the ASF amount demanded by CGTMSE or paid by the Bank would be reconciled in due course. In order to make dispute free demand for ASF-2010, branches are advised to mark closure of guarantee accounts in CGTMSE site, as and when such accounts are closed.

Sl. No.: 215/2009 – 10 : Cir No. : NBG/SMEBU-CGTSI/17/2009 – 10 dated 08.07.2009

PORTFOLIO CREDIT GUARANTEE SCHEME FOR MICRO AND SMALL ENTERPRISES (PCGS)

The Bank has launched “Portfolio Credit Guarantee Scheme (PCGS)” to obtain guarantee cover, offered by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for the entire portfolio of collateral free and/or third party guarantee free credit facility upto Rs.100 lakhs per borrower (Term Loan plus Working Capital) extended by the bank to the Micro and Small Enterprises (MSEs). The details of the scheme are available in the circular.


Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE)

Closure of Guaranteed Accounts under Guarantee Scheme (CGS)

Please refer to extant instructions regarding closure of CGTMSE guaranteed accounts through online closure module mode applicable since 1st April, 2009. Now online closure requests of the Member Lending Institutions (MLIs) are being approved by CGTMSE on a daily basis and demand for ASF-2010 is being generated simultaneously on pro-rata basis from 1st April, 2009 till the date of closure of the accounts. The accounts are being marked as closed in the system after receipt of the Annual Service Fee (ASF) from the MLIs.

As ASF is levied by CGTMSE after the financial year is over, it is very difficult to collect the fees for the accounts which have been closed during the year. Further, with the implementation of PCGS, the ASFs are being paid in a centralised manner

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based on the Demand Note of the Trust. Hence, non-recovery of ASFs while closing a loan account covered under the scheme will result in a direct loss to the bank. In order to avoid such difficulties, branches/ operating offices have to lodge online closure requests immediately after closure of the guaranteed accounts and arrange to pay the dues immediately after generation of ASF by CGTMSE for the closed accounts which is being generated by CGTMSE throughout the year as and when they receive the request of closure. Branches/Operating offices should recover ASF on prorata basis in addition to the outstanding amount while going for closure of a CGTMSE guarantee covered account and credit the ASF amount in their Charges account. Once Demand Advice Notice (DAN) is generated by CGTMSE; it has to be paid immediately by debiting to Branch Charges account.

Incidentally, it is observed that ASF 2010 in respect of several accounts closed during the current financial year and DAN has been generated in the system, has not been paid to CGTMSE which may be paid immediately, in order to avoid difficulties after the financial year is over.


Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE)

Procedure for invocation of guarantee and preferment of Claim

As per the existing guidelines for preferment of claim under Credit Guarantee Scheme, the Member Lending institutions (MLIs) are required to inform CGTMSE, the date on which the account was classified as NPA. It is observed that in many of the cases our branches / operating offices are not informing the CGTMSE about the date of classification of the asset as NPA, for which CGTMSE is unable to make provision in its book for these likely claims thereby delay in settlement of such claims. It has also been observed that in many instances the date of NPA as per RBI guidelines and that indicated in the application for claim are different. To avoid delays in settlement of claims, branches / operating offices are required to adhere the norms prescribed by RBI for classification of the account as NPA. Henceforth, our branches / operating offices are to indicate the date of

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classification of the account as NPA in a particular calendar quarter, by end of subsequent quarter using the following option in the online system in order to improve the claim settlement process.

(Member Login area > Guarantee Maintenance >Periodic Information > NPA Details)

In terms of modified provisions of Credit Guarantee Scheme, the Branches/ Operating offices are to lodge the applications for claim within a maximum period of one year from the date of NPA, if NPA is after the lock-in period or within one year of lock-in period, if the NPA is within lock-in period. However, CGTMSE now provides one time facility to file the claims upto January 31, 2010, for those cases which have become NPA before the date of above circular and Branches / Operating offices have exceeded the permissible time period for lodging the claims, after which no such claim will be considered by the Trust. Please, therefore, arrange to submit all such claims to CGTMSE immediately.

Sl. No.: 53/2010 – 11 : Circular No. : NBG/SMEBU-CGTSI/9/2010 – 11 dated 03.05.2010

Credit Guarantee Fund Trust for Micro & Small enterprises (CGTMSE)

Definition of “Primary Security” ---- Clarification

In order to have better clarity and uniform understanding, the definition of “Primary Security” was reiterated, in conformity with CGTMSE guidelines as under:-

Definition of “Primary Security” in respect of a credit facility shall mean the assets created out of the credit facility so extended and / or existing unencumbered assets which are directly associated with the project or business for which the credit facility has been extended.

It is further clarified that for the purpose of CGTMSE cover, Primary security is defined as under:

i) Assets created out of the credit facility so extended.

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ii) Unencumbered assets which are directly associated with the project / business for which the credit facility is extended i.e. land & building of Factory / office / godown which pertains to the unit and associated with the project / business.

iii) Although no third party guarantee should be taken for loan accounts to be eligible for CGTMSE guarantee cover, in case the constitution of the borrower is proprietary or partnership, the personal guarantee of proprietor / partner is not treated as third party guarantee. Personal guarantee of directors, where borrower constitution is a company would be treated as third party guarantee.

Sl. No.: 155/2009 – 10 : Cir No. : NBG/PBU/AL-AUTOLOAN/13/2009 – 10 dated 10.06.2009

Personal Banking Advances : Review Procedure of Rejected Applications

In view of the business campaigns being launched to increase our presence in car loans and also to sensitize the staff regarding complaints received from applicants on rejection of car loan applications, the extant review procedure of rejected applications at RACPCs as conveyed by BPR Dept are reiterated in the circular.

i. Chief Manager/ Manager (Sanction) would explain the reasons for rejection to the applicant on phone and give audience to his statements, before a proposal is finally rejected. The fact of audience should be properly recorded on the appraisal. This requirement has also been validated in the Workflow software which is being rolled out in the Circles.

ii. RACPCs should also ensure that the proposals are returned only for genuine reasons and not for fear of violation of TAT. They should maintain the TAT by close and strict monitoring of the process and sub-process flow at RACPC and by enforcing the Service Level Agreements with the Vendors, Lawyers, Valuers etc. Further, the rejection cases should be advised to branches/ customers immediately, and a list of such rejections be submitted to DGMs (O & C) once in a week for post facto perusal and review. DGM’s observations on the reports should be noted by RACPC for future guidance. DGMs (O & C) should monitor on a regular basis and ensure that the loan applications at RACPC are not returned merely to maintain the sanctity of TAT.

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Incorrect interpretations of circular instructions lead to inconsistencies and the banks image and customer service suffers. The above instructions may therefore be kept in mind while declining the retail loans applications at RACPC.

Sl. No.: 173/2009 – 10 : Cir No. : NBG/PBU/PL-STUDENT/3/2009 – 10 dated 23.06.2009

PERSONAL BANKING ADVANCES :: MODEL EDUCATION LOAN SCHEME –CHANGES :: SBI STUDENT LOAN SCHEME

In view of IBA’s recommendations, necessary changes are made in SBI Student Loan Scheme to extend the moratorium from the current 12 months to 24 months in genuine cases after satisfying that the student did not get any employment after completing studies. A request letter from the student and co-borrower should be obtained before considering extending the moratorium period. On receipt of the request letter an ‘exchange letter’ to be issued to the borrower/guarantor as per the specimen enclosed to the circular and acknowledged copy filed with the documents. This change is applicable to SBI Student Loan Scheme only and not to SBI Scholar Loan Scheme which currently has 6 months as moratorium period as students passing out from the institutions approved under the scheme generally get placements in campus recruitment even before passing out.

Sl. No.: 186/2009 – 10 : Cir No. : NBG/PBU/HL-HOME LOANS/5/2009 – 10 dated 26.06.2009

PBBU-Home Loans-New Product : SBI Easy Home Loan

Special features of the captioned product being launched on 01st July 2009 are as under – Facility Type Term Loan or OD as in SBI MaxGain. (OD facility will be available for loans above Rs.5 Lacs.) Loan amount Upto (and including) Rs.30 Lacs Interest rate • Interest rate during the first year (i.e. till first anniversary date from the date of first disbursement) is Fixed at 8% p.a. • Interest rate during next two years is Fixed at 9%. p.a. • Interest rate after three years may be Fixed or Floating as per the borrower’s choice made at the time of sanction. If floating rate option is chosen, then the rate will be 2% below SBAR. If fixed rate

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option is chosen, then the rate will be 1% below SBAR prevailing on the third anniversary date from the date of first disbursement, and shall have a reset frequency of 5 years from the third anniversary date of the loan. Fixed interest rate shall be subject to force-majeure clause.

• Concessions including discretionary concession, if any, will be available only on interest rate applicable after three years.

Repayment programme If interest rate during the first year is X%, interest rate during next two years is Y%, and interest rate after three years is Z% , and loan period is T months then,

The parameters used for computation of EMI will be as under –

Period EMI Principal Interest rate, % p.a.

Term In months

First 12 months EMI1 Full loan amount X% T

Next 24 months EMI2 Balance outstanding at

the end of 12th month

Y% T-12

Remaining Loan period

EMI3 Balance outstanding at

the end of 36th month

Z% T-36

Note - EMI Calculator for SBI Easy Home Loan & SBI Advantage Home Loan will be made available for this purpose through SBI Times.

Eligible loan amount For the purpose of loan eligibility based on EMI/NMI ratio, EMI3 mentioned above, i.e. EMI for the loan period after 36 months should be used. For this purpose, EMI3 will be arrived at using SBAR as on the date of sanction. Processing Fee Fully waived upto 30th September 2009. Documents Arrangement letter and Home Loan Agreement for SBI Easy Loan scheme

CBS Product codes 6250-2060 SBI Easy Fixed Interest Rate (TL)

6250-2160 SBI Easy Floating Rate (TL) 6050-2015 SBI Easy (OD)

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Features other than those mentioned above will be the same as in case of SBI Home Loan Scheme.

Sl. No.: 187/2009 – 10 : Cir No. : NBG/PBU/HL-HOME LOANS/6/2009 – 10 dated 26.06.2009

PBBU-Home Loans-New Product : SBI Advantage Home Loan

Special features of the captioned product being launched on 1st July 2009 are as under –

Facility Type Term Loan Loan amount More than Rs.30 Lacs Interest rate • Interest rate during the first year (i.e. till first anniversary date from the date of first disbursement) is Fixed at 8% p.a. • Interest rate during next two years is Fixed at 9.5%. p.a

• Interest rate after three years may be Fixed or Floating as per the borrower’s choice made at the time of sanction. If floating rate option is chosen, then the rate will be 1.5% below SBAR. If fixed rate option is chosen, then the rate will be 0.50% below SBAR prevailing on the third anniversary date from the date of first disbursement, and shall have a reset frequency of 5 years from the third anniversary date of the loan. Fixed interest rate shall be subject to force-majeure clause. • Concessions including discretionary concession, if any, will be available only on interest rate applicable after three years.

Others features like Repayment programme, Eligible Loan amount, Processing charges are like the SBI Easy Home Loan Scheme.

CBS Product codes 6250-2058 SBI Advantage Home Loan (Fixed Int. Rate)

6250-2158 SBI Advantage Home Loan (Floating Int. Rate)

Sl. No.: 213/2009 – 10 : Cir No. : RABG/RBNFMCFI-MICROFI/1/2009 – 10 dated 07.07.2009

Scheme for financing Micro Finance Institutions (MFIs)/ Non Government Organisations (NGOs)

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The following relaxations were permitted in the captioned scheme:

i. Track record: Profitability parameter :: "Where the MFIs are in existence for more than two years, it should be profitmaking in the preceding 2 years and the projected profits of MFIs/NGOs should be sufficient to meet the repayment obligations of the bank loan."

ii. Calculation of TOL/TNW: (a) The loan loss provisions kept by the NGOs/MFIs may be treated as part of TNW, as it is a general reserve kept aside from the profits. (b) The unsecured loans from members of Governing Body may be treated as part of TNW. However, an undertaking from the members not to withdraw the unsecured loans during the currency of bank loans should be obtained. Further, the withdrawal, if permitted, should be subject to equal amount brought in by other members on similar undertaking.

Sl. No.: 223/2009 – 10 : Cir No. : NBG/PBU/PL-PENSION/5/2009 – 10 dated 11.07.2009

Personal Banking Advances:PERSONAL LOANS UNDER SBI LOAN TO AFFULENT PENSIONERS

In view of the increase in the pension of Central Government and a few State Governments, a new scheme “SBI Loan to Affluent Pensioners” has been formulated. The salient features are : Eligibility: A.Pensioners: (i) All Central, State Government pensioners and SBI Pensioners whose pension accounts are maintained by our branches. (ii) Pensioners whose pensions are disbursed by Govt. Treasuries by cheques drawn in favour of our branches as per mandate of the pensioner are also eligible subject to condition that pensioner should not be more than 72 years of age. B.Family Pensioners: Family pensioner, i.e.spouse authorised to receive pension after the death of the pensioner, subject to condition that family pensioner should not be more than 65 years of age.

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Loan Amount: (a) Pensioners: Maximum of 12 months net pension with a ceiling of Rs.3.00 lac (b) Family Pensioners: A maximum of 9 months net family pension with a ceiling of Rs.1.50 lacs. In no case the EMI should be more than 25% of the net pension drawn by the family pensioner. Collateral Security: (a) Pensioners: Third party guarantee (TPG) of the spouse eligible for family pension. In the absence of the spouse, TPG of any other family member or a third party worth the loan amount. (b) Family Pensioners: Third party guarantee of a person who has been maintaining a satisfactorily conducted account with the bank, preferably of the son/daughter of the family pensioner.

Repayment Period: In EMIs commencing from the pension payable one month after disbursal of loan. Instalment is deducted at the time of payment of pension:

Age at the time of loan Sanction

Repayment period Age at the time of full repayment

Upto 70 years 36 months 73 years

70-72 years 24 months 74 years

Pensioners will have to submit their PAN Number or Form 15H before availing loan under this scheme. Please note that this is a new scheme governed by new parameters on loan ceiling and age. The existing scheme with loan amount ceiling at Rs.1.00 lac will continue.

Sl. No.: 241/2009 – 10 : Cir No. : NBG/PBU/HL-HOMELOANS/9/2009 – 10 dated 17.07.2009

HOME LOAN – NRI Home Loans : REVIEW

Our Housing Loan scheme for NRIs/PIOs is similar to the Bank's normal Housing Loan Scheme except in respect of a few features. It has been decided to align the scheme with our Home Loan schemes for resident Indians to the feasible extent. Accordingly the features that have been revised are furnished in the circular. With these changes the only significant difference between NRI Housing Loan and Home Loan for resident Indians will be (i) non-acceptance of pari passu or second

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charge as security for NRI Housing Loans (ii) permissibility of repatriation of profits made out of sale of house as per RBI regulation in this regard.

Sl. No.: 256/2009 – 10 : Cir No. : CCO/CPPD-NPA/35/2009 – 10 dated 21.07.2009

Securitisation Companies (SCs) and Reconstruction Companies (RCs)

Approach to Price Recognition on Sale of NPAs/AUCA

A revised approach for price recognition on sale of NPAs/AUCAs has been formulated by the Stressed Assets Management Group and approved by the CPPC on 15/05/2009. The details are available in the circular.

Sl. No. : 267/2009 – 10 Circular No. : NBG/SMEBU-CGTSI/26/2009 – 10 July 27,2009.

SME -NEW Scheme - SBI Micro Loan for Micro Enterprises – This product has been designed to give thrust and focus to increase the number of Micro Enterprises units getting collateral-free credit. The Scheme is open and available up to 31.03.2010. Eligibility- Micro Enterprises as defined by the MSMED Act. Maximum Loan Rs. 5.00 lakhs, Purpose - Working Capital and Equipment Purchase, Facility Demand Loan repayable in 3 years, Assessment- as per SME Credit Card Scheme, Submission of annual Statements unaudited Balance Sheet. Rate of Interest 8 % p.a. FIXED with CGTMSE cover. No Collateral Security other than promoter’s guarantee. Processing Fee and Inspection Charges Waived. Please refer to the original circular for details.


Creation of Mortgage : Acceptance of Photocopy / laminated photocopy of title deeds

Operating units/ branches are advised that photocopies/ laminated photocopies of the title deeds are not to be accepted as security for creation of mortgage. However, Original Title Deeds in laminated form may be accepted for creating mortgage subject to compliance of extant instructions.

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Sl. No.: 288/2009 – 10 : Cir No. : NBG/SMEBU-LIP/29/2009 – 10 dated 03.08.2009

Revised Liability targets for sales teams

An action taken report was submitted for priority initiatives of Current Account for the budgets of CRÈME/RMME/MPST. As per the submitted report, the Bank has reviewed and revised the budgets for the sales teams, details of which are available in the circular.

Sl. No.: 299/2009 – 10 : Cir No. : MCG/PMD-GDS/4/2009 – 10 dated 10.08.2009

GOLD BANKING : Rupee Loans against Gold Deposits

AQS233QW2QThe extant guidelines on Rupee loan on gold deposits have been reviewed in the light of the modifications to Gold Deposit Scheme. Rupee loans against Gold Deposits can be extended at any branch of the Bank and the Gold Deposit Certificate has been classified as a ‘Specified Security’ for the purpose of Delegation of Financial Powers. The salient features of the scheme are :

Purpose: The loan may be availed for any general purpose.

Type of loan : The loan can be either in the form of a Demand Loan or an Overdraft.

Quantum of loan : Minimum – Rs.1,00,000/-, Maximum – Rs.5,00,00,000/-

For loans beyond this amount, administrative clearance to be obtained from the GM of the concerned Network of the Circle prior to noting of lien.

Margin : 25% of the Principal value of the Gold Deposit Certificates pledged.

Valuation rate to be obtained from Bullion Branch Mumbai, the Nodal Branch for GDS.

Security : Delivery of Gold Deposit Certificate, duly discharged (in blank).

Rate of interest : These loans will attract interest at SBAR to be applied at monthly intervals. If the interest remains unpaid for six months, the loan account

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will be foreclosed by premature closure of gold deposit account. Period of the loan : Not exceeding 24 months.

Repayment : • The loan may be repaid by the borrower through a bullet payment or in instalments.

• No specific repayment schedule need be prescribed, unless so desired by the borrower.

IRAC Norms : As applicable to loans sanctioned against Term Deposits will apply.

Sl. No.: 69/2010 – 11 : Circular No. : NBG/PBU/PL-PERLOANS/2/2010 – 11 dated 11.05.2010

PERSONAL BANKING ADVANCES:LOAN AGAINST GOLD ORNAMENTS:PROCESSING CHARGE

The existing processing charge in case of P-segment loan against Gold Ornaments is affecting the urban poor borrowers who wish to avail smaller amount of loan. In view of this, the processing charge has been modified as under w.e.f. 10th May, 2010.

(a) For loans up to Rs.25,000/- : Rs.500/- per application

(b) For loans above Rs.25,000/- : 1% of the loan amount inclusive of service tax or Rs.1000/- per application whichever is higher.

Sl. No.: 72/2010 – 11 : Circular No. : MCG/PMD-MGL/2/2010 – 11 dated 11.05.2010

GOLD BANKING : NEW PRODUCT : METAL GOLD LOANS (MGL)

At present, there are three different schemes for Metal Gold Loans:- (i) Metal Gold Loans to Jewellery Exporters (MGLE), (ii) Metal Gold Loans to Domestic Jewellery Industry (MGLD) and (iii) Gold Metal Loans (GML). Bank has re-visited the existing three different schemes under which gold is made available to the jewellery manufacturers, both for domestic and export purposes on loan basis. The introduction of Metagrid gold banking software has enabled the Bank to merge the three schemes into one product i.e. Metal Gold Loan without affecting the

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customers’ requirements and also to take care of certain operational aspects. The details of the new product viz. Metal Gold Loan and its comparison with the existing schemes are enclosed. The Designated Branches under the Circles / MCROs / CAG should handle the metal gold loans strictly as per the provisions contained in this circular. For more details, please refer the circular.

Sl. No.: 315/2009 – 10 : Cir No. : CCO/CPPD-CP/40/2009 – 10 dated 14.08.2009

Competitive Pricing

A new Credit Committee WBCC-II, headed by CGM (SME-BU) at the Corporate Centre has been created which need to be vested with discretionary powers for extending concessionary pricing. SBAR has also been revised downward from 12.25% p.a. to 11.75% p.a. w.e.f 29.06.2009. CCC-II/CCC-I/MCCCs are vested with powers to improve pricing up to 75 bps below SBAR subject to a floor rate 11.50%. As SBAR has been revised downward, the floor rate would also need appropriate revision.

In view of the above, it has been decided to modify the existing discretionary structure for competitive pricing, the details of which are available in the circular.

Sl. No.: 316/2009 – 10 : Cir No. : CCO/CPPD-CRARATING/41/2009 – 10 dated 14.08.2009

BASEL II IMPLEMENTATION :: MIGRATION TO INTERNAL RATING BASED APPROACH :: LINKING OF INTEREST RATES TO CRA RATING

As per extant instructions switchover to the revised CRA Model should be completed immediately. To smoothen the switchover it has been decided to draw timelines for completing related activities. In this context, Global IT Centre, Belapur advised that w.e.f. 05.08.2009, necessary changes have been incorporated in the system to link the interest rates to CRA Rating Grades from SB1 to SB16, in respect of CC/OD accounts.

Since the changes in interest rates will affect the interest income, it is imperative that the ratings as per the new CRA Model are keyed in by the Branches in a time bound manner, before the end of the current month. To ensure recovery of

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appropriate rates of interest in CBS, the operating units should adhere to the following timelines:

(i) Branches to complete keying in of new Rating by 25.08.2009. (ii) Confirmation by the Branches to their Controllers that new Ratings have been incorporated in case of all eligible borrowers by 30.08.2009. For this purpose a Nodal Officer may be identified by the Circles in CCFO Department to consolidate the information and submit the same to the Risk Management Department, Corporate Centre. (iii) Circles/ SBUs to confirm to Corporate Centre by 06.09.2009.

Sl. No.: 13/2010 – 11 : Circular No. : CCO/CPPD-BASEL/2/2010 – 11 dated 07.04.2010

BASEL II IMPLEMENTATION : CREDIT RISK MITIGATION AND COLLATERAL MANAGEMENT (CRM AND CM) POLICY

The revised policy on Credit Risk Mitigation and Collateral Management (CRM and CM) of the Bank is enclosed as Annexure to the circular. The significance of the CRM and CM Policy in Basel II Framework and the need for scrupulous adherence with its prescriptions are once again highlighted below for the ready reference of the Operating Units:

a. Under the Basel II Framework, Banks which take eligible Financial Collateral securities such as Cash, Government and highly rated Corporate Bonds, Gold, etc., are allowed to reduce their credit exposure to counterparty when calculating their capital requirements by taking into account the risk mitigating effect of the collateral security.

b. In addition to the general requirements for legal certainty, the legal mechanism by which collateral is pledged or transferred must ensure that the Bank has the right to liquidate or take legal possession of it, in a timely manner, in the event of the default, insolvency of the counterparty (and, where applicable, of the custodian holding the collateral).

c. Credit Risk Mitigation techniques reduce or transfer Credit Risk. However, these may simultaneously, increase other risks. Hence, it is imperative on the

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Branches to ensure meticulous adherence to the laid down instructions relating to Verification and Valuation of Collaterals, Margin Requirements, Insurance, Documentation process, Custody of Collaterals, External Ratings of Corporate Loan Accounts, etc.

d. Under Basel II Framework, capturing full information relating to eligible Financial Collaterals is essential for the purpose of capital calculation. Therefore, particulars of eligible Financial Collaterals are required to be entered in the System.


Credit Delivery – Revised Format 'S'

Please refer to extant instructions on modified 'S' format. Section 1 of the format contains Borrower's profile. A need has now been felt that the borrower's profile should also include information on Promoters of the Company and the Group to which it relates. The circular contains revised section.

Sl. No.: 372/2009 – 10 : Cir No. : NBG/BOD-CAS/32/2009 – 10 dated 03.09.2009

REVISION IN CREDIT AUDIT SYSTEM : WITH EFFECT FROM 1st AUGUST 2009

The existing system of Loan Review Mechanism at LHO/On Site Credit Audit at branches, effective from 2004, has recently undergone a change in the wake of revision of various guidelines of the Bank and RBI. The format and detailed guidelines for compilation of Credit Audit Report/Scoring have been uploaded on State Bank Times under Department/I & MA/CAD site. The important features of the revision are available in the circular.

Sl. No.: 683/2009 – 10 : Circular No. : CCO/CPPD-ADV/73/2009 – 10 dated 09.01.2010

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Appointment of Nominee Director on the Board of Companies Assisted by the Bank

Review of Policy & Authority Structure

A need has been felt to review the existing policy on the captioned subject. It has now been decided as under:- (i) The nominee directors may be appointed selectively in cases where a) The unit is running into problems and is likely to become sick, b) Where Bank’s exposure to the company(as defined under RBI’s exposure norms) exceeds Rs. 500 crores; or c) Available evidences indicate that functioning of the unit/management is detrimental to the interest of the Bank;

(ii) The authority structure for approving appointment of nominee directors will continue to be with ECCB. (iii) Serving officials to be generally appointed as nominee directors on an ex-officio basis. The officials are to be of the rank of SMGS V and above with sufficient credit background. Preference will be given to suitable officials who are MBAs, ICWAs, Company Secretaries (CS) or Graduate Engineers. Senior retired employees not below the rank of Deputy General Manager and having the requisite background may also be considered as full time nominee directors in exceptional cases and where it is not possible to identify/spare an existing serving official. (iv) The information that a nominee director is to be appointed/has already been appointed need to be incorporated in all proposal submitted for sanction, renewal or review. The observation of the nominee directors, if any, would also be required to be commented upon in such proposals.

The detailed procedure for appointing the directors is available in the circular.

Sl. No.: 583/2009 – 10 : Cir No. : CCO/CPPD-CONTREP/64/2009 – 10 dated 19.11.2009

Control Report Format for Credit Sanctions: Review

Please refer to the circular introducing modified Control Report Format for reporting credit sanctions by WBCC/CCCC. Consequent upon constitution of Wholesale Banking Credit Committee-II (WBCC-II) at the Corporate Centre, a need was felt to review the authority structure for reporting of sanction for

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control. Accordingly, it has been decided to put in the following authority structure for reporting of sanctions for control by CCC-II and above.

Sanctions by Report to Sanctions by Report to

CCC II CCC I MCCC WBCC-II

CCC-I and WBCC II

WBCC-I WBCC-I CCCC

CCCC ECCB

Further, it has also been decided to introduce separate control report formats as per the annexures enclosed to the circular for reporting to various committees as under.

Annexure 1 - The renewals/ reviews at the existing level without changes in any of the existing terms and conditions will be by way of simple format with brief details of adverse features, if any.

Annexure 2 - The renewals/reviews with changes in terms and conditions will be reported by way of a modified control report format specifically on the changes

Annexure 3 - All other sanctions would continue to be reported in the existing format

Sl. No.: 585/2009 – 10 : Cir No. : NBG/SMEBU-SMEDOC/51/2009 – 10 dated 19.11.2009

SME BUSINESS :: COMPLIANCE WITH FAIR PRACTICES CODE FOR LENDERS

MODIFICATION IN APPLICATION FORMAT

Bank is required to compile Risk Profiling Templates in terms of RBI instructions. One of the risk assessment areas is assessment of Compliance Risk in respect of Compliance with Guidelines on Fair Practice Code for Lenders while dealing with Customers in India in matter of lending. One vital compliance requirement under

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the captioned code is that “Banks and Financial institutions should devise a system of giving acknowledgement for receipt of all loan applications and time frame within which loan applications up to Rs.2 lakhs will be disposed off should also be indicated in acknowledgement of such applications”.

In order to comply with the above requirements, it has been decided to introduce a format for giving acknowledgement to all loan applicants on the following lines. The date of disposal should be mentioned mandatorily for loans upto Rs. 2 lakhs.

“Received the application dated ---------- from Sri/M/s---------------------- for Working Capital / Term loan Limit of Rs.-------------. The application will be disposed off within ---------days as per the Bank’s extant instruction.’” Signature of Authorized Officer with date and Stamp should be made available there.

This acknowledgement will be incorporated as a tear off portion in the existing application format when Bank will go for fresh printing. Till that period an additional sheet is to be enclosed to the existing loan application form.

Sl. No.: 592/2009 – 10 : Cir No. : CCO/CPPD-IND EXPNOR/66/2009 – 10 dated 21.11.2009

Industry Exposure Setting Norms : Advisories by Credit Risk Management Department (CRMD)

Credit Risk Management Department at Corporate Centre issues advisories in respect of about 40 Industries from time to time. CRMD advisories are based on a detailed review of the manufacturing activity and examines factors such as demand, capacities, production, technology, imports and exports, raw material availability and costs, pricing, Government and Regulatory policies etc. which are generally not applicable/relevant in determining outlook for the trading activity.

The manufacturing units have large fixed costs and their production costs are influenced by the factors mentioned above. The pricing of manufactured goods is determined by the conditions obtaining at large geographical level such as states,

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national and sometimes global. It has therefore been possible to prescribe a uniform approach towards lending to manufacturing units in an industry sector.

However, the profitability of trading units, on the other hand, depends on factors such as credit terms available from suppliers, competition at local level, reputation and ability of the trader, major economic activity in the area, cost of selling goods etc. The nature of risks faced by a manufacturing unit in a sector is, therefore, quite different from that for a trading firm in the same sector. The credit standards in the Bank, such as financial bench marks, minimum level of security for financing trading firms are also different.

It has therefore been clarified that the Advisories of CRMD in respect of approach towards lending and threshold Rating Grades for various industries are only applicable to the Manufacturing units and should not be extended for the Units trading in the goods manufactured by the units falling in those industry categories.

Sl. No.: 593/2009 – 10 : Cir No. : CCO/CPPD-CIBIL/67/2009 – 10 dated 21.11.2009

Updation of CIBIL records by banks and strengthening the internal machinery for customer grievances redressal

Please refer to extant guidelines, wherein instructions were issued to the operating units/branches to ensure that the names of the borrowers who have cleared their dues in full be advised to CIBIL directly so as to enable them to withdraw the names of such borrowers. A copy of the letter should be forwarded to the borrower for his information. It is understood that in a large number of cases where dues have been cleared/loans have been repaid etc, CIBIL database have not been updated. It was also understood that uploading CIBIL records with credit data gets unduly delayed. RBI has expressed serious concern on these issues and has instructed the Banks to take appropriate steps to ensure that

a. CIBIL records are updated periodically as and when loans are repaid/amounts written off/ charges reversed. b. the customer is advised in this regard.

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Sl. No.: 646/2009 – 10 : Circular No. : NBG/SMEBU-MSMEDACT/55/2009 – 10 dated 21.12.2009

Priority Sector Lending – Categorisation of activities under service under the MSMED ACT, 2006

As per the directions of RBI, it has been decided to include loans granted by banks in respect of following activities under Micro and Small (Service) Enterprises within the priority sector, provided such enterprises satisfy the definition of Micro and Small (Service) Enterprises in respect of investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006) (i.e. not exceeding Rs. 10 lakh and Rs. 2 Crore respectively).

(a) Consultancy Services including Management Services; (b) Composite Broker Services in Risk and Insurance Management; (c) Third Party Administration (TPA) Services for Medical Insurance Claims of Policy Holders; (d) Seed Grading Services; (e) Training –cum-Incubator Centre; (f) Educational Institutes; (g) Training Institutes; (h) Retail Trade; (i) Practice of Law, i.e. legal services; (j) Trading in medical instruments (brand new); (k) Placement and Management Consultancy Services; and (l) Advertising agency and Training centres

Accordingly, there will be no separate category for “Retail Trade” under priority sector. Loans granted by banks for Retail Trade [i.e. advances granted to retail traders dealing in essential commodities (fair price shop), consumer co-operative stores; and advances granted to private retail traders with credit (limits not exceeding Rs. 20 lakh) would henceforth be part of the Small (Service) Enterprises.

Circles may report such loans under the head “Total credit to Small Enterprises” in the half-yearly (Ad-hoc) [under 2 (a) and 2 (ii)] and yearly (final) [under 14, 15, 19, 20 and 21] return on priority sector advances. The category of loans mentioned above must be classified under Small Business Finance (SBF) in terms of circular no.NBG/SME BU-PRI sector/32/2007-08 dated 13.02.2008.

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Sl. No.: 357/2009 – 10 : Cir No. : CCO/CPPD-BANK GUARAN/44/2009 – 10 dated 28.08.2009

Issue of Guarantees by banks

As per Bank’s Loan Policy : “The bank will not execute guarantees covering inter-company deposits/loans. BGs will also not be issued for the purpose of indirectly enabling the placement of deposits with non-banking institutions”.

Although RBI has not permitted issue of guarantees by banks on behalf of corporate entities inrespect of NCDs/ Debt instruments as mentioned above it has clarified that guarantees may beissued by banks favouring FIs/other banks/ other lending agencies for loans extended by them.However, SBI in terms of para 4.26 of Bank’s Loan Policy has taken a decision not to issuesuch guarantees for domestic operations. Further, the Bank will also not undertake the businessof co-acceptance of bills of its constituents.


Access to own Credit Report

Credit Information Companies (Regulation) Act, 2005 has been operationalised with effect from 14th December 2006. Section 21 of the Credit Information Companies (Regulation) Act 2005, provides that “any person, who applies for grant or sanction of credit facility, from any credit institution, may request such institution to furnish him a copy of the credit information obtained by such institution from the Credit Information Company”. Further sub section (2) of the said section also specifies that every credit institution shall on receipt of request, as indicated in subsection (1), shall furnish to such person a copy of the credit information.

The Bank has been sharing credit related information with CIBIL, a credit information company. The credit related data are uploaded to CIBIL on a regular basis by the Business Intelligence Department extracting the same from the Core Banking Solution (CBS) implemented by the Bank. In terms of the RBI instructions operating offices/branches/processing centers are required to ensure strict compliance of the provision of Section 21 of the Credit Information (Regulations)

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Act, 2005 as aforesaid and furnish to the applicant a copy of the credit information obtained by it from the Credit Institution Company (in our case the CIBIL). RBI, in the Credit Information Companies Regulations, 2006, framed under the Act, has prescribed in Regulations 12 (3) maximum fees of Rs.50/- for the purpose.

Sl. No.: 435/2009 – 10 : Cir No. : CCO/CPPD-SMA/51/2009 – 10 dated 24.09.2009

Integrated approach to review and management of Special Mention Accounts

In view of the comments of RBI Auditors, the extant instructions in regard to identification and management of Special Mention Accounts are reiterated for strict compliance by operating officials, as under:

1. Identification of Special Mention Accounts(SMAs)-Modification of definition: As per extant instructions, the following two categories of accounts have been designated as SMAs: i) Accounts where interest/ instalment has not been serviced for 30 days.

ii) Accounts which are not in default but are showing early warning signals such as frequent return of cheques / bills discounted, devolvement of LCs, declining financials etc.

2. Review process-Time norms: To have added focus on monitoring of Standard Assets, time schedule for review of standard assets has been decided as under :

i) Preparation of check list for all standard accounts(above Rs. 1 cr)

First week of every month

ii) Review by the Branch/Operational Unit Committee

5th of every month, if 5th happens to be a holiday, the succeeding working day

iii) Submission of SAR reports to the reviewing authority for SMAs

Within two days of the Branch/Operational Unit review

Sl. No.: 831/2009 – 10 : Circular No. : CCO/CPPD-IND EXP NOR/82/2009 – 10 dated 11.03.2010

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Industry Exposure Setting Norms :: Advisories by Credit Risk Management Department (CRMD) :: Authority structure to permit deviations

It has been approved by appropriate authority to modify the authority structure to include CGM (SAMG) for permitting deviations from RMD advisories in respect of units domiciled at SAMG branches. The revised authority structure for permitting RMD deviations will be as under.

Sanctions by Authority

For sanctions up to CCC-I / MCCC

Chief General Manager (Circles/MCG/SAMG)

For sanctions by WBCC-II & above

Group Executive

Sl. No.: 798/2009 – 10 : Circular No. : CCO/CPPD-SAM/79/2009 – 10 dated 25.02.2010

STRESSED ASSETS MANAGEMENT : ADVANCES UNDER COLLECTION ACCOUNT (AUCA) :: MODIFICATION IN POLICY

As per extant policy, accounts written off are parked in AUCA for continued follow up subject to : a) Outstanding in the account being more than Rs. 50000/-, b) Legal action has been initiated and/ or some tangible security is available and the realizable value thereof is more than 20% of the outstandings.

It has now been decided that all accounts written off, irrespective of the outstandings or security available or initiation / non-initiation of legal action, may be parked in AUCA henceforth.

Sl. No.: 820/2009 – 10 : Circular No. : NBG/SMEBU-OPER/81/2009 – 10 dated 05.03.2010

SMEBU : SBI Scheme for One Time settlement of NPAs in SME (SBI OTS-SME, 2010)

The Bank introduced the captioned scheme, the salient features are as under :

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This will be a non-discretionary and non-discriminatory scheme.

Last date (i) Receipt of Application : 31st May,2010, Processing Applications : 30th June,2010, Final payments : 31st March,2011.

Coverage : All NPAs in the SME sector, classified as “doubtful” or “loss” on or before 31st March 2009, with outstanding balance of Rs. 1 cr and below on the date on which the account was classified as “doubtful” or “loss”.

Settlement Formula - Amount & Cut-off date:

NPAs classified as “Doubtful’ or “Loss” on or before 31st March 2009: The minimum amount that should be recovered would be 100% of the outstanding balance in the eligible accounts as on the date on which the account was categorised as “Doubtful” or “Loss” as per IRAC norms.

However, as the chances of recovery in aged assets diminish with the increase in age, to incentivise the aged assets the following graded discounts will be given on the outstandings. No discount has been offered for the assets in the Doubtful or loss category up to 3 years since in these assets we are unlikely to have exhausted all possible recourse for recovery of dues, especially through sale of mortgaged properties, where such securities exists.

Doubtful or loss NPAs >10 years----------------------60%

Doubtful or loss NPAs >5 years to 10 years--------25%

Doubtful or loss NPAs >3 years to 5 years--------- 15%

Doubtful or loss NPAs up to 3 years------------------NIL

Further, to incentivise faster recovery, incentive of additional 15% and 10% discount would be given to those borrowers who make full payment within one month and three months respectively from the date of approval of the OTS.

Sanctioning Authority : The concerned Branch Managers / Heads of Processing Cells like SARC, SMECCC, etc. can themselves sanction the OTS in respect of branches linked to them, without going through the Screening Committee process.

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Payment : The settled amount must be paid within 31.03.2011 (the validity period), failing which the OTS sanction will be rendered infructuous. Processing of the applications will be done only after deposit of 5% of the eligible amount to indicate the borrower’s willingness. No interest will be charged if the entire settled amount is paid within the stipulated period.

Sl. No.: 760/2009 – 10 : Circular No. : NBG/SMEBU-SBI SMILE/72/2009 – 10 dated 13.02.2010

SBI Small and Micro Interest-free Loan as Equity (SBI SMILE)

The Bank had launched a scheme way back in 1978 called the ‘Equity Fund Scheme’. Under this scheme, eligible first time entrepreneurs were provided equity assistance up to a maximum of Rs.1.00 lac to meet shortfall in their own contribution for financing their projects. Now, it has been decided to launch a scheme called ‘SBI Small and Micro Interest-free Loan as Equity’ (SBI SMILE) for providing equity assistance up to a limit of Rs.10.00 lacs to applicants with technical and professional qualifications, satisfying the conditions as detailed in the scheme furnished in Annexure 1 to the circular. Concomitantly, the existing equity fund scheme will be discontinued with immediate effect. For more details, please refer the circular.

Sl. No.: 780/2009 – 10 : Circular No. : NBG/PBU/PLEDUCATION/17/2009 – 10 dated 20.02.2010

Personal Banking Advances : IBA MODEL EDUCATION LOAN SCHEME :: MODEL EDUCATION LOAN SCHEME-CHANGES :: EDUCATION LOANS TO OR MORE WARDS OF ONE PERSON

Indian Bank’s association has recently advised us the following changes regarding Education Loans to two or more wards of one person, which may be followed : “There is no ceiling in maximum aggregate amount of loan when two or more wards of a parent/guardian individually avail loan. Educational Loan is given for an individual and not for the family as a unit. Each ward of a parent/guardian may be sanctioned loans upto Rs. 4 lakhs individually without insisting for any security.”

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Sl. No.: 784/2009 – 10 : Circular No. : NBG/PBU/PL-PERLOANS/18/2009 – 10 dated 22.02.2010

PERSONAL BANKING ADVANCES: LOAN FOR SUBSCRIPTION TO IPOs

Please refer to the extant instructions on the captioned scheme. With the revival of market conditions, a number of reputed companies are scheduled to access stock market in order to raise equity and there is vast scope for acceptable business in respect of retail funding of IPO issues. To capitalize on the wave of IPOs, the Appropriate Authority has approved the undernoted deviations in respect of sanction of loan for subscription to IPOs up to 31.03.2011.

Parameter Terms and conditions of

the scheme

Deviations allowed

Purpose (Identification of IPOs)

PSUs and Public Limited Companies selected by GM(PB) and GM Treasury

PSUs and Public Limited Companies selected by the Circle CMC. The IPO should be rated 3 or better.

Amount of Loan

Rs.50,000/- Up to Rs.50,000/- per IPO subject to maximum exposure of Rs.10 lacs per person as per extant RBI instructions.

Others Credit Scoring Model as in Personal Loan

Credit Scoring Model not required as in the case of Loans against Shares / Debentures to individuals.

Please ensure that all other terms and conditions of the Loan for subscription to IPOs schemes are meticulously followed.



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Recognising the need to encourage banks, take up infrastructure financing in a big way and considering the fact that the beneficial rights to the lenders through annuities and toll collection in respect of funding to road/highway projects on BOT basis are tangible in nature, RBI has made the following two modifications:

a. Banks may henceforth treat the advances to the infrastructure sector for construction of road/highway projects under the Build Operate Transfer (BOT) model collaterally secured by annuities and toll collection rights and where there are provisions to compensate the project sponsor if a certain level of traffic is not achieved, as tangible securities subject to the condition that Bank’s right to receive annuities and toll collection rights is legally enforceable and irrevocable.

b. Review the provision norms for unsecured advances to the infrastructure sector as under : Unsecured exposures in respect of infrastructure lending identified as sub-standard will attract a provision of 15% instead of 20%.

To avail the benefit of lower provisioning in respect of lending to the infrastructure sector, the operating units/branches should put in place an appropriate mechanism to escrow the cash flows and also ensure they have a clear and legal claim on these cash flows.

Sl. No. : 28/2010 - 11 Circular No. : NBG/PBU/PL-SCHOLAR/1/2010 – 11, April 19,2010.

SBI SCHOLAR LOAN SCHEME: Branches are instructed to open new SBI Scholar Loan accounts under the following three product codes and ensure that no new loan accounts are opened under the old product code 6250-4302.

Product Maximum Loan Amount Product Code

SBI Scholar Loans- List ‘A’ Rs. 15 lacs 6250-4304

SBI Scholar Loans- List ‘B’ Rs. 10 lacs 6250-4305

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SBI Scholar Loans -List ‘C’ Rs. 7.50 lacs 6250-4306

Sl. No.: 872/2009 – 10 : Circular No. : NBG/PBU/PL-SCHOLAR/19/2009 – 10 dated 31.03.2010

PERSONAL BANKING ADVANCES : SBI SCHOLAR LOAN SCHEME

REVIEW, MODIFICATIONS AND INCLUSION OF NEW INSTITUTES

Based upon the review/ suggestions/ recommendations received from the circles, the competent authority has reviewed the scheme and approved the following modifications under SBI Scholar Loan scheme:

LOAN AMOUNT : Maximum amount varies from Rs.7.50 lacs to Rs.15 lacs based on the type of institute as listed in annexure I to the circular.

CO-BORROWER : The loan would be sanctioned jointly in the name of the student and his parent/ guardian. In case of married person, co-obligator can either be spouse or parent / parent-in-law. Parental coobligation can also be substituted by a suitable third party guarantee.

SANCTION & DISBURSEMENT : At Campus / Branch designated by Circle near the campus. However, after the completion of the studies and if the student desires, the loan account can be transferred to a branch closer to the place of co-borrower and preferably which has made KYC verification at the time of availing loan for tracking purposes.

COURSES COVERED : Regular full time Degree/Diploma Courses and not certificate/ part-time courses, through entrance test/ selection process. Full time Executive Management Courses like PGPX (for IIMs) are also covered.

Sl. No. : 41/2010 – 11 Circular No. : NBG/SMEBU-CBWRF/8/2010 – 11, April 23, 2010.

SME BU: Commodity Backed Warehouse Receipt Financing: Concessionary Rate of Interest - In order to be competitive in the market and book maximum

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business during April to June 2010, it has been decided by the competent authority to extend the concessionary rate of interest of 10% for all fresh sanctions and disbursals, under Commodity backed warehouse receipt finance effected upto 30th June, 2010.

Sl. No.: 103/2010 – 11 : Circular No. : NBG/SMEBU-CBWRF/17/2010 – 11 dated 19.05.2010

SME BUSINESS : COMMODITY BACKED WAREHOUSE RECEIPT FINANCE

MODIFICATION IN SCHEME

This scheme has been formulated for the traders/ owners of goods against the warehouse receipts of warehouses managed by MCX/NBHC and CWC/SWC by way of Demand Loan/ Cash Credit. It has been decided to modify the scheme by extending the Commodity Backed WHR finance to manufacturing units also for the storage of commodity for the purpose of processing subsequently. Warehouse Receipt Financing facility is to be extended to manufacturing units within the overall Assessed Bank Finance (ABF) as part of overall working capital limit as a working capital demand loan (WCDL) since, stand alone limits under this scheme may lead to double financing to these units. All other terms & conditions of the scheme would remain unchanged. For more details, please refer the circular.

Sl. No. : 44/2010 – 11 Circular No. : NBG/PBU/HL-HOME LOANS/1/2010 – 11, April 30, 2010.

SPECIAL HOME LOANS SCHEME: LIST OF HOME LOANS COVERED BY SBILIFE - The list of accounts opened by Circles under SBI Special Home Loan Scheme and found to be eligible for SBI Life cover, has been furnished in the Annexure. The premium payment for the accounts has been duly made to SBI Life.

Sl. No.: 26/2010 – 11 : Circular No. : NBG/SMEBU-PRISECTOR/7/2010 – 11 dated 16.04.2010

Priority Sector Lending – Advances to Micro and Small Enterprises engaged in exports

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As per guidelines of RBI on lending to Priority Sector, finance granted by banks to micro and small enterprises as defined under Micro, Small and Medium Enterprises Development (MSMED) Act,2006, is eligible for classification under Priority Sector. RBI has clarified that loans granted by commercial Banks to micro and small enterprises (MSE) (manufacturing and services) are eligible for classification under priority sector, provided such enterprises satisfy the definition of MSE sector as contained in MSMED Act, 2006, irrespective of whether the borrowing entity is engaged in export or otherwise. The export credit granted to MSE may be reported separately under heading “Export credit to micro and small enterprises sector.”


Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances to Projects under Implementation

As per extant instructions on Prudential Norms on IRAC and Provisioning pertaining to advances in respect of projects under Implementation, a grace period of upto two years for infrastructure projects and upto six months for other industrial projects is permitted beyond the documented date of commencement of operations for retaining the standard asset status of the borrowal account. Recently, RBI modified these instructions and increased the grace period in respect of infrastructure projects from the existing two years to three years and in respect of infrastructure projects involving court cases / arbitration proceedings to four years. Similarly in respect of non-infrastructure projects the grace period has been increased to twelve months from the existing six months.

Branches may avail the benefit of relaxed asset classification norms and quickly identify viable Project Loans both infrastructure related and non-infrastructure related for restructuring in terms of the revised RBI instructions.

Sl. No.: 15/2010 – 11 : Circular No. : CCO/CPPD-CDR/4/2010 – 11 dated 07.04.2010

CORPORATE DEBT RESTRUCTURING : Revision in guidelines relating to Recompense

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In order to make the ‘Policy of Recompense’ more rational, realistic and equitable, CDR Cell while revising the guidelines on ‘Recompense Policy’ have spelt out concessions that may be reckoned for computation of recompense. Extra Ordinary Income has been identified as one of the added Trigger Events for seeking recompense. Besides, a clause on modus operandi to recover recompense amount has also been added in the revised guidelines. However, recompense will not be applicable in cases of withdrawal of the package and in one time settlement / negotiated settlement cases.

Revised guidelines relating to policy of recompense are enclosed to the circular.

Sl. No.: 866/2009 – 10 : Circular No. : NBG/SMEBU-TEL/83/2009 – 10 dated 29.03.2010

MODIFICATION IN TRADERS EASY LOAN (TEL) SCHEME

TEL scheme provides financing of business requirements of borrowers (TLs, FB and NFB) in Trade and Service segments against mortgage of property. The following two modifications in the Scheme have been approved for implementation with immediate effect.

Existing guidelines Revised guidelines

(i) The Working capital credit facilities sanctioned under the TEL are to be renewed / reviewed every year – like in normal Cash Credit accounts.

Working Capital credit facilities sanctioned under TEL scheme would be valid for a period of two years. Renewal of the limits will be due every two years. The account will be subject to annual review. The review will be based mainly on conduct of account. As this is a short review – based on conduct of account – and not a fresh sanction/ renewal, the Branch Manager would be the reviewing authority.

A format devised for the review is enclosed to the circular.

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(ii) At the time of renewal, if the limits assessed are less than the existing limits, the borrower is given 90 days time to bring down the outstanding to the assessed level. Where the borrower is not able to bring down the outstanding within this period, the excess amount is carved out as a demand loan and is repayable in 12 months.

At the time of renewal / annual review of the account, if the limits are assessed to be less than the existing limits, and the borrower is not in a position to repay the excess amount in 90 days, the excess amount would be carved out as a demand loan and may be allowed to be repaid within a maximum of 24 monthly installments.

During this time, if on later renewal, the borrower is eligible for higher limits, the repayable amount and the repayment period would be reduced accordingly.

Sl. No.: 876/2010 – 11 : Circular No. : CCO/CPPD-SME/85/2010 – 11 dated 01.04.2010

Advances – Debt Restructuring Mechanism for Small and Medium Enterprises (SME)

The Scheme is applicable to all the borrowers having funded and non-funded outstanding up to Rs.10 crores under Multiple / consortium banking arrangement. It will be applicable prospectively and covers standard, substandard and doubtful categories of accounts. The revised Debt Restructuring Scheme for SMEs, as approved by the ECCB is placed as annexure to the circular.

Sl. No.: 86/2010 – 11 : Circular No. : NBG/PBU/HL-HOME LOANS/4/2010 – 11 dated 14.05.2010

SBI Realty : Modifications :: (i) Ceiling, (ii) Margin, (iii) Risk Mitigants

It has been decided to modify the product “SBI Realty” as under :-

i. Ceiling on the loan amount : Rs.10 Cr ii. Permissible EMI/NMI ratio : For borrowers with Net Annual Income above Rs.10 Lac : 50% (Note : There is no change in extant instructions applicable to the borrowers with Net Annual income upto Rs.10 Lac) iii. Margin :

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Loan amount Margin

<=Rs.75 Lac 20% (same as in Home Loan)

>Rs.75 Lac and upto Rs.1 Cr

25% (same as in Home Loan), (Say Y%)

>Rs.1 Cr Y% for Loan of Rs.1 Cr, plus 50% for loan in excess of Rs.1 Cr.

e.g. if loan amount is Rs.1.6 Cr then margin will be [Rs.25 Lac + (1.6 Cr-1 Cr)*50%]=Rs.55 Lac i.e. 34.40%. Discretionary power to reduce margin, if used, will be restricted to loan portion upto Rs.1 Cr only. Margin for loan portion in excess of Rs.1 Cr, will be 50%. Margin concession sanctioned under discretionary powers will not be applicable to 50% margin for loan portion in excess of Rs.1 Cr.

iv. Maximum time period for commencement of construction of house : 2 years from the date of availing loan. In case of loan for plot of land in development projects undertaken by Government agencies, and the date of handing over possession of developed plot to the purchaser in such projects exceeds two years, the maximum time period may be extended by the sanctioning authority in sync with the date of possession.

