Description
The exposure to the credit risks large in case of financial institutions, such commercial banks when firms borrow money they in turn expose lenders to credit risk, the risk that the firm will default on its promised payments
Credit Risk Management in State Bank Of India
EXECUTIVE SUMMARY
Credit Risk Management in State Bank Of India
TITLE OF THE PROJECT
“Credit Risk Management in State Bank Of India”
BACKRO!"# OF PROJECT TOPIC$
Credit risk is defined as the potential that a ank orro!er or "o#nterpart$ !ill
fail to meet its oligations in a""ordan"e !ith agreed terms% or in other !ords it is defined
as the risk that a firm&s "#stomer and the parties to !hi"h it has lent mone$ !ill fail to
make promised pa$ments is kno!n as "redit risk
The e'pos#re to the "redit risks large in "ase of finan"ial instit#tions% s#"h
"ommer"ial anks !hen firms orro! mone$ the$ in t#rn e'pose lenders to "redit risk%
the risk that the firm !ill defa#lt on its promised pa$ments( As a "onse)#en"e% orro!ing
e'poses the firm o!ners to the risk that firm !ill e #nale to pa$ its det and th#s e
for"ed to ankr#pt"$(
IMPORTA"CE OF THE PROJECT
The pro*e"t helps in #nderstanding the "lear meaning of "redit Risk Management In State
Bank Of India( It e'plains ao#t the "redit risk s"oring and Rating of the Bank( And also
St#d$ of "omparati+e st#d$ of Credit ,oli"$ !ith that of its "ompetitor helps in
#nderstanding the fair "redit poli"$ of the Bank and Credit Re"o+er$ management of the
Banks and also its ke$ "ompetitors(
Credit Risk Management in State Bank Of India
OBJECTI%ES OF PROJECT
-( To St#d$ the "omplete str#"t#re and histor$ of State Bank Of India(
.( To kno! the different methods a+ailale for "redit Rating and #nderstanding the
"redit rating pro"ed#re #sed in State Bank Of India(
/( To gain insights into the "redit risk management a"ti+ities of the State Bank Of
India(
0( To kno! the RBI 1#idelines regarding "redit rating and risk anal$sis(
2( St#d$ing the "redit poli"$ adopted Comparati+e anal$ses of ,#li" se"tor and
pri+ate se"tor(
METHO#OLO&$
#ATA COLLECTIO" METHO#
To f#lfill the o*e"ti+es of m$ st#d$% I ha+e taken oth into "onsiderations +i3 primar$ 4
se"ondar$ data(
Primar' data$ ,rimar$ data has een "olle"ted thro#gh personal inter+ie! $ dire"t
"onta"t method( The method !hi"h !as adopted to "olle"t the information is 5,ersonal
Inter+ie!’ method(
,ersonal inter+ie! and dis"#ssion !as made !ith manager and other personnel in
the organi3ation for this p#rpose(
Se()ndar' data$ The data is "olle"ted from the Maga3ines% Ann#al reports% Internet%
Te't ooks(
The +ario#s so#r"es that !ere #sed for the "olle"tion of se"ondar$ data are
Credit Risk Management in State Bank Of India
o Internal files 4 materials
o 6esites 7 Vario#s sites like !!!( sharekhan("om
!!!(indiainfoline("om
!!!(si("o(in
!!!(in+estopedia("om
!!!((!ikepedia("om and other site
Findings$
• ,ro*e"t findings re+eal that SBI is san"tioning less Credit to agri"#lt#re% as
"ompared !ith its ke$ "ompetitor&s +i3(% Canara Bank% Corporation Bank%
S$ndi"ate Bank
• Re()*er' )f Credit$ SBI re"o+er$ of Credit d#ring the $ear .889 is 9.(0:
Compared to other Banks SBI 5s re"o+er$ poli"$ is +er$ good% hen"e this red#"es
;,A
• T)ta+ Ad*an(es$ As "ompared total ad+an"es of SBI is in"reased $ear $ $ear(
• State Bank Of India is granting "redit in all se"tors in an E)#ated Monthl$
Installments so that an$ od$ "an orro! mone$ easil$
• ,ro*e"t findings re+eal that State Bank Of India is lending more "redit or
san"tioning more loans as "ompared to other Banks(
• State ank Of India is e'panding its Credit in the follo!ing fo"#s areas<
-( SBI Term =eposits
.( SBI Re"#rring =eposits
/( SBI >o#sing ?oan
0( SBI Car ?oan
2( SBI Ed#"ational ?oan
Credit Risk Management in State Bank Of India
9( SBI ,ersonal ?oan @et"
• In "ase of indire"t agri"#lt#re ad+an"es% SBI is granting /(-: of ;et Banks
Credit% !hi"h is less as "ompared to Canara Bank% S$ndi"ate Bank and
Corporation Bank( SBI has to entertain indire"t se"tors of agri"#lt#re so that it
"an ha+e more n#mer of orro!ers for the Bank(
• SBI&s dire"t agri"#lt#re ad+an"es as "ompared to other anks is -8(2: of the ;et
Bank&s Credit% !hi"h sho!s that Bank has not lent eno#gh "redit to dire"t
agri"#lt#re se"tor(
• Credit risk management pro"ess of SBI #sed is +er$ effe"ti+e as "ompared !ith
other anks(
RECOMME"#ATIO"S$
• The Bank sho#ld keep on re+ising its Credit ,oli"$ !hi"h !ill help Bank&s effort to
"orre"t the "o#rse of the poli"ies
• The Chairman and Managing =ire"torAE'e"#ti+e =ire"tor sho#ld make
modifi"ations to the pro"ed#ral g#idelines re)#ired for implementation of the
Credit ,oli"$ as the$ ma$ e"ome ne"essar$ from time to time on a""o#nt of
organi3ational needs(
• Banks has to grant the loans for the estalishment of #siness at a moderate rate of
interest( Be"a#se of this% the people "an repa$ the loan amo#nt to ank reg#larl$
and promptl$(
• Bank sho#ld not iss#e entire amo#nt of loan to agri"#lt#re se"tor at a time% it
sho#ld release the loan in installments( If the "limati" "onditions are good then
the$ ha+e to release remaining amo#nt(
• SBI has to red#"e the Interest Rate(
Credit Risk Management in State Bank Of India
• SBI has to entertain indire"t se"tors of agri"#lt#re so that it "an ha+e more n#mer
of orro!ers for the Bank(
CO"CL!SIO"$
The pro*e"t #ndertaken has helped a lot in gaining kno!ledge of the BCredit ,oli"$ and
Credit Risk ManagementC in ;ationali3ed Bank !ith spe"ial referen"e to State Bank Of
India( Credit ,oli"$ and Credit Risk ,oli"$ of the Bank has e"ome +er$ +ital in the
smooth operation of the anking a"ti+ities( Credit ,oli"$ of the Bank pro+ides the
frame!ork to determine DaE !hether or not to e'tend "redit to a "#stomer and DE ho!
