Law and practice Of banking and insurance
Title: Report on State Bank of India
Under the guidance of Prof. Vinay Asthana
Table of Contents
EXECUTIVE SUMMARY 3
1. INTRODUCTION 4
1.1 HISTORY 4
1.2. LOGO AND SLOGAN 4
2. FINANCIAL STATEMENT 5
3. CUSTOMERS AND COMPETITION 8
4. Non-Performing Asset (NPA) 9
Ways to tackle the NPA’s: 9
4. CHALLENGES IN BANKING 11
5. TOPIC OF OUR CHOICE: SBI server leaks bank balance details of Indians 13
[bookmark: _Toc5881152]EXECUTIVE SUMMARY
State Bank of India (SBI) is that the largest state-owned banking and money services company in India.
The bank provides banking services to the customer. In addition to the banking services, the bank through its subsidiaries, provides a spread of economic services, that embrace life assurance, businessperson banking, mutual funds, MasterCard, factoring, security, Trading, pension fund management and first business organisation within the market.
The Bank operates in four business segments, particularly
· Corporate/ Wholesale Banking”,
· Retail Banking
· Alternative Banking Business.
The Treasury section includes the investment portfolio and mercantilism in interchange contracts and by-product contracts.
The company/Wholesale banking section contains the Disposal activities of Corporate Accounts cluster, middle company Accounts cluster and Stressed Assets Management cluster.
The Retail Banking section consists of branches in National Banking cluster, that primarily includes personal banking activities, as well as disposal activities to company customers having banking relations with branches in The National Banking Group. The banking company cluster, with over 16000 branches, has the biggest banking branch network in Republic of India.
The State bank of India is the 10th most reputed company in the world according to Forbes the bank has 190 overseas offices spread over 36 countries. They have branches of the parent in national capital, Dhaka, Frankfurt, Hong Kong, city, London and geographical region, l. a., Male within the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo.
State Bank of India was incorporated within the year 1955.
The Bank traces their ancestry to British India, through the Imperial Bank of India, to the instauration in 1806 of the Bank of Kolkata, creating them the oldest industrial
Bank in the Indian Sub-continent.
The Government of India nationalized the Imperial Bank of India within the year 1955, with the banking company of India taking a hr stake, and name was modified to
State Bank of India.
1. [bookmark: _Toc5881153]INTRODUCTION
· State Bank of India (SBI), with a multi-year history is the biggest business bank in INDIA.
· In terms of advantages, stores, benefits, branches, clients and workers SBI is biggest bank.
· The Government of India is the single biggest investor of this Fortune 500 element with 61.58% proprietorship.
· SBI is a global banking and money related administrations organization situated in India.
1.1 [bookmark: _Toc5881154]HISTORY
· Started as bank of Calcutta on June 1806.
· Re-structured as the bank of Bengal on 2 January 1806
· Later on Bank of Madras, Bank of Bombay and bank of Bengal were amalgamated to frame supreme bank of India in 27 January 1991.
· It was nationalised on 1995 and was renamed as State Bank of India.
State Bank of India has merged its five associate banks and Bharatiya Mahila Bank Ltd. with itself from 1st April, 2017. This is the first such large scale consolidation in the Indian Banking industry. With this merger, your Bank is ranked at the 54 position among the top 1″,000 global banks, as per the global ranking by “The Banker” in July 2017. This merger helped your Bank to reduce 1″,805 branches and rationalised 244 administrative offices, which saves around ` 1″,099 crore per annum. We believe that the long-term benefits of the merger will significantly outweigh the near term challenges and the efficiencies generated through the merger will help the Bank to sustain the mission of being an enduring value creator.
[bookmark: _Toc5881155]1.2. LOGO AND SLOGAN
· The logo of the SBI is blue hover with a little cut in the base that delineates flawlessness and the little man the basic man – being the focal point of the banks business.
· The logo originated from National foundation of Design (NID), Ahmedabad and it was propelled by Kankariya Lake.