Following processes have been introduced for mitigation of the credit risks and the fraud risks :- (i) With a view to minimizing the risk of overvaluation of the property, it has been decided to introduce independent valuation of the property by two empanelled valuers for loans above Rs.50 Lacs under SBI Realty. Lower of the two valuations will be considered for loan assessment. (ii) With an objective of minimizing fraud risk, it has been decided to obtain two title search reports from different lawyers – one before loan sanction, and one before disbursement of loan under SBI Realty. (iii) For loans above Rs.50 Lacs under SBI Realty, a fresh CIBIL Credit Information Report on the borrower should be obtained before disbursement of loan, in addition to the one obtained as part of loan sanction process.

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Sl. No.: 104/2010 – 11 : Circular No. : CFO/BSMG-INTRATES/1/2010 – 11 dated 19.05.2010

BASE RATE : INTRODUCTION OF NEW LENDING RATE SYSTEM

Presently, all the Indian Banks are following BPLR (Benchmark Prime Lending Rate) system for credit pricing. In order to achieve the transparency and transmission of monetary policy to the lending rate, RBI has instructed the banks to move to another system called “Base Rate” system, effective from July 1, 2010. The salient features of the new system are detailed below.

(i) Base Rate will include all those elements of the lending rate, which are common across all categories of the borrowers. Accordingly the components of the Base Rate are Cost of Deposit, the negative carry on SLR and CRR, unallocated overhead cost and average return on Net Worth. The requirement of negative carry arises because of the return on CRR is nil and the return on SLR notionally deployed in 364 days Treasury Bills earns a lower yield compared to Cost of Deposit. This loss is to be compensated by charging the borrowers at a rate higher than cost of deposit. Similarly, the unallocated overhead cost with that component of overhead, which needs to be recovered from borrowers but cannot be directly related to a borrower or product. The average return on Net Worth deals with the portion of profits of the Bank, which needs to be recovered from advances portfolio as a whole.

(ii) The Base Rate will be the minimum rate for all loans and banks are not permitted to resort to any lending below the Base Rate. (iii) All categories of loan shall be priced only with reference to the Base Rate, except:- (a) DRI advances, (b) Loans to bank’s own employees, (c) Loans to bank’s depositors against their own deposits. These categories may not have reference to the Base Rate.

(iv) The actual lending rate on a loan will be the Base Rate plus other customer specific charges. The actual lending rate needs to be transparent and consistent. Any periodical change made in Base Rate shall be applicable to all existing loans which are linked to the Base Rate. The customer specific charges will constitute the spread over Base Rate. These will be the ‘Product specific operating cost’,

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‘Credit Risk Premium’ and ‘Tenor Premium’. It may be noted that there will be a ‘Credit Risk Premium’ for every account, which will be a part of the spread. The ‘Product Specific Operating Cost’ is the component of operating cost, which is directly linked to the product group/ borrower. (v) The Base Rate system would be applicable to all new loans and all the loans that come up for renewal. Existing borrowers may switch to the new system before expiry of the existing contracts. The new system would be applicable for all new term loans and all the term loans which come for review or for interest reset.Operating staff should become familiar with the new system which is in the offing as our credit pricing system will undergo a major change and the implementation time is very short.

Sl. No.: 76/2010 – 11 : Circular No. : NBG/SMEBU-CONSTEQUIP/15/2010 – 11 dated 12.05.2010

MODIFICATION IN THE TERMS OF SME CONSTRUCTION EQUIPMENT LOAN SCHEME (SCEL)

The Scheme is presently to finance purchase of equipments by borrowers engaged in construction activity only. It has now been decided that the borrowers engaged in mining activities can also be financed under the scheme, subject to compliance of all other terms and conditions of the Scheme. As a corollary, the borrowers engaged in mining activities can now be financed under our other company specific construction equipment loan schemes viz. Tie up with JCB, Telecon, Volvo, Escorts etc.

Sl. No.: 50/2010 – 11 : Circular No. : NBG/PBU/AL-AUTOLOAN/1/2010 – 11 dated 30.04.2010

PERSONAL BANKING: CAR LOAN :: INTEREST RATE REVIEW

EXTENTION OF INTEREST RATE FOR ALL NEW CAR LOANS TILL 30th JUNE 2010

At present the special interest rate offer of 8% (fixed) for the 1st year, 10% (fixed) for the 2nd & 3rd year and from 4th year onwards applicable card rate as on the date of sanction on floating rate basis, is available for all new car loans under

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SBI Ezee Car Loans & SBI Advantage Car Loans till 30th April 2010. It has been decided to continue the interest rates in their present form for all New SBI Ezee Car Loan & SBI Advantage Car loans sourced and logged into the system upto 30th June 2010.

Misc.:-

Sl. No.: 44/2009 – 10 : Cir No. : NBG/BOD-KYC/9/2009 – 10 dated 18.04.2009

KYC/AML MEASURES: MONITORING OF TRANSACTIONS

SUBMISSION OF COUNTERFEIT CURRENCY REPORTS (CCRs)

Please refer to e-Circular No.466/2008-09 dated the 4th November, 2008. In terms of para 6.2.3 of Procedural Guidelines circulated vide above referred Circular, Counterfeit Currency Reports (CCRs) are required to be filed with Financial Intelligence Unit-India (FIU-IND) in all cases of detection of Counterfeit Currency Notes both at the branches as well as at Currency Verification and Processing System (CVPS) of RBI while processing remittances sent to them. It is reiterated that CCRs are required to be filed in all instances of detection of Counterfeit Currency individually i.e. in each instance of customer deposit/remittance and such CCRs should not be clubbed with other/similar instances. The reporting of CCRs is to be done on prescribed format enclosed with the above referred circular. Reporting of Counterfeit Currency to FIUIND is in addition to usual reporting of Counterfeit Currency detection to RBI, filing complaint/FIR with Police Authorities and National Crime Records Bureau, New Delhi which should also be ensured.

Sl. No. : 735/2009 – 10 Circular No. : NBG/BOD-KYC/80/2009 – 10

KNOW YOUR CUSTOMR / ANTI MONEY LAUNDERING /COMBATING OF FINANCING OF TERRORISM (KYC/AML/CFT) - Further amendments have been made in PMLA 2002 vide Ministry of Finance, Govt. of India, Notification dated 12.11.2009 and RBI have accordingly incorporated certain changes in KYC/AML guidelines for implementation:-

Branches are, therefore, required to ensure that:

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(i) Verification of identity of non-account based customer (i.e. walk in customer) is done while carrying out transaction of an amount equal to or exceeding rupees fifty thousand whether conducted as a single transaction or several transactions that appear to be connected.

(ii) Verification of identity of the customer for all international money transfer operations.

(iii) Classification of all accounts of non-profit organizations as high risk category should be done in CBS (Customer Information File) and proper record of transactions involving receipts of Rs.10 lacs or its equivalent in foreign currency in these accounts is maintained.

Sl. No.: 45/2009 – 10 : Cir No. : IT/GLOBALIT-INB/1/2009 – 10 dated 20.04.2009

Internet Banking :: New product : sbi-e-billpay

Bill payment registration for all customers including non internet banking customers

Internet Banking customers have the facility to register for bill payment by giving details of their utility bills (like telephone, electricity bills etc) online through our website www.onlinesbi.com, after which Internet Banking system gets them registered with the respective billers for payment of their bills using the bank’s internet banking channel. After they are registered with the billers as above the Bank receives electronic copy of their periodical bills directly from the billers which are uploaded on our above website. Customers can make online payment of these bills or they can give us auto pay instructions to pay their bills by debiting their identified account. Intimation of receipt of the bill from the biller is sent to the customer through SMS apart from displaying the bill to the customer in bill payment page. We are now introducing a new product named sbi-e-billpay for auto bill pay facility to all our Savings Bank/ Current Account customers even without registration for Internet Banking. Under the scheme customer will submit a written request to the branch for one time offline registration for payment for each type of bill, after which Bank will send the details to the respective billers for registration. After successful registration the bank receive the bill in

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electronic form directly from the biller from next billing cycle, for auto pay process. SMS will be sent to the customer every time a bill is received as well as when it is paid. System will pay the bill 3 days before the due date of the bill. This new product will take effect from 1st April 2009.

There will be no charges for registration. Charges applicable for regular Internet Banking bill payment transaction will mutatis mutandis be applicable for transaction under ‘sbi-e-billpay’, which at present is NIL. Transfer Price Mechanism (TPM) applicable to normal retail Internet Banking transactions will be applicable to transactions under the proposed scheme also. Internet Banking department will do backend process and provide necessary support to Circles and branches.

Benefits to the Bank: i) After one time registration of the biller all future bills received from the biller will be paid by INB system without any manual intervention. ii) Variable cost of INB transaction is negligible, therefore, migration of branch transactions to INB system will substantially reduce the cost of operations. iii) Bank will earn commission from the biller. iv) Auto generation of SMS advice to the customer will improve customer service.

The operational guidelines for ‘sbi-e-billpay’ are detailed in the Annexure ‘A’ to the circular.

Sl. No.: 25/2010 – 11 : Circular No. : NBG/BOD-KYC/6/2010 – 11 dated 16.04.2010

OPERATIONAL RISK IN THE BANK : KNOW YOUR CUSTOMER / ANTI MONEY LAUNDERING / COMBATING FINANCING OF TERRORISM (KYC/AML/CFT) MEASURES : POLICY AND PROCEDURAL GUIDELINES : ACCOUNTS OF PROPRIETORY CONCERNS

Please refer to e-Circular No.860/2009-10 dated the 26th March, 2010.

Apart from following the extant guidelines on customer identification procedure as applicable to the proprietor, branches should call for and verify the following documents before opening of accounts in the name of proprietory concern:-

i) Proof of the name, address and activity of the concern like registration certificate (in the case of a registered concern), certificate/license issued by the

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Municipal authorities under Shop & Establishment Act, sales and income tax returns, CST/VAT certificate, certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities, License issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food Drug and Control Authorities etc. ii) Any two of the above documents would suffice. These documents should be in the name of the proprietory concern.

These guidelines will apply to all new customers, while in case of accounts of existing customers, the above formalities should be completed in a time bound manner and should be completed before December 31, 2010.

Sl. No.: 48/2009 – 10 : Cir No. : IBG/FD/FD-EXPORTS/4/2009 – 10 dated 20.04.2009

On-line downloading of GR Forms

At present, GR Forms [to be completed in duplicate for export otherwise than by Post including export of software in physical form i.e. magnetic tapes / discs and paper media] can be obtained by the exporters from the Regional Offices of the RBI at the cost of Re.1. As part of simplifying the procedures, it has been decided to make the GR Forms available on-line on the Reserve Bank's website www.rbi.org.in. Accordingly, the exporters have the option to use the GR Forms available on-line as well. While downloading the GR-Forms, the exporter may ensure to use 'Legal' size paper i.e. 8.5 * 14 inches. Further, both the printer (printing preference) and the paper size in the page setup option have to be set to legal size before printing. The GR number will be automatically allotted when the document goes to the print queue. The exporters will continue to have the facility of purchasing the GR Forms from the Regional Offices of the Reserve Bank, as hitherto. However, this facility would be phased out within a period of one year.

Sl. No.: 53/2009 – 10 : Cir No. : IT/GLOBALIT-ITSS/2/2009 – 10 dated 21.04.2009

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HARDWARE PURCHASE POLICY - RELEASE OF PAYMENT

The policy in respect of release of payments for purchase of computer hardware, software and peripherals has been reviewed and the following terms of payment have been approved:

a) For purchases not exceeding Rs.2,00,000/- per order :

- 100% against delivery and installation or within 15 days after delivery, whichever is earlier.

b) For purchases exceeding Rs.2,00,000/- per order :

- 90% against delivery and installation or within 15 days after delivery, whichever is earlier.

- 10% after expiry of the warranty period or against submission of a Bank Guarantee valid till expiry of warranty period.

The above recommendations should be implemented with immediate effect.

Sl. No.: 55/2009 – 10 : Cir No. : NBG/PBU/LIMA-SB/1/2009 – 10 dated 22.04.2009

Savings Bank Rules : Modification

In view of the recent changes in inter-bank ATM transaction charges, it has been decided to modify the Savings Bank Rule no. 35 as under, with effect from 01.07.2009, keeping other rules unchanged.

Ceiling On Number Of Withdrawals (Revised instructions) : Rule no. 35: The maximum number of debit entries permitted in each account is 30 per half year or as decided from time to time. The debits will include all types of debit transactions i.e. by withdrawals, cheques, letters, standing instructions or by any other manner but excluding alternate channels like transactions through State Bank ATMs and Internet Banking. As such cash withdrawal at ATMs of other banks will be counted as a debit entry in the account for the above purpose and are not to be treated as transactions made through alternate channels. Debits on account of service

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charges will also be excluded. For accounts opened after commencement of the half year, the number of permissible debit entries will be calculated on a pro rata basis. Charges prescribed for exceeding this limit are available at the Bank’s website www.statebankofindia.com. This information can also be obtained from branches.

Sl. No.: 79/2009 – 10 : Cir No. : CS&NB/CS&NB-TECH/1/2009 – 10 dated 02.05.2009

Mobile Banking Service : Service over Wireless Application Protocol (WAP)

As per extant instructions on mobile banking, the solution was available only for java enabled phones. The Bank has now deployed a Wireless Access Protocol (WAP) application to facilitate the customers having GPRS enabled GSM / CDMA phones to avail of the mobile banking service. The advantage of using this mode for Mobile Banking Service is that the customers having non java mobile handsets with GPRS connection can use the facilities. WAP service can also be availed by all the users on CDMA phones since data transfer facility is available in all such phones. This service is provided through a secure site with Verisign Certificate. It will operate in a fashion similar to internet banking within the limitations of mobile phones. The transactions performed through this service will have a second factor authentication in the form of a random number (called WAP_Login_Id) sent by SMS to the customer. The features of the WAP based service are available in the circular. The process for usage of WAP based service is detailed in Annexure A to the circular, for the information of the staff at branches / Administrative Offices.

Sl. No.: 68/2010 – 11 : Circular No. : CS&NB/CS&NB-TECH/1/2010 – 11 dated 10.05.2010

Mobile Banking Service : Service over USSD (Unstructured Supplementary Services Data)

The Mobile Banking Service presently available can be used over (i) java enabled mobile phone where mobile banking application needs to be downloaded and (ii) Wireless Application Protocol (WAP) where user having non java mobile phone with

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GPRS connectivity can use the Service. It has now been decided to launch the Mobile Banking Service over Unstructured Supplementary Services Data (USSD) to facilitate the customers having non java mobile phones to avail the Service. The advantage of using this mode of Mobile Banking Service is that the customers need not download the mobile banking application and can avail the facilities over a SMS session. However, since this mode is considered less secure than the application based / WAP mode, RBI has restricted the daily transaction limit per customer to Rs.1000/-. The features and process for usage of Service over USSD is detailed in Annexure to the circular.

Sl. No.: 86/2009 – 10 : Cir No. : NBG/S&P-DRAFT/2/2009 – 10 dated 06.05.2009

Issue of Duplicate Demand Draft upto Rs.50,000/- : Waiver of Indemnity for SBI Staff

With regard to issue of duplicate draft in respect of staff members, the revised instructions are as under.

i. A duplicate demand draft may be issued to a staff member, based only on a declaration (unstamped and as per the approved format –‘Annexure A’ to the circular) from him instead of a stamped letter of indemnity. ii. Since the purchaser [staff member] is not indemnifying the bank in the declaration it will not assume the nature/form of indemnity and thus would not attract stamp duty. Bank’s interest is protected at the same time, as action may be taken against the erring staff for making a false declaration. iii. The staff as a purchaser shall declare that: a. The original draft has been lost and is not traceable. b. The payment of the draft has not been made to either the beneficiary or the purchaser (staff) of the draft and the draft is outstanding in the bank’s books for payment. c. The original draft if traced, shall not be presented for payment. iv. A cut off limit has been fixed at Rs.50,000/- for issuance of the draft without obtaining letter of indemnity (stamped) where the purchaser of the duplicate draft is a staff member. Beyond this cut off the staff member will be required to furnish a stamped letter of indemnity as applicable to the general public /

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customers. Except for waiver of indemnity and obtention of declaration, in case the purchaser of demand draft is a staff member, all other instructions in respect of issuance of duplicate demand draft shall remain unchanged.

Sl. No.: 90/2009 – 10 : Cir No. : IBG/FD/FD-PUR/IR/10/2009 – 10 dated 07.05.2009

ESTABLISHMENT OF INWARD REMITTANCE CELL(IRC) AT GLOBAL MARKET UNIT, KOLKATA

As part of BPR initiative, Bank has opened Inward Remittance Cell at Global Market Unit at Kolkata with the objective to reduce the Turn Around Time (TAT) of Inward Remittance Messages received through SWIFT for credit of retail customers of our Bank at all our branches. As on date, 375 forex authorised branches having sizeable inward remittance for retail customers have been linked to IRC.

With IRC in place, currently the process envisages that all remittances upto USD 10,000 or equivalent meant for retail customer (i.e. individuals) to be converted at the prevailing Card Rates and credited to their respective account immediately. The entire process is complete within 1 – 2 hours of receipt of the messages at IRC and the customer’s account is credited.

In case of remittances more than USD 10,000.00 or equivalent, the messages are routed to the concerned branches for further action. Remittances for opening of accounts are also routed to branches as hitherto. IRC also has the capability to send the remittances received for credit of customers account with other Banks by means of NEFT/Drafts.

Since IRC will put through conversion transactions up to USD 10,000.00 equivalent and as per FEDAI guidelines customer consent is required for remittances above USD 5000.00 equivalent, there may be occasions wherein the customer might require the remittance proceeds in FC. In such cases IRC will facilitate re-conversion at level rate within 07 days from the date of transaction as and when requested by the Branch on behalf of the customer. Branches are advised to

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exercise utmost caution in this area so that request from customers is addressed timely.

Branches are also requested to advise IRC about any specific instruction received from the customers as to disposal of remittance messages irrespective of the amount so that due care is exercised at IRC while processing messages. With the setting up of the centralized processing of Inward Remittance Messages, customers will have a single contact point. IRC will facilitate customer queries to be attended to instantly and the work load at branches will be reduced as IRC with its trained man-power will be taking care of the processing of major chunk of remittance messages besides handling reconciliation issues in respect of IRC related transactions.

Branches have been instructed during the IRC workshops conducted across the circles to input / update the mobile number and e-mail address of the customer in CBS so that Bank will be in a position to advise the customers of the credit by the fastest method, viz. SMS / E-mail. Branches are once again advised to urgently update the customer profile in CBS.

The month/date wise paid message report of IRC will be made available in Web FD under IRC link. As of now, the branches can view a report of the paid messages through this link.

Sl. No.: 96/2009 – 10 : Cir No. : NBG/S&P-SP/4/2009 – 10 dated 07.05.2009

VISUALLY IMPAIRED PERSONS : PROVISION OF SELF OPERATED CHEQUE BOOK FACILITY

Gist of extant Instructions relating to 'Blind Depositors' were as under :

a) Deposit account can be opened in the name of blind persons, to be operated singly or jointly with others or in the names of sole proprietorship concerns/ firms/ partnerships. b) A blind person may open ordinary or cheque operated deposit account in his sole name or jointly with other person(s). c) Alike other literate depositors, if a blind person is literate and is in a position to sign uniformly, he may put his signature on the account opening form, pay-in-slips and

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the withdrawal order forms. d) Except for the extra care to be taken in handling cash payment to the blind depositor, all other rules relating to withdrawing amount through withdrawal slip are the same for both the 'literate depositors' and the 'literate blind depositors'. e) In case of a cheque operated account, the blind person may operate the account singly (i.e., through a power of attorney) or jointly with any other person as given below: i) All withdrawals by cheques will be permitted only under the signature of a duly constituted attorney of the blind account holder. ii) Where one of the depositors is blind, a joint account to be operated by 'either or survivor' or 'anyone of us or survivor(s)' may be opened and only the co-depositor, who is not blind, is allowed to operate on the account by means of cheques.

However, in view of recent court directions, SELF OPERATED CHEQUE FACILITY has now been provided to the visually impaired / blind depositors.

Sl. No.: 98/2009 – 10 : Cir No. : NBG/BOD-GB/14/2009 – 10 dated 08.05.2009

SCHEMES INVOLVING PRIZE/LOTTERY/OTHER INCENTIVES WITH AN ELEMENT OF CHANGE

RBI has advised banks that they should not offer any banking product, including online remittance schemes, with prizes/lottery/free trip (in India and / or abroad) etc., or any other incentive having an element of chance, except inexpensive gifts costing not more than Rs.250/-, as such products involve non-transparency in the pricing mechanism and therefore go against the spirit of the guidelines. Such products, if offered by banks, would be considered as violation of the extant guidelines and would be liable for penal action.


FRAMEWORK OF SERVICE CHARGES FOR ELECTRONIC PAYMENT PRODUCTS AND OUTSTATION CHEQUE COLLECTION : CLARIFICATION ON SERVICE TAX

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Please refer to e-Circular No.399/2008-09 (NBG.BOD.GB.29/2008-09) dated 11.10.2008, on levy of service charges for electronic payment products and outstation cheque collection. In this connection, RBI have clarified that the frame work of service charges is inclusive of all charges / levies other than service tax. Branches/CPCs, may, therefore, collect service tax additionally, on the amount of service charges, advised vide e-Circular under reference. The above instructions are applicable with immediate effect.


SERVICE CHARGES : RATIONALISATION : CONCESSION TO ARMED FORCES PERSONNEL

Please refer to e-Circular No.713/2008-09 dated 02.03.2009. In view of requests from the Defence sector, the waivers in the service charges for Defence Personnel / Para Military forces and retired employees of such forces has been revised and the same are annexed to this Circular.

Sl. No.: 115/2009 – 10 : Cir No. : NBG/SMEBU-SBI SHAKTI/7/2009 – 10 dated 18.05.2009

NEW PRODUCT : ‘SBI SHAKTI’ CURRENT ACCOUNT

At present we have the following types of Current Accounts (CA) for non-individual customers. (i) Power Pack CA (ii) Power Gain CA (iii) Sahaj CA (iv) Normal CA & (v) Power Jyoti CA. The first two are premium accounts wherein the customer gets various concessions/freebies for maintaining the stipulated Quarterly Average Balance (QAB). The third one, with a QAB of Rs. 1,000 caters to the needs of SME entrepreneurs who have small means and the fourth one is the normal current account with a minimum balance stipulation of Rs. 10,000/-, whereas, the Powerjyoti CA is for Institutions, charitable organizations etc., for their collection needs.

Taking into consideration the customer demands and benchmarking with similar products of other banks, a new CA product is designed with a QAB of Rs.20,000/-

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titled as ‘SBI SHAKTI’, which will help in attracting those customers who desire to have lower QAB, with certain concessions/benefits, which other banks are also offering.

SBI SHAKTI CA is being introduced at all the branches on a pilot basis for four months, after which a review will be made.

Salient features of the product :

QAB (Quarterly Average Balance) : Rs.20,000/- Penalty for non maintenance of QAB : Rs.750/- per quarter Cash deposit & cash withdrawal at Home Branch : Unlimited.

Cash deposit and withdrawal at non-home CBS branches Maximum Amount: Rs. 20,000 per transaction. Charges Rs.100 per transaction. CINB Available Free.

Deposit of cheques, clearing instruments etc. are also available with suitable service charges. Penalty for closing account within 12 months : Rs.750/-

Product code : 5081-2401 Product description : CA-SBISHAKTI-PUB OTH-ALL-INR

GLCC CODE : 2001110011

Sl. No.: 120/2009 – 10 : Cir No. : NBG/ABU/PDM-GCC/3/2009 – 10 dated 25.05.2009

AGRI BUSINESS :: REVIEW OF PRODUCT : GENERAL CREDIT CARD

In terms of RBI’s instructions, the eligibility criteria under the captioned scheme has been modified as under : Eligibility : i. All our existing customers with the branch having satisfactorily conducted deposit accounts including no-frills deposit accounts in our books; say, for the last 6 months, or so, and / or loan accounts classified as standard assets will be eligible for availing loan under the scheme. ii. GCC facility should, however, not be extended to the KCC borrowers. Security : It is a clean and unsecured advance.

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Sl. No.: 121/2009 – 10 : Cir No. : NBG/S&P-DECEASED/5/2009 – 10 dated 25.05.2009

Model Operational Procedure for Settlement of Claims of Deceased Depositors :: Treatment of Pipeline Flows (Funds) in the name of the Deceased Depositor

“Model Operational Procedure for Settlement of Claims of Deceased Depositors” brought out by the IBA, covers ‘Treatment of Pipeline Flows’ in the name of the deceased account holder in its “Part IV – Simplification of the process for settlement of the claim in deceased depositors' accounts”. Treatment of “Pipeline Flows (Funds) in the name of the deceased depositor” has now been introduced in our Bank. ‘Pipeline Flows (Funds)’ implies the credits to be received in future in the name of the deceased constituent, for credit to his account maintained with the Bank.

The instructions with regard to ‘Treatment of Pipeline Flows (Funds)’ are given below:

i. In order to avoid hardship to the survivor(s) / nominee of a deposit account, the bank may be authorized by the survivor(s) / nominee to return the pipeline flows (funds) to the remitter with the remark "Account holder deceased" and to intimate the survivor(s) / nominee accordingly. The survivor(s) / nominee / legal heir(s) could then approach the remitter to effect the payment through a negotiable instrument or through ECS transfer or any other suitable mode in the name of the appropriate beneficiary”.

ii. At the time of settling the claims of deceased depositors the Bank may obtain appropriate authorization from the survivor(s) / nominee in the form of unstamped “Letter of Authority with regard to the treatment of Pipeline Flows (Funds) in the name of the Deceased Account Holder”.

iii. The “Letter of Authority with regard to the treatment of Pipeline Flows (Funds) in the name of the Deceased Account Holder”, shall be signed by the survivor(s) / nominee or the claimant(s) of the deceased constituent.


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INOPERATIVE ACCOUNTS IN BANKS

While continuing with the extant instructions in respect of Inoperative Accounts, the following modifications were made in view of RBI instructions :

1. An annual review should be carried out of accounts with the balance of Rs.5000/= and more and in which there are no operations (‘no credit or debit’ other than crediting of periodic interest or debiting of service charges) for more than a year. The Banks may inform the account holders in writing on the prescribed format, to ascertain the reason for non-operation in the account. If, it is due to shifting of the locality, they may be asked to provide details of their new accounts to which the balance in the existing account could be transferred.

2. To reduce the risk in ‘Inoperative Accounts’, if the balance in the account is more than Rs.25,000/= the following steps should be taken:

a. If the letter is returned undelivered, they may immediately be put on enquiry to find out the whereabouts of customers or their legal heirs in case of deceased account.

b. In case, the whereabouts of the customers are not traceable, person(s) who has/have introduced the account holder should be contacted. Contacting the employer or any other person whose details are available with the Bank may also be considered.

c. The account holder may also be contacted telephonically if the telephone/cell number is available. In case of non-resident accounts, account holders may also be contacted through e-mail and confirmation be obtained.

Sl. No.: 125/2009 – 10 : Cir No. : CS&NB/CS&NB-REMITTANCE/2/2009 – 10 dated 28.05.2009

USAGE OF INTER-BANK WINDOW FOR CUSTOMER TRANSACTIONS

It is brought to the Bank’s notice by RBI that many RTGS participants are routing RTGS customer payments in the inter-bank session i.e., after the transaction timings, probably to accommodate late transactions of high net worth customers.

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It is advised that different time windows are prescribed for different types of RTGS transactions taking various things into consideration. RBI has to ensure that a credit has to return to the sender’s account if it cannot be afforded to the Beneficiary’s account within one hour and thirty minutes. Routing of customer transactions in the inter-bank session violates the return discipline since the gap of one hour and thirty minutes is not maintained. As such, branches are advised to strictly adhere to RTGS procedural guidelines and desist from pushing customer transactions in the inter-bank mode. It is to be noted that failure to comply with these regulations will attract penalty under Sec 30 of the Payments and Settlement Systems Act, 2007(51 of 2007).


INTERNET BANKING : Procedure for resetting of password of BV Pre-Printed Kits

Internet Banking service was introduced in the bank in July 2001. In January 2006, Internet Banking has migrated to new application software. Now, bank has decided to upgrade Internet Banking database from Oracle9i to Oracle10g w.e.f 30/06/2009 which will result in from 30/06/2009, the customers who have not logged in so far and make a login attempt may face the login problem. Therefore, they will be requested to obtain a fresh password. Communication to them will be made through following modes (i) SMS to the customers wherever mobile number is available in Internet Banking database (ii) By showing suitable message on the internet banking site, whenever the customer tries to login.

Branches are advised to (a) Place a notice at branch notice board for the affected customers advising them to obtain a fresh password from any branch of the bank where they have an account. (b) Whenever such customers approach for the new password, after verifying the credentials of the customer and receiving the request in writing, reset the password using a fresh PP Kit.

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Sl. No.: 128/2009 – 10 : Cir No. : IT/GLOBALIT-ITSS/5/2009 – 10 dated 30.05.2009

COMPUTER HARDWARE PURCHASE POLICY : NEW PANEL OF VENDORS

The revised Panel of computer hardware vendors for procurement of computer hardware, i.e. File Server, PCs, terminals, workstations, thin clients, LCD Monitors, printers, and other peripherals, LAN infrastructure, and providing related maintenance support and services, has been approved by the appropriate authority and will consist of the following : i. Accel Frontline Ltd, ii. Acer India Pvt Ltd, iii. Allied Digital Services Ltd, iv. IBM India Pvt Ltd, v. CMS Computers Ltd, vi. R.P. Infosystems Pvt Ltd, vii. HCL Infosystems, viii. HP India Sales Pvt Ltd, ix. PCS Technology Ltd, x. Sai Infosystems India Ltd, xi. Tata Consultancy Services Ltd (TCS), xii. Wipro Ltd and xiii. Zenith Computers Ltd. This new Panel will supplant the previous panel, and will take effect immediately. The Third Party Annual Maintenance (AMC) arrangements at the Circles may be decided locally after following provisions laid down in the Procurement Policy of the Bank as well as CVC guidelines. This Panel will be valid upto 31/05/2012 or until revised communication in this regard.

Sl. No.: 140/2009 – 10 : Cir No. : CS&NB/CS&NB-PPI/3/2009 – 10 dated 04.06.2009

Policy Guidelines for issuance and operation of PREPAID PAYMENT INSTRUMENTS IN INDIA

Prepaid payment instruments issued by banks and non-bank entities have been gaining popularity as a means of payment in India. In order to ensure an orderly development and operations of this product, RBI has issued and notified the "Guidelines for Prepaid Payment Instruments in India" on 27th April, 2009. A copy of the same is annexed to the circular for guidance.


FINANCIAL INCLUSION BY EXTENSION OF BANKING SERVICES

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USE OF BUSINESS FACILITATORS (BFs) AND BUSINESS CORRESPONDENTS (BCs)

Please refer to Circular No. RBNF/Cir (L) No. 03/2008-09 dated 22.09.2008 wherein distance criterion prescribed by RBI for the BC model was advised. Now, RBI has decided to increase the maximum distance criterion (distance between the place of business of a BC and the base branch) for operation of Business Correspondent (BC) for rural, semi-urban and urban areas from the existing 15 kms to 30 kms. The relaxed guidelines may accordingly be used to re-align the Circles business plans and increase the area of operation and outreach of the CSPs of the BCs engaged.

Sl. No.: 160/2009 – 10 : Cir No. : CFO/A&C-TDS/4/2009 – 10 dated 16.06.2009

TAX DEDUCTION AT SOURCE (TDS) : NEW TDS PAYMENT AND INFORMATION REPORTING SYSTEM

Central Board of Direct Taxes have explained the new TDS payment and information reporting system with effect from 1st April 2009, introduced vide their Notification No.858(E) dated 25th March 2009. The important changes in the existing requirements, in nutshell, are set out below:

CBDT has introduced the centralised processing of returns which envisages no interface with the taxpayer. The processing has to be done in an automated jurisdiction-less manner. Therefore, it has been decided by CBDT that, henceforth, claim for TDS shall be allowed only if the–

(i) Amount has been deposited by the deductor.

(ii) Information relating to the deductee has been furnished by the deductor; and

(iii) Claim matches the information furnished by the deductor.

For this purpose the under noted mechanism has been put in place:

� It is mandatory for all deductors to pay the amount of TDS electronically.

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� It is mandatory for all deductors (including Central Government and State Governments) to make the payment by electronically submitting an income-tax challan in Form No. 17.

� In the process of electronically submitting the income-tax challan in Form No. 17, the deductor will be required to furnish to the Taxpayer Information Network (TIN) system maintained by National Securities Depository Limited (NSDL) either through screen based upload or file upload, three basic information relating to the deduction i.e., PAN, name of the deductee and amount of TDS.

� Upon successful remittance of the TDS to Central Government account and the uploading of the basic information as mentioned above to the TIN system, every deduction record will be assigned a unique transaction number (UTN).

� NSDL will create a facility to e-mail the UTN file to the deductor if the email address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.

� The new rules are effective from 01.04.2009. For more details, refer the circular.


OPERATIONAL RISK IN THE BANK : KNOW YOUR CUSTOMER / ANTI MONEY LAUNDERING /COMBATING FINANCING OF TERRORISM (KYC/AML/CFT)

POLICY AND PROCEDURAL GUIDELINES : ADDITIONAL PROVISIONS

Please refer to e-Circular No.466/2008-09 dated the 4th November, 2008. With a view to bringing in clarity in regard to circumstances in which a customer of the Bank is permitted to act on behalf of another person / entity, it has been decided to incorporate the Customer Acceptance Policy of the Bank. Details are available in the circular.

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It is also reiterated that Cash Transaction Reports (CTRs) are to be perused to detect any suspicious transactions / pattern of suspicious transactions by the operating functionaries which should be immediately reported to the Principal Officer (KYC/AML) at BOD through proper channel.

Further, at the time of approval of the procedural guidelines to facilitate implementation of the KYC/AML/CFT Policy of the Bank, ECCB had approved nomination of Money Laundering Reporting Officers (MLROs) for Circles, Business Groups and Business Units. In order to delineate the roles of operating level functionaries for implementing the KYC/AML/CFT measures formulated by the Bank and making the reporting structure complete, Assistant General Manager (Administration) / Assistant General Manager (Region) / Assistant General Manager (BPR operating outfits) have been nominated as Deputy MLROs and Branch Heads/Heads of BPR outfits as Assistant MLROs. The responsibility for reporting STRs / CCRs in respect of transactions passing through their units as well as transactions routed through the accounts having their branch/office as home branch will lie with the Assistant MLROs. They shall report through their respective Dy. MLROs to the MLRO of the Circle/Business Group/Business Unit, who in turn, will escalate the matter to the Principal Officer (KYC/AML) at Corporate Centre, if required. The flow chart in respect of KYC/AML/CFT reporting is provided in the circular.


Mobile Banking Service :: Registration Process – Modification

The customers opting for mobile banking service can have the service activated either by presenting an application at the branch or by making a service request over the ATM. The services were getting activated on the next working day. The service request over the ATM has now been made online enabling the customers to make use of the facility almost instantaneously. Consequently some minor process changes have been incorporated. The revised process of registration for Mobile Banking Service is as under:

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Steps in registration Modification in the step

i) Send SMS <MBSREG> <MobileMake> <Mobilemodel> to 567676 to get the User ID and default MPIN

No change

ii) Download the mobile banking application either from the link received in another SMS or using Bluetooth.

No change

iii) Open the application using User ID and

change default MPIN

No change in the process but Change

MPIN will have to be the first step in the activation before registration at ATM or branch.

iv) Select a secret question from a drop down menu and enter the answer.

Step eliminated.

v) Register at ATM or branch Process will remain same but this will have to be done only after the default MPIN is changed. If a user registers over ATM or branch before changing the default MPIN, suitable message will be sent advising the fact.

vi) Account will be activated next day after the ATM or branch registration

The registration over ATM has been made online and therefore, the user will be activated immediately. However, in the case of branch registration, the user will be activated only the next day.

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Mobile Banking Service : DEMAT Service

Please refer to extant instructions on the captioned service. Keeping in mind the needs of our customers, the Bank has incorporated enquiries regarding DEMAT accounts into the mobile banking application. The salient features of this offering are as under:

i) The facility is available for customers having e-Z trade accounts where a Demat account is linked to a Savings/Current account and also to a Trading account. ii) The DEMAT account can be linked only to the Savings/ Current account that has been enabled for Mobile Banking. iii) The customer has to register the Demat account first through the Mobile Banking application using the Menu: Demat Account Services > Option > Add Demat Account > enter Demat account > Select the account to be linked > Select ADD from Option > enter MPIN > send the request. iv) The User can make enquiries regarding Portfolio Value, Bill statement, Last Five Transactions and Transaction Status. DIS Booklet can also be requested for. v) The Contact Centre has been advised about the feature and its operation. Customers may be advised to call the Contact Centre number in case they require any assistance for using this functionality.

The new applications have been uploaded on the Bank’s website. The existing customers who are interested in availing the Demat Enquiry facility would need to download the new application.

Sl. No. : 687/2009 – 10 : Circular No. : NBG/S&P-SP/24/2009 – 10 dated 14.01.2010

Mobile Banking Service (MBS)

Mobile Banking Service (MBS) in our bank has been introduced in all non-rural branches from 31st March 2009. The facilities presently available over Mobile Banking Service (MBS) are Account Balance Enquiry, Mini Statement, Cheque Book

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request, Fund Transfer, Bill payment, Mobile top up, Recharge of Tata sky/ other Direct to Home Services, Demat Account Enquiry Services, Payment of SBI Life insurance premium and Merchant payments. New facilities like purchase of railway tickets, movie tickets, air tickets and shopping on Mobiles are in the offing. These facilities besides offering a bouquet of convenient products will have a beneficial effect of decongesting our branches.

Therefore it will be worthwhile and hence, all operating units wherever Mobile Banking Services (MBS) are available as per the existing instructions ab inito offer these services to the customers as part of the products like Savings Bank/Current account at the time of opening these accounts. Till the time a specific Mobile Banking Service (MBS) offer provision is incorporated in the Account opening forms (Part - II) the operating units shall stamp the Account opening forms for the purpose (as noted in the circular) before issuance to the customers and instruct all its Relationship Managers / other Points of customer contact to properly educate all the customers they come in contact with about the advantages of using our 24 X 7 Mobile Banking Services.

Sl. No.: 714/2009 – 10 : Circular No. : CS&NB/CS&NB-M/12/2009 – 10 dated 25.01.2010

Mobile Banking Services : Revision in Transaction Limits

The daily upper ceiling for transactions per customer is fixed at Rs 50,000/- (aggregate of funds transfer and transactions involving purchase of goods/services) within an overall calendar month limit of Rs. 2,50,000/-.

The users can register a new payee, assigning up to a maximum limit of Rs 50,000/-. The maximum limit assigned for the existing payees can be modified through the option -> SETTINGS-> MANAGE PAYEES-> SELECT PAYEE TYPE-> SELECT PAYEE->VIEW DETAILS-> EDIT.

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Sl. No.: 165/2009 – 10 : Cir No. : CS&NB/CS&NB-PPI/5/2009 – 10 dated 18.06.2009

RUPEE PREPAID CARDS : eZ-pay (PAYROLL) CARDS: DISCRETIONARY POWERS

In view of the the recent RBI instructions on free-usage of other Bank ATMs, it has been considered desirable to restrict the use of eZ-pay cards to SBI Group ATMs. As such, branches have to invariably obtain an undertaking from the corporate customers purchasing the eZ-pay card to the effect that usage for the card for cash withdrawal and balance enquiry will be restricted to SBI Group ATMs only. The corporate should in turn undertake to inform all cardholders in this regard. The revised discretionary powers structure in this regard for circle functionaries is provided in the circular.

Sl. No.: 168/2009 – 10 : Cir No. : S&P/SKB/129/2009 – 10 dated 20.06.2009

BPR PROJECT-INTER OFFICE INSTRUMENT : ISSUANCE OF IOI THROUGH FILE UPLOAD PROCESS

A new process for issuing instruments on a single design, security form, covering all the three products viz., SBI Drafts, Bankers Cheques and Associate Bank Drafts, with improved security and reconciliation processes, named as “Inter Office Instrument (IOI)” was introduced earlier. As per extant instructions, the process for issuance of multiple IOIs against a single voucher through batch process or file upload is not available.

Revised Instructions- The process for issuance of multiple IOIs against a single voucher through batch process or file-upload has since been developed in CBS. The salient features of the process are described in circular.

Sl. No.: 172/2009 – 10 : Cir No. : IT/GLOBALIT-ATM/6/2009 – 10 dated 23.06.2009

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(1) MANDATORY CHANGING OF PASSWORD FOR ATM JOINT CUSTODIANS

(2) ATM CASH BALANCING- VERIFICATION OF ATM CASH

It is now decided that the mandatory interval between change of passwords of the Joint Custodians of the ATM would not exceed 3 months. ATM transactions are reflected in ATM Core Transactions Account (98549BBBBBC) in CBS which appears in the branch balance sheet and is to be treated on par with the Branch Cash Balance. With a view to further streamline the ATM Cash verification process, it has been decided to conduct the ATM Cash Verification, the details of which are available in the circular.

Sl. No. : 265/2009 – 10 Circular No. : IT/GLOBALIT-ATM/9/2009 – 10 July 27,2009.

Reconciliation of transactions at ATMs failure – Time limit - Branches are instructed to ensure resolution of complaints and reimbursement of amount wrongfully debited, within a max. period of 12 days from the date of receipt of the customer complaint at the branch. The controllers will monitor the status of the complaints on a weekly basis. Branches must attend to all such complaints with utmost promptitude. Branch has to manually calculate the compensation payable to the customer @ Rs.100 per day from the 13th day of the date of receipt of complaint from the customer till the date of actual credit to the customer’s account and accord credit automatically along with the credit of the failed transaction.

Sl. No.: 98/2010 – 11 : Circular No. : IT/GLOBALIT-ATM/4/2010 – 11 dated 18.05.2010

CUSTOMER COMPLAINTS RELATING TO ATM TRANSACTIONS

Based on RBI’s advices, uniform template has been prepared by Indian Banks’ Association for customer complaints about ATM transactions and the same is given in the annexure to the circular. Branches are advised to ensure the following: i) Uniform template to be made available at ATM sites. ii) Display of

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ATM ID at each ATM site. iii) Display of Contact Centre numbers. Branches have to ensure that details of the complaint received in uniform template are updated in Complaint Management System (CMS) immediately. After registering the complaint in CMS, Ticket number of the complaint should be given to the customer to help him keep track of the resolution progress. No Branch shall reject any template submitted by SBI customer of any branch and have to necessarily receive and update in CMS. On uploading the details of the complaint in CMS, the complaint will automatically be escalated to the Current branch and ATM branch for resolution.


CENTRALISATION OF ATM COMPLAINTS REGISTRATION :: COMPLAINTS MANAGEMENT SYSTEM (CMS)

With a view to efficiently and effectively handle complaints, Complaints Management System (CMS) has been launched on 21st December 2009 which would enable registration of ATM & POS related financial complaints at the Contact Centre, branches, Administrative and Corporate Office.

Customers can contact the Call Centre through the 1-800-112211 (toll free number) and 080-26599990, for registering the ATM & POS related financial complaints under the following four categories:

1) Account debited but cash not dispensed.

2) Account debited twice for the same withdrawal.

3) Amount debited but amount not transferred to merchant establishment.

4) Account debited twice for the same transaction at POS.

The application will be available at Branches, Contact Centre, Administrative offices and ASC. All complaints received from various modes viz. email, telephone, written communications, etc has to be necessarily be entered on the same day in

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the CMS application (URL https://10.0.22.170:8070/CMS) at branches/ administrative offices/Corporate Centre to effectively resolve and monitor the complaint to ensure full and final closure within the stipulated period and avoid payment of compensation to the customer. Upon completion of lodgment of the complaint, an email will be generated by the CMS application.

ROUTING, RESOLUTION, ESCALATION & CLOSURE

Complaints relating to "SBI Card used on SBI ATMs" will be dealt at branches / CM (Admin) at Administrative Units duly monitored by Alternate Channels/ITS Department at LHOs and Complaints under the remaining categories would be dealt at the ATM Switch Centre (ASC).

After resolving the complaints, the CMS application would be updated by Branches/ASC, so that when customers make enquiries subsequent to lodging their complaints, they may be suitably advised by the contact centre agents.

Escalation will be routed to the CM (Admin) of the respective Regions and then to the AGM (Alternate Channels/ITS) at LHOs. At the end of the day, an e-mail will be sent to the AGM (Alternate Channel/ITS) containing lists of complaints pending with the circle, for follow up.

Closure of complaint in CMS is a 2-step process. The complaint will be resolved at the Branches but the closure cannot be effected unless the CM (Admin)/ Authorized official of the Administrative Unit authorizes the closure.

Customers can keep track of the progress of their complaints by calling the Contact Centre or sending a SMS “ATM ticket number” to 567676 (for e.g. ATM AT429212345).

SERVICE DESK REQUEST OPTIONS

Branches should not lodge in the Service Desk for the following types of complaints after the implementation of CMS application wef December 21, 2009.

a) SBI Card used on SBI ATMs

b) SBI Card used on Associate Bank ATMs

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c) SBI Card used on Shared Network (SNW) ATMs

d) SBI Card used on National Financial Switch (NFS) ATMs.

e) SBI Card used on Visa/Master card ATMs/POS

DIRECT POSTING TO CUSTOMER ACCOUNTS BY ASC

ATM Switch Centre (04292) will directly post entries to the customer accounts on account of BROS/SWOS/resolution of customer complaints, wef 21st December 2009. Branches should ensure that entries posted by 04292 branch (ATM Switch Centre) to the customer accounts are properly verified (information will be available in the narrative) by a designated official / employee. In case of any discrepancy, the same may be advised to [email protected].


COMPLAINTS MANAGEMENT SYSTEM (CMS) : DISPUTE RESOLUTION AT A GLANCE FOR BRANCHES /CONTROLLERS

The Bank has compiled a ready reference “Dispute Resolution at a Glance” for branches and controllers in respect of various types of complaints (Annexure-I to the circular). Branches / controllers are advised to ensure that the complaints are resolved within the stipulated 12 working days from the date of complaint and thus obviate payment of compensation @ Rs.100 per day of delay beyond 12 working days.


OPERATIONAL RISK IN THE BANK : KYC COMPLIANCE AND FRAUD PREVENTION DAY :: 1st AUGUST 2009

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Bank is fully dedicated to customer satisfaction by providing full range of financial services in customer friendly and conducive manner ensuring, interalia, that the funds and identity security needs of its customers are fully secured by following the regulatory guidelines (KYC etc.) as well as the systems and procedures laid down by the Bank. One of the important prerequisites of ensuring safe and secure customer satisfaction is properly knowing and understanding the regulatory requirements as also the laid down systems and procedures. Increasing sophistication of banking products coupled with use of technology and non face-to-face customer transactions has thrown formidable challenge before the operating functionaries in keeping their knowledge and skill levels current/up-to-date. In our Bank, additional challenges have emerged in this regard because of issues of size of network, diversity in geographical locations, large number of products (with a view to 360° satisfaction of customer needs) and huge customer base. The challenges are further compounded by designs of unscrupulous elements out to exploit banking system for channelising illegal funds and financing of terror. Similarly, a large number of frauds are getting perpetrated in the Bank using new and innovative methods misusing the technology being used. This highlights the need for proper awareness about customers, products and transactions including proper observance of system and procedures. Perpetration of a fraud is not only a drain on Bank's resources but is also fraught with serious reputational risk and exposes vulnerability of operating systems. Registering much needed emphasis in the minds of all operating functionaries is, therefore, urgently needed.

It has, therefore, been decided to dedicate 1st August of each year as KYC Compliance and Fraud Prevention Day and observe 1st August 2009 as 1st KYC Compliance and Fraud Prevention Day in the Bank and every year thereafter. In the event 1st August happening to be a holiday, this day will be observed on the next working day. Branches / offices will be advised about activities and programmes to be undertaken / organized, for observing KYC compliance and Fraud Prevention Day, separately.


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ISSUE OF DOMESTIC TDR/STDR IN THE FORM OF ADVICES : DISCONTINUANCE OF ISSUE OF TERM DEPOSIT / SPECIAL TERM DEPOSIT RECEIPTS ON SECURITY FORMS

It has now been decided by the competent authority to extend the system of issue of receipts for fixed deposits in the form of a system generated advice on preprinted Non security form look alike receipt format in place of usual receipt on security form to all branches of the bank. However, these instructions shall not be applicable for issue of receipts for fixed deposits received under State Bank Tax Saving Scheme 2006, which shall continue to be governed by the existing instructions on this issue. The revised instructions shall be applicable with effect from 01.09.2009, which are appended to the circular.


Bankers Book Evidence Act, 1891 :: Submission of Certificates to a Court of Law along with Print-outs of electronic data

RBI has advised that whenever the Banks submit any data stored in their computer systems as evidence under the Banker’s Book Evidence Act 1891 to a court of Law, the data must be accompanied by certificates prescribed under clause (a) and (b) of Section 2A of the Act. The relevant extracts from the Banker’s Book Evidence Act, 1891 are annexed to the circular. The operating units/branches may ensure submission of certificates as prescribed in the extract while making submission to a Court of Law pertaining to any data stored in the computer systems as evidence.

Sl. No. : 271/2009 – 10 Circular No. : NBG/PBU/CS-CNB/2/2009 – 10, July 29,2009

GRIVANCE REDRESSSAL MECHANISM IN BANKS – DISPLAY OF NAMES OF NODAL OFFICERS APPOINTED UNDER THE BANKING OMBUDSMAN SCHEME, 2006- With a view to strengthening the Grievance Redressal Mechanism, it is necessary that names of officials displayed at the branches also include the name of the concerned Nodal Officer appointed at their Regional / Zonal Offices in terms of paragraph 15 (3) of the Banking Ombudsman Scheme, 2006. Further, banks may also display on their web-sites, the names and other

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details of the officials at their Head Office / Regional Offices /Zonal Offices who can be contacted for redressal of complaints. This should also include the names of the Nodal Officers / Principal Nodal Officers appointed under the Banking Ombudsman Scheme, 2006.


Implementation of Systems & Procedures :: ‘Systems & Procedures Audit’.

It has been observed that most of the irregularities and frauds occur due to non-adherence to the laid down instructions and not for want of proper systems and procedures. Therefore conducting ‘Systems Audit’ periodically, was considered necessary to ensure that instructions issued from the Corporate Centre from time to time, are complied with. To further safeguard branches from frauds ‘Systems Audit’ was made part of the Circle Audit. Twenty (20) areas covered at present under the ‘Systems Audit’, do overlap some of the areas covered by the RFIA and are included as a separate annexure to be verified by the Circle Auditors as they need more focus.

Areas for ‘Systems & Procedures Audit’ are revisited with a view to delete, modify and add areas as required in keeping with changes in systems post CBS and BPR.

The ‘Systems Audit’ has been renamed as “Systems & Procedures Audit” to give a better idea of the activity undertaken.

The revised areas for ‘Systems & Procedures Audit’ are:

1. System of half-yearly verification of the draft forms.

2. Revised procedure for reporting loss of ‘blank draft forms’ is implemented

3. System of soiled note remittance.

4. SBI-MF / LIC-MF Dividend Warrants are paid only through “Dividend Warrant payment module”.

5. ‘Inter Branch Loaning of Draft Forms’ restricted only to Currency Chest / Repository Branches with strong room.

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6. Destruction of old records.

7. Modified procedure for sending acknowledgements for receipt of security forms.

8. Implementation of “Revised Cash Dept. Procedures”.

9. Following laid down procedures for “Non home transactions”.

10. “In branch cash handling” done as per the laid down process.

11. ‘VVRs’ are checked as per Bank’s laid down instructions.

12. ‘KYC’ norms are adhered to.

13. ‘Staff Accounts’ are scrutinized periodically.