m#"h "redit to e'tend( The ,ro*e"t !ork has "ertainl$ enri"hed the kno!ledge ao#t the
effe"ti+e management of BCredit ,oli"$C and BCredit Risk ManagementC in anking
se"tor(
• BCredit ,oli"$C and BCredit Risk ManagementC is a +ast s#*e"t and it is +er$
diffi"#lt to "o+er all the aspe"ts !ithin a short period( >o!e+er% e+er$ effort has
een made to "o+er most of the important aspe"ts% !hi"h ha+e a dire"t earing
on impro+ing the finan"ial performan"e of Banking Ind#str$
• To s#m #p% it !o#ld not e o#t of !a$ to mention here that the State Bank Of
India has gi+en spe"ial inp#ts on BCredit ,oli"$C and BCredit Risk
ManagementC( In p#rs#an"e of the instr#"tions and g#idelines iss#ed $ the
Reser+e Bank of India% the State ank Of India is granting and e'panding "redit
to all se"tors(
• The "on"erted efforts p#t in $ the Management and Staff of State Bank Of
India has helped the Bank in a"hie+ing remarkale progress in almost all the
important parameters( The Bank is mar"hing ahead in the dire"tion of a"hie+ing
the ;#merF- position in the Banking Ind#s
Credit Risk Management in State Bank Of India
BA;GI;1 I;=USTRY OVERVIE6
Credit Risk Management in State Bank Of India
I"#!STR& O%ER%IE,
Hist)r'$
Banking in India has its origin as "arr$ as the Vedi" period( It is elie+ed that the
transition from mone$ lending to anking m#st ha+e o""#rred e+en efore Man#% the
great >ind# *#rist% !ho has de+oted a se"tion of his !ork to deposits and ad+an"es and
laid do!n r#les relating to the interest( =#ring the mogal period% the indigeno#s ankers
pla$ed a +er$ important role in lending mone$ and finan"ing foreign trade and
"ommer"e( =#ring the da$s of East India Compan$% it !as to t#rn of the agen"$ ho#ses
top "arr$ on the anking #siness( The general ank of India !as the first *oint sto"k ank
to e estalished in the $ear -HI9(The others !hi"h follo!ed !ere the Bank of >ind#stan
and the Bengal Bank( The Bank of >ind#stan is reported to ha+e "ontin#ed till -J89%
!hile the other t!o failed in the meantime( In the first half of the -J
th
Cent#r$ the East
India Compan$ estalished three anksK The Bank of Bengal in -I8J% The Bank of
Boma$ in -I08 and The Bank of Madras in -I0/(These three anks also kno!n as
presiden"$ anks and !ere independent #nits and f#n"tioned !ell( These three anks
!ere amalgamated in -J.8 and The Imperial Bank of India !as estalished on the .H
th
Lan -J.-% !ith the passing of the SBI A"t in -J22% the #ndertaking of The Imperial Bank
of India !as taken o+er $ the ne!l$ "onstit#ted SBI( The Reser+e Bank !hi"h is the
Central Bank !as "reated in -J/2 $ passing of RBI A"t -J/0% in the !ake of s!adeshi
mo+ement% a n#mer of anks !ith Indian Management !ere estalished in the "o#ntr$
namel$ ,#n*a ;ational Bank ?td% Bank of India ?td% Canara Bank ?td% Indian Bank ?td%
The Bank of Baroda ?td% The Central Bank of India ?td (On L#l$ -J
th
-J9J% -0 Ma*or
Banks of the "o#ntr$ !ere nationali3ed and in -2
th
April -JI8 si' more "ommer"ial
pri+ate se"tor anks !ere also taken o+er $ the go+ernment( The Indian Banking
ind#str$% !hi"h is go+erned $ the Banking Reg#lation A"t of India -J0J% "an e roadl$
"lassified into t!o ma*or "ategories% nonFs"hed#led anks and s"hed#led anks(
S"hed#led Banks "omprise "ommer"ial anks and the "oFoperati+e anks(
Credit Risk Management in State Bank Of India
The first phase of finan"ial reforms res#lted in the nationali3ation of -0 ma*or anks in
-J9J and res#lted in a shift from "lass anking to mass anking( This in t#rn res#lted in
the signifi"ant gro!th in the geographi"al "o+erage of anks( E+er$ ank had to earmark
a min per"entage of their loan portfolio to se"tors identified as Bpriorit$ se"torsC the
man#fa"t#ring se"tor also gre! d#ring the -JH8&s in prote"ted en+ironments and the
anking se"tor !as a "riti"al so#r"e( The ne't !a+e of reforms sa! the nationali3ation of
9 more "ommer"ial anks in -JI8 sin"e then the n#mer of s"hed#led "ommer"ial anks
in"reased fo#rF fold and the n#mer of ank ran"hes in"reased to eight fold(
After the se"ond phase of finan"ial se"tor reforms and lierali3ation of the se"tor in the
earl$ nineties( The ,SB&s fo#nd it e'tremel$ diffi"#lt to "omplete !ith the ne! pri+ate
se"tor anks and the foreign anks( The ne! pri+ate se"tor first made their appearan"e
after the g#idelines permitting them !ere iss#ed in Lan#ar$ -JJ/(
T-e Indian Banking S'stem$
Banking in o#r "o#ntr$ is alread$ !itnessing the sea "hanges as the anking se"tor seeks
ne! te"hnolog$ and its appli"ations( The est port is that the enefits are eginning to
rea"h the masses( Earlier this domain !as the preser+e of +er$ fe! organi3ations( Moreign
anks !ith hea+$ in+estments in te"hnolog$ started gi+ing some BO#t of the !orldC
"#stomer ser+i"es( B#t% s#"h ser+i"es !ere a+ailale onl$ to sele"ted fe!F the +er$ large
a""o#nt holders( Then "ame the lierali3ation and !ith it a m#ltit#de of pri+ate anks% a
large segment of the #ran pop#lation no! re)#ires minimal time and spa"e for its
anking needs(