· “ PURE BANKING , NOTHING ELSE”
· “WITH YOU ALL THE WAY”
· “THE BANKER TO EVERY INDIAN”
· “A MAN OF THE COMMON MAN”
· “THE NATION BANKS ON US”
2. [bookmark: _Toc5881156]FINANCIAL STATEMENT
Profit & Loss Statement: Statement which shows income (or) gain and expense (or) loss, to show the net profit or net loss of a financial year.
Comparing Profit & Loss statement of two years:
· Total Interest Income remained flat at Rs.54″,850 Cr in Q2FY18 against Rs.54″,820 Cr in Q2FY17
· Total Interest Expenses down by 1.19% YoY from Rs.36″,701 Cr in Q2FY17 to Rs.36″,264 Cr in Q2FY18.
· Interest Expenses on Deposits down by 1.28% YoY from Rs.34″,421 Cr in Q2FY17 to Rs.33″,980 Cr in Q2FY18 despite a growth of 10.27% in Deposits.
· Increase in Operating Expenses contained at 2.28% YoY from Rs.14″,277 Cr in Q2FY17 to Rs.14″,603 Cr in Q2FY18.
· Staff Expenses down by 7.19% YoY from Rs.8″,300 Cr in Q2FY17 to Rs.7″,703 Cr in Q2FY18.
· Overheads up by 15.43% YoY from Rs.5″,977 Cr in Q2FY17 to Rs.6″,900 Cr in Q2FY18 mainly due to 26.09% increase in Tech-related expenses and 44.80% increase in Depreciation.
Cash Flow Statement: Statement which shows inflow and outflow of cash during a financial year.
The SBI Holdings cash flow statement is one of the important reports considered by investors doing a fundamental analysis of the company. In simple terms, the cash flow statement measures the cash that has come into the company, and the cash that has gone out during a given period.
SBI Holdings stock comparison chart provides an easy way to compare the stock price with peers along with details of SBI Holdings stock price history. The statement of cash flows can be categorized into three main sections:
· SBI Holdings saw a negative change in Net Change in Cash and Cash Equivalents of $410.18M in 2018. Apart from the SBI Holdings stock price, this is one of the things an investor looks for, as it shows the net change in cash on hand for a company, compared to previous period.
· Cash Flow from operating activities: Operating activities include the core business activities. This line item refers to the cash generated from the same and stood at a negative value of $-299.11M for SBHGF.
· Cash Flow from investment activities: This includes buying/selling of land and equipment, acquisitions and mergers, sell-off, investment in other companies like buying bonds, stocks etc., and was $70.92M for SBHGF in last 2018 report.
· Cash Flow from financing activities: Financing activities include the cash that comes into a company in the form of loans or interest earned or shareholders money, as well as the cash that goes out. SBI Holdings earned $671.17M from financing activities, in the form of repayment of loans or interest paid, dividend pay-out to shareholders etc.
Balance sheet: Statement which shows the assets, liabilities and capital of a business.
During the last quarter of FY2018, the bond yields continued to firm up which hit severely the banks’ balance sheet, due to the mark-to-market losses incurred by the banks in their investments. In the post-demonetisation period, banks have invested a huge amount of money in Government bonds due to tepid credit growth. In Q3 FY2018 quarterly results, most of the banks have reported a loss due to their higher provisioning against the mark-to-market losses in investments in Government bonds. To ease the pressure, RBI recently has advised the banks to do the mark-to-market loss provisioning in the next four quarters.
3. [bookmark: _Toc5881157]CUSTOMERS AND COMPETITION
Services provided to customers are
· Safe deposit locker
· Domestic Treasury
· Internet Banking
· ATM services
· E- Pay
· Booking service
Customised Banking and Lifestyle Benefits
A committed and experienced Relationship Manager (RM) allotted for all your Banking needs to give a Personalized Banking Experience.
Entryway Step Banking – Customer Relationship Executives accessible for pickup and conveyance of reports to spare the problems of movement/visits.