Sl. No.: 287/2009 – 10 : Cir No. : NBG/SMEBU-NPS/28/2009 – 10 dated 03.08.2009

NEW PENSION SYSTEM (NPS)

New Pension System for every citizen was introduced on the 1st May, 2009 by Provident Fund Regulatory and Development Authority (PFRDA) to provide old age income security to citizens in the age group of 18-55. State Bank of India has been selected as a Point of Presence (POP) and our 25 branches are presently participating as Point of Presence-Service Provider (POP-SP) for registering the citizens under the scheme and remitting their subscriptions. Brief details of the scheme are placed as Annexure ‘A’ to this Circular so that whenever any person visits one of our branches, he/she is provided with all the basic information regarding the scheme. For detailed information PFRDA web site at http://pfrda.org.in could be logged in by the Branches. This site can be logged in through SBI TIMES also. The list of branches presently authorised to handle this business is placed as Annexure B to this circular.

Sl. No.: 293/2009 – 10 : Cir No. : MCG/PMD-GOLDCOIN/2/2009 – 10 dated 04.08.2009

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BULK SALE GOLD COINS :: DISCOUNTS ON BULK SALES—SBI GOLD COINS

Our Branches are often approached by customers interested to buy SBI gold coins in bulk. Requests are also received for participating in the tenders floated by PSUs, companies and organisations desirous of buying our regular or customized gold coins in bulk quantities. Such bulk purchasers expect a discount on the rates displayed by us for sale of retail coins. While participating in tenders for bulk supply we have to necessarily offer discount on our usual mark up to be able to quote a competitive price.

At present, discounts are considered on a case to case basis at MCG level in Corporate Centre. Keeping in view the business opportunities, the appropriate authority has approved the following Authority Structure to facilitate fast decisions regarding offering discounts at the local level.

For SBI Coins (Total quantity 500 gm or more):

Discount Authority

Discount upto 2% on card rate (i)Circle GMs, (ii) MCG GMs, (iii) CAG GM

Discount upto 4% on card rate CGM (MCG)

Discount above 4% on card rate DMD (MCG)

For customized gold coins as hitherto, Precious Metals Department at Corporate Centre should be approached for discounts.

This Authority Structure is applicable with immediate effect.


REQUEST FOR INDEPENDENT DOMAIN NAME REGISTRATION : NEW WEB FACING APPLICATION OTHER THAN INTERNET BANKING : POLICY DECISION IMPLEMENTATION

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Over a period of time we have found that various branches/administrative units/ application owners have hosted their own web sites for different purposes. While most of these sites are informational, some of them are transactional with various web facing applications running. In view of the strong brand name the domain names www.onlinesbi.com and www.sbi.co.in command today, and in view of the advantages of a single domain name presence in the cyberspace, it has now been decided to implement a “single domain name policy” to be adopted and applied across all web facing banking applications and informational web sites on offer from SBI. While as per the policy the transactional sites will be registered as sub domains of www.onlinesbi.com, the informational sites will be registered as sub domains of www.sbi.co.in. Internet Banking department, GITC has been identified as the nodal department for the purpose of this exercise. For more details, please refer the circular.


SC / DDP AUTOMATION (NON CCPC CENTERS) : LEVERAGING FUNCTIONALITY IN CBS FOR CHEQUE COLLECTION

Please refer to the extant instructions on cheque collection. As per the Cheque Collection Policy – 2009 approved by the Bank and circulated, the branches are required to dispose off at their end only, the cheques, received across the counter or through the Drop Box, drawn on local or outstation branches of the Bank. Outstation cheques drawn on our own branches are not required to be sent for local clearing or as SC/DD. The instructions apply to all Market Segments. Further, at the centers where Speed Clearing is operational, the cheques drawn on CBS enabled branches of other banks are not required to be sent for collection but can be presented to the drawee bank in local clearing for payment.

The Instruments drawn on outstation branches of Other Banks / Associate Banks at centers where we are established would continue to be sent in collection till all the branches of the banks operating in India are CBS enabled and Speed Clearing Concept is implemented in total.

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To leverage the CBS functionality and infuse efficiency and improvement in collection / DD Purchase system of the Bank, all branches / offices transacting collection of instruments drawn on outstation branches of Other Banks / Associate Banks at centers where we are established will follow the SC/DD automation instructions as per these circular as approved by the appropriate authority, while handing collections / DDP business. The revised instructions shall be applicable with immediate effect.

Sl. No.: 656/2009 – 10 : Circular No. : NBG/BOD-GB/71/2009 – 10 dated 29.12.2009

SERVICE CHARGES : FRAMEWORK OF CHARGES FOR OUTSTATION CHEQUE COLLECTION

RBI advised that there are instances where collecting branches are levying charges from the customers in excess of the maximum charges prescribed, which is presumably on account of including out of pocket expenses, charges recovered by destination banks, etc., in addition to the bank’s own charges. The violations of the instructions are being viewed very seriously by RBI, as it breaches the guidelines of recovery of Service Charges under the Payment & Settlement System Act, 2007.

In order to remove any ambiguity in levy of service charges for collection of outstation cheques, it is clarified that the framework of charges specified in the directions (to be levied by the collecting branches from their own customers for collection of outstation cheques) is all inclusive and has to be compiled with irrespective of the quantum of charges recovered by the destination banks / branches. However, in addition to the prescribed charges, Service Tax levied may be collected from the customers.

In order to ensure compliance of RBI directions, branches are advised to proceed as under:-

(i) To review of all Service charges levied for outstation cheque collection on or after 11.10.2008 and ensure that charges levied by the branches are as per frame work of charges specified in Circulars which is all inclusive and ensure that P&T,

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Courier charges or remittance charges have not been recovered except Service Tax, as applicable.

(ii) If there is any case of excess recovery, it should be refunded immediately with interest at Savings Bank rate for the period.

(iii) A report as per the prescribed format (enclosed to the circular) is required to be put up by the branches to the controllers by 31st January 2010.

(iv) The controllers of branches have to ensure the compliance of above instructions by constituting special task force so that exercise is completed by 31st January 2010. The controllers will have to submit the consolidated report of the Region / branch wise to Local Head Office, for onward submission to Corporate Centre.


Levy of Service Charges : Violation of directions under PAYMENT & SETTLEMENT ACT 2007

RBI advised the Bank that they have been receiving complaints from customers regarding charges being levied by the branches for collection of outstation cheques not being in conformity with the maximum charges prescribed by them in terms of the powers vested vide the Payment and Settlement Systems Act, 2007. As such, the extant instructions in regard to recovery of service charges on electronic products and collection of outstation instruments, were reiterated in the circular for meticulous compliance by the branches.

Sl. No.: 661/2009 – 10 : Circular No. : IT/GLOBALIT-ITSS/24/2009 – 10 dated 31.12.2009

eProcurement : Reduction in Threshold Limit to Rs.10 Lacs

As per extant instructions, all our Local Head Offices, branches, Administrative Offices and Associate Banks were advised to consider the eProcurement method,

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as the most preferred option for all procurements with aggregate value of Rs.15 lacs and above.

In view of the favourable experience that the Bank has had in undertaking purchases through the eTendering route, it has now been decided by the Top Management to bring down the threshold value for making purchases through the eTendering route from Rs.15 lacs to Rs.10 lacs per event with immediate effect. Please, therefore, note that all purchases valued Rs.10 lacs and above, should essentially be effected through the eProcurement route only and any deviation for a specific purchase would need to be approved by the Group Head. Additionally, in view of the low per event charges payable to the service provider, procuring offices may utilize eTendering for procurements of value less than Rs.10 lacs also, if they so desire. In order to make a gradual transition towards implementation of end-to-end eTendering, as recommended by the CVC, all procuring offices are advised to accept Technical Bids online by utilizing the relevant module available in the current application.

Sl. No.: 663/2009 – 10 : Circular No. : NBG/PBU/LIMA-E/13/2009 – 10 dated 01.01.2010 e-Invest : ASBA(Application Supported by Blocked Amount) : Implementation of Phase II Bank had introduced E-invest (ASBA) scheme in September 2008 as a supplementary process of applying in public issues of Companies intended to raise funds from the market through book building process. This process was applicable for public issues as well as for right issues. In 1st phase the facility was available only for retail individual investors applying at cut off price. In view of the good market response for the same amongst the retail investors, SEBI has decided to extend ASBA facility, to other category of investors as well (referred as “ASBA Phase II” hereinafter). Against the single bidding at cutoff price in phase–I, ASBA Phase II would provide facility of multiple bidding, revision/modification/deletion of bids to investors.

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Provision of Application form:- At present branches are facing difficulty in procuring application forms for ASBA. Therefore it has been decided by SEBI that banks can generate application forms internally. In this regard, SEBI is working on a template for ASBA form which will be common across all public issues. This template will be made available to all Banks as and when the same is ready (Please note that the template will be provided by PBBU in its website->Download forms>Misc. products>ASBA.) Investors can be given print out of such template for making an ASBA and submitting it to banks. The generation of application number for such applications is detailed in the circular. Applicability for right issues:- ASBA will also be applicable for right issues. BSE has provided uploading facility for right issues. Against the earlier instructions, where Branches have to send excel file to their respective LHO, branches can now directly accept the rights application from the investor and upload to BSE. ASBA facility in rights issues will be available to all shareholders of the issuer company as on record date provided if he/she: • Is holding shares in dematerialized form and has applied and /or additional shares in the issues in the dematerialized form. • Has not renounced his / her entitlement in full or in part, • Is not renouncee to the issue, • Applies through a bank account maintained with the bank. • Applying using rights application send by the company. This facility of ASBA phase II has also been provided to our entire internet banking users. Branches can promote internet banking among investor community advising them about the facility. Customer can apply in the name of third parties also provided he/she gives correct DPID and PAN of respective person. Not more than 5 bids can be made from a single account. Branches should note that in case of more than 5 bids all bids shall be cancelled. Accordingly Bank has decided to implement ASBA phase II from 1st January 2010 in all the erstwhile designated branches. Instructions to this effect are enclosed in the Annexure “A” to the circular. Non designated branches are advised to take precaution and not to unmark the lien with

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the reason “IPO”. The lien with reason “IPO” should be unmarked only by the nodal branch or the designated branch as the case may be.

Sl. No. : 699/2009 – 10 Circular No. : NBG/BOD-GB/79/2009 – 10 January 16, 2010

CONTROLLERS' VISIT TO BRANCHES:POST CIRCLE REDESIGN: The guidelines for controllers' visit has been restructured:-Chief General Manager Two Branches in each network every month or alternatively 5-6 branches in each network in every quarter and 2/3 BPR outfits in six months giving some flexibility in the schedule of visit. Also, atleast one rural branch visit every month - as per RBI's guidelines. General Manager (Network): He should visit all direct branches under his control, and 2/3 BPR outfits operating in the Network once every six months. He shall also visit other branches / offices in the network, by rotation, and branches considered critical from business/operational risk angle are visited atleast once every half year.

DGM/AGM (Region) / Regional Manager: He has to visit all branches and RCPCs under his control, at least once in six months. However, Regional Manager may visit any Branch(es) more frequently than the prescribed norms depending on the criticality of the operating unit or if the situation so warrants. Though his primary objective would be business development, being Controller of branches, he is expected to review all the control aspects, as per RBI's guidelines. For details and other circle functionaries, please refer to the original circular.

Sl. No. : 701/2009 – 10 Cir. No. : NBG/S&P-STATIONERY/25/2009 - 10, Jan. 19,2010

OTHER PERSONALISED CHEQUE FORMS: CHANGE IN SECURITY FEATURES-

The redesigned Personalized Cheque leaves will continue to be printed on light yellow color base stationery with undernoted security features: a) Bank's logo and letters SBI shall be printed in invisible ink characters with secondary fluorescence b) Micro lettering shall be in straight line c) Background design shall be printed in fugitive ink which gets smudged on contact with water. d) The word "Genuine" shall

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be printed in superimposed form on letters "SBI" which shall be visible through a decoder only. The Central Stationery Department Kolkata has made arrangements to make the redesigned base stationery for cheque leaves available to all LCPC's from January 2010. Cheques drawn on old design formats shall continue to be valid till stocks last.


TRILINGUAL FORMULA IN BANKS

All branches are requested to comply with the following aspects as directed by RBI :

(a) Displaying indicator boards at all the counters in English, Hindi as well as in the concerned regional language. Business posters at semi-urban and rural branches of banks should also be in the concerned regional languages. (b) Providing customers with booklets consisting of all details of service and facilities available at the bank in Hindi, English and the concerned regional languages. (c) Use of Hindi and regional languages in transacting business by banks with customers, including communications to customers.

RBI also advised that in order to ensure that banking facilities percolate to the vast sections of the population, banks should make available all printed material used by retail customers including account opening forms, pay-in-slips, passbooks etc. in trilingual form i.e. English, Hindi and the concerned regional language.

Sl. No.: 510/2009 – 10 : Cir No. : IT/GLOBALIT-ATM/17/2009 – 10 dated 22.10.2009

REVISION OF CUSTOMER CHARGES FOR USE OF OTHER BANK ATMS

FOR CASH WITHDRAWAL AND BALANCE ENQUIRY

As per the extant instructions NO charges are to be recovered from our cardholders for use of other Bank ATMs for cash withdrawal and balance enquiry. As per the directives of the Indian Banks’ Association, it has now been decided to revise the charges as under effective from 15th October 2009.

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TYPE OF ACCOUNT SERVICE REVISED CHARGES

Savings Bank Account

Balance Enquiry NIL

Current Account and KCC

Balance Enquiry NIL

Savings Bank Account

Cash Withdrawals:

a. Up to 5 withdrawal transactions at other Bank ATMs in a month

b.Above 5 withdrawals tran-sactions

a. Free

b. Rs.20/- per withdrawal transaction.

Current Account and KCC

Cash Withdrawals Rs.20/- per withdrawal transaction (i.e., no free withdrawal transactions permitted)

Further it has been decided to cap the maximum amount of withdrawal on other Bank ATMs by our cardholders at Rs.10000/- per transaction. Similarly, State Bank Group ATMs will also disburse maximum of Rs.10000/- per withdrawal by other Banks’ cardholders.

Sl. No.: 514/2009 – 10 : Cir No. : NBG/S&P-MISC/18/2009 – 10 dated 23.10.2009

BRANCH MANNAGER’S MONTHLY CERTIFICATE [BMMC]

As per extant instructions, “All branches are required to certify 29 areas listed in Form-16 of the BMMC”. Now, all branches shall submit a certificate in respect of ‘Charges Account’ to their controllers by incorporating a specific certificate as clause 30 in the ‘Branch Manager’s Monthly Certificate [BMMC] – Form 16’ of the branch, certifying that: “Expenses booked to Charges Account are genuine,

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necessary and well controlled in addition to having sanction of the competent authority”.


SCRUTINY OF STAFF ACCOUNTS BY THE BRANCH MANAGERS AND INCORPORATION CERTIFICATES IN THIS REGARD IN THE BMMC

Scrutiny of Staff Accounts is a device to discover the disproportionate amounts to known source of their income and also a support to prevent /locate frauds. Branch Managers/Controllers are supposed to accomplish it regularly. There is no provision in CBS for separate series of account numbers for Staff Accounts and thus it is cumbersome to select the staff accounts and watch the transactions put through in the same. Hence, for the convenience of Branch Managers and easy observation of Staff Accounts, CDC has started generating branch wise report on irregular staff accounts/staff accounts having transactions beyond threshold limit of Rs.1.00 lac per calendar month at the respective branches and these are also available to their Controllers. Meaningful scrutiny of these reports are expected from Branch Managers/Controllers Accordingly, the certificate incorporated in BMMC will stand revised as under- ''Staff Accounts are reviewed at regular intervals and no suspicious transaction and /or case of an officer/employee living beyond means has been observed going by the reports provided by CDC for the month”.


RETURN OF CHEQUES BY BANK BRANCHES CITING “LINK FAILURE” AS A REASON

WAIVER OF SERVICE CHARGES FOR CHEQUE RETURNED IN CLEARING HOUSES

RBI has advised that they are receiving complaints about network-related reasons being quoted by the drawee banks/branches for returning cheques drawn on them

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in clearing. “Link failure” is frequently cited as a reason for returning cheques and the presenting banks, in such cases, do not also desist from imposing cheque returned unpaid charges on the payee account holders.

In this connection, RBI have clarified that link failure is an operational disruption and such instances are mostly observed in remote locations where the cheque volumes are not significant. In situations of link / network / connectivity issues, RBI has advised to proceed as under:- i) Branch should explore other alternatives before returning the cheques viz. processing at the service/drawee/nearby branch as feasible. ii) After exhausting all avenues if it is necessary to return the cheque due to link failure, it may be returned under Reason Code 84 (Other reasons – Connectivity Failure) with no charges to be debited to the payee’s account. iii) No charges shall be recovered from the payee for return of cheque in such cases. iv) Such cheques should be represented in the next clearing without waiting for a request from the payee. v) Annexure ‘D’ of the Uniform Regulations and Rules for Bankers’ Clearing Houses (URRBCH) provides a model list of objections that can be mentioned by banks at the time of return of unpaid cheques.

In view of the RBI guidelines as also with a view to preventing hardship to customers, it has been further decided by the competent authority that in case a clearing instrument is returned unpaid under the reason Code 84 (Other Reasons – Connectivity Failure), returning charges should be waived.


IMPLEMENTATION OF SPEED CLEARING SYSTEM

In term of RBI instructions, Speed Clearing System has been implemented by RBI at all MICR Clearing Centres for processing / collection of outstation cheques through local clearing facilitating collection of cheques drawn on outstation core banking enabled branches of banks. At present, there are 67 MICR Clearing Centres, out of that 23 are managed by us and we have clearing CPCs at 50 MICR Clearing centres and at rest 17 centres, the cheques are presented to MICR Clearing centres through Service Branch/ Main Branches.

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In order to roll-out the Speed Clearing System in our Clearing CPCs, following decisions have been taken :-

a) The Speed Clearing System will be rolled-out at our all Clearing CPCs after the software for processing of inward clearing cheques is developed and tested by Core Banking Project of IT Department (Time line - December 2009)

b) Till then, the Service Branch/Main Branches of respective MICR Clearing Centres will process the Speed Clearing instruments.

c) BPR Dept. will issue necessary guidelines to CCPCs regarding processing manuals for clearance of speed clearing instruments including OLRR.

d) Specific guidelines pertaining to multi-city cheques will be issued by the respective business units.

e) The detailed guidelines pertaining to processing of speed clearing system in State Bank is enclosed as Annexure-II to the circular.

f) Recovery of service charges applicable for speed clearing instruments shall be applicable.


INOPERATIVE ACCOUNTS IN BANKS

Instructions have now been modified in order to bring the uniformity across the banks, with regard to the tenure for identifying an account ‘INOPERATIVE’.

i. The tenure for treating the ‘Savings’ as well as ‘Current Account’ ‘inoperative/dormant’ shall be identical now.

ii. ‘Savings’ as well as ‘Current Account’ should be treated as inoperative if there are no transactions in the account for over a period of two years.

iii. ‘Savings’ as well as ‘Current Account’ should be treated as dormant if there are no transactions in the account for over a period of one year.

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iv. Except for above [the tenure for non-operation], all other instructions relating to Inoperative/Dormant accounts shall remain unchanged.

On availability of technology support for above, the date for implementation of the revised instructions shall be declared by the IT Department.


Provision of Cheque Book Facility to Visually Impaired Persons

Self Operated Cheque Facility to Visually Impaired Persons

Instructions relating to ‘Self Operated Cheque Facility for Visually Impaired’ persons were modified in terms of ‘Revised Procedural Guidelines from RBI & IBA’ as given below:

a. Third party cash payment of self drawn cheques by visually impaired persons is now permitted. b. Letter of undertaking for “Self Operated Cheque Facility to Visually Impaired/Blind person” is dispensed with and shall not be obtained henceforth. c. If a visually impaired depositor is able to sign the cheques consistently, affixing her/his thumb impression at the time of issuing cheque is not required.

In accordance with the provisions of revised IBA guidelines, the visually impaired account holder(s) / prospective customer(s) need to be informed/explained about her/his/their ‘rights & liabilities’ before/at the time opening the account, by reading out to them the details.

‘Annexure A/B’, (enclosed to the circular) duly signed by the account holder(s), should be obtained in duplicate. One copy separately filed at the branch, shall remain in the custody of the ‘Manager of the Division/Branch Manager’, whereas, the duplicate copy shall be annexed to the account opening form when forwarding it to the LCPC.

The cheque leaves hitherto required to be branded as “CARE – Depositor Visually Impaired”, shall now be stopped. However, if the depositor(s) feel(s) that her/his/their signature may not exhibit consistency due to the impairment / some

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other infirmity and do/does not mind branding “CARE – Depositor Visually Impaired” stamp, in order to avoid the ‘cheque being returned unpaid’ on account of ‘difference in the signature’, in such cases a written request for branding the cheques may be obtained, cheques shall be branded and thumb impression shall also be obtained and witnessed by the Bank Official under his signature and specimen signature number, along with the Bank stamp.

Except for above, all other instructions relating to the accounts of visually impaired customers shall remain unchanged.

Sl. No.: 581/2009 – 10 : Cir No. : NBG/PBU/LIMAPersona/12/2009 – 10 dated 19.11.2009

Personal Banking : High Networth Individuals (HNIs)

The Top Management of the Bank felt the need for redefining HNIs (High Networth Individuals) as per population groups. Accordingly, the new definition of HNIs will be as under :

Total Relationship

(minimum 2 out of a,b and c)

Rs.

Advances

Minimum (a)

Rs.

Deposits

Minimum (b)

Rs.

Assets under

Management

(Minimum) (c)

Rs.

Metro/ Urban 15 lacs 10 lacs 5 lacs 2.5 lacs

Semi-Urban/Rural

7.5 lacs 5 lacs 2.5 lacs 1.25 lacs

Definition of Affluent and Mass Affluent categories will continue to remain the same as under:

Category Annual income

i) Affluent >Rs 10 - 50 lacs/annum

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ii) Mass Affluent >Rs2.40 -10 lacs/annum

Sl. No. : 619/2009 – 10 Circular No. : NBG/BOD-GB/67/2009 – 10

FRAUDS - IMPLEMENTATION OF RBI GUIDELINES:ON BEST PRACTICES CODE IN BANKS - RBI had advised the banks to arrange for implementation of Best Practices Code (BPC), as proposed by the Mitra Committee, as a measure to prevent frauds. The BPC relates to detailed procedural rules for entering into transaction relations. The main objective is that the procedures, especially those in fraud prone areas, should be well documented, comparable with national and international best practices, experimented with and improved upon in light of the experience gained. Accordingly, the BPC was prepared and advised to the Circles/Branches in 2006. The BPC has now been revised and updated by an in-house committee headed by the Chief General Manager & Principal, State Bank Academy, Gurgaon and duly approved by the competent authority. The salient features of BPC are enclosed to this e-circular.


PREVENTION OF FRAUDS THROUGH FAKE CHEQUES

TESTING FOR FUGITIVE INK USED FOR BACKGROUND PRINTING

It has been observed that many frauds had been perpetrated through encashment of fake cheques recently. On investigation it transpired that the cheques do not contain the security features of our non MICR Cheques and are crude replicas of the cheques printed by our empanelled printers. However, fake cheques could have been detected, in case greater attention was paid to look for the security features in-built of our cheques. In this connection, one of the security features inbuilt in our cheques is background printing of the bank's name and symbol, with fugitive ink. Fugitive ink gets smeared in contact with water or any liquid containing water and helps in detection of any alteration done on the writings on the cheques. As such, it has been decided that testing for fugitive ink be made compulsory for payment of cheques for Rs.25,000/- and above. All that the concerned assistant and /or the passing official have to do is to put a droplet of water on any part of

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the cheques to see if the ink smears before payment of those cheques. If the ink does not smear, the cheque is treated as fake and payment should not be made. In case, any fake cheque for Rs.25,000/- and above is detected which does not contain any mark of smear, it would be assumed that no testing had been carried out.

Sl. No.: 466/2009 – 10 : Cir No. : NBG/S&P-DRAFT/16/2009 – 10 dated 05.10.2009

BPR PROJECT : INTER OFFICE INSTRUMENT (IOI) ISSUANCE ON ASSOCIATE

BANK BRANCHES

As per extant instructions, it was mentioned that the issuance of IOIs on branches of Associate Banks was kept out of the process meant for issue and payment of IOIs for SBI branches. The process of payment of IOIs in all Associate Banks has since been tested successfully. Accordingly, the branches of the Bank authorised to issue drafts on Associate Bank Branches shall now issue only IOIs. These should be drawn on the Associate Bank branches authorised for payment of drafts issued by our Bank as per extant instructions.

The process for issuance of IOIs on Associate Bank branches is described below.

1. Funding Transaction: The funding transaction for issuance of IOI on Associate Bank branches is similar to the issuance of IOI on SBI branches except for the following.

The drawee bank code should be selected accordingly from the drop-down menu.

2. Issuance of IOI: (i) The security forms are same for IOI-drafts on SBI branches and also on the branches of Associate Banks. This is irrespective of the amount i.e. there is no distinction of OT or TT or OL. (ii) After successful issuance of IOI, the amount will be transferred from “IOI to be issued Account” to “Agency Clearing General Account”. (iii) As all the drafts are computer printed, there will not be any advice. (iv) The IOIs issued on branches of Associate Banks are to be reported to Agency Clearing Department in the daily extract alongwith

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other agency clearing transactions. (v) As in the case of IOI on SBI branches, no handwritten IOIs will be issued and no manual correction is permitted.

3. Cancellation of IOI issued on Associate Bank branches: (i) No Change in the existing process. (ii) The amount of the cancelled IOIs is to be debited to “Agency Clearing General Account” as hitherto.

4. Revalidation of IOI issued on Associate Bank Branches: There is no change in the existing process.

5. Payment of IOI issued on Associate Bank Branches: System does not allow payment of IOI issued on Associate Bank Branches in the Branches of State Bank of India.


New Process of Reporting & Control :: Overhead Expenses Beyond the Budgeted Levels

Chairman’s observations in the “Policy Guidelines for the year 2009-2010” of our Bank regarding ‘Overheads’ read as: ‘A target of not more than 5% growth in overheads over March 2009 level should be set for all the branches and offices’.

An analysis of ‘Charges Account’ reveals the following:

a. In the year ending March 2009, the ‘Total Overheads’ have risen by 21.75%.

b. In the same year while the ‘controllable overheads’ have increased by 23.51%, the ‘non-controllable overheads’ have gone up by 18.02%.

A new process for Reporting & Control of the expenditures [Total Overheads] overshooting the budgeted levels, has now been devised and is detailed in the circular.

i. While exercising the powers delegated, the officials shall ensure that the monthly/annual budgets allocated under the overheads are not exceeded. Wherever, the budget is surpassed the excess expenditure shall be adjusted in the subsequent months.

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ii. To check the unusual growth of overheads a cap of 5% has been fixed over budgeted levels.

iii. Whenever a branch/administrative unit surpasses the monthly budgeted levels of the ‘Total Overheads’ and the variance is more than 5%, the Branch / Administrative Unit (AU) shall seek the approval from the respective ‘AGM Administration’. ‘AGM Admin.’ shall assess the position and where justified, shall approve the proposed expenditure, overshooting the budget settled for the Branch/AU. This enhancement shall be met from the total budget allocated to the ‘AGM Admin.’

In case the ‘AGM Admin.’ utilizes and exhausts his budget for ‘Total Overheads’ including the 5% cap, he shall seek the approval of the ‘GM Network’, who in turn shall seek the approval of ‘CGM’ Circle/Others in the similar circumstances. Similar approval is to be obtained in respect of Circle also, that is, it should be referred to the next higher authority for approval.

Sl. No.: 422/2009 – 10 : Cir No. : IT/GLOBALIT-ISD/14/2009 – 10 dated 18.09.2009

NETWORK SECURITY :: Internet Access, Wireless LAN, Third Party Laptops etc.

It is observed that various insecure practices are being followed in our offices / branches which endanger the security of our network. The details of the weaknesses, their impact and the instructions to be followed are given in the circular. Brief details are as under:

Case 1 - Systems on Bank’s network are accessing Internet directly and are by-passing Central Internet Proxy.

Impact : a) A compromised workstation / desktop / laptop can lead to unrestricted exposure of bank’s critical systems to the internet. b) Security of these systems & stored data can get compromised over a direct insecure internet connection.

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Instructions to be followed : a) Internet access should be through Bank’s centralised Internet proxy maintained by our IT-Networking deptt. b) Systems connected to the bank’s network should not be connected to internet directly using any Data-cards, Broadband, Modems, Bluetooth devices, cable internet, GPRS through mobile phones etc. Any such connectivity should be discontinued immediately.

Case 2 - Third Party Personnel connecting their media, laptops to Bank’s network

Impact : a) As these third party users get access on Bank’s applications and databases, a malicious user can steal sensitive bank information without any detection. b) Malware infected laptops can compromise bank’s systems. c) A compromised laptop can expose bank’s critical systems to the internet over the insecure connection.

Instructions to be followed : a) Media which is brought by third party personnel should be scanned for virus. b) Third party personnel should use bank controlled work station for bank related work. c) Third party personnel should not be allowed to carry or connect their laptops to bank’s network without specific formal approval by appropriate authority.

Case 3 – Wireless LAN deployed insecurely

Impact : a) An adversary can eavesdrop on sensitive bank information. b) An adversary can connect to SBI network. c) An adversary can gain administrative access to the access point.

Instructions to be followed : a) Deployment of Wireless LAN / Wireless Access Points is prohibited.

Deviations / Violations

Any requests for considering deviations to any of the above-mentioned instructions should be sent to DGM(IT-Networking), State Bank Global IT Centre, Sector 11, CBD Belapur, Navi Mumbai latest by 15th October 2009 for review.

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Staff members are also requested to contribute to strengthening network security by reporting deviations / violations through the following channels:

Email to [email protected] / Logging in Service Desk under Information Security Incidents.

Sl. No.: 830/2009 – 10 : Circular No. : NBG/PBU/LIMA-SB/20/2009 – 10 dated 11.03.2010

PAYMENT OF INTEREST ON SAVINGS BANK ACCOUNT ON DAILY PRODUCT BASIS

RBI has advised the banks that in view of the present satisfactory level of computerization in commercial bank branches, payment of interest on Savings Bank accounts would be made on daily product basis w.e.f. 01.04.2010. The existing S.B. Rules (No 42) has accordingly been revised as “Rule No.42: Interest will be calculated on a daily product basis w.e.f. 01.04.2010. Interest will be credited to the account at half yearly intervals. Interest will be paid only if works out to Re.1/- or more. Thereafter fifty paise and more will be rounded off to the next higher rupee and anything less will be ignored”. Global IT Centre has developed the necessary backend changes and no effect of this change is to be given at the branch end.

Sl. No.: 832/2009 – 10 : Circular No. : NBG/S&P-DECEASED/30/2009 – 10 dated 12.03.2010

Settlement of Claims in respect of Missing Persons

With a view to alleviate hardship to claimants in respect of Missing Persons, it has been decided to entertain small value claims without a valid death certificate. In line with the RBI instructions, it has been decided that the claims up to a threshold limit of Rs.1,00,000/-(Rs. One Lac only) will be entertained without insisting for valid death certificate. All such claims in respect of missing persons, reported missing for a minimum period of one year, shall be settled on production

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of the following documents: 1. FIR, 2. Non-traceable report issued by the police authorities and 3. Indemnity from the claimant. The AGM (Admin) of the respective region will be the authorized authority to settle such claims. The claims in respect of missing person above Rs.1,00,000/-- may be settled as per the existing instructions i.e. after getting court order from the competent court.

Sl. No.: 796/2009 – 10 : Circular No. : CCO/CPPD-ADV/77/2009 – 10 dated 25.02.2010

Vigilance Administration : Role of Professionals engaged by the Bank

The role of Chartered Accountants, Advocates and Valuers and the bank’s expectation from them are broadly stipulated / defined as under.

Role of Chartered Accountants: (i) Verification and certifying the correctness of Books of accounts such as outstanding receivables, stocks in trade, cash/funds flow,sales and purchase etc., (ii) Conducting Stock Audit, (iii) Verification of charges subsisting in favour of the Bank in the books of the Registrar of Companies, (iv) Preparation of Techno Economic Viability Report (TEV report), (v) Statutory and Concurrent Audit related work, (vi) Certification of accounting procedures, and (vii) Certification of correctness of account balances.

Role of Valuers : Valuation of assets like Plant and machinery, Stocks in Trade, land and Building, and other movable / immovable properties standing in the name of borrowers and guarantors.

Role of Advocates : (i) Issuance of title verification certificates in respect of immovable properties offered as securities to the bank either as primary or as collateral security, (ii) Issuance of Legal Opinions in varied matters, (iii) Filing of civil/criminal suits, seek interim orders, moving of special leave petitions if and when required, obtaining of decrees and execution thereof, and (iv) Extend professional support in arranging for Lok Adalats / Bank Adalats in consultations with local administration and judiciary, by virtue of their profession.

However, the roles of the professionals and the Bank’s expectation as stated in the circular are not exhaustive and the Circles / Operating units while assigning

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the jobs to these professionals may add additional role / responsibilities as considered necessary.

Sl. No. : 737/2009 – 10 Circular No. : NBG/S&P-SP/27/2009 - 10

REVISION OF PAY IN SLIPS/ WITHDRAWAL FORMS-Post CBS, a need is felt to revise pay-in-slips / withdrawal forms to incorporate new features such as home branch, PAN no., Contact no. of the customer etc. Accordingly, the Bank has redesigned the following forms for use at all the branches. Color code of the paper and size of the forms are also shown against each for printing of the revised forms. Forms are prepared in English and circles are advised to print the same bilingually after translating the forms in Hindi/local language as per requirement. Hard copy of these pay-inslips/ withdrawal forms in English along with Hindi translation of forms has been forwarded to Circles vide letter dt.01.02.2010.

Sl. No.: 750/2009 – 10 : Circular No. : NBG/PBU/CS-CST SERVI/3/2009 – 10 dated 13.02.2010

BANKING CODES AND STANDARDS BOARD OF INDIA (BCSBI) : Revision of Code (THE CODE)

Banking Codes and Standards Board of India (BCSBI) released Code of Commitment to Customers (The Code) on July 01, 2006. The Code was adopted by the Member Banks for compliance. Code had a provision that it will be revised after three years. BCSBI has now revised the Code and released the new Code in August 2009. The Code does not replace or supercede regulatory or supervisory instructions of RBI and Banks are required to comply with such instructions/directions issued by RBI from time to time. A copy of the revised Code of Commitment to Customers is placed at Annexure-I to the circular.

Sl. No.: 768/2009 – 10 : Circular No. : NBG/PBU/LIMA-Persona/15/2009 – 10 dated 17.02.2010

Personal Banking : Payment of Interest on Term Deposits at Calendar Quarter :: New Product Codes

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The Bank has traditionally being paying interest on Term Deposits anniversary quarterly basis i.e. a TDR made on 10th February 2010 will pay interest on 10th May 2010 and thereafter on every anniversary quarter. With the application of TDS at source, there have been suggestions that due to the financial year ending on 31st March, interest payments on TDRs should also be paid as at calendar quarter so that the interest payment can coincide and interest received by the depositor can be computed and advised to the depositor, for the purpose of filing Income Tax returns. Therefore, the Bank came out with a whole range of TDRs which can be opened wherein the interest will be paid at calendar quarter. The product codes have been given in the Annexure A to the circular. These products have been made active in CBS and branches can now open the accounts.

Sl. No. : 30/2010 – 11 Circular No. : NBG/PBU/LIMA-FORMS/1/2010 – 11 ,April 20,2010.

MODIFICATION OF ACCOUNT OPENING FORM FOR INDIVIDUALS: SB account opening form has been modified keeping in view the changes in the Savings Bank Rules, KYC Norms, the process of opening Savings Bank Account through the LCPCs and suggestions received by Corporate Centre upto 28.02.2010. Revised account opening form is w.e.f. 01.05.2010.

The key features of the form are:

i) The new Account Opening Form will be monolingual i.e. separate English and Hindi versions have been printed and should be made available at the branches. This has helped us reduce the size and the implied impact on the environment.

ii) It will be applicable to all locations, i.e. Metro/Urban/Semi-Urban/Rural branches.

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iii) Provisions have been made for: The UID (Unique Identification) number which will be launched by the Government of India shortly. Delivering (in the form of tear-off) an abridged version of the Savings Bank Rule to the customer as this has been mandated by Banking Code and Standards Board of India. Capturing the applicants’ CIF number so as to avoid creation of multiple CIFs. Providing introduction in case of “Tiny Accounts”

iv)The Form if printed and filled in the space provided, can be optically scanned so as to provide relief to the LCPC for Data entry work etc.

The structural design of the form has been slightly modified to factor in the flow of activities at the LCPCs

Pages 5 – 6 contain ‘Account Opening Part-II’ which will have to be filled by new as well as existing customers. While the information in Part-I will be customer oriented, it will be account oriented in Part-II.

Sl. No. : 33/2010 – 11 Circular No. : IBG/FD/FD-SALES/OR/5/2010 – 11, April 21, 2010.

Overseas Investments – Liberalisation- RBI has now decided (vide their A.P.(DIR Series) Circular No.45 dated 01.04.10), to allow Indian companies to participate in a consortium with other international operators to construct and maintain submarine cable systems on co-ownership basis, under the Automatic Route. Accordingly, branches may allow remittances by Indian companies for overseas direct investment, after ensuring that the Indian company has obtained necessary licence from the Department of Telecommunication, Ministry of Telecommunication & Information Technology.

Sl. No. : 37/2010 – 11 Circular No. : IT/GLOBALIT-COREBKG/2/2010 – 11 April 22, 2010.

INACTIVATION OF USER ID - Whenever a teller does not log into the system for 15 days period defined at the institutional level, the system would inactivate the teller and will throw an error “7757: Teller Inactivated”. This inactive teller can be made active by tellers having user types 20, 21, 25, 45, 50, 60, 75 or 80

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through the screen 9764. This functionality has been operationalised on 16th April, 2010.


OUTWARD DAK : USE OF PIN CODES

Postmaster General, Mumbai, requested our Bank to use Pin Code on all outward despatch of communications, for effective and speedy reach of such communications. They have also advised commencement of address curing services, including validation of pin code, correction of wrong pin codes, populating pin codes wherever they are not found and adding state and city, if required, etc. In case of requirements of any assistance, they have advised us to contact Shri V.A. Shaikh, Assistant Superintendent (Address curing service), Phone No. 022-22621688 and e-mail ID is [email protected].

Sl. No.: 27/2010 – 11: Circular No. : CCO/CPPD-PRODUCT/5/2010 – 11 dated 16.04.2010

NEW PRODUCT: CLIENTELE BUSINESS IN CURRENCY FUTURES: SBI FX TRADE

The Bank has decided to start the clientele business in currency futures to tap the huge business potential in this segment. In this business, Bank acts as an intermediary/broker by providing an online platform linked to the Bank a/c for the customer to place the trades in the exchanges. Department of Global Markets, Mumbai would coordinate the product on behalf of the Bank. The product would be known as SBI FX Trade. For more details of the product, please refer the circular.

Sl. No.: 7/2010 – 11: Circular No. : NBG/GAD-PPF/2/2010 – 11 dated 05.04.2010

GOVERNMENT BUSINESS: PUBLIC PROVIDENT FUND SCHEME 1968: (i) RECKONING OF DATE OF DEPOSIT IN CASE OF CHEQUE PAYMENT, (ii) OPENING OF ACCOUNT OF A MINOR

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To bring uniformity in the reckoning of date of deposit in the PPF Scheme 1968 vis-à-vis SCSS 2004, the Government of India has decided that hereafter when a deposit is made in the PPF account by means of a local cheque or demand draft by the subscriber, the date of realization of the amount will be the date of deposit. RBI has reiterated that as per Rule (3) of PPF Scheme 1968, an individual may, on his own behalf or on behalf of minor, of whom he is the guardian, subscribe to the Public provident Fund. Further, it is reiterated that either father or mother can open a PPF account on behalf of his/her minor child but not both.

Sl. No.: 863/2009 – 10 : Circular No. : IBG/FD/FD-NRRAVOS/88/2009 – 10 dated 27.03.2010

VOSTRO ACCOUNTS – EXCHANGE HOUSES :: DESIGNATED DEPOSITORY AGENCY ARRANGEMENT : RUPEE VOSTRO DRAWING ACCOUNTS (RVDAs) : REVISED INSTRUCTIONS

Commencing from the1st April 2010, the following procedure is being introduced:-

I. Draft drawings: All drafts issued by the Exchange Houses will be drawn only on ISBM and payable at par at all branches of SBI in India. Drafts shall be printed with the legend “Payable at Par at all branches of State Bank of India”. The payee branches will carry out necessary steps to check the details in RVDA and verify that the payment is not stopped, comply with the AML norms and thereafter, afford credit to the beneficiary’s account. Branches are advised to choose the following menu in CBS for putting through the transactions: Foreign Exchange -> Vostro Remittance -> Payments -> By transfer to Customer A/c (SCR 01042)

II. Noting of “stop payment” and refund /cancellation of drafts issued by Exchange Houses:

All stop payment and refund instructions are to be forwarded by the EHs directly to ISBM, who after confirming that RVDA has not been debited, will note the stop payment instruction, and refund the amount of the draft to the Exchange House. Please note that in case of Bank holidays in Mumbai, the stop payment instructions would be noted by ISBM on the next working day.

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VERIFICATION OF ATM CASH : WORKSHEET FOR BRANCHES

RECONCILIATION OF 98549 BALANCE /ADMIN / PHYSICAL CASH

Verification of ATM Cash Balance is part of the Branch Balance Sheet and the same is verified by the Statutory Auditors. Non-reconciliation of 98549bbbbbc with the physical cash and admin balance / counter balance will have an adverse effect. This task has to be completed by the branch on a daily basis. An excel worksheet was uploaded to aid the branches in reconciliation of the 98549 balance with Admin / Physical Cash and a write up on the reconciliation procedure to be followed in the ATM Web – ABOSS. At present, the excel sheet can be used for branches attached with upto 100 ATMs.

Sl. No.: 873/2009 – 10 : Circular No. : IT/GLOBALIT-INB/28/2009 – 10 dated 31.03.2010

Internet Banking : Online opening of Term deposit / Special Term deposit account

e-TDR / e-STDR is an online creation of term deposit facility through Internet Banking channel for retail Internet Banking customers. A new link namely e-TDR/e-STDR has been provided under request section for retail internet banking users for online opening of TD/STD account. A system advice of term deposit is generated instantly.

The features & rules which will be applicable for e-TDR/ e-STDR are as follows:

1. No manual intervention is required by branches at the time of opening of term deposit account under this product.

2. Domestic, NRE & NRO customers & Staff members can avail this facility.

3. The online opening of term deposit a/c facility will be available between 08:00 HRS IST and 20:00 HRS IST. Request received for e-TD/e-STD beyond this period will be scheduled for next opening hours, if user opts for the same. The

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existing system of sending request to branch as manual intervention transaction will continue for those, who want duly signed TD/STD advice in physical form.

4. The TD / STD a/c in INR will be opened in the same name(s) and mode of operation as in the debit a/c from which e-TD/e-STD a/c is funded.

5. The interest proceeds on the Term Deposit (e-TD), will be credited by default to the account from which the Term Deposit (e-TD) was funded.

6. The minimum amount limit for creation of e- TD / e-STD will be same, as mentioned for product code in CBS. The maximum limit of amount for online opening of term deposit a/c will be equal to maximum permissible limit for transfer of funds to own accounts, which is presently Rs.10 lac.

7. For enquiring current term deposit interest rates, a hyperlink has been provided on e-TDR/e-STDR request page, which redirects the user (through Internet) to term deposit interest rate page of our Corporate web-site (www.sbi.co.in / www.statebankofindia.com).

8. Senior citizens (Public & Staff) will not be able to avail privileged rate of interest facility in e-TDR/e-STDR. They will be required to opt for the physical copy either through onlinesbi.com (MIT request) or directly through branch.

9. Benefit of interest rate to staff will be available only if the debit a/c is categorized as staff account in Core database.

10.The e-TD /e-STD advice (in lieu of term deposit receipt), which is generated through Internet Banking channel, will contain the debit a/c no., from which the TD/STD a/c is funded. If request for encashment of e-TD /e-STD on maturity or before maturity is received by customer’s home branch then branch should transfer the proceeds of e-TD/e-STD into the debit a/c as mentioned on e-TD/e-STD advice, only after verification of e-TDR/e-STDR details from Core database.

11.Branches will follow the instructions applicable for a normal TD/STD when e-TD/e-STD request is submitted to the branch for payment or pre-mature payment.

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12.There will be no default nomination in e-TD/e-STD presently. Home branches of the customers can set the nominees on the request of customers after receiving appropriate documents from him/her.

13.Terms & conditions of e-TDR/e-STDR are displayed to customer and also printed on e-TDR/e-STDR advice.

14. Instructions/rules/guidelines for normal Term Deposit accounts issued by the Bank and those which will be issued by the Bank in future, will mutatis mutandis be applicable for e-TDR/e-STDR accounts also.

Sl. No. : 35/2010 – 11 Circular No. : CFO/A&C-TDS/1/2010 – 11 April 21,2010.

TDS ON CERTAIN PAYMENTS BY THE BANK: FY 2010-2011: REQUIREMENT TO FURNISH PERMANENT ACCOUNT NUMBER (PAN) BY THE DEDUCTEES - We advise that the IT department at Belapur is in the process of incorporating the necessary changes in the system, which may take some time. Till such time these changes are not effected in the system, branches may please be advised to deduct TDS at higher rate manually in all cases where the customer has not provided his/her PAN. Declaration filed in 15G/15H shall not be accepted unless the person filing such declaration furnishes his/her PAN card details.

Sl. No.: 88/2010 – 11 : Circular No. : NBG/PBU/HL-HOME LOANS/5/2010 – 11 dated 15.05.2010

SBI Earnest Money Deposit (EMD) Scheme : Modifications :: (i)Minimum Income, (ii) Margin, (iii) Loan Amount, (iv) Security

Sl. No.: 95/2010 – 11 : Circular No. : NBG/PBU/LIMA-Persona/2/2010 – 11 dated 18.05.2010

PERSONAL BANKING : NOMINATIONS IN TDRs/STDRs SWIPED UNDER MODS

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Law Department opined that the nomination given by the customer for the deposit account will hold good for the term deposits also (created under auto sweep facility) and separate nominations are not required for the Multi Deposits so created. If any customer, however, specifically requests for separate nominations for term deposits, he can be permitted to do so and Form DA-1 should be obtained for each such swiped term deposits. Branches are advised to take note of this.


PERSONAL BANKING SEGMENT : REVISION / RATIONALIZATION OF SERVICE CHARGES

Appropriate authority have approved the changes on the following service charges and the revised Service Charges structure is annexed as Annexure to the circular :

a) Issue of Cheque Book, b) Account Closure, c) Inoperative Account, d) Transfer of Account, e) Cheque returning Charges, f) Issue of Demand Draft, g) Failed SI Charges, h) Failed EMI Charges, i) Safe Deposit Locker Charges, j) Interest Certificate, k) Presentation of Usance bill, l) Signature verification, m) Solvency Certificate, n) Record copy of Cheque, o) ATM Card / PIN / Kit returned by courier, p) Allowing operation by Power of Attorney.

The Service charges for collection of Outstation Cheque will be applicable as per RBI guidelines issued under Payment & Settlement System Act, 2007, which is all inclusive plus the Service Tax. No P&T/Courier charges should be levied separately. Any deviation in these charges will be treated as non-compliance and may attract punitive action under the said Act.

It has been decided that the charges should come into effect from 15th June 2010. The same will be advised to customers on our website, thereby ensuring that a minimum of one month notice is given to customers. The branches are also advised to publicize the new service charges in the Comprehensive Notice Board of the Bank. For full details, please refer the circular.


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GOVERNMENT BUSINESS :: PROVISION OF e-FREIGHT FACILITY TO CUSTOMERS

RECOVERY OF SERVICE CHARGES : CLARIFICATION

It has been decided to recover uniform service charges as applicable to inter-city transactions on all e-freight transactions as under:-

i) Upto Rs.20,000/- : Nil

ii) Above Rs.20,000/- and upto Rs.5 lac : Rs.1.50 per thousand

iii) Above Rs.5 lac : Re 1.00 per thousand (Minimum Rs.750/- and Maximum Rs.1250/-)

The revision was made effective from the 1st April 2010.

10 Policy Guidelines

Chairman’s Policy guidelines (Hyperlinked also) Patna Circle Policy Guidelines (please refer Patna Circle section)

Chairman’s Policy guidelines 2010-11

Commendable progress:

Growth in CASA deposits has been excellent Cost of Deposits has improved to 5.80% (provisional) as on Mar 2010 (6.30% - Mar 09). Market share in advances is up by 29 bps to 16.28% in March 2010. YOY growth in retail loans has been 26.08% as on March 2010 The Bank opened 1049 branches and have added 10081 group ATMs during FY 10. With

these additions, the total number of branches has increased to 12496 till the end of March 10 and the number of group ATMs to 21485.

Bank has attained excellence in various areas of banking in domestic as well as international market, as is evident from the various awards and recognition, the Bank has received from a number of reputed agencies.

New initiatives

The focus of CITIZEN SBI Project is to transform the Bank into a platform that provides inner fulfilment for its employees and tries to transform the community around us by going beyond institutional and personal success.

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In order to build on the success of BPR initiatives, BPR-II will be rolled out shortly. Marketing Teams and Relationship Managers broadly split up into customer centric and product centric sales forces.

A new training structure, namely, Strategic Training Unit has been put in place for assessing the specific and general training needs of all employees across all verticals in the Bank, and appropriate design and development of training contents and methodology, e-learning etc. The revamped training system will provide holistic training along-with building competencies in functional areas as well as soft skills.

Further 1200 new branches are to be opened during FY 2010-11.

Key priority areas are : Asset Quality, CASA Deposits, Other Income, Cross Selling, Cost Control, Centralised Processing Cells, Market Share, Financial Inclusion, Corporate Strategy & New Businesses, Customer Service, Migration to Alternate Channels and Data quality.

The benchmarks that are set out for 2010-11 are as under :

Rural Banking Group

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Rural and semi-urban centres offer vast opportunities in view of the increasing prosperity, large Government spending through schemes like NREGA and the strong financial inclusion drive. Accordingly, growth budgets of RBG for FY 2010-11 are set as under:

As against growth of 17.83% in FY10, growth in RB (NF) deposits should be targeted at 30% with growth targets for Savings Bank and Current Account deposits at 28% and 32% respectively. One crore new accounts (inclusive of technology based accounts) should be targeted during the year 2010-11. Of these, 80% should be CASA. Targets for number of accounts should be as under:

Target for number of accounts for FY 2011 : DEPOSITS

PER SME

Current A/c 1,00,000 Current A/c 1,50,000

Savings 96,00,000 Savings 1,50,000

Advances should grow by 28% this year against a growth of 20% last year. An increase of 20 lac loan accounts should be targeted alongwith increase in market share by 100 bps. Product-wise targets should be as under:

ADVANCES Number (In ‘000) Amount (in Rs. crs)

Housing Loans 208 5200

Education Loans 75 740

Agri Processing Loans 1000 11750

Auto Loans 30 760

Personal Loan & Other Products 287 5500

Loans to SSI 30 2170

Loans to SBF 150 2180

C&I (Mfg. & Trade) 20 2550

Targets for deposits and advances should be channel wise (Branch, OMRs, BC/BFs), together with focused monitoring of each channel.

As mentioned earlier, financial inclusion and outreach have to be one of our core objectives for increasing our presence in hitherto under banked/unbanked areas,

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ultimately resulting in improved market share. Towards this objective, the following targets should be fixed: 50,000 unbanked villages (Cumulative 1,50,000) to be covered during 2010-11. Tie up with Central/State Governments for distribution of social benefits through SBI

Tiny Cards. Micro finance through SHGs/NGOs to be augmented. Number of SHGs credit linked to

be targeted at 2 lacs (Cumulative 17.75 lacs SHGs) by March 2011.

25% growth in Agri deposits should be targeted with more emphasis on CASA growth.