Credit Risk Management in State Bank Of India
A#tomated teller ma"hines or pop#larl$ kno!n as ATM are the three alphaets that ha+e
"hanged the "on"ept of anking like nothing efore( Instead of tellers handling $o#r o!n
"ash% toda$ there are effi"ient ma"hines that don&t talk #t *#st dispense "ash( Under the
Reser+e Bank of India A"t -J/0% anks are "lassified as s"hed#led anks and nonF
s"hed#led anks( The s"hed#led anks are those% !hi"h are entered in the Se"ond
S"hed#le of RBI A"t% -J/0( S#"h anks are those% !hi"h ha+e paidF #p "apital and
reser+es of an aggregate +al#e of not less then Rs(2 la"s and !hi"h satisf$ RBI that their
affairs are "arried o#t in the interest of their depositors( All "ommer"ial anks Indian and
Moreign% regional r#ral anks and state "oFoperati+e anks are S"hed#led anks( ;on
S"hed#led anks are those% !hi"h ha+e not een in"l#ded in the Se"ond S"hed#le of the
RBI A"t% -J/0(
The organi3ed anking s$stem in India "an e roadl$ "lassified into three "ategories< DiE
Commer"ial Banks DiiE Regional R#ral Banks and DiiiE CoFoperati+e anks( The Reser+e
Bank of India is the s#preme monetar$ and anking a#thorit$ in the "o#ntr$ and has the
responsiilit$ to "ontrol the anking s$stem in the "o#ntr$( It keeps the reser+es of all
"ommer"ial anks and hen"e is kno!n as the BReser*e BankC(
C.rrent s(enari)$/
C#rrentl$ D.88HE% the o+erall anking in India is "onsidered as fairl$ mat#re in terms of
s#ppl$% prod#"t range and rea"h F e+en tho#gh rea"h in r#ral India still remains a
"hallenge for the pri+ate se"tor and foreign anks( E+en in terms of )#alit$ of assets and
Capital ade)#a"$% Indian anks are "onsidered to ha+e "lean% strong and transparent
alan"e sheets F as "ompared to other anks in "omparale e"onomies in its region( The
Reser+e Bank of India is an a#tonomo#s od$% !ith minimal press#re from the
1o+ernment
Credit Risk Management in State Bank Of India
6ith the gro!th in the Indian e"onom$ e'pe"ted to e strong for )#ite some time
espe"iall$ in its ser+i"es se"tor% the demand for anking ser+i"es espe"iall$ retail
anking% mortgages and in+estment ser+i"es are e'pe"ted to e strong( Mergers 4
A")#isitions(% takeo+ers% are m#"h more in a"tion in India(
One of the "lassi"al e"onomi" f#n"tions of the anking ind#str$ that has remained
+irt#all$ #n"hanged o+er the "ent#ries is lending( On the one hand% "ompetition has had
"onsiderale ad+erse impa"t on the margins% !hi"h lenders ha+e en*o$ed% #t on the other
hand te"hnolog$ has to some e'tent red#"ed the "ost of deli+er$ of +ario#s prod#"ts and
ser+i"es(
Bank is a finan"ial instit#tion that orro!s mone$ from the p#li" and lends mone$ to the
p#li" for prod#"ti+e p#rposes( The Indian Banking Reg#lation A"t of -J0J defines the
term Banking Compan$ as NAn$ "ompan$ !hi"h transa"ts anking #siness in IndiaN and
the term anking as NA((e0ting f)r t-e 0.r0)se )f +ending a++ in*estment )f de0)sits1
)f m)ne' fr)m t-e 0.2+i(1 re0a'a2+e )n demand )r )t-er3ise and 3it-dra3a+ 2'
(-e4.e1 draft )r )t-er3ise56
Banks pla$ important role in e"onomi" de+elopment of a "o#ntr$% like<
• Banks moilise the small sa+ings of the people and make them a+ailale for
prod#"ti+e p#rposes(
• ,romotes the hait of sa+ings among the people there$ offering attra"ti+e rates of
interests on their deposits(
• ,ro+ides safet$ and se"#rit$ to the s#rpl#s mone$ of the depositors and as !ell
pro+ides a "on+enient and e"onomi"al method of pa$ment(
• Banks pro+ide "on+enient means of transfer of f#nd from one pla"e to another(
• >elps the mo+ement of "apital from regions !here it is not +er$ #sef#l to regions
!here it "an e more #sef#l(
Credit Risk Management in State Bank Of India
• Banks ad+an"es e'pos#re in trade and "ommer"e% ind#str$ and agri"#lt#re $
kno!ing their finan"ial re)#irements and prospe"ts(
• Bank a"ts as an intermediar$ et!een the depositors and the in+estors( Bank also a"ts
as mediator et!een e'porter and importer !ho does foreign trades(
Th#s Indian anking has "ome from a long !a$ from eing a sleep$ #siness instit#tion
to a highl$ proFa"ti+e and d$nami" entit$( This transformation has een largel$ ro#ght
ao#t $ the large dose of lierali3ation and e"onomi" reforms that allo!ed anks to
e'plore ne! #siness opport#nities rather than generating re+en#es from "on+entional
streams Di(e( orro!ing and lendingE( The anking in India is highl$ fragmented !ith /8
anking #nits "ontri#ting to almost 28: of deposits and 98: of ad+an"es(
Credit Risk Management in State Bank Of India
T-e Str.(t.re )f Indian Banking$
The Indian anking ind#str$ has Reser+e Bank of India as its Reg#lator$ A#thorit$( This
is a mi' of the ,#li" se"tor% ,ri+ate se"tor% CoFoperati+e anks and foreign anks( The
pri+ate se"tor anks are again split into old anks and ne! anks(
Reser*e Bank )f India
7Centra+ Bank8
S(-ed.+ed Banks
S"hed#led CoFoperati+e Banks
S"hed#led
Commer"ial Banks
,#li" Se"tor
Banks
;ationali3ed
Banks
SBI 4 its
Asso"iates
,ri+ate Se"tor
Banks
Old ,ri+ate
Se"tor Banks
Moreign
Banks