Mark Debit and Credit Cards offering Life Style Benefits and Accelerated Reward Points.
Speculation and Other Products
Top tier Investment Products crosswise over different Asset Classes conveyed through an Unbiased and an Open Investment Platform by our accomplished Research Team and Investment Counsellors.
A wide extent of bleeding edge items intended to expand your Wealth Creation openings alongside Direct Equity and Fixed Income Services through our accomplices.
Assurance Solutions as Life and General Insurance that defend your future, yet additionally help you plan for unexpected conditions.
Help of Online Will Services to our Clients through Platform offered by SBI Cap Trustee Co. Ltd.
Advanced Convenience on the Move
A first of its sort ‘e-Wealth Centre’ with expanded Banking hours which empowers Banking and Investment exchanges by means of Voice and Video Call with your Relationship Manager.
Another age road of dealing with your accounts in a hurry through future-prepared Internet Portal and Mobile App which empower Transactions, Portfolio Review and Tracking readily available.
[image: Image result for sbi model]
4. [bookmark: _Toc5881158]Non-Performing Asset (NPA)
A nonperforming resource (NPA) alludes to a characterization for advances or advances that are in default or are falling behind financially on planned instalments of vital or intrigue. Much of the time, obligation is delegated nonperforming when credit instalments have not been made for a time of 90 days. While 90 days of default is the standard, the measure of slipped by time might be shorter or longer relying upon the terms and states of each credit.
Banks are required to arrange NPAs further into Substandard, Doubtful and Loss resources.
1. Substandard assets: Assets which has remained NPA for a period not exactly or equivalent to a year.
2. Doubtful assets: An advantage would be named far-fetched on the off chance that it has stayed in the unsatisfactory class for a time of a year.
3. Loss assets: according to RBI, “Misfortune resource is viewed as uncollectible and of such little esteem that its continuation as a bankable resource isn’t justified, in spite of the fact that there might be some rescue or recuperation esteem.”
[bookmark: _Toc5881159]Ways to tackle the NPA’s:
TECHNOLOGY AND DATA ANALYTICS
The launch of recent banking merchandise and increase in client coverage demand technology upgradation for comprehensive observation.
Data analytics may be a valuable element to effectively conduct periodic reviews and audit.
Analytics provides insight into method anomalies, trends and risk indicators through the extraction and analysis of transactional data.
INDEPENDENT BORROWER BACKGROUND CHECKS
One of the key reasons for stressed assets may well be copied back to the lapses within the initial client due diligence and inefficiencies within the sanctionative method.
Past history – earlier defaults, excise/ income tax raids and/or negative information about the borrower should be adequately disclosed to the sanctioning committee of banks.
Apart from discussion with the receiver, surprise site visits should be undertaken especially in case of high value loans.
ENHANCING INTERNAL SKILL SETS ON CREDIT ASSESSMENT/EVALUATION
Keeping the business dynamics and complicated business structures under consideration, banks are required to enhance the skill sets of the credit teams.
For instance, credit team/analysts need to undergo periodic training to upgrade their skills; scoring models, industry benchmarks and credit evaluation sheets should be updated regularly.
FORMULATING SEPARATE TEAM FOR MONITORING OF ACCOUNTS
Some banks have a separate dedicated team for observance the performance of key accounts.
The accounts square measure chosen supported the number disbursed, vulnerability of the business model/industry, indication of diversion or siphoning off bank funds, etc.
A separate dedicated team for account observance would assist in early identification of irregularities, if any, and specialize in immediate remedial measure.
Public domain searches and market intelligence will assist banks to assemble extra info round the recipient and its business operations, wherever indicators for suspicious activities exist.
Thenew run tips have additionally emphasised on grouping freelance info through market intelligence/public domain/Registrar of Companies/defaulter list as a district of the pre-sanction method.
Tracking of “market information” and monitoring databases during the annual review have also been stipulated by the regulator.