Agri advances should grow by 25%. While achieving this growth, focus should be on the areas with low incidence of NPAs like Kisan Credit Cards, Seed Growers & Processors, Warehouse Receipts, Contract Farming, Gold Loans and Pulses, Oilseeds & Spices. Business from new emerging sectors like Horticulture, Fisheries, Food Processing, Biotechnology, Greenhouse Farming and Dairy should be garnered. At the same time, it has to be ensured that Government benchmarks for Agri Priority Sector Advances, Advances to Weaker Sections and Advances to Minority Communities are achieved.

Containment of NPAs should be on top priority. Efforts of Rural Recovery Teams (RRTs) should be geared up by increasing their numbers. CSPs of BC/BF should also be entrusted with the task of recovery (after compliance with regulatory requirements). For RBG as a whole, gross NPA levels as on March 2011 should not exceed the level of March 2010 as also the percentage should decline by 60 bps. Focussed attention should be given to incorporating ‘NPA Holidays’/Data Cleaning/Data correction to resolve technical NPAs.

Other Income should continue to be in focus and a target of 23% should be fixed for RBG with a sub-target of 300% for growth in income from cross selling.

There should be zero growth in controllable overheads and a cap of 5% on non controllable overheads (excluding expenses on new branches opened during the year).

Corporate Strategy & New Businesses

The targets for various initiatives of New Businesses for 2010-11 will be as follows:

Payment Business

The Bank is in the process of setting up an IT platform, called Integrated Payment Hub, which will enable centralized processing of all types of payments, improve performance and efficiency of processes and also integrate various channels, like, internet banking, mobile banking, points of sale, kiosk banking, ATM, IVR, etc.

Demat & Online Trading business

• New demat accounts to be opened in FY 10-11 : 2.52 lacs

• New eZ-trade@sbi accounts to be opened in FY 10-11 : 2.00 lacs

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Financial Planning & Advisory services (FPAS)

• To increase reach of FPAS to 1500 branches by March 2011.

• To launch Wealth Management services at 25 centres by March 2011.

Merchant Acquiring Business (MAB)

The following targets have been set for 2010-11:

• Deployment of 1,25,000 POS Terminals

• Enroll 100 large merchants to support online purchases

Mobile Banking Services (MBS)

Addition of 1.5 crores new users should be targeted for 2010-11.

11 Other Policies

Compensation policy, Customer Service (please refer SBI Master Circulars)

12 SBI Data

Some key statistics of the Bank as at 31.03.10 PPT (Hyperlinked, please see it)

Net Profit for FY10 maintained at Rs. 9166 crores against Rs. 9121 crores in FY09.

Business Growth of Rs.1,54,983 crores (YoY) at the end of Mar 10. Deposits of the Bank went up by Rs.62,043 crores driven by CASA growth of

26.76% and retail TD growth of 17.64%, despite shedding of high cost bulk deposits by 50.15%, resulting in a YOY growth of 8.36% in deposits from Rs.7,42,073 crores in Mar 09 to Rs.8,04,116 crores in Mar 10.

Savings Bank deposits grew at an average of Rs.4,897 crores per month during FY 10, total CASA growth during the year being Rs.73,168 crores.

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CASA ratio has improved from 39.29% as on March 2009 to 46.67% as on March 2010, a growth of 741 bps.

Market share in total deposits as on Mar 10 at 16.31% (17.70% as on Mar 09), declined by 139 bps YOY, while market share in low cost demand deposits at 17.51% (17.43% as on Mar 09) is up by 8 bps.

Gross Advances up by Rs.92,940 crores, a growth of 16.94% from Rs.5,48,540 crores in Mar 09 to Rs.6,41,480 crores in Mar 10.

Market share in advances as on Mar 10 at 16.28% (15.99% as on Mar 09), an increase of 29 bps YOY.

Credit Deposit Ratio is up to 73.56% as at the end of Mar 10 from 66.63% at the end of Mar 09, an increase of 693 bps, bucking the industry trend as the credit deposit ratio for ASCB has come down from 72.32% as on Mar 09 to 72.22% as on Mar 10. Incremental CD ratio during FY10 was 157%.

Agri advances have grown by 16.54% from Mar 09 to Mar 10. Total disbursements under Agri Advances were Rs.34,179 cr during FY10. Credit extended to 12.32 lac new farmers during the year.

NII increased by 13.41% in FY10 over FY09. Interest income on advances has increased by 9.11% YOY, despite a fall in

yield by 49 bps from 10.15% as on Mar 09 to 9.66% as on Mar 10 owing to reduction in peak PLR by 200 bps and average PLR by 87 bps during FY 10 over FY 09.

Growth in Interest expenses on deposits was contained at 14.23% during FY 10 against 40.13% growth during FY 09, through strategic shedding of high cost bulk deposits, which are down to just 1.79% of total deposits as compared to 10.74% a year ago and growth of 26.76% YOY in CASA deposits.

Fee income is up by 26.57% YOY. Operating Expenses up by 29.84% in FY10 over FY09, driven by five key costs,

as the Bank invested heavily in laying the foundation for future growth: During Q4FY09, nearly 27,000 new employees came on board in various

categories, the full impact of which on staff expenses was felt during FY10. The Bank has recruited 3,350 employees in FY10. Rs. 627 crores arrears for wage revision pertaining to previous years

provided during FY10. Additional contribution for pension at Rs.1,998 crores against Rs.1,469

crores last year. Additional expenses of Rs.59 crores on Financial Inclusion. An expenditure of Rs. 347 crores incurred on opening of 1,049 new branches

and installing 7,788 new ATMs during the year.

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Loan loss provision during FY10 at Rs.5147.84 crores against Rs. 2,474.97 crores made during FY09, an increase of 108% YOY. Provision coverage ratio (incl. AUCA) went up to 59.23%.

Gross NPAs stood at Rs.19,535 crores Return on Assets (ROA) declined to 0.88% in FY10 from 1.04% in FY09. Return on Equity declined to 14.84% in FY10 from 15.07% last year. Net Interest Margin (cumulative) improved from 2.56% as on 31st Dec 09 to

2.66% as on 31st March 10. Average Cost of Deposits has been brought down by 50 bps to 5.80% as on

Mar 10 from 6.30% as on Mar 09. Yield on advances (YOA) at 9.66% in FY10 is lower by 49 bps as compared to

10.15% in FY09. Cost to income ratio has increased to 52.59% as on Mar 10 from 46.62% as on

Mar 09 due to higher operating expenses incurred on branch and ATM expansion, recruitment of new employees, pension contribution and lower profits from sale of investments.

As per Basel II the CRAR of the Bank is at 13.39% as at the end of Mar 2010, compared to 14.25% last year, with Tier 1 at 9.45%. As per Basel I the CRAR was 12.00% and Tier I was 8.46% as on Mar 10.

SBI Group Net Profit for FY10 at Rs. 11,734 crores up by 7.11% from Rs. 10,955 crores for FY09.

13 Indian Economy Data

Indian Economy

Highlights of Monetary Policy Statement 2010-11

by Dr. D. Subbarao, Governor RBI on 20th April, 2010

The State of the Economy

Emerging market economies (EMEs) are significantly ahead on the recovery curve, but some of them are also facing inflationary pressures.

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The Indian economy is recovering rapidly from the growth slowdown but inflationary pressures, which were triggered by supply side factors, are now developing into a wider inflationary process.

The Reserve Bank had projected the real GDP growth for 2009-10 at 7.5 per cent. The final real GDP growth for 2009-10 may settle between 7.2 and 7.5 per cent.

Reserve Bank’s estimates show that the total flow of financial resources from banks, domestic non-bank and external sources to the commercial sector during 2009-10 at Rs.9,71,000 crore, was higher than the amount of Rs.8,34,000 crore in the previous year.

Scheduled commercial banks (SCBs) raised their deposit rates by 25-50 basis points between February and April 2010 so far, signaling a reversal in the trend of reduction in deposit rates. On the lending side, the benchmark prime lending rates (BPLRs) of SCBs have remained unchanged since July 2009.

The Base Rate system of loan pricing, which will replace the BPLR system with effect from July 1, 2010, is expected to facilitate better pricing of loans, enhance transparency in lending rates and improve the assessment of monetary policy transmission.

Surplus liquidity that prevailed throughout the year declined towards the end of the year in consistent with the monetary policy stance.

The large market borrowing by the Government put upward pressure on the yields on government securities during 2009-10.

Equity markets generally remained firm during the year with intermittent corrections in line with the global pattern.

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The Union Budget for 2010-11 has begun the process of fiscal consolidation by budgeting lower fiscal deficit (5.5 per cent of GDP in 2010-11) and revenue deficit (4.0 per cent of GDP in 2010-11)

Foreign exchange reserves stood at US$ 279 billion as on March 31, 2010.

Outlook and Projections

The baseline projection of real GDP growth for 2010-11 is placed at 8.0 per cent with an upside bias.

The baseline projection for WPI inflation for March 2011 is placed at 5.5 per cent.

M3 growth for 2010-11 is placed at 17.0 per cent. Consistent with this, aggregate deposits of SCBs are projected to grow by 18.0 per cent. The growth in non-food credit of SCBs is placed at 20.0 per cent.

Monetary Measures: The Bank Rate has been retained at 6.0 per cent. It has been decided to increase Repo Rate by 25 basis points from 5.0 per cent to 5.25 per cent with immediate effect, Reverse Repo Rate by 25 basis points from 3.50 per cent to 3.75 per cent with immediate effect and CRR from 5.75 per cent to 6.0 per cent of their net demand and time liabilities (NDTL) effective the fortnight beginning April 24, 2010.

Other Key features related to Banking:

It has been decided to mandate banks to switch over to the system of Base Rate from July 1, 2010.

It is proposed that investment in non-SLR debt securities (both primary and secondary market) by banks where the security is proposed to be listed on the

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Exchange(s) may be considered as investment in listed security at the time of making investment.

It is proposed to mandate banks not to insist on collateral security in case of loans up to Rs.10 lakh as against the present limit of Rs.5 lakh extended to all units of the micro and small enterprises (MSEs) sector.

It is proposed to permit banks to engage any individual, including those operating Common Service Centres (CSCs), as BC, subject to banks’ comfort level and their carrying out suitable due diligence.

It is proposed to allow well-managed UCBs to set up off-site ATMs without seeking approval through the annual business plans.

It is proposed to set up a Committee to look into banking services rendered to retail and small customers, including pensioners. The Committee will also look into the system of grievance redressal mechanism prevalent in banks, its structure and efficacy, and suggest measures for expeditious resolution of complaints. The Committee will further strengthen the mechanism, for implementing the Reserve Bank’s guidelines on customer service, through on-site and off-site inspections.

It is proposed to prepare a discussion paper on the mode of presence of foreign bank through branch or wholly owned subsidiaries by September 2010.

It is proposed to permit banks to formulate their own policies towards conversion of term deposits, daily deposits or recurring deposits for reinvestment in term deposit.

It is proposed to implement the Supervisory Review and Evaluation Process (SREP) framework for banks from the inspection cycle 2010-11 as an integral part of the Annual Financial Inspection (AFI) of banks.

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It is proposed to set up a Working Group on information security, electronic banking, technology risk management, and tackling cyber frauds.

14 Customer Service

Segmentation of customers on the basis of Net Worth

High Net worth Individuals (HNIs)

Re-defined as per Population Groups.

Population Group’s

Total Relationship

(Minimum 2 out of

a,b & c) Rs.

Advances Minimum

(a)

Rs.

Deposits Minimum

( b)

Rs.

Assets under Management

(c)

Rs.

Metro/Urban 15 Lac 10 Lac 5 Lac 205 Lac

Semi Urban/Rural

7.5 Lac 5 Lac 2.5 Lac 1.25 Lac

Category Annual Income

1) Affluent > Rs.10 to Rs.50 Lac/annum

2) Mass Affluent >Rs.2.40 to Rs.10 Lac / annum

Ultra HNI:- Ultra high net worth individuals are those who have at least $1 million in assets

(about Rs.4.45 crore).

15 SBI in NEWS

In Last >90 Days

(Please connect to “Internet”, if you want to view news. However , gist of the news given below )

SBI in News Last 3 months

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DATE PUB. CAPTION

25-May-2010 DH SBI to expand reach to 50,000 unbanked villages in 2010-11

24-May-2010 ET Banks to offer 'clean loans' to telcos for 3G spectrum buy

24-May-2010 BL SBI to open 100 more branches in AP

23-May-2010 BS SBI has Rs 20,000 cr for 3G auction

22-May-2010 ET Indian banks to provide over Rs 35,00 crore to telecom companies for 3G

22-May-2010 BL SBI to go slow on hiring this year

21-May-2010 ET SBI ups loan limit 10-fold

21-May-2010 BS SBI on cost-cutting drive, to go slow on branch expansion

20-May-2010 ET 'Tiny Branch': Mobile phone and fingerprint scanner to help banks

20-May-2010 BL SBI may review teaser home loans depending on liquidity

20-May-2010 FE SBI rolls out mobile banking service

18-May-2010 BS Strong growth to offset provision pressures

18-May-2010 CN SBI recovers from post-result slide

17-May-2010 ET SBI seeks more time for higher NPA provisioning

17-May-2010 BL Inflation vs growth

15-May-2010 BS SBI plans Rs 200-crore retail bond issue, to list SBI Life...

15-May-2010 BL Higher provisions drag SBI net 32%

15-May-2010 BL Insurance arm to start work in August

15-May-2010 BL SBI chief sees interest rates hardening soon

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15-May-2010 FE SBI to expand global presence, plans foray into LatAm mkts

15-May-2010 FE SBI Q4 net plunges 32% on expenses, provisions

14-May-2010

State Bank Of India - Dividend

11-May-2010 FE SBI wins Asian Banker Award

11-May-2010

State Bank Of India - AGM/Book Closure

7-May-2010 ET After special housing rates, SBI sweetens its farm loan

7-May-2010 FE SBI extends special farm loan scheme with modification

7-May-2010 TE SBI lowers rates on new crop, irrigation loans

6-May-2010 ET SBI ties up with Visa, Elavon to set up point of sales terminals

5-May-2010 BL New models of SBI ATMs soon

3-May-2010 BS SBI TO GO FOR TOP DECK REJIG

2-May-2010 ET SBI teaser rates to continue; HDFC, ICICI scrap scheme

1-May-2010 BS SBI extends teaser rates till June

1-May-2010 FE SBI teaser home loan scheme gets two-month extension

29-Apr-2010 ET SBI to introduce bar-enabled ATMs for seamless bill payment facility

28-Apr-2010 TE Barcode-enabled ATMs from SBI

28-Apr-2010 DH SBI Life net profit for 10 at Rs 276 cr

27-Apr-2010 BL SBI interviews put off

27-Apr-2010 FE SBI lights up clean technology initiative with wind farm launch

23-Apr-2010 BL SBI instals windmills for captive use

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22-Apr-2010 FE SBI in pact for clean solutions

21-Apr-2010 BL O.P. Bhatt, Chairman, SBI

17-Apr-2010 ET 'Interest rates unlikely to rise sharply in 2-3 months'

17-Apr-2010 BL SBI extends farmers' loan scheme

17-Apr-2010 PN Interest rates unlikely to rise sharply in 2-3 months: SBI

12-Apr-2010 ET SBI gets first batch of middle-level staff

7-Apr-2010 ET You can gain from SBI's special home loan scheme

7-Apr-2010 BS SBI hints at raising key rates in a few months

7-Apr-2010 FE SBI taps B-schools to create pool of bank execs

7-Apr-2010 PN SBI says no immediate rate hike

6-Apr-2010 ET SBI opens strategic training unit to hone trainee skillsets

6-Apr-2010 ET You can gain from SBI's special home loan scheme

3-Apr-2010 BL SBI customers can get it done with ‘SMS Unhappy'

3-Apr-2010 FE SBI increases foreign currency deposit rates

2-Apr-2010 BL SBI extends teaser home loan plan till April 30

2-Apr-2010 TE SBI hikes rates on home loans

31-Mar-2010 FE SBI reaches out to the unbanked

31-Mar-2010 DH SBI to kick off Doha, Jeddah operations soon

30-Mar-2010 BS State Bank-Indore merger swap ratio set at 34:100

30-Mar-2010 BS SBI enters custodial services

30-Mar-2010 BL SBI closer to expediting merger of associates

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30-Mar-2010 FE SBI-State Bank of Indore swap ratio at 34:100

30-Mar-2010 DH State Bank of Indore merger process with SBI begins

29-Mar-2010 CN State Bank of India issues shares

29-Mar-2010

Other announcement of State Bank Of India,

29-Mar-2010

State Bank Of India - Allotment of shares

29-Mar-2010

State Bank Of India - Issue of Equity shares

27-Mar-2010 BL SBI introduces Platinum Debit Card

26-Mar-2010 ET SBI-State Bank of Indore merger likely in FY11

26-Mar-2010 BL Scheme for SBI's acquisition of State Bank of Indore modified

25-Mar-2010 ET SBI plans up to Rs 15,000-cr rights issue in Q3 FY11

25-Mar-2010 BS Open to overseas acquisitions: Bhatt

25-Mar-2010 DH SBI open to overseas acquisition: Bhatt

24-Mar-2010 ET No rate hike till Apr 20: SBI

24-Mar-2010 BL SBI to seek Govt nod for Rs 20,000-cr rights issue

24-Mar-2010 FE SBI to wait for policy review before hiking rates; rights issue in next FY, says Bhatt

22-Mar-2010 ET SBI to open 1,000 branches in 2010-11

22-Mar-2010 FE SBI awaits RBI nod to buy stake in Tata Motors Fin

22-Mar-2010 DH SBI to open 1,000 branches in 2010-11

21-Mar-2010 BL SBI not to hike lending rates now, says Bhatt

17-Mar-2010 FE Rs 20k-cr SBI rights issue likely by Nov-Dec

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11-Mar-2010 BS SBI prefers rights issue over govt stake dilution: Bhatt

11-Mar-2010 BL SBI planning 10-year retail bond issue next fiscal

11-Mar-2010 FE SBI to float retail bonds with over 10-yr tenure

11-Mar-2010 FE Citizen SBI first phase over

10-Mar-2010 BL SBI favours rights issue to dilution of Govt stake

10-Mar-2010 FE Govt weighs options for SBI fund raising

10-Mar-2010 FE Bhatt prefers righs issue, plays down stake dilution route

9-Mar-2010 BS Government tables SBI Bill in Lok Sabha

9-Mar-2010 FE SBI Bill reintroduced to pare govt holding to 51%

9-Mar-2010 DH State Bank of India gets government nod for fund tap

9-Mar-2010 TG Bill to lower govt stake in SBI

7-Mar-2010 ET SBI shortlists Visa, RBS, Global Payments for POS partnership

6-Mar-2010 BS SBI not to raise rates soon

5-Mar-2010 ET Commercial taxes e-Payment launched

5-Mar-2010 BS Banking on talent

4-Mar-2010 BS SBI plans to scale up staff intake

27-Feb-2010 ET SBI to gain from govt's decision on farm loan repay

27-Feb-2010 BL Growth-oriented Budget, says O.P. Bhatt

26-Feb-2010 BL You don't need maths to become a bank officer!

SBI in News

SBI wins Asian Banker Award

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Financial Express Tuesday, May 11, 2010

SBI has won the Asian Banker Achievement Award for being the strongest bank in Asia Pacific region, instituted by the Qatar Financial Centre Authority and the Asian Banker magazine. It is in recognition to SBI's combination of financial performance and key business improvements.

State Bank Of India - AGM/Book Closure NSE Announcements Tuesday, May 11, 2010

State Bank Of India has informed the Exchange that the Annual General Meeting of the shareholders of the Bank will be held on June 16, 2010. Further the Register of shareholders of the Bank will be closed for transfer of shares from June 11, 2010 to June 16, 2010, both days inclusive, for payment of dividend for 2009-10, if any, to be considered at Bank's Central Board Meeting scheduled to be held on May 14, 2010.

State Bank Of India - Dividend NSE Announcements Friday, May 14, 2010

State Bank Of India has informed the Exchange that the Central Board at its meeting held on May 14, 2010, have declared a dividend of Rs. 30.00 per share (300%) for the year ended March 31, 2010 inclusive of an interim dividend already paid of Rs. 10.00 per share (@100%).

SBI Q4 net plunges 32% on expenses, provisions Financial Express Saturday, May 15, 2010

The country's largest bank, State Bank of India, registered a 32% drop in net profit for the last quarter of fiscal 2009-10 at Rs 1,866.60 crore, against Rs 2,742 crore in the corresponding quarter of the previous fiscal, due to a rise in employee costs, fall in other income and higher provisioning for non-performing assets. For the whole fiscal, net profit was Rs 9,166 crore against Rs 9,121 crore in FY09, a marginal 0.4% increase. The results disappointed the markets, with the SBI scrip falling 4% to close at Rs 2,222.65, on a day when the Sensex fell 1.57%.

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Explaining the reasons for the sharp dip in the fourth quarter, the bank said operating expenses grew 40.93% mainly due to increase in staff expenses and additional provisioning for pension; other income was down 4.44% due to a 72% decline in profit on sale of investments. Operating expenses were 29.84% higher in FY10, driven by five key costs: during Q4FY09, when nearly 27,000 new employees came on board, the full impact of costs was felt in FY10; Rs 627 crore went into wage revision arrears; Rs 1,998 crore was spent towards additional contribution for pension; an additional Rs 59 crore was spent on financial inclusion; and Rs 347 crore was spent to open 1,049 branches and installing 7,788 new ATMs during the year. Loan loss provision during FY10 stood at Rs 5,147 crore against Rs 2,474 crore in FY09, an increase of 108%. For the quarter, non-performing assets provisioning stood at Rs 1,600 crore. But net interest income of the bank in FY10 increased 13.41% over FY09, while cumulative net interest margins, which had declined from 2.93% in FY09 to 2.30% in June 2009 improved sequentially to 2.43% in September 2009, 2.56% in December 2009 and 2.66% in March 2010. Income from resource operations rose 13.40% as yields were low during FY10 due to a liquidity overhang. Year-on-year, fee income was up 26.57%. Analysts said though there were asset quality pressures on the bank, on core parameters like CASA (current and savings account) and fee income, it had performed well. At the post-results press conference, SBI chairman OP Bhatt said the bank had Rs 40,000 crore in extra liquidity at the end of April and that it had cost the bank Rs 273 crore to carry it. However, Bhatt said that going forward, he envisioned a higher growth rate for the bank, riding on several factors. The retail loans segment is growing fast, with education, home and auto loans being the key drivers. We have put in an NPA management system in place and the results are bearing fruit. Also, we have a pipeline of projects worth Rs 25,000 crore and we have sanctions to do business of another Rs 20,000 crore. The ability to raise resources is much better, said Bhatt. Bhatt said incremental NPAs are going down - the slippage in Q2 of FY10 was Rs 2,000 crore, in Q3 it came down to Rs 1,400 crore and in Q4 to Rs 674 crore. Vaibhav Agarwal, VP, research, banking, Angel Broking, said the asset quality pressure for the bank was coming mainly from corporate and SME accounts.

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The bank saw a total business of Rs 1,54,983 crore at the end of March 2010 with deposits at Rs 62,043 crore and advances at Rs 92,940 crore. Savings bank desposits grew at an average of Rs 4,897 crore per month during FY10, while total CASA (current and savings accounts) growth during the year was Rs 73,168 crore. Bhatt said due to the huge liquidity overhang, the bank would grow down our deposits till June, but expected retail deposits to go up in Q2 and Q3. The bank had brought down its average cost of deposits by 50 bps to 5.80% as on March 31, from 6.30% as on March 09. He said he was bullish on credit growth and expected it to be at 21-22% for FY11. Gross advances for the year was up by Rs 92,940 crore, a growth of 16.94% from Rs 5,48,540 crore in March 09 to Rs 6,41,480 crore in March 10. SBI, which is continuing with its teaser rates till June 30, saw its home loan portfolio growing by 31.69% year-on-year from a level of Rs 54,063 crore in March 09 to Rs 71,193 crore in March 10. Almost 95% of its customers in rural, semi-urban and urban areas are first-time buyers, Bhatt said. Other bank stocks were impacted as well, with the BSE Bankex falling 1.85%. All 14 Bankex constituents declined, with SBI falling the most (-4%), followed by Canara Bank (-2.56%), PNB (-2.14%) and Kotak Mahindra Bank (-2.13%). Sensex heavyweight SBI pulled the index down by 34.56 points, while the banking sector on an overall basis contributed to half of Sensex's 271-points fall. Higher-than-anticipated employee expenditure and NPA provisioning were the key reasons that contributed to the drag on SBI's profitability said an Ambit research report. While analysts expect that the sharp rise in provisioning could be to achieve the RBI mandated 70% provision coverage ratio for bad loans before September, the concern is about the coverage ratio. NPA provisioning, although high, is just about keeping pace with incremental slippages, mentions the Ambit report. So, while gross NPAs inched up by 4% during the quarter (sequentially), net NPAs were lower by an identical margin on a sequential basis. As a result, the bank's provisioning coverage ratio remains at less than 45%. Analysts said they were comfortable with 50% provisional figures.

SBI to expand global presence, plans foray into LatAm mkts Financial Express Saturday, May 15, 2010

The State Bank of India is planning to foray into Latin America. This will be the first time

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any Indian bank will establish presence in that continent. This will be in addition to the bank's plans in Africa, where it will convert its licences into banking branches. The bank is also planning to convert its Washington DC office into a running branch. There are places where we already have licences. For example, in Botswana we already have licences and we have not utilised that so far, the bank's chairman & managing director OP Bhatt said on the sidelines of the FY10 results announcement. According to sources, the bank also has plans to open more offices in the UK and South Africa and expand operations in the Maldives and Mauritius. The bank is already present in 32 countries across the world with 142 offices. Latin America is a continent where we don't have any presence. Other option could be the countries where there is business from India but we have no presence. Like in Africa, where Indian companies might go for energy, metals or minerals, he said. The banking behemoth slowed down its overseas expansion plans since last year after the financial crisis worldwide and concentrated on serving the Indian diaspora at places where it already has a presence. We have aspirations to grow our international business. We want to grow in places where we are, where our profits have grown by almost 25% year-on-year and quarter-to-quarter by more than 70%, Bhatt said at the press conference. At present, overseas business contributes to about 11% of the bank's net profit. We would like to take it to 25% in the next few years, Bhatt said.

SBI chief sees interest rates hardening soon Business Line Saturday, May 15, 2010

There could be some hardening in interest rates in the days to come, according to Mr O.P. Bhatt, Chairman, State Bank of India. “There continues to be surplus liquidity in the system and credit offtake has not picked up, in fact it has been negative and by the end of June it could be flat. Capital inflows also look good for now, so there is no pressure on liquidity, however, if RBI takes steps to control

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inflation, liquidity could dry up, and there could be an upward bias in interest rate,” he said. The bank aims to raise Rs 15,000-20,000 crore, preferably by way of a rights issue by the end of this fiscal. “We have adequate capital at present. But we are in talks with the Government for seeking their approval for a rights issue, which would help us maintain the Government's stake at the present level of 59 per cent,” he said. The bank also had the option of raising funds by diluting government's stake from 59 per cent. “Though rights issue will be the preferred route, in case government does not agree for that, then we have the cushion of bringing down government's stake to 55 per cent (59 per cent). There is also a Bill in the Parliament, which will enable us to bring down government's stake further to 51 per cent so we can dilute up to eight per cent and can raise about Rs 20,000 crore,” he pointed out. The bank also plans to come out with a retail bond issue of about Rs 200 crore in the first half of this year. The bonds would have a duration of 15 years, with a call option for 10 years, or duration of 10 years, with a call option of five years, he said. The bank also wanted its life insurance venture, SBI Life, to be listed, he said. “We are not in need of capital for the company, but we would like it to be listed, so that there can be some price discovery. We are in touch with IRDA for that,” he said. On the overseas front, the bank plans a foray into the Latin American countries. “There are places where we already have licenses. For example, in Botswana we already have licenses and we have not utilised that so far,” he said. The bank would also consider foraying into countries where there is business from India but the bank has no presence so far – such as in Africa, where Indian companies might go for energy, metals or minerals, he observed. SBI Cards may break even SBI Cards, the credit card venture of the bank is likely to break even by the end of this fiscal, he said and added, “The losses have been coming down, we have been able to issue

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about 25,000 fresh cards on a monthly basis; we are hopeful of breaking even by this fiscal.” The net loss was down by 17 per cent at Rs 154 crore (Rs 185 crore) during the present fiscal.

Insurance arm to start work in August Business Line Saturday, May 15, 2010

The SBI General Insurance Company, a 74:26 joint venture between the State Bank of India and the Insurance Australia Group Limited (IAG), will start operations in full swing from August with an initial equity capital of Rs 150 crore, according to the SBI Chairman, Mr O. P. Bhatt. Addressing media persons on the occasion of announcing the bank's results for 2009-10, Mr Bhatt said, “While our general insurance venture had a limited commercial launch in March this year, the company will be in full operation, along with IT support, from August.” Of the initial capital base, SBI will contribute Rs 111 crore while the foreign partner will contribute Rs 39 crore, in line with the stake holding ratio. IAG will also pump in Rs 503 crore as premium to the equity share, Mr C. Narasihmhan, Deputy Managing Director, New Business, SBI said. “The premium would be deployed for expanding operations of the general insurance company,” he said. “The launch of the SBI's general insurance venture is been closely watched by other players in the industry. We will look at leveraging the entire branch network of SBI in this venture as we did in case of SBI Life,” Mr Bhatt said. The SBI brand also contributed to the reputation of IAG with its shares shooting up after the announcement of the tie up, he added. On the initial capital expenditure for the venture, Mr Narasihmhan said that nearly Rs 200 crore would be invested on setting up the IT infrastructure in the company. Apart from using the bancassurance route for selling the in-house general insurance policies from around 14,000 SBI branches, the company also plans to open 50 to 60 offices within one year.

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It targeted to break even, that is, start earning underwriting profit, in the fifth year of operation, he added. On prospects launching initial public offer for SBI Life, Mr Bhatt said, “We would like to get this company listed not because we need capital but for better price discovery which again can add value to SBI's shares.” The company was in dialogue with the Insurance Regulatory and Development Authority of India and would proceed with the IPO if and when IRDA came out with the listing guidelines, he added.

Higher provisions drag SBI net 32% Business Line Saturday, May 15, 2010

Dragged down by higher provisions towards bad loans, wage revision and pension, State Bank of India posted a 32 per cent drop in net profit on a standalone basis at Rs 1,867 crore for the fourth quarter ended March 31, 2010, against Rs 2,742 crore during the corresponding period last year. Provisions were up by 31 per cent at Rs 3,327 crore (Rs 2,535 crore) during the period under review. On a sequential basis, the net profit dipped by about 25 per cent from Rs 2,479 crore in the third quarter ended December 31, 2009. Loan loss provision (provision set aside as an allowance for bad loans) accounted for almost 66 per cent of the total provisions at Rs 2,187 crore. The drop in net profit is mainly on account of huge liquidity overhang of about Rs 40,000 crore as on March 31, 2010. The negative cost of carrying this liquidity is about Rs 273 crore. We also had extra provisioning towards pension and wage arrears to the tune of Rs 547 crore and NPA provisioning about Rs 1,800 crore during the fourth quarter, said Mr O.P. Bhatt, Chairman, SBI, while addressing a press conference to announce the bank's annual performance here on Friday. The bank's provision coverage ratio stands at 59 per cent (57 per cent). On a consolidated basis, the net profit dipped by 21 per cent at Rs 2,620 crore (Rs 3,329 crore) during the quarter under review.

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It had registered treasury gains of about Rs 1,000 crore during the fourth quarter of last year, which was not available this year. Other income, that includes profits on sale of investment was down by 4.4 per cent at Rs 4,509 crore (Rs 4,718 crore), due to 72 per cent decline in profit on sale of investments over the corresponding period last year. The bank had made a profit of Rs 1,508 crore on account of sale of investments in the quarter ended March 31, 2009. It also witnessed a 41 per cent rise in operating expenses on account of an increase in staff expenses; while overheads grew at 26 per cent due to higher expenses incurred on opening of new branches and ATMs, he said. Shares of the bank dropped 4 per cent to Rs 2,222.65 on the BSE on Friday. The Chairman of State Bank of India, Mr O.P. Bhatt (right), along with other senior officials, addressing the media in Kolkata on Friday. - A. Roy Chowdhury SBI witnessed a rise in gross non-performing assets to the tune of Rs 674 crore during the quarter. In the second quarter, the rise in NPAs was at Rs 2,000 crore, in third quarter it was Rs 1,400 crore while in fourth quarter it came down at Rs 673 crore. But, some of the existing NPAs are aging, and that will require higher provisioning. Baring agriculture the amount of NPA will keep going down, but the provisioning requirement may remain the same over the next few quarters, Mr Bhatt said. The net interest margin improved at 2.96 per cent (2.39 per cent).

SBI plans Rs 200-crore retail bond issue, to list SBI Life... Business Standard Saturday, May 15, 2010

State Bank of India (SBI) would come out with a retail bond issue of about Rs 200 crore in the first half of the year, Chairman O P Bhatt said today. This will be the first bond issue by a bank for retail clients. The size of the issue could be around Rs 200 crore to begin with. The money will help the bank shore up Tier-II capital. The bonds would have a duration of 15 years, with a call option for 10 years, or a duration of 10 years, with a call option of five years, said a top SBI official. 'The initial size could be a few hundred crores. We want to create a secondary market for them,' said Bhatt. Bhatt said SBI was in also talks with the government to raise 15,000-20,000 crore through a rights issue. The issue was expected to

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happen this financial year, he said. The bank also wanted its life insurance venture, SBI Life to be listed, he said. 'We do not capital for the company, but we would like it to be listed so that there can be some price discovery. We are in touch with Irda (Insurance Regulatory and Development Authority) for that,' he said. On interest rates, Bhatt said, 'If RBI (Reserve Bank of India) takes steps to control inflation, liquidity could dry up, and there could be an upward bias in interest rates.' However, as on March 2010, the bank had a liquidity overhang of about Rs 40,000 crore and credit offtake was not picking up, said Bhatt. The bank is expecting credit growth of 21-22 per cent in the present financial year. Bhatt said the bank would not be aggressive in deposit mobilisation till June. After that, he expected deposits to grow 15-16 per cent in the present financial year.

Inflation vs growth Business Line Monday, May 17, 2010

Announcing the results of State Bank of India for the fourth quarter ending March 2010, the bank's Chairman, Mr O. P. Bhatt, expressed the view that interest rates would likely as not harden soon. At first glance this seems puzzling. Credit growth is still below 20 per cent; industrial output data for March showed consumer non-durables growth, the best indicator of consumer spending, at a lethargic 3.3 per cent. With that kind of “stimulus” is it surprising that gross fixed investments too are yet to pick up even though capital goods did show some smart recovery? So why should the leading bank in the country talk of the possibility of interest rates hardening at this stage? The most obvious reason is the increasingly strong signals the Reserve Bank of India (RBI) has been sending about tightening liquidity and moving away from a soft monetary policy. As it has repeatedly stressed, inflation hurts and needs to be dampened. At around 10 per cent the wholesale price index is still above comfort levels; after a long hiatus the RBI finds the WPI for manufactured goods too rising — from 2.3 per cent in March 2009 to 7.13 per cent twelve months later. So far banks have desisted from picking up the hints even though the RBI reverse repo rates and cost of funds have moved up. In response, particularly the private banks have shifted from high-cost bulk deposits to current account and savings account deposits thus cutting costs. Now, if Mr Bhat's observation is anything to go by, banks are girding themselves for an increase in rates. The issue that policymakers need to ponder is whether that hardening will have the desired effect on inflation or an unwanted impact on the depressed credit market and by implication, on economic prospects? Right now inflation is certainly more widespread than it was two quarters ago; prices of manufactured

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goods have risen but they have done so on account of dearer food products, rubber and sugar; which means supply constraints have added their bit, not exuberant consumer demand. Commodity prices too could swing upwards after the present momentary lull; fuel and petroleum are moving up internationally but just how monetary policy will help curtail their baneful effects is not clear. What is clear is that higher interest rates will add to those rising costs even before the business cycle has begun to rev up leave alone become overheated. Inflation has to be engaged urgently because it precedes growth and is not the result of it. But North Block has to forge the weapons. All we have right now is pious rhetoric or resounding silence. Policymakers need to ponder whether hardening rates will smother inflation or harm the depressed credit market and by implication, economic prospects.

SBI seeks more time for higher NPA provisioning Economic Times Monday, May 17, 2010

NEW DELHI: Stung by a severe fall in its Q4 net profit due to higher provisioning for bad loans, the country's largest lender State Bank of India has sought more time from the Reserve Bank of India to meet the new requirement of setting aside funds worth 70% of the bad loans. The SBI request assumes importance as its profit dropped by a whopping 32% to Rs 1,867 crore in the fourth quarter of 2009-10 even when it raised provisioning onlyjnar-ginally from 56.19% to 59.23% of its total non-performing assets on a quarter-on-quarter basis. SBI's competitor ICICI Bank has already got six months relaxation to meet the new norms beyond the RBI stipulated September 2010. 'RBI has allowed us time till March 31 next to reach a provisioning coverage ratio of 70 %. And we should be able to achieve it in the normal course and we are on track having now got the two additional quarters,' an ICICI , Bank official said.

SBI recovers from post-result slide Cabnas Tuesday, May 18, 2010

State Bank of India rose 1.36% to Rs 2282.10 at 14:04 IST on BSE, extending gains for the

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second straight day, as the state-run bank expects its advances to grow by 22-23% in the current financial year.

Meanwhile, the BSE Sensex was up 99.42 points, or 0.59% to 16,934.98.

On BSE, 5.69 lakh shares were traded in the counter as against an average daily volume of 4.02 lakh shares in the past one quarter.

The stock hit a high of Rs 2296.60 and a low of Rs 2230.90 so far during the day

The stock has risen 2.61% in two trading sessions from a recent low of Rs 2222.65 on Friday, 14 May 2010. The two-day recovery in the stock has materialized after the stock lost 4% in a single trading session on Friday, 14 May 2010 hit by lower fourth quarter net profit. The result was announced during trading hours on 14 May 2010.

The bank's equity capital is Rs 634.88 crore. Face value per share is Rs 10.

SBI's net profit declined 31.93% to Rs 1866.60 crore on 1.9% rise in total income to Rs 22474.12 crore in Q4 March 2010 over Q4 March 2009.

The management of State Bank of India, India's biggest commercial bank in terms of branch network, is in talks with the government for infusion of capital in coming years. The management prefers rights issue without diluting government stake in the bank. However, if the above option is denied, the bank can raise capital by raising equity by decreasing government stake by 4% to 55%.

The government of India holds 59.41% (as on 31 March 2010) in the bank.

Strong growth to offset provision pressures Business Standard Tuesday, May 18, 2010

The banking sector had posted decent numbers for the March quarter until SBI came out with its results. SBI’s net profit during the quarter took a hit of 32 per cent on account of higher provisioning for non-performing assets and pay-revision arrears. It also missed analysts’ estimates. The country’s largest bank saw an improvement in its net interest margins to 2.96 per cent, up by 66 basis points over the corresponding quarter last year. Growth robust, slippages lower Even though there were concerns on the profitability, the

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bank managed to grow its net interest income (NII) by 38 per cent, the highest in last six quarters. Though the loan growth slipped to around 16.6 per cent in the March quarter, compared to 17.4 per cent in the December quarter, the performance came about on a higher base. SBI is observing good traction in retail loans — the segment it continues to focus when most of the private players shied away in fear of bad loans. Besides retail, SBI’s lending to large corporate is still robust, with loans of Rs 25,000 crore waiting in the wings to get apprised. Overall, SBI increased its market share in advances to 16.3 per cent, up by 30 basis points, last year and credit-deposit ratio also improved to 73.6 per cent (66.6 per cent as of 2008-09) at the end of 2009-10. The bank’s asset quality improved over the past quarters: from a net slippage of over Rs 2,000 crore in the second quarter 2009-10 to Rs 1,400 crore in the third quarter of the same year, while around Rs 650 crore got added to bad loans in the March quarter. Except agriculture, all other segments saw a decrease in slippages. Asset quality is unlikely to deteriorate further going ahead. Provisioning woes However, the profitability was weighed down by increase in provisions for non-performing assets on expected lines. The provisions were up 71 per cent year-on-year in the March quarter to Rs 2,350 crore. While SBI’s provision coverage increased to around 59 per cent, it was still below RBI’s mandated coverage of 70 per cent. OP Bhatt, SBI chairman, said, “We are in consultation with the RBI on the time frame. Roughly, the provisioning requirement will be between Rs 3,500 and 4,000 crore.” Should RBI allow a provisioning coverage extension over the next four quarters instead of two as envisaged originally, it should ease some of the expected pressures on SBI’s profitability. Investment rationale SBI has adequate liquidity in its books with a capital adequacy ratio of 13 per cent and further plans a rights issue to raise Rs 15,000-20,000 crore. It would serve it in good stead as the bank plans to increase its credit target to 21-22 per cent for 2010-11. Overall, SBI needs to provide Rs 1,800-2,000 crore in each of the next two quarters to improve its provision coverage to 70 per cent, which would impact its profitability. However, with the business environment improving and net interest margins seen inching higher (on the back of downward repricing of deposit rates and better CASA ratio), its operating profits are seen rising at a brisk pace, helping offset the expected surge in provisions. At Rs 2,251.45, SBI trades at 1.9 times its 2010-11 standalone book and can be considered on dips.

SBI rolls out mobile banking service Financial Express

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Thursday, May 20, 2010

On successful completion of mobile banking service on pilot basis, State Bank of India (SBI) has finally launched its mobile banking service, 'State Bank freedoM'. Launched in December 2008, the pilot covered 660 branches of the bank and was conducted till March 2009. The bank finally rolled out the service across its branches early this month, a bank official told FE on condition of anonymity. Some of the services being provided by the bank through the new initiative include cellphone top-up and utility bill payment. Also, one can transfer fund upto Rs 50,000 in case his cellphone was application-based. Otherwise, the one will be allowed fund transfer upto Rs 1,000 only. Some of the other facilities which can be availed through the new initiative include balance enquiry, mini statement for last five transactions, order for issuance of a cheque book and fund transfer within the bank. The official informed that the bank was in talks with 'G-Grahak' to provide some of the other facilities to its customers like purchase of tickets for train, airline or even a movie.

SBI may review teaser home loans depending on liquidity Business Line Thursday, May 20, 2010

State Bank of India might take a call on extending its special (eight per cent for first year) home loan scheme depending on its liquidity condition. The bank is currently sitting on surplus liquidity of Rs 40,000 crore as on March 31, 2010. Under the special home loan scheme, the bank offers loans at eight per cent interest in the first year and 8.5 per cent for the second and third years. Thereafter, it becomes a floating rate depending on the prevailing interest rates. “We are sitting on surplus liquidity at present, lending at eight per cent would make more sense than parking the funds in reverse repo, which will fetch us only about 3-3.5 per cent. We will review the need for extending the scheme further based on our liquidity position,” said Mr R. Sridharan, Managing Director and Group Executive (Associates and Subsidiaries), SBI. The scheme, which was initially launched for three months in August 2009 in order to

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facilitate home buyers during the festive season, was thereafter extended till March 31, 2010. This was later extended to June 30, 2010. Under the scheme, loans up to Rs 50 lakh and tenure of 25 years were offered at 8 per cent interest rate during first year and 8.5 per cent fixed during the second and third year. After three years, interest rate is calculated at 2.75 per cent below SBAR (for floating rate) and 1.25 per cent below SBAR with a reset frequency of five years. For loans above Rs 50 lakh, the interest rate is 8 per cent for first year and 9 per cent for the second and third year. The home loan scheme had not affected the bank's net interest margin (NIM), Mr Sridharan said, and added, “it has only had a positive impact on our margins.” The bank's NIM improved at 2.96 per cent during the quarter ended March 31, 2010, against 2.39 per cent during the corresponding period last year. The bank's home loan segment grew by about 32 per cent at Rs 71,193 crore as on March 31, 2010, against Rs 54,063 crore during the year ago period. More than 95 per cent of customers (in rural, semi urban and urban areas) were first time home buyers, said Mr S.K. Bhattacharya, Managing Director, SBI, while announcing the bank's annual performance here recently. SBI had witnessed 50 per cent increase in average home loan sanctions, from 14,400 loans sanctioned every month in February 2009 to 22,000 in September 2009. Teaser rates The introduction of ‘teaser rates' by SBI had forced other lenders to launch similar products. However, other banks withdrew the scheme in March, even while SBI decided to extend it . HDFC also followed suit by extending its teaser rate home loan scheme till June 30. Under the scheme, HDFC offers a fixed rate of 8.25 per cent up to March 2011, nine per cent for the next one year and the prevailing floating rate thereafter. The scheme had expired last month.

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'Tiny Branch': Mobile phone and fingerprint scanner to help banks Economic Times Thursday, May 20, 2010

When SBI wanted to tap customers in the naxal-hit Dantewada or the hilly region of Seiling in Mizoram, it was looking for a solution that was not just low-cost but also safe and easy to operate. So when Anurag Gupta, founder and director of the Zero Mass Foundation (ZMF) approached SBI with his idea of the 'Tiny Branch' , the bank was all ears. The Tiny Branch costs Rs 15,000 per installation and comprises of a mobile phone and a fingerprint scanner. A Nokia phone has been designed specially for ZMF to identify RFID tags; it also has an inbuilt application that helps in new account opening and to carry out other banking transactions. The phone has been modified to hold data of up to 50,000 customers for a period of five years. The phone also takes pictures of the customer for making the account card and records his name in his own voice as a voice tag, to be used later for verification purposes. Apart from written details, during enrolment, five fingers are scanned and the fingerprints recorded. The equipment can record details in 11 languages including Arabic. Once a bank zeroes in on a village, ZMF steps in, seeking help from the village elders or the Panchayat to appoint Customer Service Points (CSPs). CSPs equipped with mobile phone and fingerprint scanner, are entrusted with the responsibility of acquiring customers and also undertake banking transactions in the village. “We mostly recruit women, preferably with matriculate level of education,” explains Gupta. Of the 24,000 CSPs that the assist ZMF to carry out the bank's business, 98% are women. Proximity to a local branch is essential for the Tiny Branch to deliver cash, form submissions/collections and issuing of new account cards. Lack of power is not an impediment as the devices work on a battery that can be charged using a solar panel. Similarly there is no need of internet connectivity for enrolling customers or carrying out transactions. However, transactions have to be backed up on an hourly basis through GPRS. But what happens when there are connectivity problems?

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“CSPs sometimes tie the mobile phone to a bamboo stick and hoist it on top of their house to transmit data,” says Gupta about the ingenious ways used in difficult conditions. From being an architect to creating smart systems like mchek - a mobile payment platform to the GO Mumbai smart card, Gupta has always believed in the power of innovation. “The Tiny Branch is one of our most important creations and I had to let go of others in order to concentrate on this,” he says. While Rs 15,000 maybe low-cost , Gupta is far from being satisfied. Besides bringing down the cost of the system, he hopes to install 250,000 of these Tiny Branch's across Indian villages.

SBI on cost-cutting drive, to go slow on branch expansion Business Standard Friday, May 21, 2010

State Bank of India (SBI) has swung into action to check its rising operating expenses, one of the key factors responsible for dragging down its fourth quarter profits. As a first step, it has decided to scale down its branch expansion plan and is now expected to open around 500 branches during the current financial year, as against nearly 1,000 proposed earlier. The countrys largest lender, which was on a branch opening spree, had opened around 1,000 branches and nearly 8,000 automated teller machines (ATMs) in 2009-10. Since 2006-07, the bank has opened nearly 3,000 branches, of which 75 per cent have managed to break even. Typically, an SBI branch takes around 18 months to break even. In the fourth quarter alone, opening of new branches and ATMs dented the banks profits by Rs 100 crore. SBI started expanding in a big way in 2008-09 and 2009-10. However, the returns have not accrued to the magnitude that was expected. So, there is a thinking that we should first exploit the present capacity fully before stepping up expansion, a senior SBI executive said. The scaling down of the branch expansion plan is part of SBIs overall game plan to check costs. The public sector lender intends to cap the growth in operating expenses to around 5 per cent during the current financial year. The growth in operating expenses had reached 30 per cent in 2009-10 and 41 per cent in the fourth quarter, courtesy aggressive branch expansion and addition to headcounts.

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Together with high provisions for bad debt and staff costs, higher operating costs resulted in a 32 per cent decline in SBIs fourth quarter net profit. The change in strategy comes at a time when there are signs that the crisis in Europe could impact the pace of economic growth in 2010-11. A bank executive said SBI had to look at three aspects to shore up the bottom line -- costs, capital and liquidity. While capital and liquidity are not critical issues at present, the management was of the opinion that cost management was crucial, said a source. Besides, it was felt that by controlling costs, the bank could use some of the resources to improve the loan-loss coverage ratio, which is provisions for bad debt. While the bank has to deal with rising levels of non-performing assets, it has to increase the provision coverage ratio to 70 per cent from 59 per cent at present, for which it has to set aside an additional Rs 2,100 crore over the next two quarters. A number of belt-tightening measures are also being put in place to keep costs under check. While overall costs are being cut, the bank has decided to go ahead with its planned employee induction programme. This is a long-term focus area as a large number of staff is going to superannuate over the next two years. So, we need to find replacements and train them, an executive added. The bank has hired nearly 30,000 people during the last two years, which has also added to the overall costs. During the fourth quarter, Rs 100 crore was spent as wages for new employees. Higher operating cost has been incurred in FY10 to employ more people and open more branches/ATMs which will lead to improved service delivery and higher productivity in the coming years, SBI said in a presentation to analysts. Bank executives, however, said unlike some of the private players, which had sacrificed growth in business to put their house in order, SBI will go about acquiring business in an aggressive way. The public sector bank is projecting 20 per cent credit growth for 2010-11, compared with 17 per cent last year.

SBI ups loan limit 10-fold

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Economic Times Friday, May 21, 2010

NEW DELHI: State Bank of India (SBI) will increase by ten-fold its loan limit to individuals planning to buy land to build a house as the country's largest lender makes a greater push into the housing segment.

The bank has finalised a proposal under which it will lend Rs 10 crore for buying land for housing against the earlier cap of Rs 1 crore, said a senior SBI official. The bank has eased a rider pertaining to the construction period if the project is undertaken by government agencies. Currently, a project must be constructed within two years.

'A customer will also be eligible to avail another housing loan for other housing-related construction on that plot, enjoying the benefit of running both the loans concurrently,' said a senior SBI official.

SBI, however, has set the margin money limit - the amount a customer has to pay upfront for availing a loan - at nearly 35% for loans above Rs 1 crore.

For loans up to Rs 75 lakh, SBI has fixed the margin money requirement at 20%. SBI's latest move to push ahead in the housing sector follows its troubles with excess liquidity and a tepid credit offtake.

The bank plans to increase its credit growth target by around 22%. Last year, the central bank had revised the credit growth target for commercial banks, the money they lend to customers, to 16% from 18%.

SBI has already turned its attention to the housing sector. The bank recently extended its popular 8% home loan scheme, or teaser loans, until June 30.

It is also looking at other avenues to increase the credit offtake, though it will take steps to see that the due diligence process doesn't suffer.

'To minimise fraud risk, two title search reports from different lawyers will be obtained before sanctioning the loan,' the official said.

The sharp increase in the loan amount is also expected to boost the real estate sector, which, despite the return of buyers, continues to suffer from a big drop in banking credit. Loans to the realty sector fell 97% to Rs 842 crore for the 11 months to end February against Rs 33,617 from a year ago, say RBI

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figures.

'Schemes such as this will indirectly ensure credit flow to these companies,' said a senior official of a real estate company.