Regional
R#ral Banks
S"hed#led Uran
CoFOperati+e
Banks
S"hed#led State
CoFOperati+e Banks
;e! ,ri+ate
Se"tor Banks
Credit Risk Management in State Bank Of India
Chart Sho!ing Three =ifferent Se"tors of Banks
iE ,#li" Se"tor Banks
iiE ,ri+ate Se"tor Banks
,#li" Se"tor Banks
SBI and ;ationali3ed Regional R#ral
SUBSI=IARIES Banks Banks
SBI and s.2sidiaries
This gro#p "omprises of the State Bank of India and its se+en s#sidiaries +i3(%
State Bank of ,atiala% State Bank of >$deraad% State Bank of Tra+an"ore% State Bank of
Bikaner and Laip#r% State Bank of M$sore% State Bank of Sa#rashtra% State Bank of India
State Bank )f India DSBIE is the largest ank in India( If one meas#res $ the
n#mer of ran"h offi"es and emplo$ees% SBI is the largest ank in the !orld(
Estalished in -I89as Bank of Bengal it is the oldest "ommer"ial ank in the Indian
s#"ontinent( SBI pro+ides +ario#s domesti"% international and ;RI prod#"ts and
ser+i"es% thro#gh its +ast net!ork in India and o+erseas( 6ith an asset ase of O-.9
illion and its rea"h% it is a regional anking ehemoth( The go+ernment nationali3ed the
ank in-J22% !ith the Reser+e ank of India taking a 98: o!nership stake( In re"ent
$ears the ank has fo"#sed on t!o priorities% -E% red#"ing its h#ge staff thro#gh 1olden
handshakes"hemes kno!n as the Vol#ntar$ Retirement S"heme% !hi"h sa! man$ of its
est and rightest defe"t to the pri+ate se"tor% and .E% "omp#teri3ing its operations(
Credit Risk Management in State Bank Of India
The State Bank of India tra"es its roots to the first de"ade of-Jth "ent#r$% !hen the Bank
of "#l"#tta% later renamed theBank of engal% !as estalished on . *#n -I89( The
go+ernment amalgamatted Bank of Bengal and t!o other ,residen"$ anks% namel$% the
Bank of Boma$ and the ank of Madras% and named the reorgani3ed anking entit$ the
Imperial Bank of India( All these ,residen"$ anks !ere in"orporated as"ompanies% and
!ere the res#lt of thero$al "harters( The Imperial Bank of India "ontin#ed to remain a
*oint sto"k "ompan$( Until the estalishment of a "entral ank in India the Imperial Bank
and its earl$ prede"essors ser+ed as the nationPs "entral ank printing "#rren"$(
The State Bank of India A"t -J22% ena"ted $ the parliament of India% a#thori3ed the
Reser+e Bank of India% !hi"h is the "entral Banking Organisationof India% to a")#ire a
"ontrolling interest in the Imperial Bank of India% !hi"h !as renamed the State Bank of
India on/8th April -J22(
In re"ent $ears% the ank has so#ght to e'pand its o+erseas operations $ #$ing foreign
anks( It is the onl$ Indian ank to feat#re in the top -88 !orld anks in the Mort#ne
1loal 288 rating and +ario#s other rankings( A""ording to the Mores .888 listing it tops
all Indian "ompanies(
;ationali3ed anks
This gro#p "onsists of pri+ate se"tor anks that !ere nationali3ed( The 1o+ernment of
India nationali3ed -0 pri+ate anks in -J9J and another 9 in the $ear -JI8( In earl$ -JJ/%
there !ere .I nationali3ed anks i(e(% SBI and its H s#sidiaries pl#s .8 nationali3ed
anks( In -JJ/% the loss making ne! ank of India !as merged !ith profit making
,#n*a ;ational Bank( >en"e% no! onl$ .H nationali3ed anks e'ist in India(
Credit Risk Management in State Bank Of India
Regional R#ral anks
These !ere estalished $ the RBI in the $ear -JH2 of anking "ommission( It !as
estalished to operate e'"l#si+el$ in r#ral areas to pro+ide "redit and other fa"ilities to
small and marginal farmers% agri"#lt#ral laorers% artisans and small entreprene#rs(
Pri*ate Se(t)r Banks
Pri*ate Se(t)r Banks
Old pri+ate ne! pri+ate
Se"tor Banks Se"tor Banks
Old ,ri+ate Se"tor Banks
This gro#p "onsists of the anks that !ere estalishes $ the pri+$ se"tors% "ommittee
organi3ations or $ gro#p of professionals for the "a#se of e"onomi" etterment in their
operations( Initiall$% their operations !ere "on"entrated in a fe! regional areas( >o!e+er%
their ran"hes slo!l$ spread thro#gho#t the nation as the$ gro!(
;e! pri+ate Se"tor Banks
These anks !ere started as profit orient "ompanies after the RBI opened the anking
se"tor to the pri+ate se"tor( These anks are mostl$ te"hnolog$ dri+en and etter managed
than other anks(
Moreign anks
These are the anks that !ere registered o#tside India and had originated in a foreign
"o#ntr$( The ma*or parti"ipants of the Indian finan"ial s$stem are the "ommer"ial anks%
the finan"ial instit#tions DMIsE% en"ompassing termFlending instit#tions% in+estment
Credit Risk Management in State Bank Of India
instit#tions% spe"iali3ed finan"ial instit#tions and the stateFle+el de+elopment anks% ;onF
Bank Minan"ial Companies D;BMCsE and other market intermediaries s#"h as the sto"k
rokers and mone$Flenders( The "ommer"ial anks and "ertain +ariants of ;BMCs are
among the oldest of the market parti"ipants( The MIs% on the other hand% are relati+el$
ne! entities in the finan"ial market pla"e(
IMPORTA"CE OF BA"KI" SECTOR I" A RO,I" ECO"OM&
In the re"ent times !hen the ser+i"e ind#str$ is attaining greater importan"e "ompared to