4. [bookmark: _Toc5881160]CHALLENGES IN BANKING
Block chain for banking Industry:
The block chain could conceivably spare banks billions in real money by drastically decreasing handling costs. Banks are quick to accept the open door to decrease exchange costs and the measure of paper that they procedure. Actualizing block chain would be a stage to making banks progressively gainful and important.
Every single real bank are experimenting with block chain which could be utilized for cash exchanges, record keeping and other back-end capacities. The block chain application changes the paper-serious global exchange fund procedure to an electronic decentralized record that gives all the taking an interest substances, including banks, the capacity to get to a solitary wellspring of data. It additionally enables them to follow all documentation and approve responsibility for carefully, as an un-alterable record progressively.
Block chain is being perceived as the new innovation that would diminish misrepresentation in the budgetary existence where 45% of monetary middle people like stock trades and cash exchange administrations are inclined to money related wrongdoings routinely. Most financial frameworks on the planet, based on an incorporated database, are increasingly helpless against cyberattack in light of the fact that once programmers assault the one framework they get full access. This innovation would dispose of a portion of the present wrongdoings submitted online today against our money related establishments.
Know your Customer (KYC):
Monetary establishments spend somewhere in the range of $60 million up to $500 million every year to stay aware of Know your Customer (KYC) and client due persistence guidelines as indicated by a Thomson Reuters Survey. These guidelines are intended to help lessen illegal tax avoidance and fear mongering exercises by having necessities for organizations to confirm and distinguish their customers. Block chain would enable an association to get to the confirmation subtleties of a customer by another association, in this manner staying away from reiteration of the KYC procedure. The decrease in authoritative expenses for consistence offices would be critical.
SBI today runs the biggest bank in the nation regarding resources just as branch organise. They have branches in each niche and corner of the nation. The partner banks are local with great branch organise in the spot they are headquartered. There will be a gigantic cover of branches in the five conditions of Rajasthan, Bengaluru, Andhra Pradesh, Punjab and Kerala.
The merger is the greatest in the Indian financial industry. We haven’t seen a merger of this size. The bank is consolidating five partner manages an account with joined resources of over Rs 6 lakh crore , which is practically equivalent to the measure of the two biggest private banks HDFC Bank and ICICI Bank Ltd. The consolidated SBI element would have 24″,000 or more branches, 58″,000 ATMs and 2.7 lakh representatives. ICICI Bank has 4″,450 branches, 14″,295 and 97″,132 representatives. In an advanced time, numerous banks are not notwithstanding discussing setting up branches. The computerised wallets, as well, will make ATMs insignificant later on.
[bookmark: _Toc5881161]5. TOPIC OF OUR CHOICE: SBI server leaks bank balance details of Indians
· The SBI server was located in Mumbai and was found to be left without a password for an unknown period of time.
· Anyone could access every individual’s data from up to 2 months ago.
· The server stored messages that contained account balances, phone numbers and other details.
TechCrunch first reported about the issue late Wednesday. The security researcher happened to stumble upon one of SBI’s data servers located in Mumbai. Upon further probe, the researcher was reportedly able to access financial details of millions of the bank’s customers easily. The researcher was also able to track transactional data in real-time. However, before the report was published, the incident was reported to SBI and the bank then did put a password on its mission-critical server.
· It is beyond the realm of imagination to expect to wipe out absolutely the NPA’s of the financial business yet must be limited.
· It is constantly astute to pursue the best possible approach evaluation, supervision and follow up of advances to stay away from NPA’s
· The banks ought make strides for decreasing present NPA’s, yet fundamental safeguard ought to likewise be taken to maintain a strategic distance from future NPA’s.
· In SBI it is a decent sign that NPA’s has diminished in the previous couple of years.
NAVYA SUMAN – 16010141151
KUMAR RISHAV – 16010141303
ANVESHA SISODIA – 16010141312
NIRMAL CS – 16010141160
AKASH AGARWAL – 16010141018