SBI to go slow on hiring this year Business Line Saturday, May 22, 2010

The major recruiter among the public sector banks, State Bank of India will go slow in hiring this year. “This year the recruitment may be a little lower than what it has been for the last couple of years,” Mr O P Bhatt, SBI Chairman, told newspersons after inaugurating 51 point of sales (PoS) machines here on Friday. The bank, which had hired over 25,000 in various clerical and probationary officers for last two years, is currently in the process of finalising the plans for the year in terms of recruitment. “This year we may not open as many branches as we did last year (about 1,000) as we will complete merger of State Bank of Indoor soon, which will give us better reach,” Mr Bhatt said explaining the decreased need for hiring in large numbers. Jt Venture Plan The bank would be setting up a joint venture for acquiring merchandise business. “This year our focus is on PoS machines. This will be done through a joint venture,” he said adding that the target was to have one million PoS in the next two years. On the current number of PoS machines, he said: “I don't remember the number. In this State, we have 51 now.” The bank would continue to grow this year. “We are expecting 20 per cent credit growth this year.” The bank would raise Rs 100 to 200 crore through retail tier-II bonds. “Actually we don't need capital. This is to test the market for a product we are planning to launch,” he added.

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On the state of economy, he said the Gross Domestic Growth could be at 7.2 per cent this year and 8 per cent in the next year. Base Rate On the proposed base rate to be implemented from July 1, Mr Bhatt said the bank was preparing for it. It could be at about 8.5 per cent or a little lower for SBI. On the interest rates, he said there might not be any immediate hardening as there was enough liquidity at present.

Indian banks to provide over Rs 35,00 crore to telecom companies for 3G Economic Times Saturday, May 22, 2010

MUMBAI: Indian banks led by the country's largest bank, State Bank of India (SBI), will provide funds aggregating over Rs 35,000 crore to telecom companies for paying the government for the third generation (3G) mobile spectrum, while local investment institutions and mutual funds are also subscribing to short-term paper issued by these firms. State Bank of India (SBI) has emerged as the largest lender to telecom companies by agreeing to lend close to Rs 20,000 crore to the telecom companies. Among other banks, state-owned IDBI Bank, too, has agreed to loan Rs 8,000 crore to these companies. Bank of Baroda and Bank of India will provide Rs 3,000 crore and Rs 2,000 crore, respectively, according to bankers. Telecom companies, which won licences for bandwidth for third-generation mobile services, have to pay up close to Rs 68,000 crore to the government - far in excess of what they estimated earlier. Although banks are expected to be the biggest funding source, telcos are scrambling to raise funds from all possible sources, including insurance companies, mutual funds and overseas borrowings. Bankers said that most of the borrowing is for the short term at rates ranging from 9% to 11%. “It is most likely that telecom companies would replace the domestic loan with foreign

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borrowings in order to bring down their cost of funds,” said a senior bank official from a state owned bank. In December, the Indian central bank provided a special dispensation for telcos to raise money through the overseas borrowings route to finance 3G licence. The Reserve Bank of India has otherwise imposed fetters on companies from other sectors manifest in the ban on raising working capital loans through foreign loans and a cap on the amount that can be raised for project financing. “Most telcos had arranged loans in the range of Rs 35,000-40,000 crore several months ago, but had not drawn the money from banks since the auction got delayed. As of now, they are in talks with banks to raise top-up loans,” said senior bank officials. The top-up loan is the difference between the loan they had already arranged in the past for 3G and the amount that they will actually have to pay for the licence. Several telcos, such as Tata Teleservices, Idea, Reliance Communication and Aircel, entered the debt market on Thursday and Friday to raise money through the commercial paper route. Tata Tele raised Rs 1,500 crore for one year at 7%, while Idea raised Rs 1,000 crore for one year at 6.75% and RCom raised Rs 4,000 crore for three months at 3%. A debt market dealer said that half of the bonds issued by RCom were subscribed by life insurance major LIC, while the rest were bought by MFs such as Birla Mutual, besides banks. He said that Aircel, too, is looking at raising Rs 1,000-1,500 crore for one year. Other insurers, too, have extended loans to telcos. For private insurers the 'AAA' rating is very important which is why companies are choosing to raise short-term debt of around one year where they can obtain the best rating. They are also securing guarantees from group companies with strong cash flows. “Going by the international experience, we feel that there will be a couple of companies that will go bust and a couple of ones that will be make a lot of money. But we don't know which are these companies and are therefore more comfortable with short-term loans,” said the CFO of a private life insurer. Among those looking overseas for funds are companies such as Vodafone, Bharti Airtel, Idea and Tata Tele. “The source of funding will depend on the rates at which telecos are raising money. They will come to MFs if they are able to raise more money at lower cost. The

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borrowing pattern could be fairly well-balanced between various sources of funding,” said Ritesh Jain, head-fixed income, Canara Robeco MF. Barclays, YES Bank, Citi, Standard Chartered and HSBC are arranging the short-term loan for companies. HSBC, for instance, is helping Vodafone and Aircel tie up funds. According to MF industry officials, Bharti Airtel currently has about Rs 5,000 crore parked in liquid MFs and the company expects the balance portion to be raised through foreign borrowings. In April, of the total amount of $2.81 billion raised overseas by India Inc through foreign borrowings, Vodafone Essar had raised the highest amount. The telco raised $1.47 billion to meet its expenditure. Some of the AMCs, including Birla Sun Life MF, UTI MF and SBI MF have subscribed to commercial paper issued by Tata Tele and RCom. “An outflow to the tune of Rs 70,000 crore could cause a temporary liquidity stress,” said Lakshmi Iyer, head-fixed income, Kotak MF. She added that liquidity could come under further pressure if there are large sales by FIIs, but the money is expected to come back into the system soon as the government has lined up a big-ticket spending. According to Mr Jain of Canara Robeco, temporary liquidity issues. if it arises, could be dealt by banks borrowing from RBI under its repo facility.

SBI has Rs 20,000 cr for 3G auction Business Standard Sunday, May 23, 2010

State Bank of India will lend about Rs 20,000 crore for operators participating in the auction for third-generation (3G) spectrum, SBI Chairman OP Bhatt said today. The bank as of March end had liquidity of Rs 40,000. The 3G auction could reduce it by 50 per cent if there is no further growth in its deposits, Bhatt told mediapersons at the Hyderabad International Airport today, where he opened a new branch of the bank. Bhatt had yesterday said that more than one 3G operator had approached SBI and the bank had given appropriate limits to them.

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Borrowers have expressed fears that if money for the 3G auctions flows out of the banking system to the government, liquidity would dry up and interest rates will go up. However, this could reverse if more foreign investments come to India

Banks to offer 'clean loans' to telcos for 3G spectrum buy Economic Times Monday, May 24, 2010

Sangita Mehta MUMBAI: Banks have agreed to give clean loans - the industry term for loans against which there is no specific security - to telecom companies to acquire bandwidth for third generation (3G) mobile telecom licences. Interestingly, this follows a decision by the department of telecommunications (DoT) not to allow telecom companies to pledge the new 3G licence with banks to avail of loan. At the time of the 2G spectrum auction, DoT, telecom companies and banks had entered into a tripartite agreement wherein the licence was pledged with banks to the extent of loan availed of by the telecom company. But, during 3G auction, the telecom regulator has forbidden pledging of licence as it would amount to a transfer. As a result, banks have decided to give loans to telecom companies against cash flow and corporate guarantees. Telecom companies, which have won the 3G licences, have to jointly pay the government close to Rs 68,000 crore, double of what they had initially estimated. A huge portion of this amount - close to Rs 45,000 crore - will be provided by banks as short to medium-term loan. The country's largest bank State Bank of India will lend around Rs 20,000 crore followed by Rs 8,000 crore by IDBI Bank. Other banks like Bank of India have agreed to lend Rs 2,000 crore, while Bank of Baroda will extend Rs 3,000 crore. Even the banking regulator, the Reserve Bank of India, has made it clear to banks that loans to telecom companies will have to be treated as clean loans even if the licence is pledged with them as security. This is because, in case the telecom company defaults, banks do not have the authority to sell the licence to another operator. Banks are generally not very comfortable providing unsecured loans since they have to set aside more capital on such loans. Secondly, they do not have a security to fall back on if the borrower defaults. Nonetheless, most banks are going ahead with such unsecured loans since most of these loans would be short term, as telecom companies are expected to replace the domestic borrowing with foreign borrowing in order to bring down their cost of funds.

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In December, the RBI had given a special permission to telecom companies to raise money through the overseas borrowings route to finance 3G licence. RBI rules restrict companies in other sectors from meeting their working capital requirement through foreign loans and even put a cap on the amount that can be raised for project financing. Sources said that a few weeks ago, senior officials from several banks met to discuss on the modalities of funding the huge sum required for 3G funding. At that time, most bankers felt that they would insist upon the telecom companies to pledge the 3G licence with them, even if RBI does not recognise it as a security. “At least it will create some moral obligation on the company. However, due to disagreement among the banks, some of the large lenders have gone ahead giving loans without the licence as a security,” said a senior bank official on condition of anonymity.

SBI to expand reach to 50,000 unbanked villages in 2010-11 Deccan Herald Tuesday, May 25, 2010

New Delhi, May 24, (PTI) Country's largest lender State Bank of India plans to cover 50,000 unbanked villages during the current fiscal as part of financial inclusion drive. 'The bank under financial inclusion initiative has planned to cover 50,000 unbanked villages during 2010-11 which will take total reach to 1,50,000 villages,' a senior official of SBI said. To achieve this the bank plans to hire 15,000 business correspondents, who will help people in the rural areas to open bank accounts. 'In order to expand our presence in the unbanked areas, the bank intends to hire around 15,000 (business correspondents) in 2010-11,' the official said. It is not possible for banks to open branches in every village, so a business correspondent and business facilitator model would help in taking banking facilities to every part of the country, the official said. Business correspondents are persons who, besides helping rural people to open bank

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accounts, would facilitate in banking transactions. Their key role is to accept deposits and remit money. In Budget 2011, Finance Minister Pranab Mukherjee had said, 'To reach the benefits of banking services to the 'Aam Aadmi' (common man), the RBI had set up a high-level committee on the lead bank scheme.' After assessing the recommendations of this committee, and in further consultation with RBI, the Finance Minister had said that it was decided to provide appropriate banking facilities to habitations having population in excess of 2,000 by March, 2012. 'It is also proposed to extend insurance and other services to the targeted beneficiaries. These services will be provided using the business correspondent and other models with appropriate technology back up. By this arrangement, it is proposed to cover 60,000 habitations,' Mukherjee had said.

You don't need maths to become a bank officer! Business Line Friday, February 26, 2010

If you want to become a bank officer but are not so good at maths, there is no need to worry. You can still grab an officer's post provided you have good logical and reasoning abilities, thanks to State Bank's of India's change of policy. In its recent notification for recruitment of 4,000 probationary officers (POs), SBI has dropped the numerical ability and quantitative aptitude papers to the pleasant surprise of many a candidate. “It is a welcome change as completing numerical ability/quantitative aptitude tests in time is a problem for many who are otherwise very good at data interpretation and reasoning,'' Mr Prem Kumar, a JNTU student and aspirant for bank PO's post, told Business Line. According to a senior SBI official, a lot of thinking has gone into the change in test pattern. “At the officers' level, what is important is data crunching but not simple number crunching. A higher focus on logical reasoning abilities might be better,'' he said.

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Another angle to the decision could be the assumption that those who aspire for bank jobs should generally be good at maths. According to Mr C. S. Vepa, Director, National School of Banking, a training institute for bank exams, the increasing use of core banking solutions and computers make expertise in numerical ability not so relevant to an officer' s job. “In the current economic environment, an officer is supposed to take speedy decisions based on sound reasoning. In fact, SBI, in its notification clearly mentions that the reasoning test will be of a high level,'' he said. Many good candidates from rural areas are expected to benefit by the new pattern of exam. “Many banks are now planning customised recruitment patterns. We need to see what comes next,'' he added. Interestingly, Syndicate Bank did away with the recruitment test for its officers' exam conducted recently. “We short-listed the applicants for interviews,'' said a Syndicate Bank official. Proposal for common test There are also other proposals, one of which is a common entrance test, the score in which (like GMAT) can be used to short-list the applicants for various positions in banks. Last year, banks had hired over 50,000 candidates for which nearly 80 lakh candidates had competed. This year, about 40,000 posts are expected to be filled. Most banks are ascertaining the vacancies to be notified, said sources.

SBI lights up clean technology initiative with wind farm launch Financial Express Tuesday, April 27, 2010

At a time when global entities like International Finance Corporation (IFC) are keen on funding clean energy projects in India, State Bank of India (SBI) has taken the lead role to cut carbon footprint. The bank has already kickstarted its initiative with O P Bhatt, the

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bank's chairman, inaugurating the bank's first windfarm project in Coimbatore (Tamil Nadu) on Friday. The 15-mw project, supplied by Suzlon Energy, consists of 10 units of Suzlon's S-82 and 1.5-mw wind turbine generators. These generators were earlier installed across Gujarat, Maharashtra and Tamil Nadu. The path breaking project forms an important part of SBI's strategy to reduce its carbon footprint and sensitise clients on the need for adopting efficient processes. The electricity generated from the wind turbines will power various SBI facilities and operations across the three states. The project was completed by Suzlon in record time -- going from concept to commissioning in just four months, covering equipment supply, construction, project commissioning, power evacuation, and comprehensive operations and maintenance services. Speaking on the occasion, Bhatt said, Among the players in the financial services sector, State Bank has taken the initiative to be in the forefront in initiating steps for combating climate change and reducing carbon footprint, and we propose to take the initiative forward for which this beginning has been made in acquiring green power, with a view to making the bank as nearly energy neutral as possible over the next five years. The windmills are set up with a definite objective of reducing the dependence on the polluting thermal power and not on purely economic and business considerations. The project directly results in reducing the carbon footprint of the bank and paves the way for others to follow, he added. The bank is planning to set up an additional 20 mw capacity of windmills in Gujarat. Speaking from Coimbatore, Tulsi R Tanti, chairman and managing director, Suzlon Energy, said, This project demonstrates SBI's far-reaching vision in recognising the challenge of climate change, and our collective responsibility to combat it. As an Indian company, and the world's third largest wind power group, it gives us great pride to partner with SBI in its first green banking initiative, harnessing wind to reduce its carbon footprint.

SBI interviews put off Business Line Tuesday, April 27, 2010

State Bank of India's interviews for clerical posts due on April 27 for candidates from West Bengal, Andaman & Nicobar Islands and Sikkim have been put off in view of the bandh called by some political parties on that day, according to SBI sources. While the interviews for candidates in Andaman & Nicobar Islands will be held on April 28, no dates have been finalised for candidates from West Bengal and Sikkim. They have to contact their respective interview centres for the revised dates, the sources added. – Our Bureau

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SBI Life net profit for 10 at Rs 276 cr Deccan Herald Wednesday, April 28, 2010

Mumbai, Apr 27, DHNS State Bank of India (SBI) Life Insurance, on Tuesday, said its net profit for financial year 2009-10 was at Rs 276 crore. In terms of gross written premium (GWP), SBI Life has set a new milestone crossing the landmark figure of Rs 10,000 crore during the year under review, while its Asset Under Management (AUM) jumped by 96 per cent to Rs 28,551 crore and new business annualised premium equivalent (APE) by 37 per cent to Rs 6,358 crore.

Barcode-enabled ATMs from SBI Times of India Wednesday, April 28, 2010

KOLKATA: If you are not tech savvy and have to stand in the long queue to pay bills, then you have a reason to smile. SBI is introducing barcode-enabled ATM throughout the country for seamless bill payment facility. The facility will be available in phases to over 5 crore SBI customers across the country. An official from SBI said that this specialised ATM will take care of all the bills which has a barcode. 'This can be used to pay mobile, electricity, credit card as well as civic authority bills,' he said. According to him, the first such ATM will be rolled out in West Bengal's Mursidabad district, which houses the constituency of FM Pranab Mukherjee. In the first phase, the state will have three such ATM machines. Later, 13 more barcode-enabled ATMs will be rolled out. The official added that it has already tied up with Airtel and Vodafone.

SBI to introduce bar-enabled ATMs for seamless bill payment facility Economic Times Thursday, April 29, 2010

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Udit Prasanna Mukherji KOLKATA: If you are not tech savvy and have to stand in the long queue to pay bills, then you have a reason to smile. SBI is introducing barcodeenabled ATM throughout the country for seamless bill payment facility . The facility will be available in phases to over 5 crore SBI customers across the country. An official from SBI said that this specialised ATM will take care of all the bills which has a barcode . “This can be used to pay mobile , electricity, credit card as well as civic authority bills,” he said. According to him, the first such ATM will be rolled out in West Bengal's Mursidabad district, which houses the constituency of FM Pranab Mukherjee. In the first phase, the state will have three such ATM machines. Later, 13 more barcode-enabled ATMs will be rolled out. The official added that it has already tied up with Airtel and Vodafone.

SBI extends teaser rates till June Business Standard Saturday, May 01, 2010

The country's largest public sector lender, State Bank of India (SBI), has extended its special home loan scheme, popularly known as teaser rates, by two months even as the two largest private lenders, ICICI Bank and Housing Development Finance Corporation (HDFC), decided to let their similar schemes lapse. Only these three banks were continuing with teaser rates, a scheme under which home loan seekers are charged a fixed rate of interest for the initial years and a floating rate thereafter. Other lenders had decided to terminate teaser rate schemes at the end of March. A senior SBI executive said the bank had decided to extend the scheme, which was to expire today, since it was popular with customers and the bank's liquidity was good. The scheme would now run until June, the executive said. Under this scheme, SBI is offering home loans at a flat 8 per cent rate of interest for the first year and 9 per cent for the second and third years. From the fourth year onwards, home loans up to Rs 50 lakh would be charged an interest rate of 9.25 per cent, while higher loans would attract 9.75 per cent interest rate. SBI's teaser rate scheme was to originally expire on March 31 this year, but was extended by a month. ICICI Bank and HDFC Bank have, however, decided to end their teaser rate schemes. 'We have no plans to extend the (special) home loan scheme,' said an ICICI Bank spokesperson. Although popular with home loan seekers, teaser rates had drawn flak from the Reserve Bank of India, which said it benefitted only the new customers. Bankers said SBI had pioneered the scheme at a time when liquidity was abundant but now RBI was trying to squeeze excess liquidity from the system by increasing policy rates. Banks have already increased deposit rates and are expected to respond with

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rate hikes once demand for loans increases in the second quarter. The introduction of teaser rates by SBI had forced other lenders to launch similar products. HDFC, which had initially termed the teaser rates as gimmick, joined the bandwagon later as it could not afford to stay out of competition.

SBI teaser rates to continue; HDFC, ICICI scrap scheme Economic Times Sunday, May 02, 2010

MUMBAI: The country's largest lender, the State Bank of India (SBI), will continue to offer teaser rate schemes, which entail cheaper home loans to new borrowers, as it tries to revive flagging demand for mortgages, an official at the bank said. The bank's decision comes amid the government and the Reserve Bank of India (RBI) expressing their displeasure about such schemes, which they fear could lead to an increase in bad loans. SBI has extended the scheme for auto loans also. Teaser rate schemes at HDFC, ICICI Bank and LIC Housing, the other major lenders, however, ended on Friday. While HDFC is still undecided on continuing the scheme, ICICI Bank, in a late evening press release, said it had “no plans” to extend the special home loan scheme. Last time, mortgage leader HDFC extended the scheme a few weeks after SBI's decision. SBI's move comes despite RBI raising benchmark rates twice since March 2010, effectively signalling that banks too must increase their lending rates. “Not much has changed in terms of cost of funds, liquidity in the system or customer demand,” said an SBI official on condition of anonymity. “So, the decision was taken to continue with the scheme till the base rate kicks in.” It was SBI that sparked the battle for home loan market share by introducing teaser rates in January 2009, offering a fixed interest rate for the first three years of mortgage and floating rate thereafter. Since then, many other lenders also introduced such schemes, since demand for home loans had remained sluggish. While most banks discontinued their teaser-rate schemes in February, SBI extended the scheme with marginally higher rates till April 30. Taking a cue, ICICI Bank and HDFC also continued their schemes till April 30.

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Now, SBI is set to offer a fixed interest rate of 8% for the first year, 9% for the next two years and a floating rate thereafter. Home loan demand sluggish Customers who have taken loans of less than Rs 50 lakh will then pay a floating rate of 9.25% while those with loans above Rs 50 lakh will pay 9.75%. Despite teaser rates, offtake for mortgages has remained subdued, with housing loans growing 8.3% during the financial year to February 26, 2010, compared with a 16% growth in non-food gross bank credit, latest RBI data show. However, the SBI official said the bank had seen a net growth of Rs 17,000 crore in its home loans book, amid Rs 30,000 crore sanctions for the fiscal year ended March 2010. In the past, RBI deputy governor Usha Thorat had raised concerns over teaser loans. She said banks needed to explain to borrowers the full implications of such schemes and to appraise their repaying capacity if rates were to rise. Despite RBI raising rates, the banking system has remained flush with funds, with banks parking Rs 50,000-70,000 crore with the central bank on a daily basis under the reverse repo window. This daily money market operation yields only 3.75% on an annualised basis, while a mortgage can fetch anywhere between 8% and 11%. So, by pushing teaser rates, banks are hoping that the credit demand picks up and their profitability increases. While bond market yields have fallen since RBI last increased rates on April 20, this is being attributed to what the market perceives as less-than-aggressive tightening by the central bank. Still, most analysts warn that the 10-year benchmark bond, which ended on Friday at 8.04%, could rise to 8.25% by June. Bond yields are one of the many instruments used by bankers to get cues about interest rates.

SBI TO GO FOR TOP DECK REJIG Business Standard Monday, May 03, 2010

Over the next 15 months, the top two floors of the State Bank of India (SBI) corporate centre at Nariman Point could see new name plates in most rooms. The churn has already begun, with National Banking Group head Anup Banerji superannuating on Friday. Managing

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director Sanjay Bhattacharya is due to retire in October, while deputy managing director N Raja is due to retire in December. Chairman Om Prakash Bhatt, would have completed four years and nine months in his 18th floor corner office by the time he retires next March. Next in line is Managing Director R Sridharan, who is due to superannuate in July 2011. Also retiring next year is deputy managing director C Narsimhan. While the government is not known for advance planning when it comes to finding replacements for public sector bank management, this time work has already begun. It has interviewed four deputy managing directors -- Hemant Contractor (head of corporate and wholesale banking), K Krishnakumar (head of information technology), Diwakar Gupta, in-charge of rural and national banking and P Chaudhuri, looking after international banking business -- to appoint as managing directors. And, if it manages to push through the proposed amendments to the SBI Act, three of them could become managing directors. Among other things the Bill to amend the SBI Act, which is pending in Parliament, seeks to empower the government to appoint four managing directors. The four deputy managing directors who are in the fray have more two years of service left. Given that Sridharan will have only a few months after Bhatt's retirement, one of the four DMDs could also move into the corner office. SBI executives said with Contractor and Krishnakumar having the longest tenures among the DMDs, they are seen as potential replacements for Bhatt. The move to start the process of appointment of Managing Directors comes in the wake of a directive from Finance Minister Pranab Mukherjee, who is keen to ensure that a replacement is found before a senior executive superannuates. Before Bhatt took over as SBI Chairman in July 2006, TS Bhattacharya had been the officiating chief for several months, as the government took time to appoint A K Purwar's replacement.

New models of SBI ATMs soon Business Line Wednesday, May 05, 2010

State Bank of India is shortly coming out with varied models of ATMs such as Solar ATM, Rural ATM with bio-metric functionality, multi purpose kiosks and Talking ATMs, which will help visually challenged customers operate the ATM with ease. All the ATMs of SBI Chennai circle are enabled with image capturing facility and the average cash dispensed a day is Rs 100 crore. The ICF branch and 1,500th ATM in Tamil Nadu was inaugurated by Mrs Pompa Babbar, General Manager, Integral Coach Factory, Chennai in the presence ofMr V.G. Kannan, General Manager, SBI.

SBI ties up with Visa, Elavon to set up point of sales terminals Economic Times Thursday, May 06, 2010

State Bank of India has selected a consortium of Visa International and Elavon as partners

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for a joint venture, which will set up six lakh point of sales terminals — swipe machines for registering payments through credit and debit cards. The partners have not disclosed details of the deal size. Last year, ICICI had sold its POS terminal network to First Data Corporation for $80 million (around Rs 365 crore). While SBI’s ambitions are bigger, ICICI Bank has been an early mover and the bank already had an installed base of 1.5 lakh machines at the time of the sale. SBI has incorporated a joint venture, SBI Payments Services, where the two partners will pick up stake at a significant premium. According to Uttam Nayak, country head for Visa in India, the deal was a reflection of Visa’s commitment to India and to expand the electronic payment network beyond cities to small towns and villages. “We have been able to demonstrate our capability to expand the network in Brazil where we have a similar venture in association with banks there. This venture has taken the number of POS terminals in the country from 50,000 to 12 lakh in 12 years,” said Mr Nayak. Sources in SBI said the bank would use the POS terminal network for its financial inclusion plans by enabling very low-value transactions through pre-paid cards. The other big advantage for SBI will be the increased acceptance of its debit cards. The country’s largest bank has issued close to 7 crore debit cards to its account holders. But these cards are largely used for withdrawing cash from automated teller machines. If instead of withdrawing cash, accountholders make payments through cards, the bank will generate huge savings in cash handling and maintaining cash balances. What makes POS terminals big business are two recent developments. First, RBI has said it will allow small cash withdrawals through such POS terminals. Secondly, it has said it would encourage banking correspondents to increase financial inclusions. SBI had floated a request for proposals from potential partners for setting up a merchant acquisition business. The bank had pruned the list of candidates to three candidates — Visa, Royal Bank of Scotland (RBS) and Global Payments. After putting in place a core-banking solution, SBI has been in a hurry to acquire leadership position in electronic networks as well. Elavon US is a wholly-owned subsidiary of US Bancorp and a leading global payments provider. US Bancorp is the holding company of US Bank, the fifth-largest bank in the US.

SBI lowers rates on new crop, irrigation loans Times of India

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Friday, May 07, 2010

NEW DELHI: The State Bank of India reduced interest rates on new crop and minor irrigation loans. Interest rates on new minor irrigation loans have been reduced from the range of 10.50% - 13.25% to an uniform rate of 8.5% in the first year, and 9.5% in the second and third years for loans up to Rs 25 lakh, a SBI statement said. The special concession would be valid for both kharif as well as rabi seasons by the end of March 2011. Similarly, interest rates on crop loans between Rs 3 lakh and Rs 25 lakh have been reduced from the range of 11.75% -12.75% to 10% per annum for one year, it said. An additional concession of one percentage point will be offered to borrowers who repay the loan promptly as per the repayment schedule. Therefore, the effective interest rate will be only 9% per annum (fixed) up to one year, for borrowers paying promptly, SBI said in a statement. Last year, after the weak monsoon, SBI had devised a special scheme to help farmers and give a fillip to the agriculture sector. The only change from the last year's special scheme is that while the interest rate was 8% for minor irrigation loans last year, it has been upped to 8.5% in the new one. At the same time, the margin money requirement for new minor irrigation loans has been reduced to 10% flat, from the existing 15-25% of the project cost.

SBI extends special farm loan scheme with modification Financial Express Friday, May 07, 2010

Amidst upward bias in lending rates country's largest lender, State Bank of India (SBI) has announced extension of special concessionary schemes for the farmers availing of all minor irrigation loans upto Rs 25 lakh and crop loans above Rs 3 lakh and upto Rs 25 lakh. Interest rates on new minor irrigation loans have been reduced from the range of 10.50%-13.25% to 8.5% (fixed) in the first year and 9.5% (fixed) in the second and third years for loans upto Rs 25 lakh. Still, when compared to the earlier scheme, the bank has increased the interest rate by 50 basis points for first three years. The scheme is valid for both Kharif and Rabi seasons of the current fiscal. Similar types of concessions were extended during 2009-10 to combat weak monsoon and drought conditions in the country.

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Talking to FE, Niranjan Parsha, general manager (agri business) SBI, said, ''Though we have slightly increased the interest rate, in comparison with the earlier schemes of similar kind in past, by 50 basis points to 8.50% for the first year and to 9.50% for the second and third years because of general market conditions, still all the remaining terms and conditions remain the same''. SBI had disbursed a sum of Rs 5,000 crore under minor and high value advances of Rs 5,000 crore as on 31 March, 2010. However, the bank is likely to disburse another sum of Rs 1,000 crore under the extended scheme, said Parsha. The purpose was to improve the capacity building of farmers in improving agriculture, said Parsha.

After special housing rates, SBI sweetens its farm loan Economic Times Friday, May 07, 2010

MUMBAI: The country's largest lender, State Bank of India, has revived a scheme where irrigation and crop loans are available to farmers at cheap rates. The concession is aimed at supporting farmers during the upcoming kharif season, and the rabi season later, a bank official said. This comes on the backdrop of the bank extending its special home loans scheme till end June 2010. SBI has marginally increased its lending rates for the special scheme that was first introduced to help farmers hit by weak monsoons and drought conditions last year. This was done on account of the bank's cost of funds that increased in the period. However, rates still remain lower than normal floating rates loans, the bank official clarified. In a release issued on Thursday, SBI said it will offer all fresh minor irrigation loans at 8.5% in the first year and 9.5% for the second and third years. The rates are for loans up to Rs 25 lakh and payable in three years and above. If not for the scheme, the rates would be around 10.50% to 13.25%. Crop loans will be disbursed at 10% for a period of one year for a sum above Rs 3 lakh and up to Rs 25 lakh. There will henceforth be an additional 1% concession for timely repayment. This is to encourage “timely repayment culture,” the bank said. Such loans under Rs 3 lakh will be available to farmers at 7% and the concession for timely repayment here will be 2%, as per the interest subvention scheme of the central government. “A combination of minor irrigation and crop finance concessions are required for helping

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farmers build capacity at this juncture,” said an SBI official, who requested anonymity as per company policy. Margin money requirement for new minor irrigation loans continues to be at 10% flat from the original levels of 15% to 25% of the project cost. The moratorium period for minor irrigation loans has been given an additional extension of one year. The repayment period for new loans, thus, has been extended by one year, the release said. India's food grain output in 2009-10 is likely to equal last year's levels despite the worst drought in 37 years hitting the summer crop hard, with the bumper winter crop output expected to make up for the shortfall in the summer production, ET reported recently.

SBI wins Asian Banker Award Financial Express Tuesday, May 11, 2010

SBI has won the Asian Banker Achievement Award for being the strongest bank in Asia Pacific region, instituted by the Qatar Financial Centre Authority and the Asian Banker magazine. It is in recognition to SBI's combination of financial performance and key business improvements.

SBI instals windmills for captive use Business Line Friday, April 23, 2010

State Bank of India has taken the lead and resolved to go green with the installation of windmills for the bank's captive use. It is probably the first bank in the country to implement renewable energy project for captive use. It is in keeping with India's Green Banking Policy that the bank has decided to install windmills of 15 MW capacity in three States — 4.5 MW in Tamil Nadu, 9 MW in Maharashtra and 1.5 MW in Gujarat, state SBI sources. The windmill in Tamil Nadu at Panapatti village in Pollachi Taluk is being formally inaugurated by the Chairman, Mr O.P. Bhatt, on Friday.

SBI in pact for clean solutions Financial Express

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Thursday, April 22, 2010

Managing Emissions, providing clean technology solutions with carbon embedded assets, has signed an MoU with State Bank of India, to provide 20,000 energy efficient plants to rural India through micro finance loans.

O.P. Bhatt, Chairman, SBI Business Line Wednesday, April 21, 2010

115040313

There is an upward bias on lending rates since January. The upward bias will become stronger now after the RBI's action today and because of the daily calculation of interest rate on saving accounts. If the demand were to spurt, it (lending rate hike) will happen sooner or it may take some time. The demand supply equation in the market will change. The margins are getting compressed but if you raise lending rates now, you will price yourself out of the market in some of the products that you sell.

'Interest rates unlikely to rise sharply in 2-3 months' Economic Times Saturday, April 17, 2010

NEW DELHI: The State Bank of India (SBI), the country's largest lender, said on Friday that interest rates may not rise sharply in the next 2-3 months as the April-June quarter is a lean period for credit offtake. “There is still a fair amount of liquidity in the system, so possibly during the next 2-3 months despite the upward bias, there may not be much hike of interest rate,” SBI chairman OP Bhatt said on the sidelines of its launch of defence salary package for the Indian Air Force (IAF). Mr Bhatt, however, said he would wait for the RBI monetary policy review on April 20 to decide on teaser home loans where interest rates are low and fixed in the initial years but become floating for the remaining tenure. SBI's offer of concessional first year loan at 8% interest rate is going to end this month. “The current quarter is relatively quiet in terms of credit offtake. We will take a view at the end of this month and (look at) what the RBI monetary policy says,” he said. Already, HDFC has revived its teaser home loan rates for two weeks. Under the revived plan, home loans will begin at 8.25% for the fiscal to March 2011, and 9% for 2012. RBI has already expressed its concern over teaser rates stating that borrowers may find repayment difficult once the interest rates go up. The Shanghai Branch of SBI has obtained permission from the Chinese government to conduct business in local currency (renminbi). It will now provide funds in local currency to Indian companies operating in China for their operations. The permission was granted by the Chinese

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Banking Regulatory Commission in December, 2009.

SBI extends farmers' loan scheme Business Line Saturday, April 17, 2010

State Bank of India has extended by three months up to June-end its concessional loan scheme at 8 per cent interest for farmers against warehouse receipts. Under the ‘Produce Marketing Loan' scheme, banks extend short-term loans up to one year against warehouse receipts. This loan not only provides farmers immediate liquidity but also saves them from distress sale of their harvested produce. The bank had launched the concessional loan facility at 8 per cent (as against the card rate of 11-13 per cent) for farmers against warehouse receipts last year. Banks offer a maximum of Rs 10 lakh as loan against warehouse receipts. The margin charged, which is a function of the price volatility of agriculture produce, varies from between 15 per cent and 40 per cent. According to a senior bank official, by storing his produce in a warehouse during a bumper crop year, when prices are at their lowest, a farmer increases his chances of getting a remunerative price at a later date. In order to meet immediate liquidity requirements, the farmer can use the receipt issued against his produce stored in the warehouse to get a loan from the bank. “If a farmer is not happy with the prevailing price, he can warehouse his produce and wait for prices to recover. A farmer can hope to get remunerative price by selling his farm produce during off-season,” said the official. As of March-end 2010, SBI had an agriculture loan portfolio of about Rs 66,000 crore, up by 20 per cent from Rs 55,000 crore as of March-end 2009. New product Meanwhile, SBI on Friday launched a new product called Defence Salary Package – ‘AirForce'. This product offers a bundle of free/concessional services, including drafts, cheque books, funds transfer to any of the State Bank Group's network of almost 16,000 branches, funds transfer to any bank in India through RTGS/NEFT, and ATM cards, to the more than one lakh officers and personnel of the Indian Air Force. These facilities will be available to the DSP account holders even

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after retirement, a statement said.

SBI gets first batch of middle-level staff Economic Times Monday, April 12, 2010

kolkata: STATE Bank of India (SBI) has hired officers directly at the middle management level as part of its plans to create a pool of future business leaders. 'The country's largest bank has just hired 549 executive I trainees directly at scale-2 (read: deputymanager level) so that they can be groomed to handle top banking slots,' a I senior bank official said. The development comes at a time I when nearly 300 out of SBI's 600-odd top executives are I scheduled to retire by 2012. Of the 549 new recruits, 487 I will join SBI while the remaining 62 will operate from State I Bank of Hyderabad. 'This isn't a one-off case. Since getting I a decent crop is becoming difficult, SBI will continue with the strategy to place fresh and talented people directly at a I higher level,' chief general manager (Kolkata) Suriender I Kumar told ET. This is the first time in SBI's history that fresh management graduates are being hired from B-Schools to build a leadership pool. Not many public sector banks follow such a practice, barring a few like Union Bank of India, which recruited some 30 MBAs directly at senior levels in 2008. Public sector banks used to hire probationary officers at scale-1 or assistant manager level. Normally, it takes a minimum eight years for probationary officers to break into the scale- 3 level. 'In the new system, talented officers can get into the top executive levels even at 40 or 42,' Mr Kumar said.

You can gain from SBI's special home loan scheme Economic Times Wednesday, April 07, 2010

The teaser home loan offer seems to be a dated concept now. As most bankers are speculating a possible rate hike in the coming months, they have pre-empted it by withdrawing teaser rates campaign effective March 31. However, the State Bank of India (SBI) has decided to extend the scheme with a few changes. As per the tweaked scheme, SBI will offer a fixed rate of interest at 8% for first year and 9% for the second and third year, irrespective of the loan amount and floating rate at 1.75% below SBAR (the PLR used by the SBI). Interest rates on loan from fourth year onwards will be pegged on the then prime lending rate. According to the earlier scheme, SBI offered fixed rate of 8.5% for second and third year, if the loan size is less than Rs 50 lakh and charged 9% for loans above Rs 50 lakh in the second and third year. While the rate has increased by 0.5% for the second and third

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years, the biggest difference is in the subsequent years where the loan continues to be linked to PLR, but the spread has been revised. While those who have raised loans before March 31 will pay interest at the rate of PLR minus 275 basis points, subsequent borrowers will have to pay PLR minus 175 basis points. In effect for the remaining years, interest rates have been hiked by one percentage point. Despite the marginal increase in home loan rate for the second and third year, it remains an attractive proposition for customers who wish to repay the loan within first few years of the repayment. Most banks are already charging an interest rate of around 8.75% for a Rs 20-30 lakh loan. The rates are even higher at 9% and 9.5% for home loans in the range of Rs 30-50 lakh and Rs 50-75 lakh. The rates could increase taking cues from the Monetary Policy to be announced by the Reserve Bank of India (RBI) on April 20. In case of SBI's home loan scheme, if you prepay the loan out of your own savings, there are no prepayment charges. In other cases, the penalty is 2% on principal amount prepaid. On the flipside, however, from July 1, following the RBI's diktat, banks will peg interest rates on various loans disbursed by them to their 'Base Rate' instead of the PLR, which serves as the yardstick currently. All banks, including SBI, are yet to arrive at the new barometer for pricing loans. Therefore, the current proposition of interest rate (SBAR minus 175 basis points) fourth year onwards will become null and void in the base rate regime. Since the scheme is on only till April 30, those who opt for the loan will be doing so without any information on the kind of interest payable from the fourth year - a discouraging factor. Thus, the risk arising out of the uncertainty may not seem daunting for home loan seekers intending to prepay their loans within 5-7 years, but long-term borrowers could be thrown off track once the base rate comes into play. Therefore, any decision will have to be taken on the basis of the borrower's assessment of how beneficial the trade-off between attractive interest rates for the first three years and the ambiguity surrounding the impact of base rates could turn out to be.

SBI taps B-schools to create pool of bank execs Financial Express Wednesday, April 07, 2010

The State Bank of India (SBI) is on a talent hunt and is tapping B-schools to create a special team

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of officers. Earlier, only SBI Caps, a subsidiary of State Bank of India, had recruited from B-schools. But faced with a pressing need to create a batch of professionals capable to lead the banking behemoth, SBI has decided to go on a special recruitment drive. The officers, to be called executive trainees, will be recruited at scale II directly and will undergo special training. So far, SBI has been recruiting at the probationary officer level. Probationary officers had to wait for five years to reach scale II level. We are trying to change the matrix this time and have recruited almost 480 officials nationally at the scale-II level, said a senior SBI official. Eligibility criteria for such officials include postgraduates in economics, statistics or chartered financial analysts, chartered accountants and cost accountants. But that is merely the entry level and we selected people through several rounds of written tests, group discussions and interviews. The idea is to induct high-skilled officials, who will be groomed to become leaders in future, the official said. According to sources, almost 60% of the recruits have passed out from management schools. While basic pay scale for the probationary officers start at Rs 10,000, the new batch of officers will have Rs 13,820 as basic salary.

SBI opens strategic training unit to hone trainee skillsets Economic Times Tuesday, April 06, 2010

MUMBAI: SBI has established a strategic training unit (STU), which will bring the bank's entire training system under a unified command, headed by a chief general manager. This has been done with the objective of developing skills, particularly among the 25,000 additional recuritments that the bank is planning for the current fiscal. The bank, with over two lakh employees, has one of the largest training facilities in the country. These include 45 learning centres and four apex institutes. The STU, located at Hyderabad, will be headed by chief general manager Mahapara Ali. The apex institute includes the three Hyderabad-based organisations - State Bank Staff College with its 16.5-acre campus and the State Bank Institute of Rural Development. The fourth is the State Bank Academy, which has a 11.5-acre campus in Gurgaon. Until now, the administration of SBI's educational network was looked after by the respective operational units.

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The unified STU has been assigned the task of moving towards converting SBI into a 'Learning Organisation' capable of handling change and growth for a bank aspiring to be amongst the top 20 in the world, said N Raja, corporate development officer & deputy MD of the bank, while inaugurating the unit in Hyderabad. The State Bank of India has added 25,000 new employees to its work force in the last two years and is likely to add another 25,000 in the current year. It has also taken on massive branch expansion with over 1,000 branches opened in the last fiscal alone. “The STU is geared not only towards integrating the new recruits into SBI but also enhancing the knowledge and skills and re-orienting the attitude of its existing work force” a statement issued by the bank said. SBI has also been putting its top leaders through customised leadership programmes conducted by reputed management institutes. By creating the STU, we propose to upgrade our infrastructure, content and delivery further. Leadership development, competency building at all levels and change in management will be our focus areas,” said Mr Raja.

SBI customers can get it done with ‘SMS Unhappy' Business Line Saturday, April 03, 2010

G. Naga Sridhar

Hyderabad, April 2

Mr G. Venkatram wanted a gold loan to meet an emergency expenditure from a State Bank of India (SBI) branch. But the clerk told him to come after two days, as he was busy.

Immediately Mr Venkatram sent an SMS to the SBI Head Office stating that he was “unhappy.” Within minutes, he received a call from the branch manager and the loan was sanctioned.

This is an example to highlight the efficacy of the SMS Unhappy service launched by the SBI in Andhra Pradesh.

“When we launched this in December 2009, many thought it was just hype. But we proved them wrong, by solving 71 per cent of the problems of the customers within 48 hours. This disposal rate

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is very rare in the industry,” Mr Shiv Kumar, Chief General Manager, told Business Line.

This is a portal-linked service, which enables a dissatisfied customer to SMS “unhappy” to 8008202020, which is connected to a “happy room” at the SBI Head Office.

Within minutes, the customer will receive a call from the Head Office.

So far, the bank has received 7,865 unhappy messages (complaints), out of which 6,990 have been resolved, officials said. A majority of the complaints pertain to ATM transactions and clearance-related matters.

“Interestingly, the system is also serving the purpose of getting valuable feedback from customers. Any kind of matter can be brought to our notice with an SMS,” he said.

All the branch managers will get pop-ups on new or pending complaints in their branch.

This keeps the staff on their feet to address problems, officials said. Once a complaint is addressed, the branch head is expected to send that in writing to the portal, which will then be updated.

“Nobody except the people concerned in the Head Office can meddle with the complaints or delete them. Our staff checks with the customers before closing the complaint,” Mr Kumar said.

Expand service

In view of the “huge success” of the service, SBI is likely to replicate the system across the country.

“However, it is up to the corporate office to decide,” said the official who first thought of the system in 2008, when he was serving in Bhubaneshwar.

“I wish all banks will adopt similar transparent systems of complaint redressal. I thank SBI for this,” reads a message sent by an elated SBI customer.

These kind of “happy messages” abound on a monitor at the SBI office.

SBI reaches out to the unbanked Financial Express Wednesday, March 31, 2010

In what would herald a radical shift from the brick-and-mortar model of banking, State Bank of India (SBI), the country's largest bank, has decided to hire 15,000 new banking correspondents (BCs) in 2010-11, its chairman OP Bhatt told FE.

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SBI's grand plan on BCs is to add thousands of new correspondents to its network every year, a move that would dramatically expand rural banking. The network of BCs would have a direct linkage to sundry social security schemes, Bhatt said. Pilot projects in states like Andhra Pradesh have shown that the BC model can enhance the utility of such schemes. To make the business correspondents network the most credible and useful link between millions of farmers in rural areas and the bank branches, it will have to be expanded in a big way, Prime Minister's Economic Advisory Council chairman C Rangarajan said. SBI's move is in tune with the Budget decision to provide banking facilities in all domiciles with more than 2,000 people. The prime role of BCs would be to accept deposits and remit money. They would also provide basic financial services like insurance to the half-a-billion low-income rural people who are outside the banking network. Starting with India Post, SBI has roped in organisations with pan-India presence like ITC, Reliance Dairy Foods, Drishtee Foundation and Zero Microfinance & Savings Support Foundation to expand its BC network. According to Bhatt, the bank would also rope in petrol pump operators, rural kirana shops, retired teachers and agents of small saving scheme as BCs. What complements the BC network would be the technology platform being set up. Apart from opening more branches, we plan to serve the customer better by leveraging all other channels--ATMs, Internet banking, mobile banking... said Bhatt. The BCs can act as a mini-bank branch with facilities of cash withdrawals and deposits up to Rs 10,000. The BC is connected to a local branch that supervises the functioning of all BCs in the area. SBI has covered more than 50,000 un-banked villages, including in far flung North Eastern, Eastern and Central parts of the country. Currently, the bank spends Rs 115 on each account managed by the BC and the return may be around Rs 3, as the average bank balance of a BC account is estimated to be around Rs 30. The bank has 35 lakh BC accounts and plans to open one crore such accounts by next fiscal. The total deposits from BC accounts have risen from Rs 13 lakh to Rs 6.29 crore in January 2010, in a matter of two years. In the next three years, the bank plans to mobilise Rs 60 crore and make the whole BC/BF model profitable. The bank is also seeking assistance from Nabard, which controls financial inclusion and financial technology funds.

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In six states, the bank is channelising NREGA and other social security payments through its BC system, and is now planning to expand the services to other states. Andhra Pradesh is among the most successful states to utilise SBI's BC system. The bank has also started giving over draft facilities up to Rs 1,000, which can be treated as usual loan from the bank.

SBI to kick off Doha, Jeddah operations soon Deccan Herald Wednesday, March 31, 2010

Mumbai, Mar 30 (PTI) Moving a step closer to consolidating its position among foreign financial institutions in the Gulf region, the country's largest lender State Bank of India on Tuesday said it is in advanced stages of launching its operations in Doha and Jeddah. SBI is likely to approach the Qatar Financial Centre Regulatory Authority as early as next week to seek the final nod for the Doha branch, which is set to become the bank's second largest centre in the region after the Dubai International Finance Centre branch, a top SBI official said. 'The Doha branch will undertake all operations except retail services to the local residents. We would approach QFCRA as early as next week and expect to launch operations very soon. We expect the regulatory clearance without much delay,' the official told PTI here. Similarly, the banking major is in the final stages of opening its Jeddah branch, a full service one, providing both retail and corporate services to clients, the official said. 'In Jeddah, we have received permission from the Saudi Arabian Monetary Authority. The technology platform is already in place and is undergoing final testing before launch,' the official said. Besides enhancing its footprint in the region, the new offices will also help SBI to grab a larger share of inward remittances by Indian firms and individuals in the region, which can be routed through its branches. Recently, the bank got approval from the Chinese authorities to lend in local currency, the Yuan, to become the first Indian bank to get such permission from the country. SBI has one full-fledged branch in Shanghai and a representative office in Tianjin. The bank is planning to set up a branch in Guangzhou and upgrade the Tianjin repo office to a branch in due course.

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Overseas operations contribute around 13-14 per cent to the bank's total revenues currently, which SBI has targeted to increase to 20 per cent over the next 3-4 years. SBI has 142 outlets abroad, which include over 64 branches under five subsidiaries. These subsidiaries are in Indonesia (6 branches), Mauritius (12 branches), Nepal (32 branches), California (7 branches) and Canada (7 branches).

State Bank-Indore merger swap ratio set at 34:100 Business Standard Tuesday, March 30, 2010

Taking ahead the process of consolidating associate banks, State Bank of India (SBI) has decided to issue 34 of its shares for every 100 shares of State Bank of Indore to its minority shareholders. This is the second such consolidation within the group after State Bank of Saurashtra was merged with the country's largest lender in August 2008. The central board of SBI on March 26 approved a proposal to issue 1.16 lakh shares (of Rs 10 each) to minority shareholders of the Indore-based associate bank, SBI informed the Bombay Stock Exchange. The acquisition is subject to the approval of the government of India. Last week, SBI Chairman O P Bhatt indicated that the merger could happen in the first quarter of the next financial year (2010-11). Following the merger, SBI's issued capital would rise to Rs 635.08 crore from Rs 634.97 crore. State Bank of Indore posted a net profit of Rs 37.84 crore for three months ended December 2009, down from Rs 70.46 crore a year ago. Its total income declined to Rs 752.05 crore from Rs 803.66 crore a year ago. After the merger, SBI would be left with five associate banks -- State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. State banks of Bikaner and Jaipur, Mysore and Travancore are listed entities. Meanwhile, SBI said its two new businesses -- general insurance and custodial services -- have started operations. For general insurance, it has formed a joint venture with Insurance Australia Group (IAG). The business would be written within a limited geographical area with a few commercial products. The subsidiary would commence full-scale operations later during the year, SBI said. For custodial services, it has teamed up with French financial group Societe Generale. The company expects to do business of approximately $10 billion in its first year itself.

SBI enters custodial services Business Standard Tuesday, March 30, 2010

Shortly after launching the general insurance business, the country's largest lender State Bank today entered the custodial services space with SBI Custodial Services, a joint venture with Societe Generale of Frence.

SBI said SBI Custodial Services is the country's first stand-alone custodial services firm that will

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be servicing both domestic and overseas clients. SBI holds 65 per cent stake in the venture and Societe Generale Securities Services holds the remaining 35 per cent.

SBI closer to expediting merger of associates Business Line Tuesday, March 30, 2010

State Bank of India is gradually clearing the formalities required for merging its associate bank — State Bank of Indore — with itself. The board of SBI has approved issuance of maximum 1,16,052 shares, of face value of Rs 10 each, to the minority shareholders of State Bank of Indore as on record date at the agreed swap ratio (34 shares of State Bank of India for every 100 shares of State Bank of Indore), the bank informed the stock exchange. The share issuance will result in increase in the issued capital of SBI from Rs 634.96 crore to Rs 635.08 crore (maximum), subject to the approval of the Scheme of Acquisition of State Bank of Indore by Government of India. Recently, the draft scheme on the proposed acquisition of State Bank of Indore by State Bank of India was modified with the paragraph that provided for tax exemption to the capital gains arising from the acquisition being deleted in line with the Reserve Bank of India's suggestion.

Other announcement of State Bank Of India, BSE Announcements Monday, March 29, 2010

State Bank of India (SBI) has informed BSE that the Executive Committee of Central Board of the Bank has approved allotment of 2422 Rights Shares to eligible shareholders under the SBI Rights Issue-2008. Allotment of aforesaid shares was kept in abeyance as the Equity Shares in respect of which the above shares issued earlier were subject matter of title disputes/sub judice and the same are allotted after resolution of the dispute.

State Bank Of India - Issue of Equity shares NSE Announcements Monday, March 29, 2010

State Bank Of India has informed the Exchange that:'The Central Board of the Bank, in its meeting held on 26.03.2010, has approved issuance of maximum 1,16,052 shares, of face value of Rs.10 each, to the minority shareholders of State Bank of Indore as on record date at the agreed swap ratio

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(34 shares of State Bank of India for every 100 shares of State Bank of Indore), resulting in increase in the issued Capital of State Bank of India from Rs634,96,85,000.00 to Rs.635,08,45,520.00 (maximum), subject to approval of the Scheme of Acquisition of State Bank of Indore by Government of India'.

SBI introduces Platinum Debit Card Business Line Saturday, March 27, 2010

State Bank of India has launched SBI Platinum Debit Card, which has a higher daily withdrawal limit of Rs 1 lakh from ATMs and spending limit of Rs 2 lakh at point-of-sales. Platinum Debit Card holders would have access to premium lounges, golf courses and various lifestyle outlets in India and abroad, said a press release from the bank. Besides, the card issuance enables holders insurance coverage of Rs 5 lakh for accidental death and Rs 50,000 from liabilities arising out of card loss as supplementary benefits. SBI, which has a debit card base of over seven crore, has SBI Cash Plus, SBI Gold Debit Card and SBI Yuva Card. Mr O.P. Bhatt, Chairman, SBI, handed over the first Platinum Debit Cards to Mr Ashok Chawla, Secretary, Ministry of Finance, and Ms Shyamala Gopinath, Deputy Governor, Reserve Bank of India, in Mumbai, on Friday.