man#fa"t#ring ind#str$% anking has e+ol+ed as a prime se"tor pro+iding finan"ial
ser+i"es to gro!ing needs of the e"onom$(
Banking ind#str$ has #ndergone a paradigm shift from pro+iding ordinar$ anking
ser+i"es in the past to pro+iding s#"h "ompli"ated and "r#"ial ser+i"es like% mer"hant
anking% ho#sing finan"e% ill dis"o#nting et"( This se"tor has e"ome more a"ti+e !ith
the entr$ of ne! pla$ers like pri+ate and foreign anks( It has also e+ol+ed as a prime
#ilder of the e"onom$ $ #nderstanding the needs of the same and en"o#raging the
de+elopment $ !a$ of gi+ing loans% pro+iding infrastr#"t#re fa"ilities and finan"ing
a"ti+ities for the promotion of entreprene#rs and other #siness estalishments(
Mor a fast de+eloping e"onom$ like o#rs% presen"e of a so#nd finan"ial s$stem to
moili3e and allo"ate sa+ings of the p#li" to!ards prod#"ti+e a"ti+ities is ne"essar$(
Commer"ial anks pla$ a "r#"ial role in this regard(
The Banking se"tor in re"ent $ears has in"orporated ne! prod#"ts in their #sinesses%
!hi"h are helpf#l for gro!th( The anks ha+e started to pro+ide feeFased ser+i"es like%
treas#r$ operations% managing deri+ati+es% options and f#t#res% a"ting as ankers to the
ind#str$ d#ring the p#li" offering% pro+iding "ons#ltan"$ ser+i"es% a"ting as an
intermediar$ et!een t!oF#siness entities et"(At the same time% the anks are rea"hing
Credit Risk Management in State Bank Of India
o#t to other end of "#stomer re)#irements like% ins#ran"e premi#m pa$ment% ta' pa$ment
et"( It has "hanged itself from transa"tion t$pe of anking into relationship anking%
!here $o# find friendl$ and )#i"k ser+i"e s#ited to $o#r needs( This is possile !ith
#nderstanding the "#stomer needs their +al#e to the ank% et"( This is possile !ith the
help of !ell organi3ed staff% "omp#ter ased net!ork for speed$ transa"tions% prod#"ts
like "redit "ard% deit "ard% health "ard% ATM et"( These are the present trend of ser+i"es(
The "#stomers at present ask for "on+enien"e of anking transa"tions% like .0 ho#rs
anking% !here the$ !ant to #tili3e the ser+i"es !hene+er there is a need( The
relationship anking pla$s a ma*or and important role in gro!th% e"a#se the "#stomers
no! ha+e eno#gh n#mer of opport#nities% and the$ "hoose a""ording to their
satisfa"tion of responses and re"ognition the$ get( So the anks ha+e to pla$ "a#tio#sl$%
else the$ ma$ lose o#t the pla"e in the market d#e to "ompetition% !here slightest of
opport#nities are "apt#red fast(
Another ma*or role pla$ed $ anks is in transnational #siness% transa"tions and
net!orking( Man$ leading Indian anks ha+e spread o#t their net!ork to other "o#ntries%
!hi"h help in "#rren"$ transfer and earn e'"hange o+er it(
These anks pla$ a ma*or role in "ommer"ial import and e'port #siness% et!een parties
of t!o "o#ntries( This foreign presen"e also helps in ringing in the international
standards of operations and ideas( The lierali3ation poli"$ of -JJ- has allo!ed man$
foreign anks to enter the Indian market and estalish their #siness( This has helped
large amo#nt of foreign "apital inflo! 4 in"rease o#r Moreign e'"hange reser+e(
Another emerging "hange happening all o+er the anking ind#str$ is "onsolidation
thro#gh mergers and a")#isitions( This helps the anks in strengthening their empire and
e'panding their net!ork of #siness in terms of +ol#me and effe"ti+eness(
Credit Risk Management in State Bank Of India
EMERI" SCE"ARIO I" THE BA"KI" SECTOR
The Indian anking s$stem has passed thro#gh three distin"t phases from the time of
in"eption( The first !as eing the era of "hara"ter anking% !here $o# !ere re"ogni3ed as
a "redile depositor or orro!er of the s$stem( This era "ome to an end in the si'ties( The
se"ond phase !as the so"ial anking( ;o!here in the demo"rati" de+eloped !orld% !as
anking or the ser+i"e ind#str$ nationali3ed( B#t this !as pra"ti"ed in India( Those !ere
the da$s !hen ankers has no "l#e !hatsoe+er as to ho! to determine the s"ale of finan"e
to ind#str$( The third era of anking !hi"h is in e'isten"e toda$ is "alled the era of
,r#dential Banking( The main fo"#s of this phase is on pr#dential norms a""epted
internationall$(
SBI r).0/
The Bank of Bengal% !hi"h later e"ame the State Bank of India( State Bank of India
!ith its se+en asso"iate anks "ommands the largest anking reso#r"es in India(
"ati)na+isati)n/
The ne't signifi"ant milestone in Indian Banking happened in late -J98s !hen the then
Indira 1andhi go+ernment nationali3ed on -J
th
L#l$ -J0J% -0 ma*or "ommer"ial Indian
anks follo!ed $ nationalisation of 9 more "ommer"ial Indian anks in -JI8(
The stated reason for the nationalisation !as more "ontrol of "redit deli+er$( After this%
#ntil -JJ8s% the nationalised anks gre! at a leis#rel$ pa"e of aro#nd 0: also "alled as
the >ind# gro!th of the Indian e"onom$(After the amalgamation of ;e! Bank of India
!ith ,#n*a ;ational Bank% "#rrentl$ there are -J nationalised anks in India(
Credit Risk Management in State Bank Of India
Li2era+i9ati)n/