Scheme for SBI's acquisition of State Bank of Indore modified Business Line Friday, March 26, 2010

The draft scheme on the proposed acquisition of State Bank of Indore by State Bank of India has been modified. The acquisition is to now come into effect from the 30 {+t} {+h} day after the date of the Central Government order approving the transaction. The revised scheme was approved by the board of State Bank of Indore on March 19. This modification has come at the behest of the Reserve Bank of India, sources in the banking industry said. The central bank had made this suggestion to conform to the provisions of Section 35 of the State Bank of India Act, they added. This would also imply that the board of SBI or its executive committee will have no role in deciding the date on which the acquisition would come into effect. The initial draft scheme had provided that the SBI Board or its executive committee will decide, after the publication of the central

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Government order, the effective date on which the acquisition will come into effect. In the revised scheme, there has been no change to the earlier specified share exchange ratio of 34 shares of SBI for 100 shares of State Bank of Indore. However, the paragraph in the draft scheme that provided for tax exemption to the capital gains arising from the acquisition has been deleted in line with the RBI's suggestion. The Board of State Bank of Indore had on December 19 last year given its nod for the draft scheme. The scheme was then forwarded to the RBI by SBI for the central bank's approval and submission to the Centre for its approval and order under Section 35 of the State Bank of India Act. Meanwhile, the All India Bank Employees' Association (AIBEA) General Secretary, Mr C.H. Venkatachalam, told Business Line that AIBEA was opposed to this acquisition transaction. He also indicated that AIBEA would go on an agitation if the transaction received regulatory and Central Government nod.

Open to overseas acquisitions: Bhatt Business Standard Thursday, March 25, 2010

State Bank of India (SBI) is open to overseas acquisitions in case there is synergy in businesses. “It should fit into our environment, public sector culture, business, our clientele... If that kind of opportunity (for foreign acquisition) is there, we will see,” SBI Chairman OP Bhatt said. “If some good (overseas) opportunity is there, we may look at it seriously,” he said. Bhatt also said the bank itself had a huge international network, and added that its global operations contributed about 14 per cent to the top line at the moment. During 2008-09, its international credit portfolio increased 54 per cent to Rs 86,267 crore, against Rs 56,196 crore in the previous year. At the end of March 2009, the bank had a network of 92 offshore offices spread over 32 countries covering all time zones. The 92 offices comprise 37 branches, five suboffices, eight representative offices, 35 branches of subsidiaries, three managed exchange companies and four joint ventures. The bank along with its subsidiaries and joint ventures abroad, has opened nine outlets, including fullfledged retail operations, in Singapore last year.

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SBI open to overseas acquisition: Bhatt Deccan Herald Thursday, March 25, 2010

New Delhi, Mar 24 (PTI): Country's largest lender State Bank of India is open to overseas acquisitions in case there is synergy in businesses. 'It should fit into our environment, public sector culture, business, our clintele... if that kind of opportunity (for foreign acquisition) is there we will see,' SBI Chairman O P Bhatt told PTI. 'If some good (overseas) opportunity is there we may look at it seriously,' he said. Bhatt also said that the bank itself has a huge international network, and added that its global operations contribute about 14 per cent to the top line at the moment. During 2008-09, the SBI's international credit portfolio increased by 54 per cent to Rs 86,267 crore, against Rs 56,196 crore in the previous year. At the end of March 2009, SBI had a network of 92 offshore offices spread over 32 countries covering all time zones. The 92 offices comprised 37 branches, five sub-offices, 8 representative offices, 35 branches of subsidiaries, three managed exchange companies and four joint ventures. The bank along with its subsidiaries and joint ventures abroad, had opened nine outlets, including full-fledged retail operations, in Singapore last fiscal. Three new branches and seven ATMs were also set up to boost retail operations in Singapore. One branch and a sub-office were added to its network in Male and a representative office in Tianjin in China was operationalised. Besides, SBI California, the bank's wholly-owned arm in the US, opened its seventh branch in the country at Bakersfield. PT Bank Indomonex, a partly-owned subsidiary in Indonesia, also opened two branches during last year. As far as domestic expansion is concerned, Bhatt said, the bank plans to open another 1,000 branches in 2010-11. Of these 1,000 branches, 600 would be opened in rural and semi- urban areas. At present, the public sector lender has 12,448 branches and over 21,000 ATMs. By the end of March, 2010, it aims to scale up the number of ATMs to 25,000.

SBI to open 1,000 branches in 2010-11 Economic Times

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Monday, March 22, 2010

NEW DELHI: India’s largest lender, State Bank of India, plans to open 1,000 more branches in the next fiscal, taking its total branch network to over 13,000. “SBI has opened 1,000 branches during this year and plans to open more than 1,000 branches next year,” SBI said in a statement. At present, the public sector lender has 12,448 branches and over 21,000 ATMs. By the end of March, it aims to scale up the number of ATMs to 25,000. In the current fiscal, SBI has opened 1,000 branches and 10,000 ATMs. Of the 1,000 branches, 600 were opened in rural and semiurban areas. During 2010-11, SBI plans to hire more than 27,000 people across its various divisions. The bank also plans to recruit 20,000-22,000 people at clerical posts and 5,500 people at the probationary officer level. As a part of its strategy to enhance focus on rural operations, SBI plans to deploy 2,000 probationary officers in rural areas.

SBI awaits RBI nod to buy stake in Tata Motors Fin Financial Express Monday, March 22, 2010

Mumbai: State Bank of India (SBI) on Saturday said it is awaiting Reserve Bank's clearance to acquire up to 30% stake in Tata Motors Finance. 'We have written to the Reserve Bank. We are awaiting a response,' SBI chairman OP Bhatt told reporters on the sideline of an even here. SBI iseyeing around 30% stake in the vehicle financeing arm of Tata Motors. Acquirign stake beyond this level would require approval from the government. 'So, we will take somewhere between 20 and 30%. That means we need the approval only from the Reserve Bank of India,' Bhatt said. On part financing the Bharit-Zain deal, he said the bank has not make any commitment of advancing loan to Bharti, although it has been discussing the issue with the telecom major. 'We have not committed (ouselvs to) anythin,' the SBI chairman said. Last month, he had said that the acquisition of Tata Finance would enable SBI to strengthen its presence in the commercial vehicle segment and particularly to gain synergies in bus and trucks business.

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SBI prefers rights issue over govt stake dilution: Bhatt Business Standard Thursday, March 11, 2010

State Bank of India (SBI) Chairman OP Bhatt today said the country's largest lender would prefer to raise capital through a rights issue of equity shares rather than dilution of the government holding. 'I want the government to continue to be the major stakeholder in SBI ... If there is an opportunity to raise capital quickly and efficiently, we will like to do that (rights issue) ... It gives us a lot of flexibility in future,' he told reporters on the sidelines of a seminar on capitalism organised by the Confederation of Indian Industry (CII). The Union government has introduced a Bill to dilute its minimum permissible equity in the bank from the present 55 per cent to 51 per cent. The present equity of the government is about 59 per cent. On a fresh global offering, Bhatt said the Bill provided room for raising funds through American depository receipts. 'Our global depository receipts are already listed. The provision will also give us an option to tap the American market. However, there are no plans for using this route.' Bhatt indicated the bank was unlikely to go for a rights issue soon as it had enough capital and a liquidity. 'The bank has a five-year perspective. We do not need capital immediately because our capital adequacy ratio is now around 14 per cent,' he said. On the merger of State Bank of Indore with the parent, he said the Reserve Bank of India had given its in-principle nod for the merger. The proposal needed to be cleared by the government and the boards of both banks. Referring to a new scheme floated to settle dues of small and medium size enterprises, he said the offer would be a one-time settlement opportunity for bad loans from these units and provide relief to small companies hit by the global financial crisis. On the extension of SBI's special home loan scheme, Bhatt said the bank would decide by end-March. Under the scheme, the bank offers an 8 per cent fixed rate for home loans for a fixed period. The lender received a good response to the scheme, under which it disbursed around Rs 2,500 crore a month, he said.

Citizen SBI first phase over Financial Express Thursday, March 11, 2010

Citizen SBI, a new initiative by the State Bank of India, has completed first phase and next three phases will be over in about two years, said SBI Chairman OP Bhatt at the Conscious Capitalism summit organised by CII and Conscious Capitalism Institute (CCI), in Mumbai on Wednesday.

Government tables SBI Bill in Lok Sabha Business Standard Tuesday, March 09, 2010

The government today introduced the State Bank of India (Amendment) Bill in Parliament to give

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SBI more leeway to raise capital from the market through preference shares, bonus shares and private placement of shares. The Bill proposes to bring down the minimum government shareholding in the country's largest bank to 51 per cent from the 55 per cent prescribed in existing law. The Bill, presented by Finance Minister Pranab Mukherjee in the Lok Sabha, proposes to increase the authorised capital of SBI to Rs 5,000 crore, enabling the government to increase or reduce it in consultation with the Reserve Bank of India. 'The Bill proposes to amend the SBI Act to allow the issued capital of the State Bank to be raised by preferential allotment of shares or private placement or public issue or rights issue,' the finance minister said while introducing the Bill. At present, the Centre holds 59.41 per cent in SBI. The bank does not have much headroom to raise capital by diluting the government's equity. The Bill, when passed, would bring SBI on a par with other public sector banks, where the minimum government holding is 51 per cent. The SBI Act, 1955, was amended in 1993 to enable the bank to access the capital market. A Bill was introduced in Parliament in December 2006 but lapsed due to the dissolution of the 14th Lok Sabha. The Bill tabled today is broadly on the lines of the lapsed one, but incorporating some suggestions of a standing committee. While SBI can access the capital market by issuing equity shares and bonds, there is no provision under the existing SBI Act to enable the bank to issue preference shares and bonus shares. The Bill's statement of objects and reasons said it was aimed at providing flexibility in the management of the bank. Once cleared, it would empower the government to appoint up to four managing directors, abolish the post of vice-chairman, and enable shareholders with at least Rs 5,000 worth of shares to contest the election for directorship. SBI's stock rose 1.16 per cent, or 23.8 points, to Rs 2,070.25 on the Bombay Stock Exchange. The Bankex rose 1.09 per cent, whereas Sensex was up 0.61 per cent.

SBI Bill reintroduced to pare govt holding to 51% Financial Express Tuesday, March 09, 2010

To facilitate capital mop-up plans of the State Bank of India (SBI), finance minister Pranab Mukherjee has reintroduced the State Bank of India (Amendment) Bill, 2010, in Lok Sabha on Monday. The Bill will reduce the Centre's shareholding in the bank from the current level of 55 % to 51 % in sync with the minimum threshold for other banks. Without the Bill, the bank can raise resources only through rights issue. Post the passage of the Bill, SBI plans to raise Rs 10,000 -15,000 crore in 2010-11, out of the Rs 40,000 crore it plans to raise within next three years. The Bill's statement of objects and reasons said the legislation was aimed at allowing reduction of shareholding of the Central government from 55% to 51% consisting of the equity shares of the issued capital. The amendment Bill seeks to provide for enhancement of the capital of State Bank by issue of preference shares, to enable it to raise resources from the market by public issue or

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preferential allotment or private placement. The Bill will also provide more flexibility to the management of the bank in running it. After the passage of the Bill, SBI's authorised capital will rise to Rs 5,000 crore and enable the government to increase or reduce the authorised capital in consultation with RBI. The bank also plans retail bonds next fiscal, said a official. If Parliament passes the Bill, theCentre will be empowered to appoint not more than four managing directors, abolish the post of vice-chairman and enable shareholders with at least Rs 5,000 worth of shares to contest the election for directorship of the bank. With the amendment, the SBI would comply with the Basel Capital Accord, the current international framework on Capital Adequacy adopted in 1988 and Basel Committee on Banking The UPA-I had first brought the bill in Lok Sabha in December 2006 and it was referred to a Parliamentary Standing Committee. But the Bill lapsed due to the dissolution of the House. The present Bill introduced today is broadly on the same lines as the lapsed one, but incorporates certain recommendations of the Standing Committee.

SBI to gain from govt's decision on farm loan repay Economic Times Saturday, February 27, 2010

MUMBAI: State Bank of India (SBI) will be the biggest beneficiary of the government's decision to giver farmers more time to repay their loan. The finance minister in his union budget speech on Friday said that the the government would extend the repayment period under one-time settlement (OTS) scheme by six months to June 2010. In its third quarter results ending December 2009, SBI had indicated that it has not provided for a sum of Rs 1530 crore farm loan as it is 'awaiting decision of government on request by bank for extension of repayment date.' Had government not extended the scheme, SBI would be required to set aside the sum from its fourth quarter pre-tax profits. Earlier, the government has come out with a scheme where by 25% of the loan would be waived if the farmer pays 75% of the loan due as one time settlement which was valid till December 2009. Farm loans which are under stress and where the borrower has failed to provide 75% on the table by December 2009 had to be treated as bad loan.

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While many banks like Bank of Baroda had fully provided for such farm loans will also benefit as any payment made by the farmers could to be plouged back as profit. Rating agency ICRA too had estimated that a part of the delinquent agriculture portfolio could be classified as NPA if some relaxation by the RBI or government does not come.

SBI plans to scale up staff intake Business Standard Thursday, March 04, 2010

State Bank of India, the country's largest lender, is set to recruit 25,000 clerical staff to fill up vacancies and new positions, as part of its expansion plans. 'The recruitment process is underway and the bank is now seeking legal opinion on extending the initial estimate of 11,000 by almost two-fold to 25,000, following large-scale retirements and the decision to set up new branches across the country,' a senior State Bank of India official said. 'The decision would help us save time and cost as we would not have to initiate the recruitment process yet again in the next one year. The estimated cost for the clerical recruitment in 2010 is pegged at Rs 50 crore.' According to the official, almost 2.7 million applicants appeared for the written examination and the interviews would be held over the next two-three months for those who have been shortlisted. 'The recruitment will be in two phases, the process ending before March 2011.' The bank has recruited approximately 33,000 clerical staff since 2007 and the recent initiative will take the total pass the 50,000 mark by the end of March 2011. It has also inducted 6,000 clerical hands in its associate banks. State Bank of India plans to expand its branch network to 50,000 by the end of the current decade from the existing 17,075 branches. These including 12,207 domestic and 141 overseas branches. The remaining are part its six associate banks. The bank also has plans to merge the associate banks with the parent body over the next few years. To further enhance its customer base from the existing 250 million accounts, SBI has opened 975 branches in the current fiscal and intends to add another 1,000 branches during 2010-11. The bank's branch expansion plan is a reversal from its strategy at the start of the decade, when SBI, like most other finacial institutions, was focusing on its existing network and generating more business from them.

Banking on talent Business Standard Friday, March 05, 2010

Employer of choice' is not a branding that the country's largest bank is used to. But it finally happened last month when the State Bank of India (SBI) figured in the list of the top 10 employee-friendly Indian organisations in a Business Today survey. It was a surprise as the hurdles were many. The public sector legacy means that the SBI management's hands are tied. The bank can pay only a fraction of what competitors do; promotions are still largely time-bound; long rural stints are

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a must; and recruitments are time-consuming -- reasons that may be enough for critical talent to head for the exit door. N Raja, deputy managing director of SBI, says a public sector bank has to learn to live with the constraints as its mandate is much beyond just making profits. But the attrition level, he says, is still well within single digits, though it's something the bank is determined to bring down. The bigger challenge, he says, is to attract the right kind of talent in specialised functions that SBI has got into: Private equity, treasury, risk management, general insurance etc. For example, the bank has been looking for a chief economist for some time now. But the available pool is small, and though the right candidates are enthused by the challenges that the job offers, the remuneration is a problem as SBI just can't match competition. But the bank is fighting back, and how. Even with a large employee base of over 200,000, business per employee has gone up from Rs 2.99 crore in 2005-06 to Rs 5.56 crore and profit per employee has more than doubled from Rs 2.17 lakh to Rs 4.74 lakh. The process started when soon after taking charge, Chairman OP Bhatt held an offsite in Amby Valley, which resulted in documenting 'The State of the Nation' -- the bank's strategy paper. Employees were then asked to document their vision for SBI. This set the ball rolling for the mindset change. Earlier, review meetings started with how SBI was losing market share to ICICI Bank and HDFC Bank. That changed to what SBI can learn from them and how it can beat them. But the idiom now is how SBI can hold on to its lead. Raja says the mindset change is part of a carefully-crafted strategy that began with 'Parivartan' (a 100-day programme to increase the communication skills of employees) and 'Citizen SBI' -- mammoth HR exercises that covered each of the 200,000 employees. Last month, SBI did an HR audit -- a first in its long history -- and the feedback ranged from non-transparent promotion policy to rigid transfer rules. The bank brass is now burning the midnight oil to figure out how to redress these grievances. The bank has also just set up a Strategic Training Unit (STU), monitored by Raja and headed by a chief general manager, so that training gets the due it deserves. The focus now is on how to improve the course content and the quality of faculty at its training institutes with outside help, if required. The STU is doing several other firsts. Since leadership development is a focus area, SBI has tied up with the Indian School of Business to prepare a course module for chief managers and deputy general managers. 'They are good, but the idea is to make them better,' Raja says. The duration of the course will be six months, in phases. The bank has also tied up with Duke University of the US, a leading executive education institute, for giving leadership training to general managers and chief general managers. Another initiative of the STU is setting up of an elaborate e-learning platform. The bank offers 130 courses on its intranet at present, but the problem is that only 2,000 employees can log in to the system concurrently. The idea now is to have customised courses for each level of employees who can take online tests as well. The platform will be ready in six months, Raja says. There's more. Apart from the 120-odd B-school graduates (not the IIMs) that it plans to recruit for highly-specialised functions, SBI for the first time has recruited 500 Scale-II managers directly (probationary officers join in Scale-I after two years of training) for functions that require specialised knowledge. So, the overall knowledge levels of its officers are being scaled up gradually. Raja agrees the pay scales are still not enough to attract top B-school graduates, but

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says that SBI doesn't fare badly if overall cost-to-company (CTC) is taken into account. For example, CTC of a probationary officer is Rs 4.8-5.2 lakh if other facilities like free housing, medical reimbursements, furniture allowance etc are considered. That doesn't sound convincing enough as the gap with its private competitors on cash in hand is still very wide. For example, according to a recent advertisement, the bank is offering Rs 8.25 lakh per annum CTC for the post of chief manager (Risk Management System), the eligibility being that the person should have a minimum of 10 years experience. It's certainly doubtful whether the money is enough to attract talent. Overall, the elephant may not be dancing as yet, but it is surely shaking its leg to be in tune with the changing world.

Commercial taxes e-Payment launched Economic Times Friday, March 05, 2010

Nageshwar Patnaik BHUBNESWAR: Companies and firms doing business in Orissa now can make payment of their commercial tax dues through Corporate Internet Banking Portal of State Bank of India. Chief minister Naveen Patnaik on Wednesday inaugurated this facility saying that this would facilitate hassle free payment of commercial taxes without wasting time. In this occasion, the Navaratna PSU National Aluminium Company Limited (NALCO) made a token payment of Rs one crore. On behalf of Nalco, the payment was made by NALCO chairman cum managing director A.K. Srivastava in the presence of the Company Director (Finance) B.L. Bagra and other dignitaries of state government and State Bank of India officials. E-challan cum Receipt, as a proof of payment of above amount, was generated through the system and same was handed over personally by Mr Patnaik to Mr Srivastava. Department of Commercial Taxes and State Bank of India, has taken the E-payment facility initiative.

SBI shortlists Visa, RBS, Global Payments for POS partnership Economic Times Sunday, March 07, 2010

Mayur Shetty MUMBAI: The country's largest lender State Bank of India (SBI) has shortlisted three candidates as potential partners for a joint venture that will install five lakh swipe machines for credit and debit cards across the country. The candidates are Visa, Royal Bank of Scotland (RBS) and Global Payments.

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After putting in place a core-banking solution, SBI has been in a hurry to acquire leadership position in electronic networks as well. SBI, which has over 20,000 automated teller machines, has long overtaken ICICI Bank in ATMs. Electronic swipe machines known as point of sales or POS Terminals, besides increasing acceptance for a bank's credit cards also earn a revenue for the bank out of every transaction. Each time a card is swiped, the merchant pays a small per cent of the transaction in the form of a merchant discount rate. The money is shared between the card issuing bank and the bank that owns the POS terminal and small portion goes to the payments provider, either Visa or Mastercard. ICICI Bank, which had the largest network of POS Terminals with over 1.5 lakh machines, had recently carved out its POS network into a separate company where KKR-owned First Data held an 80% stake and the rest remained with ICICI Bank. The deal fetched ICICI Bank over Rs 400 crore. Axis Bank has over one lakh machines, followed by HDFC Bank, which has around 75,000 POS terminals. What makes POS terminals big business are two recent developments. First, RBI has said it will allow small cash withdrawals through such POS terminals. Secondly, it has said it would encourage banking correspondents to increase financial inclusions. In the banking industry, retailers with a swipe terminal are seen as ideal banking correspondents as they can facilitate payments and withdrawals in unbanked areas as long as there is telephone connectivity. Among potential candidates, Visa is a global giant in the payments space, but POS terminals is a relatively new area for the card company . RBS has a significant POS terminal business in Europe. Global Payments, a listed US payment processing company , is already in India in a joint venture with HSBC. Sources said SBI's proposed joint venture will be very unlike ICICI Bank's venture. While ICICI Bank has farmed out the unit completely and has retained a very small stake, SBI will continue to drive the business with a majority stake of 65%. Also, SBI is likely to seek a brand premium from the partner since the bank will be lending its name to the business. The bank will also be actively involved in acquiring merchant establishments and will receive some kind of payments for services provided.

Base rate for bank seen at around 8%

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Economic Times Wednesday, February 24, 2010

SBI has said the proposed base rate for the bank seems to be around 8%. 'Base rate at this point seems to be around 8% for the bank,' SBI Chairman OP Bhatt said. SBI is at present looking into all aspects of the base rates system proposed by RBI and is yet to take a final call based on asset liability situation, he said.

SBI base rate seen around 8%, says Bhatt Economic Times Tuesday, February 23, 2010

New Delhi : Country’s largest lender State Bank of India (SBI) today said the proposed base rate for the bank seemed to be around 8 per cent. SBI Chairman OP Bhatt said this on the sidelines of an AIMA event here. The Reserve Bank of India (RBI) has proposed to replace the benchmark prime lending rate (BPLR) with base rates from April this year. The base rate is the lowest rate that a bank can charge from acustomer and is intended to bring about more transparency in the lending operations of banks. SBI was at present looking into all the aspect of the base rate system proposed by RBI and was yet to take a final call based on asset liability situation, he said. Asked if SBI has approached RBI for more time to migrate to the base rate regime, he said, “We do not intend to approach RBI, but possibly other banks may seek some relaxation for compliance.” Further, he said the base rate would not translate into higher interest rate. Asked about the merger of the State Bank of Indore with itself, Bhatt said, the merger should take place by March this year. The bank was currently seeking regulatory approval from RBI and thereafter it would go to the government for clearance, he said.

New interest norm to hit SBI margins Economic Times Monday, February 22, 2010

Mumbai: State Bank of India chairman OP Bhatt has said that the bank's margins will shrink by 20-25 basis points after it shifts to calculating interest on savings accounts on daily balances from April 1. The Reserve Bank has asked banks to change the present system of crediting interest rates

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on savings accounts. At present banks calculate interest based on minimum monthly balance held between on 10th to last day of each month. Mr Bhatt said although margins would take a hit in the short term, they will recover in the medium term as yields on advances will rise. SBI's net interest maintain (difference between the cost of funds and yields on advances) rose from 2.30% in June 2009 to 2.82% in December 2009. “ The impact (due to change in interest calculation) will be 60 to 65 basis on the saving deposit book, which is a third of our total deposits. So the overall impact will be 20-25 bps on NIM,” Mr Bhatt said.

Govt is free to appoint outsider to head State Bank, says Bhatt Financial Express Monday, February 22, 2010

Clearing air over the issue whether officials from banks other than the State Bank of India (SBI) can be appointed at the top posts of the bank, OP Bhatt, chairman, SBI has said the government is free to bring an outsider to head the bank.

SBI internally decides the appointment of officials till the level of deputy managing directors (DMD). Both the managing directors (MDs) and chairman are appointed by the government. The government is free to bring in outsider to occupy these posts,'' Bhatt told FE.

Bhatt's statement assumes importance considering the recent controversy where the government under pressure from the public sector bankers, changed its stand to include names of top SBI officials to participate in the interview for selecting the chiefs of 10 public sector banks.

The public sector bankers said unless they were allowed to occupy top positions of SBI, no official from the country's largest public sector bank should be allowed to compete for the posts of PSB chiefs.

The ministry of finance in fact had sent letters of regret to senior officials from SBI whose names were dropped at the last moment.

It is worth mentioning that Bhatt after a five-year stint will retire in March 2011. FE had last week reported that the government had to drop names of some senior SBI officials (at the DMD level) along with the senior officials of some other state-owned financial institutions like National Bank for Agriculture and Rural Development (Nabard) , Exim Bank, National Housing Bank (NHB) at the last moment after initially inviting them for an interview scheduled on Februay 17.

The interview was conducted by a panel headed by R Gopalan, secretary, financial services, ministry of finance.

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Interestingly, among two MDs of SBI and 14 DMDs, 10 will either be retiring before Bhatt or do not have required two years residual services to be considered for the top post of SBI.

Sources point out under this circumstance where only four DMDs are eligible ,the government may yield to the wishes of the public sector bankers who can be considered for the top posts at the SBI. This can successfully set a new trend, said a PSB chief.

At earlier occasions, top officials of SBI have been appointed as the chiefs of various public sector banks (PSBs). Recently, Yogesh Agarwal who was one of the MDs at SBI was shifted to IDBI Bank as its CMD.

Core banking technology puts SBI transactions on online superhighway Financial Express Monday, February 22, 2010

Thanks to its new core banking technology, State Bank of India, the country's largest bank, can now handle about 35 million transactions a day as compared to just 10 million earlier. Fund transfers can now take place virtually in seconds, a dramatic improvement over minimum of a day just a few years back.

The over three-fold increase in SBI's transactions capacity has benefited its whole range of customers hooked on to one or more of its 17,700 branches across the country--from petroleum companies to daily wage earners, jawans and pensioners.

The key factor behind the successful completion of the core banking project, given its magnitude and complexity, was SBI's highly systematic and process-oriented culture, observes SBI chairman, OP Bhatt.

Ever since SBI started implementing its core banking technology in 2003, it has seen an estimated 60% jump in customer accounts. Currently, SBI, together with its subsidiaries, has roughly 260 million accounts. With the core banking system in place, all SBI branches are inter-connected from a centralised information technology department located at Belapur, Navi Mumbai.

Says SBI's deputy managing director (IT), A Krishnakumar, Oil firms can now

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get their dues from local dealers faster. Similarly, core banking helps government funds getting transferred directly to beneficiaries through SBI accounts without any third party (state government) interference.

Even the beneficiaries of the National Rural Employment Guarantee Act can now have their dues directly credited to their SBI savings account by the government authorities in New Delhi.

It's no longer necessary to use the earlier balancing of book method. Besides, errors are easily rectified, frauds are minimised and human errors eliminated. The core banking technology, christened 'Project SBI First, was installed by Tata Consultancy Services.

Of course, it wasn't easy to convince all customers in rural areas to use the facility. They were initially skeptical, says Krishnakumar. Further, the bank needed to carry out rigorous training programmes for its huge staff base of 2,00,000 employees. Currently, the bank is facing a minor problem of ATM connectivity at some its remote branches, due to a shortage of power. SBI plans to switch to bio-metric ATMs, which run on non-conventional energy and are cost effective. Tenders have been placed for 500-1000 such ATMs. Typically, a bio-metric ATM costs around 2 lakh as compared with Rs 4-5 lakh for a normal ATM.

Krishnakumar observes that core banking has helped reduce stress levels among SBI employees and instead of doing the tedious job of matching debit and credit transactions to balance the books, employees are putting in more effort to cross-sell investment products and building customer relations. For instance, a deputy branch manager would need to make 400 entries in a ledger every day to match debit and credit transactions to balance the book.

He could rarely leave before 7 pm but today, thanks to the core banking technology implemented by the bank, he can leave earlier and his productivity too has improved.

New base rate lending rule will help SBI: Bhatt Business Standard

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Wednesday, February 17, 2010

The country’s largest lender, State Bank of India (SBI), today said the proposed base rate mechanism to replace benchmark prime lending rate (BPLR) will be beneficial for it. “It is good for us,” SBI Chairman OP Bhatt told Business Standard. According to the draft norms issued by the Reserve Bank of India (RBI) last week, the new benchmark will be based on the cost of deposits, overhead costs, adjustment for negative carrying cost on funds pre-empted by cash reserve ratio and statutory liquidity ratio and a profit margin. At the same time, RBI has proposed a ban on lending below BPLR from April 1. While banks will benefit by around one percentage from the adjustment for negative carrying cost on cash reserve ratio and statutory liquidity ratio, the ban on sub-BPLR loans is also expected to increase yield on advances. For banks such as SBI, sub-BPLR loans accounted for nearly three-fourths of all lending. With low credit demand, banks were offering short-term corporate loans at 6-7 per cent per annum. SBI’s base rate was estimated at around 9 per cent. With the implementation new norms, no loans can be extended below the base rate. Export finance and loans to weaker sections will be the only exceptions, for which RBI will issue guidelines soon. Bhatt said SBI was comfortable with the proposed April 1 deadline. Asked about his assessment on bond yields, the SBI chairman said he expected the yield on 10-year government bonds to cross the 8-per cent mark in the near future. He said it would settle around 7.5-7.6 per cent by the end of March. “Bond yields may go above 8.1 per cent, but ultimately will come down to 7.5 per cent, as liquidity will be there,” said Bhatt. The closing yield on the 10-year government bond today was 7.86 per cent, two basis points below its 16-month high close yesterday. If SBI’s projections are correct, the impact on the treasury portfolio will not be significant, as the yield would be close to the level seen at the end of December. Banks have to mark-to-market (recalculate at current value) the bond portfolio based on the yield at the end of each quarter.

State Bank Of India - Change in Compliance officer NSE Announcements Wednesday, February 17, 2010

State Bank Of India has informed the Exchange that Sh. Shyamal Sinha, General Manager, is the new Compliance Officer of the Bank in place of Sh. Mrinal Shankar, General Manager and Bank's

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earlier Compliance Officer, who has since been transferred to Bank's other office. The details of the new Compliance Officer are as under: Name: Sh. Shyamal Sinha; Designation: Compliance Officer; E-mail address: [email protected]

CARE assigns ‘AAA’ to SBI perpetual bonds Economic Times Friday, February 12, 2010

MUMBAI: CARE has assigned 'CARE AAA' rating to the perpetual bonds issue of Rs 1,000 crore of State Bank of India, which indicates best credit quality and highest safety for timely servicing of debt. Such instruments carry minimal credit risk. The rating factors in SBI's long standing track record of operations, its dominance in the Indian banking system with its large asset size and extensive branch network, majority ownership by Government of India, access to stable low cost deposit base, stable asset quality, adequate capitalisation level and overall good profitability. The rating of hybrid instruments (Perpetual Bonds and Upper Tier II Bonds) factors in additional risk arising due to existence of lock-in clause in such instruments. Any delay in payment of interest/ principal (as the case may be) following invocation of the lock-in-clause, would constitute as an event of default as per CARE's definition of default, and as such these instruments may exhibit somewhat sharper migration of rating as compared to conventional subordinated debt instruments. SBI is the largest bank in India in terms of asset size and net earnings, with the government holding 59.41% equity. Advances of SBI stood at Rs.542,503 crore as on March 31, 2009 and deposits at Rs.742,073 crore, with the proportion of low cost deposits being 42%. SBI recorded profit after tax of Rs.9121 crore during FY09 due to steady growth in both interest and non-interest income. For H1FY10, SBI reported PAT of Rs.4,821 crore (H1FY09:Rs.3,900 crore) on total income of Rs.42,343 crore (Rs.34,113 crore). Deposits stood at Rs.7,72,904 crore and advances at Rs.5,72,214 crore on September 30, 2009. CAR was healthy at 14.11% (Basel II). Gross NPA and net NPA ratios stood at 2.99% and 1.73% respectively as on Sep 30, 2009.

SBI comes of age Business Standard Wednesday, February 10, 2010

It’s not often that one sees an organisation hiring a cricket stadium to showcase its technological prowess. But State Bank of India (SBI) did just that and the presence of India Inc’s leading lights at Mumbai’s Brabourne Stadium on Sunday evening was an acknowledgement of the coming of age of India’s largest bank, albeit a state-owned one. The bank has brought all its 13,000 branches under what is known as core banking solution (CBS), making it one of the largest banks in Asia to have a single CBS platform. But technology is just one chapter in the story of how the elephant has started dancing. The country’s largest lender has been adding 1,000 ATMs per month over the last year (the largest such rollout in the world); it plans to nearly treble its branch network to 50,000 in

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the next 10 years; and it will roll out services in 50,000 unbanked villages by March — a classic case of how the “Banker to the Nation” has been leveraging technology as well as physical presence to tap economic opportunities. In the process, it has come up with a stellar performance on several fronts. For example, its market share in incremental growth in home loans was as high as 84 per cent in April-October 2009. The bank has also become the largest player in auto loans, with a market share of around 15 per cent. Even with a large employee base of over 200,000, business per employee has gone up from Rs 2.99 crore in 2005-06 to Rs 5.56 crore and profit per employee has more than doubled from Rs 2.17 lakh to Rs 4.74 lakh. The bank saw its market share in advances grow, though its share in deposits has declined of late. When he took over in July 2006, SBI Chairman OP Bhatt’s blueprint for regaining the lost glory of the bank had a wide range of must-dos: Win back the middle class and high net worth customers who had deserted it, build a global treasury, dominate in the small and medium enterprises space and gain leadership in emerging new businesses such as private equity, pensions and general insurance. To his credit, Bhatt has achieved all that. The biggest change, of course, has been in the mindset of its employees. These are great achievements considering that the government had expressed fear four years ago that going by the loss of market share, SBI could lose its top slot to a private sector challenger. Many say that Mr Bhatt has been plain lucky as his term coincided with the global meltdown, which saw companies moving back towards public sector banks. Depositors felt their money would be safer with banks backed by the government. What also helped matters was that risk-averse private banks had more or less stopped lending once the financial crisis hit. It is also a fact that the flight of deposits to public sector banks was a double-edged sword for SBI. It is stuck with high-cost deposits which saw its net interest margin taking a hit in recent months. There are many other challenges, the biggest being capital to enable the bank to pursue a 25 per cent growth strategy. In the absence of equity dilution, which the law restricts, the bank will be unable to meet the target. Over to the government.

SBI launches hard drive on software Business Standard Sunday, February 07, 2010

High net worth customers walking into a State Bank of India branch could soon be greeted by name as soon as they reach the counters. That’s because scanners at the doorstep will detect an RFID chip embedded in their debit cards and flash an alert on the bank’s computers. A senior SBI official said this will happen in the “near future”, and is a part of the country’s largest and oldest bank’s drive to use technology to take the concept of a ‘friendly bank’ a notch higher. Having spent close to Rs 2,300 crore over the last five years on information technology, the bank is planning to spend another Rs 900 crore over the next three years. And true to its new-found aggression, SBI has hired Mumbai’s Brabourne Stadium on Sunday evening to showcase its technological prowess in the presence of Finance Minister Pranab Mukherjee.

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Also in attendance will be industry leaders like Mukesh Ambani, TCS Vice-chairman S Ramadorai, and Bharati Group Chairman Sunil Mittal. Economist Jeffery Sachs and Cisco CEO John Chambers will speak on a video link. In a span of nine years (2000-09), SBI has managed to roll out core banking systems (CBS) to all its 13,000 branches, making it one of the largest banks in Asia to have a single CBS platform. While there are many banks that have centralised CBS and a fully-networked ATM system in place, what differentiates SBI is the sheer size. Consider this: SBI alone has 170 to 180 million accounts and its subsidiaries have another 80 million or so. The average daily transactions handled by the IT system are about 25 million. And peak-time transactions (generally in March) go up by 10 - 15 per cent. SBI Chairman O P Bhatt said technology has played a big role in giving SBI the edge it enjoys today. The implementation has happened in a phased manner, but any new branch is on CBS now from the very first day. The second part of the exercise was to connect the ATMs. Over the last nine months, SBI has added 1,000 ATMs per month, the largest such rollout in the world. To mitigate the risk, SBI has set up a disaster recovery site in another state. And not to be caught unawares, it conducts disaster recovery testing at regular intervals. SBI recently signed an eight-year contract with IBM for data mining and warehousing. “This will allow us to get qualitative information about customers. That in turn will help our employees to make informed decision. This is still at a preliminary stage. The real benefit of this will take a few more years but in the next few months we will start extracting monthly information reports. We are investing about Rs 80 - 90 crore for this system,” added SBI Deputy Managing Director (IT) Krishna Kumar. The process for this mammoth implementation started in 2000 after SBI developed a technology roadmap along with KPMG.

SBI decides to treble its branch network this decade Business Standard Friday, February 05, 2010

State Bank of India, the country's largest lender, plans to nearly treble its branch network to 50,000 by the end of the current decade, from 17,075 at present. SBI has 12,207 domestic and 141 overseas branches. The rest belong to its six associate banks. It has 250 million accounts. The bank plans to merge the associate banks with itself over the next few years. Only Industrial and Commercial Bank of China, which had 16,386 branches at the end of 2008 and provided services to 190 million personal clients and 3.1 million corporate clients, matches SBI's network. The branch expansion plan is a reversal of SBI's strategy at the start of the decade. Like most banks then, SBI was focusing on its existing network and generating more business from it. Besides, technology was expected to help banks reach more customers. But, over the past few years, banks have started opening branches in large numbers again. What helped was permission from the government to recruit employees. This year alone, SBI opened 975 branches; it intends to add another 1,000

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during 2010-11. At the start of the decade, SBI had around 9,100 branches. In recent months, the Reserve Bank of India (RBI) has liberalised branch licensing norms, allowing domestic banks to freely open branches in towns with a population less than 50,000. The bank's chairman, OP Bhatt, said the plan to open 33,000 branches was not ambitious. Despite the thrust on financial inclusion, a large number of villages did not have any banking service and the new branches would service a part of the new client base. According to RBI, assuming that a person has only one account in India, only 59 per cent of adults in the country have bank accounts. Besides financial inclusion, high economic growth in this decade will require expansion of banking activity. The annual growth in loan books could be 20-25 per cent a year to support economic growth of 8-9 per cent yearly. 'At this rate, the business could double every three years,' Bhatt said. The outstanding credit of the SBI group grew 4.5 times in seven years to Rs 750,362 crore at the end of March 2009. The business could grow at least eight times in size by 10 years, Bhatt said. Rising income levels of the middle class, which need varied financial services like credit and wealth management, along with big-ticket project and infrastructure finance, will throw up large businesses on the lending side. A State Bank executive said getting low-cost and long-tenure deposits was crucial to opening branches in rural areas. 'The brand name and perception of strong government support gives us an edge in raising funds in the hinterland,' he said. The intent gains significance in the backdrop of a brainstorming session in Goa a few weeks earlier, where nearly 50 top SBI executives reviewed the course traversed so far and indulged in crystal ball-gazing for the next three to five years. 'With the size of our bank, we have to look at the long-term and cannot merely focus on the current scenario,' said Bhatt.

SBI launches Visa gift cards Business Standard Thursday, February 04, 2010

Hyderabad: State Bank of India (SBI) has launched 'SBI Gift Cards' in Hyderabad. 'The gift cards will work on all Visa outlet shops across the country and will give a choice to the recipients. It will also be convenient for the gifting person, since he will no longer be burdened with going to shops to select items and hoping that the recipient would like that,' Shiva Kumar, chief general manager (Andhra Pradesh), stated in a press release. As a special promotion offer, issue charges for gift cards are fully waived up to March 31,2010. SBI Gift Cards are issued for a minimum amount of Rs 500 and thereafter in multiples of Rs 100, subject to a maximum of Rs 20,000. The cards are available at all its branches in Hyderabad and Secunderabad and at select other important centres, Kumar said.

JP Morgan maintains Neutral’ rating on SBI Economic Times

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Tuesday, February 02, 2010

RESEARCH: JP MORGAN RATING: NEUTRAL CMP: RS 2058 JP Morgan reiterates the cautious view on SBI and maintains Neutral' rating with March 11 price target of Rs 2,300 for SBI assumes a terminal growth rate of 8%, cost of equity of 14.2%, and an RoE of 16%, implying a P/B of 1.5x FY11E. SBI reported Q3 net profit at Rs 2,480 crore, broadly in line with expectations. Though margin improvement was better than expected, increase in NPAs and increase in duration risk are overhangs on SBI's earnings. SBI's margins have normalised at 2.8% after dipping to 2.3% in the June quarter. SBI, in order to increase yield on investment, has shifted its investment book to longer duration bonds v/s T bills, adding to the duration risk in an environment in which the yield curve is to flatten and bond yields are to increase over the next three-six months. Though the government's participation still remains a question mark, a rights issue would impact medium-term RoE improvement.

20 Indian banks in top 500 global banking list Economic Times Monday, February 01, 2010

Bhanu Pande NEW DELHI: They may not be bankers to the world yet, but Indian banks have clearly set their eyes on that. In a year that saw the worst recession for the global banking industry with several big daddies collapsing, resilient Indian banks have improved their brand value rapidly. There are 20 Indian banks in the Brand Finance® Global Banking 500, an annual international ranking by UK-based Brand Finance Plc, this year. The State Bank of India (SBI) became the first Indian bank to break into the world's Top 50 list, according to the Brand Finance study that saw HSBC retain its top slot for the third year in a row. The study, released on Sunday and made exclusively available to ET in India, used discounted cash flow methodology to arrive at a net present value (NPV) of the trademark and associated intellectual property: the brand value. SBI's brand value more than tripled to $4,551 million, up from $1,448 million in 2009 helping it grab the 36th spot in the list. ICICI Bank, the country's largest private bank, joined it in the Top 100 list with a 130% jump in its brand value at $2,164 million.

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Other big gainers in brand value include IDBI Bank (190%), Bank of Baroda (162%) and Union Bank of India (148%). The cumulative brand value of 20 Indian banks stood at $13,053 million. The 15 Indian banks that figured in last year's list saw a whopping 130% rise in their combined brand value. The number of Indian banks in the global list had more than tripled last year to 19 from six in 2007. Differentiation through strong brand and customer base value is becoming a key economic lever for Indian banks. This is as true in financial services as in consumer products. “Indian banks need to recognise their inherent brand value potential and SBI's remarkable performance by breaking into the top 50 financial services brands offers a lesson for others,” said Unni Krishnan, MD of Brand Finance India. SBI seems to be fast transforming into a brand-led business, with a broader, more holistic and sophisticated approach to managing the brand and stakeholder relationships. “Brands act as a common glue that binds all the business functions, especially in financial services firms, resulting in greater coherence of strategy, service excellence and sustained business performance,” said Unni Krishnan, MD of Brand Finance India. Asian aura shows Over all, HSBC remained the biggest bank brand for the third year in a row with its brand value rising 12% to $28,472 million. This must have been a relief to the bank that saw its brand value erode by 28% in 2009 league table. The study notes that global banking sector has begun to show tangible signs of recovery, with the world's 500 most valuable banking groups growing by 62% in terms of market capitalisation and their brand values cumulatively increasing by 49%. “This year's BrandFinance® Global Banking 500 shows how significant the recovery of global banking brands has been,” said David Haigh, CEO of Brand Finance plc. The total brand value of the Top 500 banks stands at $716 billion, up 49% over 2009 and 4% higher than in 2008, prior to the crisis. “There has been a significant shift in the balance of power globally away from the US and towards banks in emerging markets,” said Mr Haigh. The Asia region contributed 17% to the total global brand value, logging 31% growth in 2010. However, the number of Asian banks in the global 500 has dropped to 102 in 2010 from 120 the previous year. Almost all banks in the Asian Top 10 have increased in brand value. However, this rise is not as

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strong as witnessed in more developed regions like Europe and North America, as they recover from the crisis. Although the number of banks reported in the Top 500 from Asia has decreased, many banks in the region tend to be well capitalised and in countries such as India, banks have become far more competitive. As such, the normalisation of markets has not had such a relatively profound increase in brand value in the Asian region. As was the case last year, the Asian Top 10 is dominated by Chinese banks with the gap between the major Chinese banks and the rest widening. The biggest movement in the league table was made by SBI, which has seen its brand value more than triple to sixth biggest bank brand in Asia. Another notable entrant is Standard Chartered, which has stepped up its Asian presence in recent years, saw a robust 59% growth in its brand value. While the brand value increased, market capitalisation of the top 500 came down by 20% since 2008. The US dominance of global banking has declined further with a decrease in the number in the global 500 down to 85 from 95 in 2009. The number of European banks in the list increased from 170 to 197, while that from the UK decreased from 24 to 22. This suggests that the recovery on the European continent in particular France, Spain, and Switzerland has left British banks standing. The league table also notes that bank brands in emerging markets are slowly closing the gap. The top 20 bank brands in 2010, originate from nine countries, one more than 2009. It is for the first time that a Russian bank has made the top 20 (Sberbank) which has seen significant growth. The Middle East has seen a 117% growth in brand value, based on high demand for Islamic banking products and services. On the other hand, Central America has seen a 40% decline in brand value. European bank brands have recovered significantly compared to the North American and Asian markets (78%, 30% and 26% growth, respectively). Banks in the Pacific, including Australia and New Zealand have seen a recovery with growth of 58%.

SBI to open branches in villages without banks Business Line Sunday, January 31, 2010

With a view to taking the concept of financial inclusion a step forward and extend the banking umbrella in the villages without banks, State Bank of India plans to cover one lakh such villages by

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offering them banking services. The coverage of one lakh villages and the launch of the 20,000 {+t} {+h} ATM of the bank near Omarpur district in Murshidabad, West Bengal will be formally announced by the Union Finance Minister, Mr Pranab Mukherjee, according to a press invite from SBI. In an attempt to extend banking services in villages, banks have been trying to establish branches in gram panchayats. SBI had earlier entered into a Memorandum of Understanding with the Orissa Government to provide banking outposts in all 6,234 gram panchayats to facilitate Electronic Benefit Transfer of National Rural Employment Guarantee payments and other social security benefits throughout the state paving the way for financial inclusion of disadvantaged and low income groups. Banks have been either looking at setting up branches or work through business correspondent or business facilitators in order to reach out to the unbanked areas. SBI had also adopted the historical monument of Hazar Duari in Murshidabad district and had plans to provide close to Rs 75 lakh for the conservation, professional advice for museum display and to attract tourists. Union Bank Mr Mukherjee will also be inaugurating the Jangipur branch of Union Bank of India along with village knowledge centre on January 31, according to a press statement from Union Bank. The knowledge centre would impart knowledge for rural developmental activities, the release said. He would also be inaugurating a Management and Skill Development Institute jointly sponsored by Union Bank of India and SIDBI to provide financial education, credit counselling and debt management especially to the rural people. A credit disbursement camp would also be organised as a step toward financial inclusion and biometric cards would be issued. Mr M V Nair, Chairman and Managing Director, Union Bank of India, would also be present at the occasion, the release said.

O.P. Bhatt, Chairman, SBI Business Line Saturday, January 30, 2010

The RBI's decision to hike the CRR is right and good. The policy reflects the concern whether normalcy has returned because of underlying demand for stimulus package. It is a difficult situation

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for the economy as inflation is inching up. The CRR hike may only impact those banks which are short on liquidity. But there is not likely to be a rate hike for the next six months.

LOYALTY REWARDS PROGRAM FOR RETAIL INTERNET BANKING (Launched on 26th November 2009)

LOYALTY REWARDS PROGRAM is a scheme to reward existing as well as new retail internet banking customers of SBI w.e.f. 26th Nov., 2009. It is the stimulus for the customers to transact online, earn reward points and redeem the points for cash. This process is just one of the ways to reward our esteemed customers for their continued support and loyalty.

FAQ

1) Who is eligible for this service?

All existing and new retail internet banking customers of State Bank of India.

2) Am I supposed to register for availing the benefit?

No registration is required for enjoying the benefits of this program. All internet banking customers doing online transactions will be automatically eligible for loyalty rewards.

3) How am I going to be rewarded under this scheme?

Based upon the number of transactions a customer will gain points and these points can be redeemed online for cash back. The cash from the redemption proceeds will be immediately credited to the customers transaction account upon opting for redemption, subject to the availability of a minimum of 400 points at the time of each redemption.

4) How do I accumulate Points?

Internet banking customers will automatically qualify for reward points if they carry on the following transactions via onlinesbi:

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Bill payments, online shopping, merchant payments etc.

Government transactions pertaining to retail/individual customers falling under Central/State taxes (OLTAS,CBEC etc), Cyber treasury.

Railways ticket booking through IRCTC.

RTGS/NEFT (retail internet banking transactions only)/Visa Money Transfer.

5) How many points do I get for carrying on the above transactions?

The number of points rewarded for each transaction type is as per the following table

Transaction Type No. of Points Rewarded

RTGS/NEFT 5

Bill Payment/Merchant 6

IRCTC 10

VMT 10

Govt Tax Payments 20

6) What can I do with the accumulated points?

Customers can redeem the accumulated points online for cash and can use it as per their choice. The redemption amount will be immediately credited to the customer's transaction account on opting for redemption, subject to the availability of a minimum of 400 loyalty reward points in the account at the time of each redemption.

7) How is the redemption proceeds rendered back to me?

A "redeem" link is provided on the "Loyalty Points" link under the

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"My Accounts" page. The accrued points are redeemed for cash back to the customer which will be directly credited to the customer's transaction account immediately with no time loss on applying for it.

8) What is the monetary value of each point earned?

The value of each point is Rs 0.25.

9) What is the time required for getting the account credited with redemption proceeds from the time/day of redemption?

Instantaneous credit at the mentioned rate would be provided to customer's account.

10) How long will this Loyalty Rewards Program continue?

The Loyalty Rewards Program will continue for 1 year.

11) Will this program be extended beyond 1 year?

It is subject to bank's policy from time to time.

12) For how long are my accumulated points valid for redemption?

The accumulated points are valid for another three months after the withdrawal of the program.

13) Are points rewarded on online debit/credit card transactions under this particular scheme?

No. this reward program covers only online retail transactions done through our INB portal www.onlinesbi.com.

14) How do I check my points?

Loyalty point details can be seen from the "Loyalty Points" link under the 'My Accounts' tab.

15) I am a customer with only viewing rights. How do I benefit myself from this program?

To benefit from this program, a customer needs to avail transaction rights for the account. He/she can then start earning points for the transactions he/she does every time.

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16) What is the minimum redemption limit?

The minimum redemption limit is 400 points. After that it is multiples of 100 (e.g. 500, 600 and so on).

17) Can I transfer the accumulated points from one banking A/c to another A/c?

No.

18) Are corporate internet banking customers eligible for this Loyalty Program?

As of now, corporate internet banking customers cannot avail the benefits from this program.

16 Misc

a. A few current national & international issues

b. Terminology

a. A few current national & international issues i) The what, how and why of ‘Cloud Computing’

In a very nascent stage of development around the world, it is a general term used to denote a set of technologies and networks that enable ‘internet-based computing’ where shared resources software and information are provided to computers and other devices on demand through the internet. Let’s take an example of Google Docs whereat one does not need to have a word processing application installed in one’s computer in order to view or modify text or spreadsheet documents, making it a very good example of cloud computing. In other words, it

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may be explained as the use of the internet to perform tasks that one would do on his computer. In this parlance, a “cloud’ means a place to store data, images etc. that can be retrieved from any device anywhere around the world. Servers can e hired for the purpose of storing, accessing and updating/modifying large databases. It can facilitate removal of unnecessary operational and technical overheads of managing IT; ensure faster deployments and the reach of citizen services in all states irrespective of their present e-Governance readiness. A ‘public cloud’ is offered as a service via web applications/ web services, usually over an internet connection. ’Private or internal cloud’ are deployed inside the firewall and managed by the user organization.

Advantages of cloud computing: Always available, highly mobile and available across platforms, reduced upfront cost of deployment, unlimited storage pace, increased computing power with rapid scalability as and when required, easier workgroup collaboration in realtime, reduced risks of data loss, fewer maintenance issues as there is no need to install or upgrade software & hardware, improved compatibility between operating systems.

Impediments to making cloud computing popular: Access requires always on and high-speed internet connectivity, ultra-advanced technology, as yet unresolved security & privacy issues, lack of industry standards and inter-operability among applications, limited features, users are subject to many terms & conditions.

ii) What is the UIDAI Project and how it could benefit the banking industry?

The Unique Identification (UID) project headed by Shri Nandan Nilekani, has been renamed ‘AADHAAR’, that aims to give every resident of the country a unique 12-digit identification number. Shri Nilekani is the Chairman of the Unique Identification Authority of India (UIDAI). The UIDAI has been allocated Rs 1900 crore for the financial year ending 31.3.2011. The UIDAI will also be collecting the following data fields and biometrics for issuing AADHAAR, the unique number:

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b. Name c. Date of birth d. Gender e. Father’s/ Husband’s/ Guardian’s name and AADHAAR number f. Mother’s/ Wife’s / Guardian’s name and AADHAAR number g. Introducer’s name and AADHAAR number (in case of lack of documents) h. Address i. All ten fingerprints, photographs and both iris scans

The AADHAAR project is estimated to offer IT companies a Rs 15,000-20,000 crore opportunity, as it sets to build an ecosystem around the project, comprising biometrics, databases, smartcards, storage and system integration.

Apart from the obvious function of being an identity proof for Indian residents, AADHAAR will provide the identity infrastructure for ensuring financial inclusion across the country- banks can link the unique number to a bank account for every resident and use the online identity authentication to allow residents to access the account from anywhere in the country. A vast majority of villages, as yet do not have the facility of ATMs. “Making payments possible to the poor at their doorstep is an important part of financial inclusion” says Mr. Nilekani. It would lay the foundation for inclusive growth as banking could be taken to the people. The online authentication for any person can be done in just a few seconds for a transaction. The ‘Business Correspondent’ (BC) would act as a mobile ATM and a person can go to any BC in the country to withdraw/deposit money through his account. The BC only would have to verify the authenticity of the AADHAAR number through the phone and provide basic banking services to any individual. The backend operation of this transaction can be conducted on the existing platforms of ATM, internet or mobile banking. The UIDAI would come out with standards for banks on how they could make their systems ready. The AADHAAR number will also allow individuals to confirm through AADHHAR-linked biometric verification, if the services that were aimed for them actually reached them.

UID-ENABLED BANK ACCOUNT: The Unique Identification Authority of India and the RBI are in talks to explore linking the unique identity number with bank accounts to enable cashless transactions at outlets like 'kirana' stores. The Authority has proposed a UID-enabled Bank Account (UEBA) which will give customers access to their account through Business Correspondent (BC) operating a handheld micro ATM device. Transactions on the UID-enabled bank account function essentially as a prepaid system, similar to that used by mobile operators.

iii) The RBI Governor Dr. Duvvuri Subbarao at the Zurich Conference

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A high-level conference on ‘The International Monetary System’ was jointly organized by the Swiss National Bank and the IMF in Zurich on 11.5.2010. The RBI Governor, Dr. D. Subbarao represented India and stated that we will continue to move towards liberalizing the capital account, but will have a relook into this in the light of the global economic crisis. India’s policy on equity flows has been quite liberal and stable too, and in sharp contrast to other emerging market economies which liberalized and then reversed the liberalisation when flows became volatile. India’s position is that capital account convertibility is not a standalone objective but a means for higher and stable growth. We believe our economy should traverse towards capital convertibility along a gradual path. In spite of not having a fully open capital account, India has experienced large volatility in capital flows. The exchange rate of the rupee vis-a vis the US dollar appreciated when there were large capital inflows; and it depreciated whe capital inflows thinned out. The two-way movement is a clear demarcation of India’s flexible exchange rate policy. The RBI’s policy has been to intervene in the market to manage excess volatility and disruptions to the macro-economic situation. Although India does not have a deliberate strategy of building up reserves for self insurance, our reserves got built up as a result of our relatively flexible exchange rate policy,. The reserves so built up have been used to contain volatility in the event of capital flow reversals. Our reserves comprise essentially borrowed resources, and we are therefore more vulnerable to sudden stops and reversals as compared with countries with current account surpluses

iv) What is the proposed ABCD (automatic tax collection through bank credit deduction) system?

Under the proposed ABCD system, each time an amount in an account in a bank, automatically, say Rs 2 per Rs 1000 (0.2 percent) is debited to the account and transferred to the Exchequer. ABCD will apply to; a) cash deposit in favour of the account holder, b) cheques deposited in favour of the account holder, c)direct transfer from one account-holder to another account-holder in the same branch of the bank; and d) transfer from one bank to another in favour of the account holder.

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But it will exclude: a) opening credit balances taken from time to time, e.g., monthly/ quarterly etc, b) credits arising out of inter-branch transfer of the same bank of the same account holder, c) time deposit credits till they mature and get credited in the C/A or SB account oh the account holder, d) inter- branch transfers of the same bank (e.g., SBI Delhi transferring funds to SBI Mumbai to their account, e) day-to-day ‘call money’ market under RBI control, f) foreign exchange credits that are already a part of ABCD but being converted to INR and credited to the same account-holder and, g) total credit less than Rs 1,00,000 in a year. As per the RBI data, the total volume of bank transactions consisting of cheque clearances, large value gross settlement systems, other electronic settlement systems, export-import and forex inward remittances per year came to nearly Rs 161,924,592 crore. On this account alone, the ABCD at 0.2% will work out to RS 323,849 crore. This data does not include the daily cash deposits in each branch of a bank and the fund transfers within the branch from one account holder to another.

The ABCD system, when fully administered would lead to higher tax collection to the exchequer and also, will be simple to administer, as it will end the current practice of returns to be filed by the assesses, TDS, computation of depreciation, investment allowance, deductions, exemptions, appeals and litigation, ambiguities and so on . ABCD will operate through the banking system using computer technology. It will also save assesses and the CBDT costs arising out of filing and monitoring taxes.

v) Clean Development Mechanism (CDM) projects with India in perspective

India is a big market for CDM projects and accounts for about a fourth of the over 2144 CDM projects registered with the UN Framework Convention on Climate Change (UNFCCC). The CERs (certified emission reduction certificates) obtained from the CDM projects are traded in the carbon market. India is the second largest seller of CERs after China and accounts for about a fifth of the over 41 crore CERs issued by the UNFCCC. Carbon credis can be earned from four category of projects including renewable energy, energy efficiency, waste energy and

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afforestation. The current carbon trading mechanism is backed by the Kyoto Protocol, which comes to an end in 2012.

vi) Various aspects of Indian Depository Receipts (IDRs)

Each IDR is essentially a receipt, representing a share, or part of a share, in a foreign company. Quite simply, the company floating the issue appoints an Indian Depository, which in turn issues the receipts to investors. The actual shares represented by the receipts are held by an overseas custodian. It is, however, upto the issuing company to decide the number of IDRs that make up a share in the company. IDRs are denominated in rupees, thus allowing trading similar to trades in securities. While they are usually issued in the demat form, a separate application can be made if one wishes to hold them in physical form. In such a case the depository will issue an IDR certificate. IDR prices are linked to the prices of the stock on foreign exchanges, and thus changes in exchange rates will impact IDR prices. IDRs can be converted into shares but a separate application must be made to the RBI. IDRs are not exempt from long term capital gains rates. Dividends on IDRs received are taken as taxable income in anyone’s hands. When the company is taken over or merged, anyone’s rights will be similar to those of a regular shareholder.

( By Sri Ratnesh Mehrotra, Manager Training, SBLC Patna)

v) FINANCE BILL 2010: The Lok Sabha passed the Finance Bill 2010, which will give effect to the proposals in the General Budget for 2010-11. Finance Minister shared that the emphasis in the Bill had been on relief to individual taxpayers, encouraging research and development in the country, providing some relief measures in view of the recessionary impact and rationalization of procedure and steps to mitigate compliance cost.

NEW CONCESSIONS:

a) Currently, hospitals of more than 100-bed capacity, constructed in any area other than the "excluded area" are eligible for claiming 100% deduction under section 80-IB (11C) of the Income Tax Act. In view of the pressing need for more hospitals all over the country, the amended bill has provided relief to any new hospitals anywhere in India, with at least 100 beds for patients, to be included as a "specific business" for availing the benefit of investment-linked deduction.

b) Similarly, the business of developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government will also included as a "specified business" for availing of the benefit of investment-linked deduction.

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c) In consequence of the decision to allow tax-neutrality for conversion of a company in to Limited Liability partnership (LLP), the transfer of shares by the shareholders of the company in respect of such a conversion would be exempted from taxation.

d) The effective rates of levy of service tax imposed in the Budget proposals on international and domestic air passengers would be a maximum of Rs.100 per travel for domestic journey in any class and a maximum of Rs.500 per travel for international journey by economy class. Further, domestic air travel to and from the North-Eastern sector would be exempt from this tax.

e) Relief has been provided to the construction sector in the matter of service tax by enhancing their rate of abatement from 67% to 75% of the gross value where such value includes the value of the land constructed upon.

f) Constructions under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Rajiv Awas Yojana would be exempted from service tax in order to give a thrust to low-cost housing schemes for the urban poor.

g) The present service tax exemption available to the vocational training institutes affiliated to the National Council for Vocational Training and offering courses in designated trades extended to "Modular Employment Skill Development courses" provided by the training institutes registered under ‘Skill Development Initiative Scheme’ of the Ministry of Labour.

h) The Government had imposed export duty at the statutory rate of Rs.2500 per metric tonne (PMT) on raw cotton with effect from April 9 this year to contain the spiraling prices by disincentivizing exports. The Government has now decided to enhance the statutory rate for this item to Rs.10,000 PMT while maintaining the effective rate at the current level.

i) The Finance Minister also announced the Coffee Debt Relief Package 2010, specifically for small growers. j) Relief packages in the form of Special Coffee Term Loan 2002 & Special Coffee Relief Package 2005 were

sanctioned to revive the coffee sector, besides other initiatives like the Prime Minister's Relief Package for Debt Stressed Farmers and Debt Waiver and Debt Relief Scheme 2008. However, a large number of affected growers did not get the required relief, he said. Mr Mukherjee said that, as per the new package, for pre-2002 loans, 50% of the total liability shall be waived subject to a maximum benefit of Rs.5 lakh per farmer to be borne by GOI. An additional 25% shall be waived by banks and the balance shall be rescheduled. The package also envisages 20% waiver of liability under crop loans with 10% each being borne by the Government of India and banks respectively, subject to a maximum benefit of Rs.1 lakh.

RECAPITALISATION OF BANKS: Govt. has approved a plan to provide $3.4 billion to recapitalise several state banks in a bid to spur lending in Asia's third biggest economy. The infusion of Rs 150 billion in Tier-I capital instruments of public sector banks would enable them to expand their credit growth by about 1.85 trillion rupees. India has negotiated with the Washington-based World Bank for a loan of $ 3.2 billion to part-fund the recapitalisation. CLASSIFICATION IN THE BALANCE SHEET

RBI has observed that there is no uniformity in the accounting practice followed by banks in classifying the various regulatory capital instruments for the purpose of presentation in the Balance Sheet. RBI examined the issue and has advised that the following classification may be adopted in the balance sheet from the financial year ending March 31, 2010:

UNDER SCHEDULE 1-CAPITAL

(1) Perpetual Non-Cumulative Preference Share (PNCPS)

UNDER SCHEDULE 4 – BORROWINGS

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(2) Innovative Perpetual Debt Instruments (IPDI)

(3) Hybrid debt capital instruments issued as bonds / debentures

(4) Perpetual Cumulative Preference Shares (PCPS)

(5) Redeemable Non-Cumulative Preference Shares (RNCPS)

(6) Redeemable Cumulative Preference Shares (RCPS)

(7) Subordinated Debt.

IMPLEMENTATION OF The Standardised Approach

The Basel II Framework presents three methods for calculating Operational Risk capital charges in a continuum of increasing sophistication and risk sensitivity:

i) The Basic Indicator Approach (BIA);

ii) The Standardised Approach (TSA); and

iii) Advanced Measurement Approaches (AMA).

A bank following BIA can switch over to the AMA directly. However, as all the qualitative requirements relating to operational risk management applicable to TSA form

part of the qualitative requirements for AMA, therefore, if a bank does not have plans to switchover to AMA before 2014, it may first consider moving to TSA so that the work done by it in implementation of TSA could be used to meet part of the requirements for AMA as and when the bank considers switching over to that approach.

The banks which already have three year data of gross income of different business lines may also first consider implementing TSA. The basic methodology of calculation of capital charge for operational risk remains the same as in case of Basic Indicator Approach (BIA) in as much as the exposure indicator for operational risk continues to be Gross Income.

However, in TSA there is a requirement of mapping the activities of a bank into eight business lines as. In addition, banks also have to meet minimum standards for management of operational risk including

capturing of operational loss data for individual business lines as indicated in the guidelines. It may be reiterated that banks would have the discretion to adopt TSA / ASA, while continuing with

simpler approaches for computation of capital for credit and market risks.

The banks interested in migrating to TSA/ASA for operational risk capital may approach RBI (DBOD) with a formal application after March 31, 2010, with a write up in support of their compliance with the provisions.

PRUDENTIAL NORMS

EXTANT GUIDELINES: As per the guidelines on Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to advances (IRAC) norms, a grace period of two years for Infrastructure Projects and six months for Industrial projects, is available for commencement of commercial operations after the

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original date of completion of the project, for the purpose of retaining the standard asset classification, provided the account is serviced regularly.

REVISED GUIDELINES: In view of occasions when the completion of projects is delayed for legal and other extraneous reasons like delays in Government approvals etc., there may be delay in project implementation and may involve restructuring / reschedulement of loans by banks. Accordingly, RBI has decided to modify the asset classification norms for project loans before commencement of commercial operations.

EXCEPTIONS: These guidelines will not be applicable to restructuring of advances classified as Commercial Real Estate exposures; Advances classified as Capital Market exposure; and Consumer and Personal Advances.

CATEGORISATION OF PROJECT LOANS: ‘Project Loan’ would mean any term loan which has been extended for the purpose of setting up of an economic venture. Banks must fix a Date of Commencement of Commercial Operations (DCCO) for all project loans at the time of sanction of the loan / financial closure (in the case of multiple banking or consortium arrangements).

For IRAC purpose, all project loans have been divided into the following two categories:

a) Project Loans for Infrastructure sector. b) Project Loans for non-Infrastructure sector.

REVISED GUIDELINES

A) PROJECT LOANS FOR INFRASTRUCTURE SECTOR

A loan for an infrastructure project will be classified as NPA during any time before commencement of commercial operations as per record of recovery (90 days overdue), unless it is restructured and becomes eligible for classification as ‘standard asset.’

A loan for an infrastructure project will be classified as NPA if it fails to commence commercial operations within two years from the original DCCO, even if it is regular as per record of recovery, unless it is restructured and becomes eligible for classification as ‘standard asset.’

If a project loan classified as ‘standard asset’ is restructured any time during the period up to two years from the original date of commencement of commercial operations (DCCO), it can be retained as a standard asset if the fresh DCCO is fixed within the following limits, and further provided the account continues to be serviced as per restructured terms.

a) Infrastructure Projects involving court cases: Up to another 2 years (beyond the existing extended period of 2 years i.e. total extension of 4 years), in case the reason for extension of date of commencement of production is arbitration proceedings or a court case.

b) Infrastructure Projects delayed for other reasons beyond the control of promoters: Up to another 1 year (beyond the existing extended period of 2 years i.e. total extension of 3 years), in other than court cases.

Other Conditions:

a) In cases where there is moratorium for payment of interest, banks should not book income on accrual basis beyond two years from the original DCCO, considering the high risk involved in such restructured accounts.

b) Banks should maintain provisions on such accounts as long as these are classified as standard assets as under:

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Until two years from the original DCCO - 0.40% During the 3rd & the 4th years after the original DCCO-1.00%.

For the purpose of these guidelines, mere extension of DCCO will also be treated as restructuring even if all other terms and conditions remain the same.

B) PROJECT LOANS FOR NON-INFRASTRUCTURE SECTOR

A loan for a non-infrastructure project will be classified as NPA during any time before commencement of commercial operations as per record of recovery (90 days overdue), unless it is restructured and becomes eligible for classification as ‘standard asset.’

A loan for a non-infrastructure project will be classified as NPA if it fails to commence commercial operations within six months from the original DCCO, even if is regular as per record of recovery, unless it is restructured and becomes eligible for classification as ‘standard asset.’

In case of non-infrastructure projects, if the delay in commencement of commercial operations extends beyond the period of six months from the date of completion as determined at the time of financial closure, banks can prescribe a fresh DCCO & retain the “standard” classification by undertaking restructuring of accounts as per guidelines, provided the fresh DCCO does not extend beyond a period of twelve months from the original DCCO. This would among others also imply that the restructuring application is received before the expiry of six months from the original DCCO, and when account is still “standard” as per the record of recovery.

Other Conditions:

a) In cases where there is moratorium for payment of interest, banks should not book income on accrual basis beyond six months from the original DCCO, considering the high risk involved in such restructured accounts.

b) Banks should maintain provisions on such accounts as long as these are classified as standard assets as under:

Until the first six months from the original DCCO - 0.40% During the next six months - 1.00%

For this purpose, mere extension of DCCO will also be treated as restructuring even if all other terms & conditions remain same.

Other Issues: Any change in the repayment schedule of a project loan caused due to an increase in the project outlay on account of increase in scope and size of the project, would not be treated as restructuring if:

a) The increase in scope and size of the project takes place before commencement of commercial operations of the existing project.

b) The rise in cost excluding any cost-overrun in respect of the original project is 25% or more of the original outlay.

c) The bank re-assesses the viability of the project before approving enhancement of scope and fixing a fresh DCCP.

d) On re-rating, (if already rated) the new rating is not below the previous rating by more than one notch.

PRIORITY SECTOR - MSE ENGAGED IN EXPORTS

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Some commercial banks have sought clarification in respect of classification of loans granted to micro and small enterprises engaged in exports, under priority sector. The issue has been examined and it is clarified that loans granted by commercial banks to micro and small enterprises (MSE) (manufacturing and services) are eligible for classification under priority sector, provided such enterprises satisfy the definition of MSE sector as contained in MSMED Act, 2006, irrespective of whether the borrowing entity is engaged in export or otherwise. Further, the export credit granted to MSEs may be reported separately under heading "Export credit to micro and small enterprises sector".

ICICI & HDFC AS FOREIGN BANKS: ICICI Bank and HDFC Bank the two of the country’s biggest lenders in which overseas investors own more than 51% equity will now be treated as foreign banks, with the government having decided finally not to carry out further changes to its new policy on overseas investment. The government’s decision will impact future investment plans of these banks in subsidiaries or in sectors where there is a cap on foreign investment. But investments in financial services, including in insurance, which were all made before the new policy was announced in Feb. 2009 will not come under the ambit of the new rules. In the case of ICICI & HDFC Bank, foreign investment is over 51% although management rests with Indians. India’s foreign investment rules allow for overseas investors to hold up to 74% in private banks through secondary market purchases or through Global Depository Receipts or American Depository Receipts. Foreign investment in private banks is allowed up to 74%. Several Indian private banks such as ING Vysya Bank, ICICI Bank, HDFC Bank & IndusInd Bank have at least 51% foreign investment. Others such as YES Bank and Federal Bank have foreign investment precariously close to the 51% mark. WORLD ECONOMY GROWTH: As per the International Monetary Fund (IMF) estimates, the world economy could grow 4.1% this year, 0.2 points more than previously forecast. The U.S. economy is now expected to grow 3% this year, instead of the 2.7% forecast in the IMF's report. According to the draft report, Euro zone growth this year is now forecasted to be 0.8%, down 0.1 points from January's estimate. Europe's biggest economy, Germany, is expected to report a 1.2% rise in GDP in 2010 and 1.7% in 2011. WHAT IS THE MEANING OF ASBA? ASBA means “Application Supported by Blocked Amount”. ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account by Self Certified Syndicate Bank only if his application is selected for allotment after the basis of allotment is finalized. This new mechanism works well for IPOs and Rights Issues.

WHO HAS INTRODUCED ASBA? Securities Exchange Board of India (SEBI) the Capital market regulator SEBI in 2008 has introduced a new mechanism for subscribing to initial public offers (IPO) for retail investors. Called ASBA, this facility is now offered to HNIs and Corporate investors also from January 1, 2010 onwards.

WHO ARE SELF CERTIFIED SYNDICATE BANK? Self Certified Syndicate Bank (SCSB) is a bank, which offers to its customers the facility of applying to IPO through the ASBA process. An SCSB enters into an agreement with the issuer to offer the ASBA facility to all its account holders for all issues to which ASBA process is applicable.

WHO ARE THE ELIGIBLE INVESTORS UNDER ASBA? From January 1, 2010 all the investors other than Qualified Institutional Buyers (QIBs) can apply through ASBA in all types of public issues.

HOW DOES ASBA PROCESS WORK? Self-Certified Syndicate Banks (SCSB) are currently offering this facility to the Investors. The investor can visit SEBI website or BSE or NSE website to get the list of banks and their branches that are offering

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ASBA facility. An ASBA investor has to submit the filled-in ASBA application form physically to the SCSB with whom he maintains the Bank account. The SCSB shall then block the application money in the bank account as specified in the ASBA, on the basis of the authorization. The application money shall remain blocked, till finalization of the basis of allotment in the issue or till withdrawal/failure of the issue or till withdrawal/rejection of the application, as the case may be. The application data shall thereafter be uploaded by the SCSB in the electronic bidding system through a web enabled interface provided by the Stock Exchange (either NSE/BSE). Once the basis of allotment is finalized, the Registrar to the Issue shall send an appropriate request to the relevant bank for transferring the requisite amount to the issuer's account. In case of withdrawal/failure of the issue, the amount shall be unblocked by the SCSB on the receipt of information from the pre-issue merchant bankers.

WILL BANK CHARGE ANY ADDITIONAL FEES FROM ITS CUSTOMERS IF THEY CHOOSE ASBA IPO PAYMENT? No additional fee is charged.

WHEN THE BANKS WILL NEED MONEY IN CUSTOMER’S ACCOUNT TO BLOCK FOR ASBA PAYMENT OPTION? Bank will need the money in investor's account at the time of placing the bid for IPO shares through ASBA payment option. SEBI has clearly instructed that banks will not accept IPO application before blocking the bidding amount (for ASBA process). The amount will remain blocked until Registrar / Stock Exchange requests bank to release the fund either because the investor didn't receive the allotment, the IPO application got rejected or investor has withdrawn the IPO application

CAN AN INVESTOR APPLY ON ‘LOWER PRICE BAND’ USING ASBA PAYMENT METHOD? No, in the current form of ASBA, retail individual investors can only apply at cut-off price to use ASBA payment option. WHAT IS THE BENEFIT OF SUBSCRIBING FROM ASBA? There are many benefits of applying for IPO in ASBA method. The first and most important is that investors money is not debited from his account and as such he is not losing on the interest earned during that period. Secondly there is a transparency in share allotment process. Only that amount is debited from account for which shares have been allotted after the basis of allotment is completed. So there is no waiting for refund of money and no such tensions.

FINANCIAL EDUCATION AND LITERACY

To mark the Platinum Jubilee Year, RBI, in coordination with the Organisation for Economic Co-Operation and Development (OECD) organised an International Workshop on ‘Delivering Financial Literacy’ at Bengaluru in March, 2010.

The two day international workshop was organised to advance and elevate policy dialogue on financial education and literacy in the international arena and particularly in India and countries from the ASEAN( Association of Southeast Asian Nations), SAARC (South Asian Association for Regional Cooperation).

RBI’s Governor emphasized that financial literacy and awareness are integral to ensuring financial inclusion. Financial literacy is not just about imparting financial knowledge and information, but it also

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involves changing behaviour. Since the ultimate goal is to empower people to take actions that are in their own self-interest, financial education would help the consumers know enough to demand accountability and seek redressal of grievances. This in turn, would enhance the integrity and quality of financial markets.

The Finance Minister lauded the Reserve Bank’s initiative of ‘Project Financial Literacy’, which disseminates information in 13 languages through its website on the central bank and general banking concepts to various target groups.

FINANCIAL CRISIS IN GREECE

BACKGROUND

Greece is a founder member, and a mentor of the aptly named PIGS (Portugal, Italy, Greece & Spain) group of debt-ridden European member States. Greece's debt woes came to light late in 2009 when the new government took office and revealed that the country had been overspending. It was also under-reporting its debt, which had ballooned to 12.7% of the GDP - more than four times the limit allowed by the European Union.

National debt, put at €300 billion ($413.6 billion), was bigger than the country's economy, with some estimates predicting it would reach 120% of gross domestic product in 2010. The country's deficit was equal to 12.7%.

ORIGIN OF THE CRISIS: The gigantic national debt is solely the creation of government. It was created by the state subsidies to the capitalists, the tax-relief and tax evasion of the capitalists, the long-lasting protection the public sector, offers to big private companies, the enormous public spending on defence, the huge waves of privatizations in the public sector, which deprived the state of its income, the mismanagement and, the last but not the least, the scandals of the high-paid high-ranking civil servants.

HOW THIS CURRENT GIANT PUBLIC DEBT WAS CREATED:

67.5% of total tax income in 2009 went mainly towards the national and international banks for paying the treasury bills and the state bond holders, who had lent money to the state.

The €28 billion bailout package which had been provided to the banks, equalled to 12.4% of public debt, which could have been actually used to buy these banks.

In 2004, the tax rate on corporate profits was reduced from 35% to 25%, and profits of the 300 biggest companies increased by 365%. This means that tens of billions of Euros that could have been earned by the state had been given openhandedly to the capitalists.

Every year tax evasion in Greece accounts for €20 billion of lost revenue, accounting for almost 40% of the state budget deficit. According to a state newspaper, approximately 15,300 enterprises did not pay any taxes.

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The Greek defence budget for 2009-2010 has risen to 6 billion Euros. The perception of Turkey as its primary external threat has been the driving force of Greece's increased military spending. As a result Greece has maintained one of the highest percentages of defence spending in regards to GDP.

The State lost 2.675 billion Euros due to the three most recent government scandals.

WHAT HAPPENS IF GREECE GOES DOWN?

Now, after the current revelations of the way, the hangover is spreading across Europe, and affecting the future of the common European currency, the Euro. Greece is already in major breach of Euro zone rules on deficit management and with the financial markets betting the country will default on its debts, has hit badly on the credibility of the euro. There are also fears that the financial doubts will infect other nations at the low end of Europe's economic scale such as Portugal, Spain, and Italy.

Europeans fear that the "Hangover” could spread to the PIGS group, and eventually to Britain. As a result, European nations are pondering over the idea to save Greece to stabilize the euro. The unwillingness of France, Germany, and Britain to bail out Greece can take the toll on their own banks / financial institutions that have huge exposure in Greece state bonds and Treasury bills. The fall of Greece may trigger a chain reaction and the crises can reach debt ridden countries like Spain, Portugal and Italy. Also this can probably result in riots in Greece which was seen in streets of Athens in 2008.

ACTION TAKEN

In response to pressure from the EU and the financial markets, Greece announced an aggressive plan to cut down its deficit to 8.7% of the GDP this year and to bring its debt ratio into compliance with the EU policy of 3% of the GDP by 2012. Credit rating agencies (S&P) have downgraded its rating to BBB+ within a month raising doubts whether Greece will be able to pull itself out of this debt mess.

Drastic cuts in the wages of the public sector workers, minimum pension, increase in the age of retirement, abolition of the 14th month’s salary [an old long established tradition of an extra month’s wage], mass layoffs, freeze on all recruitment programmes in the public sector, increase in taxes and spending cuts have done little to alienate the fear among potential investors in Greek bonds, making it very difficult for the country to borrow money to fund its debt.

IMF: THE BEST CHOICE

The European Union is reluctant to ask the IMF for a rescue package as it means a direct assault on the goodwill of Euro and the European Union nations. Also the majority is against the bailout, as the tax payers of France and Germany will feel the heat, leaving IMF as the last alternative.

Finally, the European Union nations are preparing a bailout package for Greece that could exceed €25 billion (USD 34.4 billion). Germany and France would be the main supporters to the rescue package, which was presented before the Euro zone finance ministers. Greece has promised to cut its deficit from 12.7% to 8.7% this year while its long-term plan is to reduce the shortfall to below 3% by 2012. The 16 Euro zone countries pledged to support Greece by providing a combination of International Monetary Fund (IMF) credit and bilateral loans on market conditions as a "last resort" if their partner can no longer get credits from the capital markets and the insolvency is imminent.

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b.Terminology GENERAL BANKING AND FINANCIAL TERMS 01. ABC ANALYSIS : A selective approach to inventory control which calls for a greater concentration on inventory items accounting for the bulk of usage value. 02. ACCRUALS : Usually net profit plus depreciation which are available to the enterprise for meeting term loan obligations and other such commitments not already charged to the profit and loss account. Also called as Cash Accruals. 03. ACID TEST RATIO : A liquidity measure, which helps in testing the ability of the firm to meet its short-term financial obligations. This is worked out as current assets less inventory divided by current liabilities; also known as QUICK RATIO. 04. ACTIONABLE CLAIM : Actionable claims include either unsecured debts or claims to beneficial interests in movable property not in the possession of the claimant. The debts or beneficial interests may be present or future, conditional or contingent. Book debts are actionable claims under law. 05. AMALGAMATION : The union or merging of two or more firms or companies to form one new business. Amalgamation is one way for achieving expansion of business. 06. AMORTISATION : The gradual extinguishment of any amount over a period of time, as, the retirement of a debt by serial payments to the creditor or into a sinking fund; the periodic write down of a insurance premium. 07. ARBITRAGE : Process of selling overvalued and buying undervalued assets in related markets which are temporarily out of equilibrium. 08. ARRANGEMENT LETTER : An arrangement letter is a letter addressed to the borrower advising him in detail of all the terms and conditions of the advance. 09. ARTICLES OF ASSOCIATION :In a limited company, the document setting out the rules which will govern the internal conduct of the company, and dealing with such matters as the transmission and forfeiture of shares, the powers and duties of directors, proceedings at general meetings, the voting of members etc. 10. ASSET LIABILITY MANAGEMENT : The technique of managing both sides of the balance sheet,i.e., assets and liabilities is known as asset liability management. Asset Liability Management is a combination of the techniques of asset management, liability management and spread management into a cohesive process leading to coordinated management of the bank’s entire balance sheet. 11. ASSETS CLASSIFICATION : Introduced to Indian Banks on the recommendations of Narasimham Committee constituted by Government of India.

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As per the norms, all loan assets of banks in India are to be classified into Standard, Sub-Standard, Doubtful and Loss assets introduced from the financial year 1992—93. 12. ATTACHMENT : Attachment is seizure of property so that it can be put under the control of a court. 13. ATTESTATION : Attestation is formal witnessing of a signature. In law, three documents require attestation compulsorily : i) a mortgage deed, ii) a deed of gift and iii) a will. 14. BAILMENT : The delivery of goods to a person in trust on the terms that the goods will be returned when the purpose for which they were bailed has been effected. 15. BALANCE OF PAYMENTS :It is the difference between payments (outgo) and receipts (income) for visible as well as invisible imports and exports respectively. 16. BALANCE OF TRADE :It is the difference between the value of exports of tangible (visible) goods and the value of imports of tangible goods of the country during a particular period, usually a year. 17. BALANCE SHEET : It is a statement of the assets and liabilities of a business as at a particular date. Assets are the property, like cash and amounts due from others; liabilities represent the amounts due to others. 18. BALLOON PAYMENT : A term loan is made repayable in periodic instalments. Sometimes, the loan is amortized in equal period instalments (may also be unequal) except for the final payment, known as a “balloon” which is larger than any of the others. 19. BANKER’S LIEN : It is the right of a banker to retain such of his customer’s property as comes into his hands in the ordinary course of business as a banker; it is an implied pledge. 20. BENEFIT COST-RATIO (BCR) METHOD : A project selection criterion, it is ratio of total present value of all cash inflows and the initial cash outflow (ie., outlay)— the higher the BCR, the better. 21. BLUE CHIP : A term of American origin used to describe the shares of progressive soundly run public limited companies, which are not likely to be seriously affected by temporary trade recessions. 22. BOOK VALUE :The net value of a property as it appears in the books of a company, as distinguished from its market value or some intrinsic value. 23. BREAK-EVEN POINT : Indicates the volume of sales at which total costs are equal to total revenues and profits equal zero; the level of operations where the firm neithermakesaprofit nor incurs a loss. 24. BRIDGE FINANCING : A form of interim loan, generally made between a short

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term loan and a permanent (long term) loan, when the lender of permanent loan needs time to disburse the loan. 25. CAPITAL ASSET : Asset (such as plant and machinery) with an expected productive life of more than a year, that is not bought or sold in ordinary course of business. 26. CAPITAL GAIN/LOSS : A gain or loss resulting from the sale or exchange of asset that are not held as inventory for sale in normal course of business. 27. CAPITAL STRUCTURE :The sources of long term capital of a company., A company’s capital structure is determined by the number and types of shares it issues, and its reliance on fixed interest debt. 28.CAPITALISATION : Conversion of short term funds into permanent sources of funds. 29. CASH BUDGET : A statement showing the forecast of cash receipts and cash disbursements and net cash balance over a period of time. 30. CASH CYCLE : Time between payment for raw materials and collection of accounts receivable. 31. CASH FLOW :Total receipts from sales less actual cash expenditure required to achieve those sales. 32. CASH-LOSS : Loss without providing for depreciation. 33. CHARGE CARD : It gives purchasing power to the holder without a credit facility. The card issuer pays the bills presented by member establishments and the card holder has to clear the bills in a stipulated period. No rolling over of dues is permitted. 34. CLAYTON’S RULE: This refers to a famous case decided in 1816, which is always referred to as the leading authority upon what is known as the “appropriation of payments”. The rule states—”in a running account incoming payments are presumed to be appropriated to outgoing payments in the order in which the items occur”. 35. COMMITMENT FEE : A fee paid on the unused portion of credit line. 36. CONSORTIUM LENDING : Joint financing by two or more banks/financial institutions. 37. CONTINGENT LIABILITY : A liability which can exist definitely only upon the happening of some uncertain event, eg., the liability of a guarantor upon the guarantee which he has given. 38. CREDIT CARD : It offers a credit limit on the assessed credit worthiness of the user. Interest cost is involved here. 39. CREDIT MONITORING ARRANGEMENT (CMA) : A system of post sanction scrutiny introduced by RBI in place of erstwhile Credit Authorisation Scheme.

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Under CMA, all proposals for the sanction or renewal of credit limits of working capital (funded) of Rs.10 crore and above, are required to be submitted to RBI for post sanction scrutiny, which in 15 days from the date of sanction by the bank. 40. CREDIT RATING : Categorisation of borrowers according to their financial conduct and status. 41. CURRENT ASSETS : Assets which are generally expected to be or can be converted into cash within the next 12 months or during the operating cycle. 42. CURRENT RATIO : Current assets divided by current liabilities; used as a measure of liquidity. Also called LIQUIDITY RATIO. 43. DEBIT CARD : It helps to draw on bank accounts at selected member establishments. No assessment of credit worthiness is made. No interest cost is involved as own funds are used. 44. DEBT EQUITY RATIO : Total outside liabilities divided by tangible networth. This indicates the dependence of the firm on borrowed funds. 45. DEBT SERVICE COVERAGE RATIO : Total cash accruals, ie., net profit plus depreciation divided by annual maturing obligations. This measures a firm’s ability to meet its incurring fixed obligations such as term loan instalments, lease payments, etc. 46. DEFERRED PAYMENT : This is normally in the context of term loan which is paid in instalments over a period exceeding one year. 47. DEFERRED PAYMENT GUARANTEES :These refer to those financial guarantees issued by banks that have a currency period in excess of 12 months. 48. DEPRECIATION : Of assets, a loss in value by wear and tear, obsolescence, etc., or normal deterioration in value which takes place during the life of an asset. This is charged to profit and loss account. The two prominent methods for calculation of depreciation are i) straight-line method, ii) written down value method. 49. DU PONT ANALYSIS : It is a management control chart which links various ratios in such a way that they ultimately reflect the overall performance measure of a company, namely the return on investment. 50. ECONOMIC ORDER QUANTITY (EOQ) : Optimal order quantity as function of usage per period in units, ordering cost per order, and carrying cost per unit per period. It basically represents trade off between two types of costs—the stock-out cost and the cost of carrying inventory. 51. FIRST IN FIRST OUT (FIFO) : Method of valuing inventories and cost of goods sold. Under inflationary conditions, the method overstates closing inventory, understates cost of goods sold, and hence overstates profits. 52. FLOATING CHARGE : A charge created by a company in favour of another

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party over its undertaking and property in such a form that until the charge crystallises, the company may continue to deal with the property charged. 53. FORECLOSURE : A proceeding in or out of court, to extinguish all rights, titles and interest, of the owner of a property, in order to sell the property to satisfy a lien against it. 54. FUNDS FLOW STATEMENT :This refers to the sources and uses of funds. The statement is prepared with the objective of determining, for a given period of time, from where funds were/will be received and to what use they were/will be put. 55. LAST IN FIRST OUT (LIFO) : Method of valuing inventories and cost of goods sold. Under inflationary conditions the method understates ending inventory, overstates cost of goods sold, and hence understates profits. 56. MERGER : It is a combination of two or more firms into one firm. A merger may involve absorption ( acquisition) or consolidation. In an absorption, one firm acquires one or more other firms. In a consolidation, two or more firms combine to form a new entity. 57. MEZZANINE DEBTS :It is a participatory debt scheme, wherein the institutions share a certain percentage of profits from the financed project. This form of financing is done by fixing coupon very low to cover the cost of funds and share a part of the profits. 58. NET PRESENT VALUE : It is method for evaluating investment proposals. NPV is defined as present value of benefits minus present value of costs. 59. OPERATING CYCLE : The period involved from the time cash is invested in inventory until the time cash is received from sale of goods. 60. OPERATING PROFIT : Profit earned through the main activities of the enterprise; excess of total operating income over total operating expenses. 61. OPPORTUNITY COST : Presumptive cost incurred in selecting a decision alternative, because profit is foregone on other decision alternatives which are not selected. 62. OVERTRADING : This refers to a situation where the scale of operations of an undertaking outstrips availability of financial resources. In overtrading, the turnover will be too high which will ultimately result into shortage of cash. 63. QUICK ASSETS : Assets which can be converted into cash quickly and easily, eg., cash, bank balance, marketable securities - excluding inventory. 64. SECURED CREDITORS :A secured creditor is one who has lent money to a borrower against the security of movable or immovable property. 65. SMART CARD : Smart Card technology offers users a new payment option with the convenience of not having to use cash, particularly for small value transactions.

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66. SYNDICATED CREDIT : It is an agreement between two or more lending institutions to provide a borrower, a credit facility using common loan documentation. 67. TAKE- OUT FINANCE : Applicable in case of project funding, take-out finance means that the banks extend the long term loans for the first five years or so after which a term lending institution will take over the loan from the bank into its books. 68. WORKING CAPITAL : A firm’s investment in short terms assets, ie., current assets such as cash, inventory, receivables and marketable securities. 69. DEMATERILISATION OF SHARES: The practice of holding shares etc in electronic form with Depositories such as SHCIL and NSDL, whereby the actual physical holding of shares etc is obviated. The participants are issued with depository certificates only. 70. BIO-METRIC VERIFICATION: The process of verifying the identity of a person through the electronic capture of his finger prints,photographs,voice recognition etc. 71. REAL TIME GROSS SETTLEMENT: The process of settlement of inter-bank funds by Reserve Bank of India, on an continuous and on going basis as and when the transactions are originated by the member banks for their own transactions and transactions of their clients. 72. HAIRCUT ON COLLATERALS: The load factor by which the valuation of collateral securities is increased or decreased depending upon the risk factor assigned to each item of security. 73. PARRI-PASSU CHARGE:A charge or interest which is ranked equally in priority with another preexisting charge or interest . 74. REVERSE MORTGAGE FINANCE: The practice of extending monthly instalments similar to annuities against mortgage of immovable properties, whereby the right of the mortgagor gets extinguished at the end of the annuity period and the ownership of the property gets transferred to the Lender in consideration for the amount lent .SDThe scheme is beneficial for elderly people who have sufficient property but inadequate liquidity and wish to enjoy liquidity for the present without pating possession of their property immediately. 75. CHEQUE TRUNCATION: The process of capturing digital images of Cheques and effecting clearing settlements amongst member banks based on these digital images .

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17 Circle Specific

j. Policy Guidelines 2010-11 k. Patna Circle data (Please

Refer Banking & Finance Newsletter Mar.’10 Quarter)

a. Patna Circle :Policy Guidelines 2010-11

CIRCLE POLICY GUIDELINES

FINANCIAL YEAR 2010-11

It gives me immense pleasure to address you through the medium of this important policy document, which will be the Circle's blueprint for performance during 2010-11. I take this opportunity to express my heartfelt gratitude for your valuable contribution towards the performance of the Circle during financial year 2009-2010. It was your hard work, commitment, zeal and dedication, which enabled the Circle to successfully meet many of the targets set for us.

PERFORMANCE DURING 2009-10

2. As we retrospect, we find that while we have done commendable work in some areas, we missed out our targets in a few. I append some of the highlights of our performance in key areas during 2009-10:

Parameter Level as on 31.03.2010

( Rs. in Crores)

Growth

( Rs. in Crores)

% Growth (Y-O-Y) % Budget Achievement

Segmental Deposits

55,830.09 6392 6.33% 38.24

Segmental Advances

16359.55 3203 24.35% 80.07

Net Profit 1523.23 9.20% 78%

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Other Income

346.51 26.52% 88.39 %

Overheads 383.12 23.55% Exceeded budget by 18%

3. Some of the notable areas of performance during the previous year were as under:

2nd highest CASA ratio of 62.01% amongst all Circles, which is substantially higher than the all Circles' average of 48.81%.

Cumulatively, we stood 3rd in terms of the level of Segmental Deposits as at the end of March 2010.

In Advances, we were 2nd in terms of percentage growth and 1st in terms of percentage budget achievement, during the year, amongst all Circles.

Achievement of 223%, 120% and 123% of the respective year-end budgets under Housing Loans, Education Loans and Car Loans show our concerted efforts towards augmentation of ‘P’ advances.

Y-o-Y increase of 31% under 'Miscellaneous Income' in the Circle with 178% increase in income from 'Technology Products', 138% increase in 'Cross-selling' and 38% increase in 'Government Business’.

Installation of 512 new ATMs in our Circle during FY 2009-10, almost doubling the total number of ATMs in the Circle to 1062 as on 31.03.2010.

During the year, we have opened 80 new branches securing 2nd position on this front. Thus the total number of branches in the Circle as on 31.03.2010 reached 1085.

Service Desk at Patna Circle was adjudged 1st amongst all Circles. Under BPR Project, Circlewise, we were ranked 1st in rollout and performance of

BPR initiatives as at the end of March 2010. Overall performance of our 'Super Circle of Excellence' branches was rated 2nd

amongst all the Circles as per Corporate Centre norms. 7 PC based Kiosk Banking Outlets have been opened first time in the Circle by

engaging "Society for Advancement of Village Economy" (SAVE) as Business Correspondent in Gaya and Jehanabad districts of Bihar.

BUSINESS PLANS

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4. I now delineate my expectations and views regarding our immediate challenges and some of the key priority areas, which are fundamental to the numerical targets, Corporate Centre has set for us.

Customer Service:

5. We have a number of products with features incorporated as per the needs of the customers, which are among the best in the industry. We have the technology platform and the physical reach. However, we are not the best in class in all areas of customer service. We need to meet customers’ expectations of service quality consistently across time and space. We need to focus on ownership of the customer for all products, at all levels, and at all interaction points, be it marketing teams, branches, CPCs, controllers or senior functionaries. Customer issues should be resolved on top priority, and as far as possible, at the first contact point itself. Ensuring pleasant customer experience during each interaction alone can help us in achieving business growth and improving market share.

NPA Management and Asset Quality:

6. Though, we were able to marginally decrease our NPAs Y-o-Y, from March 2009 level of Rs.893.89 crores to Rs.867.54 crores as on March 2010, the present level of NPAs is still very high vis-à-vis our level of Advances. Our performance under cash recovery and upgradation was far from satisfactory. Higher level of NPAs has impacted Net Interest Income and profitability adversely. Obviously, our credit management leaves considerable scope for improvement. Given the recent guidelines from RBI regarding increasing the provision coverage ratio to 70% under IRAC norms, the net profit of the Circle/Bank will be adversely affected. Essentially, we have to arrest the increasing trend of Gross NPAs. Hence, our target for the next year should be an actual decline from the level of March 2010. As some additions are bound to happen, we will have to make concerted efforts towards recovery and upgradation. Reduction of NPAs should, therefore, receive the primacy of attention at all levels and appropriate Action Plans need to be drawn up. Close review and monitoring of Special Mention Accounts and Standard Restructured Accounts for preventing their slippage into NPA category has to be put in place with all seriousness. During FY11, our focus should be on preventive NPA management. Where required, additional resources should be placed for maintenance and monitoring functions.

7. P-segment loans form a major chunk of our advances portfolio. Keeping customer contact and maintaining asset quality is a major challenge. While leverage of technology

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for the purpose of soft recovery activities like sending out loan account statements, telecalling and sending reminders using modern techniques is being explored by the Corporate Centre, regular updating of contact information like telephone number and address of the borrowers is a major task to be completed in right earnest.

8. One factor working in our favour is the recent upturn in economic activity and industrial production, which should help in reduction of NPAs. With growing industrial activity, improved employment climate and the healthy Rabi crop, we should focus on upgrading the NPAs in SME, Retail and Agri segments, which had high slippages during FY10.

9. Hence, I set a target for zero growth in gross NPAs, with decline in Gross and Net NPA ratios by 60 bps each by March 2011.

Control on Overheads:

10. Y-o-Y Increase of 23% in Overheads is a major cause of concern for us. All necessary steps need to taken to contain the overheads within budgeted level during the current year. Expenses need to be incurred judiciously, keeping in mind the cost benefit aspect. There is a need to segregate costs, which are controllable, and those, which are non-controllable. There should be zero growth in controllable overheads and a cap of 5% on non controllable overheads (excluding expenses incurred on new branches opened during the year). Premises need to be selected judiciously and the expenditure on ambience and other facilities to the customers should be need based. Abnormal increase under any sub-head of Overheads needs to be analysed critically and all efforts should be made to contain expenses on repairs and maintenance, electricity and gas, traveling and halting allowance, entertainment etc. Stationery should invariably be indented from Circle Stationery Department. There should not be any local purchase & printing of stationery. Miscellaneous expenses require even closer control and monitoring. Correct classification of expenses must be done for meaningful monitoring. No discretionary power should be exercised for expenses beyond budgeted levels. All expenses beyond budgeted levels need prior approval by the next higher authority. In other words, FROM NOW ONWARDS, ONE WILL BE ABLE TO AUTHORISE THESE EXPENDITURES ONLY IF IT IS WITHIN ONE’S FINANCIAL POWERS AND ONLY IF IT IS WITHIN THE BUDGET ALLOCATED.

Growth in Other Income:

11. Significant scope for increase in other income exists especially due to increasing coverage both by way of opening of new Branches and opening of new

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accounts for financial inclusion. Cross Selling and Marketing of Technology Products provide huge potential, as penetration is low in our area of operations. We need to focus on income from these sources in addition to the traditional sources of fee income. Ideally, we should meet all operating expenses through “Other Income” so that the entire interest margin goes to profit. For the next year, we have to target a growth of at least 40%. It is, therefore, necessary to achieve substantial improvement in fee income from loan processing, LCs and Bank Guarantees, Govt. Business, Tech Products, Core Power and Cross-selling. We have to aggressively look for all possible opportunities, which can improve ‘other income’ and thus boost our profit. Income leakage, particularly observed in the following areas by the inspecting officials, should be monitored and plugged 100%:

Non-recovery of services charges as per schedule of charges. Non/incorrect recovery of loan processing charges. Non-recovery of Inspection and other charges. Non-recovery of Locker rent. Non-application of correct rates of interest. Non/incorrect recovery of LC/BG commission.

Cross Selling:

12. As discussed above, income from Cross selling will be one of the key drivers in achieving other income targets. The growth was more than 138% in FY10, however, given the huge potential available, we can and should leverage our strong brand name to tap this potential and earn fee income for the Bank. The endeavour should be to sell at least two products to every customer. I therefore expect a growth of 300% in Cross Selling Income with focussed attention for each activity (i.e. Life Insurance, General Insurance, Mutual Fund, Credit Card).

CASA Deposits:

13. We should no longer depend on high cost term deposits for attaining the budgeted growth, as this weighs heavily on Bank’s profit. Each branch has to set separate targets for growth in Savings Bank and Current Account deposits, with a view to improve CASA ratio as per the potential available and this should be monitored and analyzed meaningfully by the controllers every month. We have to go after customers, both big and small; individuals and institutions; Government and Corporates. This will also contain cost of deposits. Right from the beginning of the year, we have to make concerted efforts with proper strategies in place. We have to endeavor for the retention of the huge influx of current account deposits during each year in March. However, we have witnessed a sudden decline in current account deposits in our Circle during the very first week of April 2010,

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which is indeed a matter of great concern. The trend needs to be arrested immediately. To encourage operating functionaries, performance of CASA has been covered under the incentive scheme to staff members. The revised method of calculation of SB interest on daily balance needs to be adequately publicised among our customers, which may increase our SB balance. SB deposits need to be increased through products like Corporate Salary Package and Financial Advisory Services. As regards CA, there is a need to focus more on CATS (Co-operatives, Associations, Trusts & Societies) and leverage products like Power Jyoti, Power Pack and Power Gain.

SME Financing:

14. We could have done much better under SSI and SBF financing. Let us observe FY 2010-11 as 'Year of SME Financing' for the Circle with special thrust on financing under SSI and SBF segments for which ample scope exists at almost all the centres in our Circle. All eligible SME advances must be brought under the CGTSME (Credit Guarantee fund Trust for Micro and Small Enterprises) scheme. Towards this end it has also been decided to observe 2010-11 as 'CGTSME Year' in our Circle.

Centralised Processing Cells:

15. The first phase of BPR initiatives have now been completely rolled out and should be leveraged by the branches for improving productivity and response time, thereby enhancing customer service and customer satisfaction. Bank’s systems & processes have been extensively restructured and strengthened under the BPR project to enable us to handle not only increased volumes but also face competition head on, by empowering our frontline staff to offer superior services. The CPCs should have sufficient staff with the desired skills to enable them to function efficiently and improve TAT (turnaround time). Similarly, the Sales Teams should be provided with the required number of suitable staff to enable them to cover the entire area of operations, thus getting maximum business and beating the competition. Training requirements for different categories of staff need be assessed carefully and brought to my knowledge/ to the knowledge of controllers so that appropriate training can be imparted.

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Market Share:

16. There has been a loss of Market share In advances in some of the Top 100 centres in the country. With a view to offsetting this loss and regain our leadership, branches located in Patna, Ranchi, Jamshedpur, Dhanbad and Bokaro Steel City should contribute more towards this aim. Please arrange to chalk-out time-bound centrewise and productwise action plan.

Financial Inclusion:

17. Financial Inclusion and outreach have to be one of our core objectives for increasing our presence in underbanked/unbanked areas, ultimately resulting in improved market share. This year we will also start targeting financial inclusion in urban and metro areas.

Corporate Strategy & New Businesses:

18. A number of new initiatives have been taken during the current year. The products/businesses launched provide a cutting edge to our existing businesses and should be aggressively marketed by the operating functionaries with increasing number of branches covering these initiatives.

Migration to Alternate Channels:

19. Migration of transactions to alternate channels (INB, ATM, POS and mobile banking) should be actively encouraged as we have tech enabled world-class products in all our alternate channels. This will not only reduce the cost of transactions, it will also help in decongestion of branches, enabling them to focus on marketing and more efficient customer service. Trained staff should be available at all branches to help customers migrate to these channels. By the end of FY 2011, the percentage of transactions through alternate channels should reach 40%.