In the earl$ -JJ8&s the then ;arasimha rao go+ernment emarked a poli"$ of
lierali3ation and ga+e li"en"es to a small n#mer of pri+ate anks% !hi"h "ame to e
kno!n as ;e! generation te"hFsa++$ anks% !hi"h in"l#ded anks like ICICI and >=MC(
This mo+e along !ith the rapid gro!th of the e"onom$ of India% ki"k started the anking
se"tor in India% !hi"h has seen rapid gro!th !ith strong "ontri#tion from all the se"tors
of anks% namel$ 1o+ernment anks% ,ri+ate Banks and Moreign anks( >o!e+er there
had een a fe! hi""#ps for these ne! anks !ith man$ either eing taken o+er like
1loal Tr#st Bank !hile others like Cent#rion Bank ha+e fo#nd the going to#gh(
The ne't stage for the Indian Banking has een set #p !ith the proposed rela'ation in the
norms for Moreign =ire"t In+estment% !here all Moreign In+estors in Banks ma$ e gi+en
+oting rights !hi"h "o#ld e'"eed the present "ap of -8:% at pesent it has gone #p to 0J:
!ith some restri"tions(
The ne! poli"$ shook the Banking se"tor in India "ompletel$( Bankers% till this time%
!ere #sed to the 0F9F0 method DBorro! at 0:K?end at 9:K1o home at 0E of f#n"tioning(
The ne! !a+e #shered in a modern o#tlook and te"hFsa++$ methods of !orking for
traditional anks(All this led to the retail oom in India( ,eople not *#st demanded more
from their anks #t also re"ei+ed more(
Credit Risk Management in State Bank Of India
C!RRE"T SCE"ARIO/
C#rrentl$ D.88HE% o+erall% anking in India is "onsidered as fairl$ mat#re in terms of
s#ppl$% prod#"t range and rea"hFe+en tho#gh rea"h in r#ral India still remains a "hallenge
for the pri+ate se"tor and foreign anks( E+en in terms of )#alit$ of assets and "apital
ade)#a"$% Indian anks are "onsidered to ha+e "lean% strong and transparent alan"e
sheetsFas "ompared to other anks in "omparale e"onomies in its region( The Reser+e
Bank of India is an a#tonomo#s od$% !ith minimal press#re from the go+ernment( The
stated poli"$ of the Bank on the Indian R#pee is to manage +olatilit$F!itho#t an$ stated
e'"hange rateFand this has mostl$ een tr#e(
6ith the gro!th in the Indian e"onom$ e'pe"ted to e strong for )#ite some timeF
espe"iall$ in its ser+i"es se"tor% the demand for anking ser+i"esFespe"iall$ retail
anking% mortgages and in+estment ser+i"es are e'pe"ted to e strong( M4As% takeo+ers%
asset sales and m#"h more a"tion Das it is #nra+elling in ChinaE !ill happen on this front
in India(
In Mar"h .889% the Reser+e Bank of India allo!ed 6ar#rg ,in"#s to in"rease its stake in
Gotak Mahindra Bank Da pri+ate se"tor ankE to -8
This is the first time an in+estor
has een allo!ed to hold more than 2: in a pri+ate se"tor ank sin"e the RBI anno#n"ed
norms in .882 that an$ stake e'"eeding 2: in the pri+ate se"tor anks !o#ld need to e
+etted $ them( C#rrentl$% India has II s"hed#led "ommer"ial anks DSCBsE F .I p#li"
se"tor anks Dthat is !ith the 1o+ernment of India holding a stakeE% .J pri+ate anks
Dthese do not ha+e go+ernment stakeK the$ ma$ e p#li"l$ listed and traded on sto"k
e'"hangesE and /- foreign anks( The$ ha+e a "omined net!ork of o+er 2/%888
ran"hes and -H%888 ATMs( A""ording to a report $ ICRA ?imited% a rating agen"$% the
p#li" se"tor anks hold o+er H2 per"ent of total assets of the anking ind#str$% !ith the
pri+ate and foreign anks holding -I(.: and 9(2: respe"ti+el$(
Credit Risk Management in State Bank Of India
Banking in India
- Central Bank Reser+e Bank of India
.
;ationalised Banks
State Bank of India% Allahaad Bank% Andhra Bank%
Bank of Baroda% Bank of India% Bank of
Maharastra%Canara Bank% Central Bank of India%
Corporation Bank% =ena Bank% Indian Bank% Indian
o+erseas Bank%Oriental Bank of Commer"e% ,#n*a and
Sind Bank% ,#n*a ;ational Bank% S$ndi"ate Bank%
Union Bank of India% United Bank of India% UCO
Bank%and Vi*a$a Bank(
/
,ri+ate Banks
Bank of Ra*astan% Bharath o+erseas Bank% Catholi"
S$rian Bank% Cent#rion Bank of ,#n*a% Cit$ Union
Bank% =e+elopment Credit Bank% =hanala'mi Bank%
Mederal Bank% 1anesh Bank of G#r#nd!ad% >=MC
Bank% ICICI Bank% I=BI% Ind#sInd Bank% I;1 V$s$a
Bank% Lamm# and Gashmir Bank% Garnataka Bank
?imited% Gar#r V$s$a Bank% Gotek Mahindra Bank%
?akshmi+ilas Bank% ?ord Grishna Bank% ;ainitak Bank%
Ratnakar Bank%Sangli Bank% SBI Commer"ial and
International Bank% So#th Indian Bank% Tamil ;ad#
Mer"hantile Bank ?td(% United 6estern Bank% UTI
Bank% YES Bank(
Credit Risk Management in State Bank Of India
COM,A;Y ,ROMI?E
Credit Risk Management in State Bank Of India
STATE BA"K OF I"#IA
;ot onl$ man$ finan"ial instit#tion in the !orld toda$ "an "laim the anti)#it$ and
ma*est$ of the State Bank Of India fo#nded nearl$ t!o "ent#ries ago !ith primaril$ intent
of imparting stailit$ to the mone$ market% the ank from its in"eption moili3ed f#nds
for s#pporting oth the p#li" "redit of the "ompanies go+ernments in the three
presiden"ies of British India and the pri+ate "redit of the E#ropean and India mer"hants
from ao#t -I98s !hen the Indian e"onom$ ook a signifi"ant leap for!ard #nder the
imp#lse of )#i"kened !orld "omm#ni"ations and ingenio#s method of ind#strial and
agri"#lt#ral prod#"tion the Bank e"ame intimatel$ in +al#ed in the finan"ing of
pra"ti"all$ and mining a"ti+it$ of the S#F Continent Altho#gh large E#ropean and Indian
mer"hants and man#fa"t#rers !ere #ndo#tedl$ thee prin"ipal enefi"iaries% the small
man ne+er ignored loans as lo! as Rs(-88 !ere dis#rsed in agri"#lt#ral distri"ts against
glad ornaments( Added to these the ank till the "reation of the Reser+e Bank in -J/2
"arried o#t n#mero#s Central 7 Banking f#n"tions(
Adaptation !orld and the needs of the ho#r has een one of the strengths of the Bank% In
the post depression e'e( Mor instan"e 7 !hen #siness opport#nities e"ome e'tremel$
restri"ted% r#les laid do!n in the ook of instr#"tions !ere relined to ens#re that good
#siness did not go post( Yet seldom did the ank "ontra+enes its +al#e as depart from
so#nd anking prin"iples to retain as e'pand its #siness( An inno+ati+e arra$ of offi"e%
#nkno!n to the !orld then% !as de+ised in the form of ran"hes% s# ran"hes% treas#r$
pa$ offi"e% pa$ offi"e% s# pa$ offi"e and o#t st#dents to e'ploit the opport#nities of an
e'panding e"onom$( ;e! #siness strateg$ !as also e+aded !a$ a"k in -J/H to render
the est anking ser+i"e thro#gh prompt and "o#rteo#s attention to "#stomers(
Credit Risk Management in State Bank Of India
A highl$ effi"ient and e'perien"ed management f#n"tioning in a !ell defined
organi3ational str#"t#re did not take long to pla"e the ank an e'e"#ted pedestal in the
areas of #siness% profitailit$% internal dis"ipline and ao+e all "rediilit$ A impe""ale
finan"ial stat#s "onsistent maintenan"e of the loft$ traditions if anking an oser+ation of
a high standard of integrit$ in its operations helped the ank gain a preF eminent stat#s(
;o !onders the administration for the ank !as #ni+ersal as ke$ f#n"tionaries of India
s#""essi+e finan"e minister of independent India Reso#r"e Bank of go+ernors and
representati+es of "hamer of "ommer"ial sho!ered e"onomi"s on it(
Modern da$ management te"hni)#es !ere also +er$ m#"h e+ident in the good old da$s
$ears efore "orporate go+ernan"e had e"ome a p#33led the anks o#nd f#n"tioned
!ith a high degree of responsiilit$ and "on"erns for the shareholders( An #nroken
re"ords of profits and a fairl$ high rate of profit and fairl$ high rate of di+idend all
thro#gh ens#red satisfa"tion% pr#dential management and asset liailit$ management not
onl$ prote"ted the interests of the Bank #t also ens#red that the oligations to "#stomers
!ere not met( The traditions of the past "ontin#ed to e #pheld e+en to this da$ as the
State Bank $ears itself to meet the emerging "hallenges of the millenni#m(
Credit Risk Management in State Bank Of India
ABO!T LOO
THE PLACE TO SHARE THE "E,S 666::
SHARE THE %IE,S ::
Togetherness is the theme of this "orporate loge of SBI !here the !orld of anking
ser+i"es meet the e+er "hanging "#stomers needs and estalishes a link that is like a
"ir"le% it indi"ates "omplete ser+i"es to!ards "#stomers( The logo also denotes a ank
that it has prepared to do an$thing to go to an$ lengths% for "#stomers(
The l#e pointer represent the philosoph$ of the ank that is al!a$s looking for the
gro!th and ne!er% more "hallenging% more promising dire"tion( The ke$ hole indi"ates
safet$ and se"#rit$(
Credit Risk Management in State Bank Of India
MISSIO"1 %ISIO" A"# %AL!ES
MISSIO" STATEME"T$
To retain the Bank&s position as premiere Indian Minan"ial Ser+i"e 1ro#p% !ith !orld
"lass standards and signifi"ant gloal "ommitted to e'"ellen"e in "#stomer% shareholder
and emplo$ee satisfa"tion and to pla$ a leading role in e'panding and di+ersif$ing
finan"ial ser+i"e se"tors !hile "ontaining emphasis on its de+elopment anking r#le(
%ISIO" STATEME"T$
? ,remier Indian Minan"ial Ser+i"e 1ro#p !ith prospe"ti+e !orldF"lass
Standards of effi"ien"$ and professionalism and instit#tional +al#es(
? Retain its position in the "o#ntr$ as pioneers in =e+elopment anking(
? Ma'imi3e the shareholders +al#e thro#gh highFs#stained earnings per
Share(
? An instit#tion !ith "#lt#ral m#t#al "are and "ommitment% satisf$ing and
1ood !ork en+ironment and "ontin#es learning opport#nities(
%AL!ES$
? E'"ellen"e in "#stomer ser+i"e
? ,rofit orientation
? Belonging "ommitment to Bank
? Mairness in all dealings and relations
Credit Risk Management in State Bank Of India
? Risk taking and inno+ati+e
? Team pla$ing
? ?earning and rene!al
? Integrit$
? Transparen"$ and =is"ipline in poli"ies and s$stems(
Credit Risk Management in State Bank Of India
ORA"ISATIO" STR!CT!RE
MA"AI" #IRECTOR
6 M 6M 6 M 6M 6M
;O0erati)ns< ;C=B< ;F=S< ;I< = C%O ;P=#<
9)na+ )ffi(ers
Functional Heads
CHIEF E"ERAL MA"AER
Credit Risk Management in State Bank Of India
Regional offi"ers
,RO=UCTS A;= SERVICES
Credit Risk Management in State Bank Of India
PRO#!CTS$
State Bank Of India renders +arieties of ser+i"es to "#stomers thro#gh the
follo!ing prod#"ts<
,ersonal ?oan ,rod#"t<
• SBI Term =eposits
• SBI Re"#rring =eposits