Some Other Areas:

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Non compliance with Income Tax and Service Tax provisions may result in huge financial loss to the Bank and may also expose the Bank to reputational risk. All features of TDS compliance, Service Tax Compliance and quoting of PAN etc., should be fully complied with.

KYC norms, systems and procedures should be meticulously followed by the operating units so as to avert any possible fraud and save the bank’s money and image.

Data quality requires major improvements. Data Purification should be taken as a drive to ensure that all the data in CIS as well as CBS is absolutely correct and complete.

For the purpose of Risk Management, borrowers enjoying credit limits of Rs.5 crs and above must be rated by one of the designated external credit rating agencies.

While we have implemented a world-class core banking system across all our branches, we are not exploiting the system to generate information, which will help us to increase business and improve customer satisfaction. Operating units should, therefore, come out with suggestions and make demands on our IT systems. It shall be the endeavour of our IT department to provide the maximum possible support.

The Bank’s Corporate Social Responsibility initiatives provide a readymade avenue for our employees to practice citizenship in the society by identifying suitable projects for assistance. Please actively come up with proposals in this regard. This will not only improve the image of the Bank, but will also help in garnering more business.

BUSINESS GOALS, BENCHMARKS & BUDGET FOR 2010-2011

21. We have settled comparatively moderate budgets this year. I trust that you would have chalked out your strategies for achieving your budgeted targets/goals. Let us try to achieve the year-end budget by December 2010 itself so that we can focus on qualitative aspect in the last quarter.

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22. I would now share with you benchmarks of performance set for our Circle for FY 2010-11:

Parameter Growth/ Benchmark

Segmental Deposits 26.80 %

Current Accounts Deposits (Domestic) Minimum 29.34 %

(Desirable- 37 %)

Savings Bank Deposits (Domestic) Minimum 32.55 %

(Desirable- 34 %)

Segmental Advances 24.76 %

CASA Ratio Increase by 300 bps

Total Other Income 40%

Cross Selling income 300%

Forex income 75%

Government Commission 25%

LC Commission 50%

BG Commission 50%

% of transactions through Alternate Channel

40%

Gross NPA Ratio 60 bps below Mar-10 ratio

Net NPA Ratio 60 bps below Mar-10 ratio

Operating Profit 40% improvement

Net Profit 25%

Improvement in Market Share of Domestic Deposits

> 55 bps from Mar-10 Level

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Improvement in Market Share of Domestic Advances

> 80 bps from Mar-10 Level

Cost of Deposits % Reduction by 10 bps from March 2010

Yield on Advances % Increase by 10 bps from March 2010

L.C. Business Minimum 50%

BG Business Minimum 50%

Forex Sales Turnover Minimum 50%

Forex Purchase Turnover Minimum 50%

Overheads Growth not more than 5%*

* Zero growth in controllable overheads (TA/HA, Telephone and Miscellaneous) and a cap of 5% on non-controllable overheads (this ceiling to exclude expenses on new branches opened during the year).

23. In order to attain these benchmarks, the Circle is required to achieve the following business goals during the new fiscal -

Rs. in crores

PARAMETER GROWTH TARGET

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NBG RBG

CIRCLE

Segmental Deposits 6749 8213 14962

SME 2400 2050 4450

Agl 450 450

P - domestic 4300 5700 10000

P - NRI 49 13 62

Segmental Advances 2000 2050 4050

C&I - Manufacturing 100 20 120

C&I - Trade 400 75 475

SSI 200 75 275

SBF 200 280 480

Agl 600 600

P 1100 1000 2100

OTHER QUALITATIVE & QUANTATIVE TARGETS:

24. Growth in SME advances to be targeted at 22.72% with the following granular targets. Priority sector advances under SME to grow by 25%.

Trade & Services Manufacturing Activity/Scheme /Product

Amount inCrores

No. of New Accounts (Excluding GSS)

Activity/ Scheme/Product

Amount in Crores

Traders' Easy Loan 50 800 Pharma & chemicals 20

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SRTO loans 30 1000 Textiles 20 Transport Plus 30 150 Auto Ancillary 20 Doctor Plus & Health 15 150 Engineering & 60 Dealer Finance (incl. 20 100 Food Processing 50 Rent Plus 15 SME Micro 20 Paryatan Plus 10 Collateral free loan 150 SBI Shopee 5 School Plus 20 100 Loans to Builders, 30 20 Commodity Financing 15 20 SME Micro 10 Collateral free loan 50 2000 Total T&S 300 7190 Total

Manufacturing 340

National Banking Group (Metro and Urban Branches)

Growth in deposits of NBG (excluding SCE branches) should be targeted at 25.83%, at the same time ensuring that growth targets for Savings Bank and Current Account deposits are fixed at 35% each.

Total advances of NBG (excluding SCE branches and branches in top 100 centres) should grow by 25.32%.

P-Segment deposits growth should be targeted at 27.48% during FY11 against a growth of 21% during FY10.

Growth in P-Segment advances at 26.61% against a growth of 25.33% recorded during FY10. Within P segment, Home Loans, Auto Loans and Education Loans to grow by 30%, 41% and 35% respectively.

Growth in SME deposits has been negative at -8.45% during FY10 due to shedding of high cost bulk deposits and therefore, a challenging growth of 25% (23.29%) should be targeted during FY11 with focus on Current Account deposits. With the launch of the new SME Power products and cash pick up facility, the thrust should be on garnering CASA deposits. Circle has to strive for growth in SME deposits with composition of CASA at 65% and TD 35%. We will continue to show our non-inclination towards high cost bulk deposits.

Our Circle needs to identify three new manufacturing clusters and two Trade clusters to penetrate SME business and achieve at least 40% market share in existing clusters.

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Thrust on manufacturing sector should be continued with a target of 30% growth in Engineering, Pharmaceuticals & Chemicals, among others.

With the aim of becoming the preferred Bank for Traders, loan products to Dealers/ Traders to be marketed aggressively. Further, in order to provide cash pick up facility to SME constituents, Regions to suggest names of such potential centres.

With improved skills acquired through SME Gyanshala and experience gained over the recent past, sales forces have to market for bankable proposals and submit quality proposals to CPCs, to keep the rejection rate at SMECCs to the bare minimum and sanction rate to be improved by at least 20%.

Branches/RASMECCs should cover all SSI/SBF advances accounts (excluding Retail Trade) upto the limit of Rs. 5.00 lacs under the guarantee scheme of CGTMSE. The level of exposure under CGTMSE guarantee cover for collateral free loans should increase by 100% during financial year 2010-11.

Under Supply Chain Finance, for marketing the product ‘Electronic Vendor Finance (e-VFS)’, vendor meets should be conducted Industry Major wise in major cities in the Circle. RMs should identify the potential Industry Majors for Vendor Finance.

Similarly, for promoting Electronic Dealer Finance (e-DFS), RMs should conduct Industry Major wise dealer meets.

At least 50% of SME customers to be covered under CINB facility during 2010-11.

Super Circle of Excellence (SCE)

26. Branches under SCE should benchmark with the best performing Bank in retail banking in its area of operation. Customer service at these branches should be of the highest order and should practice Six Sigma approach. Apart from the targets for SCE for 2010-11 as indicated below, each branch of SCE should be given targets for strengthening HNI base and for mobilising eZtrade/Demat accounts:

i) 40% growth in Per Domestic Deposits with improvement in CASA ratio by at least 300 bps.

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ii) 42% growth in Per Advances with a sub target of 47%, 48% and 25% for Home, Auto and Education Loans respectively.

iii) 36% growth in SBF Advances. iv) 500% growth in Cross Selling Income. v) Minimum 70 basis points reduction in the Gross NPA ratio. vi) Improving migration to alternate channels to 45%.

Rural Banking Group (Rural & Semi-Urban Branches)

27. Rural and semi-urban centres offer vast opportunities in view of the increasing prosperity, large Government spending through schemes like MNREGA and the strong financial inclusion drive. Accordingly, growth budgets of RBG for FY2010-11 are set as under:

As against growth of 18.32% in Segmental Deposits FY10, growth in RBG deposits should be targeted at 27.66% with growth targets for Savings Bank and Current Account deposits at 28% and 32% respectively.

Growth in RBG Advances should be maintained at 25%. Targets for deposits and advances should be channel wise (Branch, OMRs, BC/BFs),

together with focused monitoring of each channel. As mentioned earlier, financial inclusion and outreach have to be one of our core objectives for increasing our presence in hitherto under banked/unbanked areas, ultimately resulting in improved market share.

25% growth in Agri deposits should be targeted with more emphasis on CASA growth.

Agri advances should grow by 26%. While achieving this growth, focus should be on the areas with low incidence of NPAs like Kisan Credit Cards, Seed Growers & Processors, Warehouse Receipts, Contract Farming, Gold Loans and Pulses, Oilseeds & Spices. Business from new emerging sectors like Horticulture, Fisheries, Food Processing, Biotechnology, Greenhouse Farming and Dairy should be garnered. At the same time, it has to be ensured that Government benchmarks for Agri Priority Sector Advances, Advances to Weaker Sections and Advances to Minority Communities are achieved.

Containment of NPAs should be on top priority. Efforts of Rural Recovery Teams (RRTs) should be geared up by increasing their numbers. CSPs of BC/BF should also be entrusted with the task of recovery (after compliance with regulatory requirements). For RBG as a whole, gross NPA levels as on March 2011 should not exceed the level of March 2010 as also the percentage should decline by 60 bps.

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Focussed attention should be given to incorporating ‘NPA Holidays’/Data Cleansing/Data correction to resolve technical NPAs.

Other Income should continue to be in focus and a target of 23% should be fixed for RBG with a sub-target of 300% for growth in income from cross selling.

There should be zero growth in controllable overheads and a cap of 5% on non-controllable overheads (excluding expenses on new branches opened during the year).

Rural Business (Agri):

28. A growth of 25.83% in Agri advances should be targeted with the following sub-targets:

Activity/Product No. of new Accounts

Amount

Crop Loans/KCC 30,000 Rs. 300 cr

Gold Loans 3000 Rs. 30 cr

Produce Marketing loans (against

Warehouse /Cold Storage Receipts)

3000 Rs. 30 cr

Horticulture 3000 Rs. 30 cr

Irrigation 3000 Rs. 30 cr

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Dairy Loans 6000 Rs. 60 cr

Tractors Loan/Other Farm Mechanisation Loan (Power Tillers, Combine Harvesters etc.)

2000 Rs. 60 cr.

Others 6000 Rs. 60 cr

Corporate Strategy & New Businesses

29. The targets for various initiatives of New Businesses for 2010-11 will be as follows:

Payment Business

30. The Bank has identified payments as a major business opportunity and an area, which requires focused attention. In this direction, 7 key initiatives, viz. International Remittances, Cash Management Product, Supply Chain Finance and Payments Focussed Liability Products for SME segment, Government Business, Youth and Upwardly Mobile customer segment in PBBU, Mobile banking and Merchant Acquiring Business, have been identified to drive payment business.

Demat & Online Trading business

31. Exponential growth in Capital Markets and rapid growth in investor base, including retail, give huge business opportunities for trading business. Our Bank being market leader in most of the financial services, should aspire to establish itself as a leading player in this segment also. In order to achieve our aspiration, the following targets have been fixed for 2010-11:

New demat accounts to be opened in FY 10-11 : 10,170 New eZ-trade@sbi accounts to be opened in FY 10-11 : 8, 135

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Financial Planning & Advisory services (FPAS)

32. There is a growing demand for financial planning and advisory services, which so far have been the USP of global banks operating in India and domestic private banks. We do not want to miss out on this business opportunity, which is not only high revenue yielding business but also becoming an essential part of a comprehensive and one stop banking solution demanded by customers, especially HNIs. All the RMs (PB) and CREs (PB) are expected to focus on this business to ensure that financial planning results in handsome business for the Circle.

Wealth Management Services

33. In FY 10-11, the Bank is planning to set up a subsidiary for providing wealth management services to ultra HNIs. The mission of the Bank is to ramp up its foothold in this high-end business segment and occupy leadership position in Wealth Management services.

Merchant Acquiring Business (MAB)

34. The Bank has created a wholly owned subsidiary and shall be shortly entering into a joint venture partnership with a leading global market player in merchant acquiring business. Though the merchant acquiring business will be done by our subsidiary company, there will be immense business potential for the Bank for float funds/CASA deposits from SME customers. The following targets have been set for 2010-11: Deployment of 14,937 POS Terminals

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Mobile Banking Services (MBS)

35. It is expected that with penetration of mobile services to the remotest corners of India, mobile banking will be the most preferred channel for payments in the near future. To retain our first mover advantage, we need to accelerate the momentum gained during FY10.

Addition of 622274 new users should be targeted for 2010-11. All eligible new customers opening accounts with us must be enrolled under MBS in addition to enrolling all existing customers. Steps should be taken to improve SMS delivery to customers and speedy resolution of customer complaints. New facilities, viz, air/ rail ticket booking, highway eTags top up, merchant payment using IVR, M-Wallet services will be introduced. In order to widen our coverage, technology for mobile banking services on low-end mobile instruments (USSD) is also being explored by Corporate Centre.

Payment Solutions Group

All branches should be activated to sell eZ-Pay cards. Tie-ups should be targeted by the branches.

For Gift Cards (GC), a level of Rs 2 Crores should be targeted. A target of USD 2.5 m for Vishwa Yatra Foreign Travel Card (FTC) has been fixed

for the Circle. 4 lacs RTGS transactions have been targetted for 2010-11.

SBI General Insurance Ltd.

37. Our Joint Venture Company formed with IAG, Australia, commenced operation in March 2010. This Company, like our other subsidiaries, is targeting to become the market leader in the coming years.

38. I am confident that in view of the potential available, our inherent strengths and the various enablers (i.e. massive increase in Branch and ATM Network, recruitment of new staff, complete roll-out of BPR initiatives, fine tuned CBS, user friendly Internet banking offering, a large suite of services like e-STDR, Core Power, Multi City Cheques, RTGS,

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NEFT, ASBA and Demat accounts) now in place, the targets are achievable. Along with product wise targets, the concept of activity budgets will enable the operating units to focus their marketing efforts in an organised and systematic manner, keeping in view the potential of the area and profile of clients.

39. In the above backdrop, it is my expectation that the goals for the year 2010-11, should be achieved. All Business Units have to put in concerted efforts for bringing about substantial improvements in their areas of business and profitability. I expect all Operating Units to chalk-out detailed strategies/action plans and keep a close watch on the progress made.

40. In the end, I would only like to add that State Bank has attained excellence in various areas of banking in domestic as well as international market and emerged as the most trusted brand in the banking industry. The various awards and recognition given to the Bank and the Chairman by a number of reputed agencies have reaffirmed the fact. Branch and ATM expansion, coupled with recruitment of sufficient staff in general as well as specialist cadres, has not only increased our reach, but has also enabled us to deliver more effective and efficient service to our customers. The message of change, inclusiveness and empowerment well-spread by “Parivartan” is being further strengthened by the path breaking “Citizen SBI” project. The whole purpose of the programme is to draw from our own wisdom and traditions derived from our culture and our family values. The focus of this Project is to transform the Bank into a platform that provides inner fulfilment for its employees and tries to transform the community around us by going beyond institutional and personal success. I request all of you to actively participate in this initiative and derive the maximum benefit from it. The workforce of the bank is its greatest strength and in turn, we should have a sense of pride and belonging with the SBI family.

41. Customer service is an area where there is always scope for improvement, and the time has come for us to move towards customer delight. We are collectively responsible to our customers, who look towards us for continuous improvement in performance.

42. It is the trust and confidence reposed by our customers in us that we are the market leaders in our area of operations, far ahead of any private or public bank. I am more than sanguine that we in Patna Circle will not leave any stone unturned towards achievement of the targets set forth for us. Wishing you all success in your endeavours,

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18 General Tips General tips & Misc. Issues, General Questions & answers.

Generally, for promotions at Scale I, II and III levels, specific-operational level, one liner kind of questions can be expected. But at higher levels of promotions conceptual, opinion or viewpoint soliciting questions can be expected. Interview is nothing but selecting most suitable candidate among suitable aspirants. It is not about knowledge testing only; it is about selection of “Banks Brand Ambassadors”. Minimum Qualification is- “Well Dressed, Well Behaved & Well Mannered” Honesty is the best policy. Be truthful. Interviews are generally meant to be freewheeling. It can be as informal as a train-travel conversation. Share your dreams or vision. Connect your dreams with Banks future. Let your answers have a spin, which come closer to your dream. Your dreams may not be practicable in the short run. But, there is nothing wrong in spelling them out because after all Interview is a process where Bank selects Future Leaders. You must possess the quality of a Dynamic Future Leader. Read some articles, which are futuristic and have a vision for Banking Industry, besides speaking of challenges. Make as many lists, points and acronyms for easy recapitulation. Please be aware of similarities or differences in closely related concepts like: Factoring & Forfeiting Stakeholder & Shareholder Equity Shares & Preference Shares Public Limited Company, Private Limited Company, Limited liability Company etc. Floating Charge & Fixed Charge Loans & Advances Guarantee & Indemnity Leasing – Hiring, Deferred Payment Guarantee & Term Loan Monetary Policy & Fiscal Policy Guarantee & Letter of Credit Siphoning of funds & Diversion of funds Funds Flow Statement & Cash Flow Statement Capital Account Convertibility & Current Account Convertibility Revenue Attachment Order & Garnishee Order Lien , Pledge & Hypothecation Certificate of Deposit & Commercial Paper

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Factoring & Financing Receivables Book Debt Financing & Receivables Financing NWC & Margin. Syndication of Loan, Consortium Lending & Multiple Banking Outsourcing, off shoring & in sourcing Cross Selling & Up selling. What is Down-selling? Economic Value Quantity & Economic Order Quantity Money for Value Prima-facie Acceptability, Technical Feasibility, Economic Viability, Financial Feasibility, Commercial Viability. Break Even & Sensitivity Analysis. Customer Service, Customer Satisfaction, Customer Delight & Customer Ecstasy. Customer Lifetime Value, Customer Wallet Size, Customer Wallet Share. Sub-prime Crisis & Global Meltdown / Recession. BPLR / PLR & Base Rate. Economic Value Added (EVA) & Market Value Added (MVA). CAR or CRAR Duty & Positive Contribution LET THIS ALWAYS BE AT YOUR FINGERTIPS

- Subjects you studied in college. - Current topics and events. - Banking (International & National) related topics. - Favourite books ( book review & book condensation attached ), movies, and

role models, Hobby. - Who’s Who in Banking System, our Bank. - What’s what? CRR, SLR, Bank’s profits, Banks Growth plan, Capital

Adequacy Ratio, NIM, Profitability, Mass Recruitment, Banks future prospects and preparedness for achieving Goals etc.

- Banks new Mission, vision & values. - Any interview date related significance (For example, if 1st July is the date

of the interview, the significance of that day). - SBI Citizen, Parivartan. - SME Gyanshala. - Merger & Acquisition and amalgamation. - Banks new initiatives, such as Custodial Services, General Insurance,

financial Planning etc. - New Products ( SME,Agri. & Per. Segment), Teaser Loans

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- Awards & Recognition ( SBI) - Campaigns : like Mobile Banking Campaign - Effect of Restructuring / Rephasement , OTS, Loan Waiver etc. - Right to recompense? - Financial Inclusion, Financial literacy, use of technology for financial

inclusion. - Latest Awards, Appointments / Recruitments, Persons in news. - NINJA concept, TQM , KAIZEN etc. - Phishing, SPAM, cyber crime etc - Why our new products specially technology products like SBI FREEDOM,

Internet Banking is not picking up as at desired level? Your practical strategy?

General Guidelines in Answering Interview Questions IMPORTANT TIPS Bearing: Walk erect and with confidence. Maintain eye contact with the interview board Chairman and Members while talking. Smile and be pleasant. Be enthusiastic and interested. You must be lively, keen and cheerful. Let your optimism and energy radiate. Conduct: Politeness pays. Be sympathetic and attentive. Observe meticulously the code of manners and etiquette. Never be rude, argumentative or offensive. Do not neglect to pay compliments. Speech: Talk slowly deliberately and audibly. You should neither shout nor mumble. Pronounce your words clearly and crisply. Never be dull or monotonous with your words. Avoid the use of such phrases like, you see, I say, of course I mean etc. Dress: chose your dress with care. It must be comfortable and befitting for the occasion. Personal Hygiene: Be neat, tidy and clean. See that you are well groomed.

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Self control: Do not become emotional or get nervous. Be confident and patient. Check unnecessary movements. The Board may deliberately try to provoke you and see how easily you could be upset. Never lose your temper. Do not bluff: State only what you know to be correct. Do not hazard guesses unless you are asked to do so. Shooting lions and boasting will land you in trouble. Do not try to be too clever. Remember, the board has year of experience and has seen many candidates. Own up your mistakes: If the board points out that you had made a mistake and you realize it to be fact, then be courageous and own it up. Never try to cover it up. The Board will respect you for your honesty. Initiative: Use your initiative but watch the reactions of the Board. Also be conscious of your limitations. Do not over shoot. Do not draw conclusions. Be discreet when you talk about your own accomplishments. They should be conveyed subtly and tactfully. Criticism and Arguments: Do not criticize. Never try to find faults. As far as possible, stress the good point of others. It is better to be silent than to criticize. Do not get involved in unproductive arguments. You have not gone to the interview to win a verbal battle but to have a meaningful conversation. See how you can agree rather than to disagree. As a last resort, you may agree or disagree. Always remember one thing, you may win an argument but then chances of winning interview are bleak. Listen and Observe: Keep your eyes and ears open. Study their reactions. You will know when to stop talking and when to listen. As a rule, do not interrupt. If the other person wishes to talk, let him do so. In fact, encourage him to talk. Be an attentive and enthusiastic listener. Practice: Practice, Practice and Practice. You must have as much practice as possible. Enlist the goodwill and co-operation of your friends, colleagues, elders and family members and have practice session with them. The more practice you have, the better it is. It will guarantee your SUCCESS. Try to frame your probable answer for probable questions. IMPORTANT TIPS FOR FACING INTERVIEWS CONFIDENTLY

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You do need to be aware about your surroundings and this includes some familiarity with current affairs. Banking industry specific questions are common. In addition, there are certain questions you may encounter during the interview, in one for or another. These relate to questions about yourself, what you have been doing and what you want to do in future. In fact, many a times interview starts with personal type questions like “Tell me about yourself” or “your SWOT analysis” etc. It is a good idea to sit for mock interviews with your friends or colleagues. Remember, practice makes man perfect. There is no correct answer as such. What you need to do is to answer these questions calmly. Even during the real interview, you should think before answering the questions. Prepare a diary of probable questions and answers and practice it as many times as you can. You need to pause before answering collect your ideas as it will help you put together all the points, substantiating your response. Though you should not gloss over your weaknesses, you need to focus on your success and your achievements/strengths. You need to convince the interviewer that you are the correct person for the higher position.

Everyone is nervous on interviews. If you simply allow yourself to feel nervous, you'll do much better. Remember also that it's difficult for the interviewer as well.

In general, be upbeat and positive. Never be negative.

Rehearse your answers and time them. Try not to talk for more than 2 minutes straight.

Don't try to memorize answers word for word. Use the answers shown here as a guide only, and don't be afraid to include your own thoughts and words. To help you remember key concepts, jot down and review a few key words for each answer. Rehearse your answers frequently, and they will come to you naturally in interviews.

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Find out what people want, than show them how you can help them get it.

You must match your abilities, with the needs of the employer. You must sell what the buyer is buying. To do that, before you know what to emphasize in your answers, you must find out what the buyer is buying... what he is looking for. And the best way to do that is to ask a few questions yourself.

You will see how to bring this off skillfully as you read the first two questions of this report. But regardless of how you accomplish it, you must remember this strategy above all: before blurting out your qualifications, you must get some idea of what the employer wants most. Once you know what he wants, you can then present your qualifications as the perfect “key” that fits the “lock” of that position.

Other important interview strategies: Turn weaknesses into strengths (You'll see how to do this in a few moments.) Think before you answer. A pause to collect your thoughts is a hallmark of a thoughtful person.

As a daily exercise, practice being more optimistic. For example, try putting a positive spin on events and situations you would normally regard as negative. This is not meant to turn you into a Pollyanna, but to sharpen your selling skills. The best salespeople, as well as the best liked interview candidates, come off as being naturally optimistic, "can do" people. You will dramatically raise your level of attractiveness by daily practicing to be more optimistic.

Be honest...never lie.

You might feel that the answers to the following questions are “canned”, and that they will seldom match up with the exact way you are asked the questions in actual interviews. The questions and answers are designed to be as specific and realistic as possible. But no preparation can anticipate thousands of possible variations on these questions. What's important is that you thoroughly familiarize yourself with the main strategies behind each answer. And it will be invaluable to you if you commit to memory a few key words that let you instantly call to mind your best answer to the various questions. If you do this, and follow the principles of successful interviewing presented here, you're going to do very well.

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Question 1 Tell me about yourself.

TRAPS: Beware; about 80% of all interviews begin with this “innocent” question. Many candidates, unprepared for the question, skewer themselves by rambling, recapping their life story, delving into ancient work history or personal matters.

BEST ANSWER: Start with the present and tell why you are well qualified for the position. Remember that the key to all successful interviewing is to match your qualifications to what the interviewer is looking for. In other words you must sell what the buyer is buying.

So, before you answer this or any question it's imperative that you try to uncover your interviewer's greatest need, want, problem or goal.

Do all the homework you can before the interview to uncover this person's wants and needs (not the generalized needs of the organisation)

Question 2 What are your greatest strengths?

TRAPS: This question seems like a softball lob, but be prepared. You don't want to come across as egotistical or arrogant. Neither is this a time to be humble.

BEST ANSWER: You know that your key strategy is to first uncover your interviewer's greatest wants and needs before you answer questions. And from Question 1, you know how to do this.

Prior to any interview, you should have a list mentally prepared of your greatest strengths. You should also have, a specific example or two, which illustrates each strength, an example chosen from your most recent and most impressive achievements.

You should, have this list of your greatest strengths and corresponding examples from your achievements so well committed to memory that you can recite them cold after being shaken awake at 2:30AM.

Then, once you uncover your interviewer's greatest wants and needs, you can choose those achievements from your list that best match up.

As a general guideline, the 10 most desirable traits that all employers love to see in their employees are:

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1. A proven track record as an achiever...especially if your achievements match up with the employer's greatest wants and needs. 2. Intelligence...management "savvy". 3. Honesty...integrity...a decent human being. 4. Good fit with corporate culture...someone to feel comfortable with...a team player who meshes well with interviewer's team. 5. Likeability...positive attitude...sense of humor. 6. Good communication skills. 7. Dedication...willingness to walk the extra mile to achieve excellence. 8. Definiteness of purpose...clear goals. 9. Enthusiasm...high level of motivation. 10. Confident...healthy...a leader.

Question 3 What are your greatest weaknesses?

TRAPS: Beware - this is an eliminator question, designed to shorten the candidate list. Any admission of a weakness or fault will earn you an “A” for honesty, but an “F” for the interview.

PASSABLE ANSWER: Disguise a strength as a weakness.

Example: “I sometimes push my people too hard. I like to work with a sense of urgency and everyone is not always on the same wavelength.”

Drawback: This strategy is better than admitting a flaw, but it's so widely used, it is transparent to any experienced interviewer.

BEST ANSWER: (and another reason it's so important to get a thorough description of your interviewer's needs before you answer questions): Assure the interviewer that you can think of nothing that would stand in the way of your performing in this position with excellence. Then, quickly review you strongest qualifications.

Example: “Nobody's perfect, but based on what you've told me about this position, I believe I' d make an outstanding match.

Alternate strategy (if you don't yet know enough about the position to talk about such a perfect fit): Instead of confessing a weakness, describe what you like most and like least, making sure that what you like most matches up with the most important qualification for success in the position, and what you like least is not essential.

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Question 4 Tell me about something you did – or failed to do – that you now feel a little ashamed of.

TRAPS: There are some questions your interviewer has no business asking, and this is one. But while you may feel like answering, “none of your business,” naturally you can’t. Some interviewers ask this question on the chance you admit to something, but if not, at least they’ll see how you think on your feet.

Some unprepared candidates, flustered by this question, unburden themselves of guilt from their personal life or career, perhaps expressing regrets regarding a parent, spouse, child, etc. All such answers can be disastrous.

BEST ANSWER: As with faults and weaknesses, never confess a regret. But don’t seem as if you’re stonewalling either.

Best strategy: Say you harbor no regrets, then add a principle or habit you practice regularly for healthy human relations.

Question 5 The “Silent Treatment”

TRAPS: Beware – if you are unprepared for this question, you will probably not handle it right and possibly blow the interview. Thank goodness most interviewers don’t employ it. It’s normally used by those determined to see how you respond under stress. Here’s how it works:

You answer an interviewer’s question and then, instead of asking another, he just stares at you in a deafening silence.

You wait, growing a bit uneasy, and there he sits, silent as Mt. Everest, as if he doesn’t believe what you’ve just said, or perhaps making you feel that you’ve unwittingly violated some cardinal rule of interview etiquette.

When you get this silent treatment after answering a particularly difficult question, such as “tell me about your weaknesses”, its intimidating effect can be most disquieting, even to polished job hunters.

Most unprepared candidates rush in to fill the void of silence, viewing prolonged, uncomfortable silences as an invitation to clear up the previous answer which has obviously caused some problem. And that’s what they do – ramble on, sputtering more and more information, sometimes irrelevant and often damaging, because they are suddenly playing the role of someone who’s goofed and is now trying to recoup.

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But since the candidate doesn’t know where or how he goofed, he just keeps talking, showing how flustered and confused he is by the interviewer’s unmovable silence.

BEST ANSWER: Like a primitive tribal mask, the Silent Treatment loses all it power to frighten you once you refuse to be intimidated. If your interviewer pulls it, keep quiet yourself for a while and then ask, with sincere politeness and not a trace of sarcasm, “Is there anything else I can fill in on that point?” That’s all there is to it.

Whatever you do, don’t let the Silent Treatment intimidate you into talking a blue streak, because you could easily talk yourself out of the position.

Question 7 Aren’t you overqualified for this position?

TRAPS: The employer may be concerned that you’ll grow dissatisfied and leave.

BEST ANSWER: As with any objection, don’t view this as a sign of imminent defeat. It’s an invitation to teach the interviewer a new way to think about this situation, seeing advantages instead of drawbacks.

“I could help you in many things they don’t teach at the Harvard Business School. For example…(how to hire, train, motivate, etc.) When it comes to knowing how to work well with people and getting the most out of them, there’s just no substitute for what you learn over many years of front-line experience. Organisation will gain all this.”

NOTE: The main concern behind the “overqualified” question is that you will leave your new employer as soon as something better comes your way. Anything you can say to demonstrate the sincerity of your commitment to the employer and reassure him that you’re looking to stay for the long-term will help you overcome this objection.

Question 8 Where do you see yourself five years from now?

TRAPS: One reason interviewers ask this question is to see if you’re settling for this position, using it merely as a stopover until something better comes along. Or they could be trying to gauge your level of ambition.

If you’re too specific, i.e., naming the promotions you someday hope to win, you’ll sound presumptuous. If you’re too vague, you’ll seem rudderless.

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BEST ANSWER: Reassure your interviewer that you’re looking to make a long-term commitment…that this position entails exactly what you’re looking to do and what you do extremely well. As for your future, you believe that if you perform each job at hand with excellence, future opportunities will take care of themselves.

Example: “I am definitely interested in making a long-term commitment to my next position. Judging by what you’ve told me about this position, it’s exactly what I’m looking for and what I am very well qualified to do. In terms of my future career path, I’m confident that if I do my work with excellence, opportunities will inevitable open up for me. It’s always been that way in my career, and I’m confident I’ll have similar opportunities here.”

Question 9 Describe your ideal Bank/organisation, location and Position.

TRAPS: This is often asked by an experienced interviewer who thinks you may be overqualified, but knows better than to show his hand by posing his objection directly. So he’ll use this question instead, which often gets a candidate to reveal that, indeed, he or she is looking for something other than the position at hand.

BEST ANSWER: The only right answer is to describe what this organisation is offering, being sure to make your answer believable with specific reasons, stated with sincerity, why each quality represented by this opportunity is attractive to you.

Question 10 What are your career options right now?

TRAPS: The interviewer is trying to find out, “How desperate are you?”

BEST ANSWER: Prepare for this question by thinking of how you can position yourself as a desired commodity.

Question 11 Tell me honestly about the strong points and weak points of your boss (company, management team, etc.)…

TRAPS: Skillful interviewers sometimes make it almost irresistible to open up and air a little dirty laundry from your previous position. DON’T

BEST ANSWER: Remember the rule: Never be negative. Stress only the good points, no matter how charmingly you’re invited to be critical.

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Question 12 What good books have you read lately?

TRAPS: As in all matters of your interview, never fake familiarity you don’t have. Yet you don’t want to seem like a dullard who hasn’t read a book since long.

BEST ANSWER: Unless you’re up for a position in academia or as book critic for The Times of India, you’re not expected to be a literary lion. But it wouldn’t hurt to have read a handful of the most recent and influential books in your profession and on management.

Consider it part of the work of your promotion exercise to read up on a few of these leading books. But make sure they are quality books that reflect favorably upon you, nothing that could even remotely be considered superficial. Finally, add a recently published best-selling work of fiction by a world-class author and you’ll pass this question with flying colors.

Question 13 Tell me about a situation when your work was criticized.

TRAPS: This is a tough question because it’s a more clever and subtle way to get you to admit to a weakness. You can’t dodge it by pretending you’ve never been criticized. Everybody has been. Yet it can be quite damaging to start admitting potential faults and failures that you’d just as soon leave buried.

This question is also intended to probe how well you accept criticism and direction.

BEST ANSWERS: Begin by emphasizing the extremely positive feedback you’ve gotten throughout your career and (if it’s true) that your performance reviews have been uniformly excellent.

Of course, no one is perfect and you always welcome suggestions on how to improve your performance. Then, give an example of a not-too-damaging learning experience from early in your career and relate the ways this lesson has since helped you. This demonstrates that you learned from the experience and the lesson is now one of the strongest breastplates in your suit of armor.

If you are pressed for a criticism from a recent position, choose something fairly trivial that in no way is essential to your successful performance. Add that you’ve learned from this, too, and over the past several years/months, it’s no longer an area of concern because you now make it a regular practice to…etc.

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Another way to answer this question would be to describe your intention to broaden your master of an area of growing importance in your field.

Again, the key is to focus on something not essential to your brilliant performance but which adds yet another dimension to your already impressive knowledge base.

Question 14 What are your outside interests?

TRAPS: You want to be a well-rounded, not a drone. But your employer would be even more turned off if he suspects that your heavy extracurricular load will interfere with your commitment to your work duties.

BEST ANSWERS: Try to gauge how this organization’s culture would look upon your favorite outside activities and be guided accordingly.

You can also use this question to shatter any stereotypes that could limit your chances. If you’re over 50, for example, describe your activities that demonstrate physical stamina. If you’re young, mention an activity that connotes wisdom and institutional trust, such as serving on the board of a popular charity.

But above all, remember that your organisation is going to promote you for what you can do for the organisation, not your family, yourself or outside organizations, no matter how admirable those activities may be.

Question 15 How do you feel about reporting to a younger person (minority, woman, etc)?

TRAPS: It’s a shame that some interviewers feel the need to ask this question, but many understand the reality that prejudices still exist among some aspirants, and it’s better to try to flush them out beforehand.

The trap here is that in today’s politically sensitized environment, even a well-intentioned answer can result in planting your foot neatly in your mouth. Avoid anything which smacks of a patronizing or an insensitive attitude, such as “I think they make terrific bosses” or “Hey, some of my best friends are…”

Of course, since almost anyone with an IQ above room temperature will at least try to steadfastly affirm the right answer here, your interviewer will be judging your sincerity most of all. “Do you really feel that way?” is what he or she will be wondering.

So you must make your answer believable and not just automatic.

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BEST ANSWER: You greatly admire an organisation that hires and promotes on merit alone and you couldn’t agree more with that philosophy. The age (gender, race, etc.) of the person you report to would certainly make no difference to you.

Whoever has that position has obviously earned it and knows their job well. Both the person and the position are fully deserving of respect. You believe that all people in an organisation, from the messenger to the Chairman, work best when their abilities, efforts and feelings are respected and rewarded fairly, and that includes you. That’s the best type of work environment you can hope to find.

Question 16 Would you lie for the Bank/organisation?

TRAPS: This is another question that pits two values against one another, in this case loyalty against integrity.

BEST ANSWER: Try to avoid choosing between two values, giving a positive statement, which covers all bases instead.

Example: “I would never do anything to hurt the company..”

If aggressively pressed to choose between two competing values, always choose personal integrity. It is the most prized of all values.

Question 17 Looking back, what would you do differently in your life?

TRAPS: This question is usually asked to uncover any life-influencing mistakes; regrets, disappointments or problems that may continue to affect your personality and performance.

You do not want to give the interviewer anything negative to remember you by, such as some great personal or career disappointment, even long ago that you wish could have been avoided.

Nor do you wish to give any answer, which may hint that your whole heart and soul will not be in your work.

BEST ANSWER: Indicate that you are a happy, fulfilled, optimistic person and that, in general, you wouldn’t change a thing.

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Question 18 Could you have done better in your last Assignment ?

TRAPS: This is no time for true confessions of major or even minor problems.

BEST ANSWER: Again never be negative.

Example: “I suppose with the benefit of hindsight you can always find things to do better, of course, but off the top of my head, I can’t think of anything of major consequence.”

(If more explanation seems necessary) Describer a situation that didn’t suffer because of you but from external conditions beyond your control.

Question 19 Can you work under pressure?

TRAPS: An easy question, but you want to make your answer believable.

BEST ANSWER: Absolutely…(then prove it with a vivid example or two of a goal or project accomplished under severe pressure.)

Question 20 What makes you angry?

TRAPS: You don’t want to come across either as a hothead or a wimp.

BEST ANSWER: Give an answer that’s suited to both your personality and the management style of the organisation. Here, the homework you’ve done about the organisation and its style can help in your choice of words.

Examples: If you are a reserved person and/or the organizations culture is coolly professional:

“I’m an even-tempered and positive person by nature, and I believe this helps me a great deal in keeping my department running smoothly, harmoniously and with a genuine esprit de corps. I believe in communicating clearly what’s expected, getting people’s commitment to those goals, and then following up continuously to check progress.”

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Question 21 Why aren’t you earning more money at this stage of your career?

TRAPS: You don’t want to give the impression that money is not important to you, yet you want to explain the concept of Total Compensation.

BEST ANSWER: You like to make money, but other factors are even more and equally important.

Example: “Making money is very important to me, and one reason I’m here is because I’m looking to make more. Throughout my career, what’s been even more important to me is doing work I really like to do at the kind of organisation I like and respect.

Question 22 Who has inspired you in your life and why?

TRAPS: The two traps here are unprepared ness and irrelevance. If you grope for an answer, it seems you’ve never been inspired. If you ramble about your high school basketball coach, you’ve wasted an opportunity to present qualities of great value to the company.

BEST ANSWER: Have a few heroes in mind, from your mental “Board of Directors” – Leaders in your industry, from history or anyone else who has been your mentor.

Be prepared to give examples of how their words, actions or teachings have helped inspire your achievements. As always, prepare an answer which highlights qualities that would be highly valuable in the position you are seeking.

Question 23 What was the toughest decision you ever had to make?

TRAPS: Giving an unprepared or irrelevant answer.

BEST ANSWER: Be prepared with a good example, explaining why the decision was difficult…the process you followed in reaching it…the courageous or effective way you carried it out…and the beneficial results.

Question 25 Tell me about the most boring assignment you’ve ever had.

TRAPS: You give a very memorable description of a very boring assignment. Result? You become associated with this boring assignment in the interviewer’s mind.

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BEST ANSWER: You have never allowed yourself to grow bored with a job and you can’t understand it when others let themselves fall into that rut.

Example: “Perhaps I’ve been fortunate, but that I’ve never found myself bored with any assignment I have ever held. I’ve always enjoyed hard work. As with actors who feel there are no small parts, I also believe that in every company or department there are exciting challenges and intriguing problems crying out for energetic and enthusiastic solutions. If you’re bored, it’s probably because you’re not challenging yourself to tackle those problems right under your nose.”

Question 26 How do you feel about working nights and weekends?

TRAPS: Blurt out “no way” and you can kiss the offer goodbye. But what if you have a family and want to work a reasonably normal schedule? Is there a way to get work life balance?

BEST ANSWER: First, if you’re a confirmed workaholic, this question is a softball lob. Whack it out of the park on the first swing by saying this kind of schedule is just your style. Add that your family understands it. Indeed, they’re happy for you, as they know you get your greatest satisfaction from your work.

If however, you prefer a more balanced lifestyle, answer this question with another: “will maintain work life balance?”

Example: I do have a family who likes to see me after work and on weekends. They add balance and richness to my life, which in turn helps me be happy and productive at work. If I could handle some of the extra work at home in the evenings or on weekends, that would be ideal.

Question 27 Are you willing to relocate or travel?

TRAPS: Answer with a flat “no” and you may slam the door shut on this opportunity. But what if you’d really prefer not to relocate or travel, yet wouldn’t want to lose the opportunity?

BEST ANSWER: First find out where you may have to relocate and how much travel may be involved. Then respond to the question.

If there’s no problem, say so enthusiastically.

If you do have a reservation, there are two schools of thought on how to handle it.

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One advises you to keep your options open and your reservations to yourself in the early going, by saying, “no problem”. You strategy here is to get the best offer you can, then make a judgment whether it’s worth it to you to relocate or travel.

Also, by the time the offer comes through, you may have other offers and can make a more informed decision. Why kill of this opportunity before it has chance to blossom into something really special?

The second way to handle this question is to voice a reservation, but assert that you’d be open to relocating (or traveling) for the right opportunity or after some time/specific event.

The answering strategy you choose depends on how eager you are for the position. If you want to take no chances, choose the first approach.

Question 28 What would you say to boss if he’s crazy about an idea, but you think it stinks?

TRAPS: This is another question that pits two values, in this case loyalty and honesty, against one another.

BEST ANSWER: Remember the rule stated earlier: In any conflict between values, always choose integrity.

Question 29 How could you have improved your career progress?

TRAPS: This is another variation on the question, “If you could, how would you live your life?” Remember, you’re not going to fall for any such invitations to rewrite person history. You can’t win if you do.

BEST ANSWER: You’re generally quite happy with your career progress.

But all things considered, you take responsibility for where you are, how you’ve gotten there, where you are going…and you harbor no regrets.

Question 30 Give me an example of your creativity (analytical skill…managing ability, etc.)

TRAPS: The worst offense here is simply being unprepared. Your hesitation may seem as if you’re having a hard time remembering the last time you were creative, analytical, etc.

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BEST ANSWER: Remember from Question 2 that you should commit to memory a list of your greatest and most recent achievements, ever ready on the tip of your tongue.

If you have such a list, it’s easy to present any of your achievements in light of the quality the interviewer is asking about.

Question 31 Where could you use some improvement?

TRAPS: Another tricky way to get you to admit weaknesses. Don’t fall for it.

BEST ANSWER: Keep this answer, like all your answers, positive. A good way to answer this question is to identify a cutting-edge branch of your profession (one that’s not essential to your employer’s needs) as an area you’re very excited about and want to explore more fully over the next six months.

Question 32 What do you worry about?

TRAPS: Admit to worrying and you could sound like a loser. Saying you never worry doesn’t sound credible.

BEST ANSWER: Redefine the word ‘worry’ so that it does not reflect negatively on you.

Example: “I wouldn’t call it worry, but I am a strongly goal-oriented person. So I keep turning over in my mind anything that seems to be keeping me from achieving those goals, until I find a solution. That’s part of my tenacity, I suppose.”

Question 33 How many hours a week do you normally work?

TRAPS: You don’t want to give a specific number. Make it to low, and you may not measure up. Too high, and you’ll forever feel guilty about sneaking out the door at 5:15.

BEST ANSWER: If you are in fact a workaholic and you sense your organisation would like that: Say you are a confirmed workaholic, that you often work nights and weekends. Your family accepts this because it makes you fulfilled.

If you are not a workaholic: Say you have always worked hard and put in long hours. It goes with the territory. It one sense, it’s hard to keep track of the hours because your work is a labor of love, you enjoy nothing more than solving problems.

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So you’re almost always thinking about your work, including times when you’re home, while shaving in the morning, while commuting, etc.

Question 34 The “Hypothetical Problem”

TRAPS: Sometimes an interviewer will describe a difficult situation and ask, “How would you handle this?” Since it is virtually impossible to have all the facts in front of you from such a short presentation, don’t fall into the trap of trying to solve this problem and giving your verdict on the spot. It will make your decision-making process seem woefully inadequate.

BEST ANSWER: Instead, describe the rational, methodical process you would follow in analyzing this problem, who you would consult with, generating possible solutions, choosing the best course of action, and monitoring the results.

Remember, in all such, “What would you do?” questions, always describe your process or working methods, and you’ll never go wrong.

Question 35 What was the toughest challenge you’ve ever faced?

TRAPS: Being unprepared or citing an example from so early in your life that it doesn’t score many points for you at this stage of your career.

BEST ANSWER: This is an easy question if you’re prepared. Have a recent example ready that demonstrates either:

1. A quality most important to the job at hand; or 2. A quality that is always in demand, such as leadership, initiative, managerial skill, persuasiveness, courage, persistence, intelligence, etc.

Question 36 What are your goals?

TRAPS: Not having any…or having only vague generalities, not highly specific goals.

BEST ANSWER: If you’re vague about your career and personal goals, it could be a big turnoff to many people.

Be ready to discuss your goals for each major area of your life: career, personal development and learning, family, physical (health), community service and (if your interviewer is clearly a religious person) you could briefly and generally allude to your spiritual goals (showing you are a well-rounded individual with your values in the right order).

Facing Interview?


Be prepared to describe each goal in terms of specific milestones you wish to accomplish along the way, time periods you’re allotting for accomplishment, why the goal is important to you, and the specific steps you’re taking to bring it about. But do this concisely, as you never want to talk more than two minutes straight before letting your interviewer back into the conversation.

Question 37 The Illegal Question

TRAPS: Illegal questions include any regarding your age…number and ages of your children or other dependents…marital status…maiden name…religion…political affiliation…ancestry…national origin…birthplace…naturalization of your parents, spouse or children…diseases…disabilities…clubs…or spouse’s occupation…unless any of the above are directly related to your performance of the job. You can’t even be asked about arrests, though you can be asked about convictions.

BEST ANSWER: You can handle an illegal question in several ways. First, you can assert your legal right not to answer. But this will frighten or embarrass your interviewer and destroy any rapport you had.

Second, you could swallow your concerns over privacy and answer the question straight forwardly if you feel the answer could help you. For example, your interviewer, a devout Baptist, recognizes you from church and mentions it. Here, you could gain by talking about your church.

Third, if you don’t want your privacy invaded, you can diplomatically answer the concern behind the question without answering the question itself.

Example: If you are over 50 and are asked, “How old are you?” you can answer with a friendly, smiling question of your own on whether there’s a concern that your age my affect your performance. Follow this up by reassuring the interviewer that there’s nothing in this job you can’t do and, in fact, your age and experience are the most important advantages you offer the organisation for the following reasons…(give some examples)

Another example: If asked, “Do you plan to have children?” you could answer, “I am wholeheartedly dedicated to my career“, perhaps adding, “I have no plans regarding children.” (You needn’t fear you’ve pledged eternal childlessness. You have every right to change your plans later. Get the oppertunity first and then enjoy all your options.)

Most importantly, remember that illegal questions arise from fear that you won’t perform well. The best answer of all is to get the oppertunity and perform

Facing Interview?


brilliantly. All concerns and fears will then varnish, replaced by respect and appreciation for your work.

Question 38 The “Secret” Illegal Question

TRAPS: Much more frequent than the Illegal question (see Question 55) is the secret illegal question. It’s secret because it’s asked only in the interviewer’s mind. Since it’s not even expressed to you, you have no way to respond to it, and it can there be most damaging.

BEST ANSWER: Remember that just because the interviewer doesn’t ask an illegal question doesn’t mean he doesn’t have it. More than likely, he is going to come up with his own answer. So you might as well help him out.

How? Well, you obviously can’t respond to an illegal question if he hasn’t even asked. This may well offend him. And there’s always the chance he wasn’t even concerned about the issue until you brought it up, and only then begins to wonder.

So you can’t address “secret” illegal questions head-on. But what you can do is make sure there’s enough counterbalancing information to more than reassure him that there’s no problem in the area he may be doubtful about.

Question 39 How do you define success…and how do you measure up to your own definition?

TRAPS: Seems like an obvious enough questions. Yet many aspirants, unprepared for it, fumble the ball.

BEST ANSWER: Give a well-accepted definition of success that leads right into your own stellar collection of achievements.

Example: “The best definition I’ve come across is that success is the progressive realization of a worthy goal.”

“As to how I would measure up to that definition, I would consider myself both successful and fortunate…”(Then summarize your career goals and how your achievements have indeed represented a progressive path toward realization of your goals.)

Facing Interview?


Question 40 “The Opinion Question” – What do you think about …Abortion…The President…The Death Penalty… Women Reservation Bill ……………(or any other controversial subject)?

TRAPS: If you give your opinion and it’s the opposite of the interviewer, you won’t change his opinions, but you could easily lose the opportunity.

BEST ANSWER: Handle it diplomatically.

Question 41 Looking back on your last position, have you done your best work?

TRAPS: Tricky question. Answer “absolutely” and it can seem like your best work is behind you. Answer, “no, my best work is ahead of me,” and it can seem as if you didn’t give it your all.

BEST ANSWER: To cover both possible paths this question can take, your answer should state that you always try to do your best, and the best of your career is right now. Like an athlete at the top of his game, you are just hitting your career stride thanks to several factors. Then, recap those factors, highlighting your strongest qualifications.

Question 42 Tell me something negative you’ve heard about our Bank

TRAPS: This is a common fishing expedition to see what the industry grapevine may be saying about the organisation.

BEST ANSWER: Just remember the rule – never be negative – and you’ll handle this one just fine.

Question 42 On a scale of one to ten, rate me as an interviewer.

TRAPS: Give a perfect “10,” and you’ll seem too easy to please. Give anything less than a perfect 10, and he could press you as to where you’re being critical, and that road leads downhill for you.

BEST ANSWER: Once again, never be negative. The interviewer will only resent criticism coming from you. This is the time to show your positivism.

However, don’t give a numerical rating. Simply praise whatever interview style he’s been using.

Facing Interview?


If he’s been tough, say “You have been thorough and tough-minded, the very qualities needed to conduct a good interview.”

If he’s been methodical, say, “You have been very methodical and analytical, and I’m sure that approach results in excellent hires for your firm.”

In other words, pay him a sincere compliment that he can believe because it’s anchored in the behavior you’ve just seen.

SOURCE: Newspaper such as The Economic Times, Business Standard, Business Line, The Chartered Accountant World, NSE / SEBI Web sites, Magazines, Books published by different units & institutions, Books Published by SBLCs and ATIs, RBI / IBA guidelines and the World Wide Web.

DISCLAIMER: This is a voluntary effort. All the sections / data/ INFORMATION are based on press reports, journals, news clippings, web sites and no responsibility is accepted for the accuracy of facts and figures contained in them. The opinion expressed is of the author and not of the Bank. Regarding products/Circular instructions it is requested to refer to the original circular for any clarification & act as per original circular. While we have taken every care to provide correct and latest information; we believe to be accurate and reliable, errors and omissions are likely. However we do not assume responsibility of any kind nor shall be liable for losses and consequences arising from uses thereof. Hence Readers are requested to be guided by the circulars issued by the Bank from time to time and the Author and SBLC Patna , is not liable for any such inadvertent and omissions, if any. We also request our esteemed readers to kindly bring to our notice , any mistake , omissions noticed by them to make suitable corrections in subsequent materials. I place on record my special gratitude to all the ATIs , SBLCs, SB Times , other Financial & promotion magazines , News papers and staff from different corner of the Bank whose publication , articles, reading material have been utilized by me as a valuable resource for the reading material. With Best Wishes,

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