• SBI >o#sing ?oan
• SBI Car ?oan
• SBI Ed#"ational ?oan
• SBI ,ersonal ?oan
• SBI ?oan Mor ,ensioners
• ?oan Against Mortgage Of ,ropert$
• ?oan Against Shares 4 =eent#res
• Rent ,l#s S"heme
• MediF,l#s S"heme
• Rates Of Interest
SBI H).sing +)an
Credit Risk Management in State Bank Of India
SBI >o#sing loan or Mortgage ?oan s"hemes are designed to make it simple for $o# to
make a "hoi"e at least as far as finan"ing goesQ
>SBI/H)me L)ans>
feat.res$
• ;o "ap on ma'im#m loan amo#nt for p#r"haseA "onstr#"tion of ho#seA flat
• Option to "l# in"ome of $o#r spo#se and "hildren to "omp#te eligile loan
amo#nt
• ,ro+ision to "l# e'pe"ted rent a""r#als from propert$ proposed to "omp#te
eligile loan amo#nt
,ro+ision to finan"e "ost of f#rnishing and "ons#mer d#rales as part of pro*e"t
"ost
• Repa$ment permitted #pto H8 $ears of age
• Mree personal a""ident ins#ran"e "o+er
• Optional 1ro#p Ins#ran"e from SBI ?ife at "on"essional premi#m DUpfront
premi#m finan"ed as part of pro*e"t "ostE
• Interest applied on dail$ diminishing alan"e asis
• P,l#sP s"hemes !hi"h offer attra"ti+e pa"kages !ith "on"essional interest rates to
1o+t( Emplo$ees% Tea"hers% Emplo$ees in ,#li" Se"tor Oil Companies(
• Spe"ial s"heme to grant loans to finan"e Earnest Mone$ =eposits to e paid to
Uran =e+elopment A#thorit$A >o#sing Board% et"( in respe"t of allotment of
sitesA ho#seA flat
• ;o Administrati+e Charges or appli"ation fee
Credit Risk Management in State Bank Of India
• ,repa$ment penalt$ is re"o+ered onl$ if the loan is preF"losed efore half of the
original ten#re Dnot re"o+ered for #lk pa$ments pro+ided the loan is not "losedE
• ,ro+ision for do!n!ard refi'ation of EMI in respe"t of floating rate orro!ers
!ho a+ail >o#sing ?oans of Rs(2 la"s and ao+e% to a+ail the enefit of
do!n!ard re+ision of interest rate $ -: or more
• InFprin"iple appro+al iss#ed to gi+e $o# fle'iilit$ !hile negotiating p#r"hase of a
propert$
• ROption to a+ail loan at the pla"e of emplo$ment or at the pla"e of "onstr#"tion
• Attra"ti+e pa"kages in respe"t of loans granted #nder tieF#p !ith CentralA State
1o+ernmentsA ,SUsA rep#ted "orporates and tieF#p !ith rep#ted #ilders D,lease
"onta"t $o#r nearest ran"h for detailsE
SER%ICES$
? =OMESTIC TREASURY
? SBI VIS>6A YATRA MOREI1; TRAVE? CAR=
? BROGI;1 SERVICES
? REVISE= SERVICE C>AR1ES
? ATM SERVICES
? I;TER;ET BA;GI;1
? EF,AY
? EFRAI?
? RBIEMT
? SAME =E,OSIT ?OCGER
? 1IMT C>ESUES
? MICR CO=ES
MOREI1; I;6AR= REMITTA;CES
Credit Risk Management in State Bank Of India
ATM SER%ICES
STATE BA"K "ET,ORKE# ATM SER%ICES
State Bank offers $o# the "on+enien"e of o+er I888 ATMs in India% the largest net!ork in
the "o#ntr$ and "ontin#ing to e'pand fastQ This means that $o# "an transa"t free of "ost at
the ATMs of State Bank 1ro#p DThis in"l#des the ATMs of State Bank of India as !ell as
the Asso"iate Banks 7 namel$% State Bank of Bikaner 4 Laip#r% State Bank of >$deraad%
State Bank of Indore% State Bank of M$sore% State Bank of ,atiala% State Bank of
Sa#rashtra% and State Bank of Tra+an"oreE and !holl$ o!ned s#sidiar$ +i3( SBI
Commer"ial and International Bank ?td(% #sing the State Bank ATMF"#mF=eit DCash
,l#sE "ard(
KI"#S OF CAR#S ACCEPTE# AT STATE BA"K ATMs
Besides State Bank ATMFC#mF=eit Card and State Bank International ATMFC#mF=eit
Cards follo!ing "ards are also a""epted at State Bank ATMs< F
-E State Bank Credit Card
.E ATM Cards iss#ed $ Banks #nder ilateral sharing +i3( Andhra Bank%A'is
Bank% Bank of India% The Bank of Ra*asthan ?td(% Canara Bank% Corporation Bank% =ena
Credit Risk Management in State Bank Of India
Bank% >=MC Bank% Indian Bank% Ind#s Ind Bank% ,#n*a ;ational Bank% UCO Bank
and Union Bank of India(
/E Cards iss#ed $ anks Dother than anks #nder ilateral sharingE displa$ing Maestro%
Master Card% Cirr#s% VISA and VISA Ele"tron logos
0E All =eitA Credit Cards iss#ed $ an$ ank o#tside India displa$ing Maestro% Master
Card% Cirr#s% VISA and VISA Ele"tron logos
;ote< If $o# are a "ardholder of ank other than State Bank 1ro#p% kindl$ "onta"t $o#r
Bank for the "harges re"o+erale for #sage of State Bank ATMs(
STATE BA"K I"TER"ATIO"AL ATM/C!M/#EBIT CAR#
E+igi2i+it'$
All Sa+ing Bank and C#rrent A""o#nt holders ha+ing a""o#nts !ith net!orked ran"hes
and are<
Credit Risk Management in State Bank Of India
• -I $ears of age 4 ao+e
• A""o#nt t$pe< Sole or Loint !ith BEither or S#r+i+orC A BAn$one or S#r+i+orC
• ;RE a""o#nt holders are also eligile #t ;RO a""o#nt holders are not(
Benefits$
• TCon+enien"e to the "#stomers tra+eling o+erseas
• TCan e #sed as =omesti" ATMF"#mF=eit Card
• ?A+ailale at a nominal *oining fee of Rs( .88AF
• T=ail$ limit of US O -888 or e)#i+alent at the ATM and US O -888 or e)#i+alent at
,oint of Sale D,OSE terminal for deit transa"tion
• ,#r"hase ,rote"tionU#p to Rs( 2888AF and ,ersonal A""ident "o+erU#p to Rs(
.%88%888AF
• TCharges for #sage aroad< Rs( -28V Ser+i"e Ta' per "ash !ithdra!al Rs( -2 V
Ser+i"e Ta' per en)#ir$(
State Bank ATM/(.m/#e2it ;State Bank Cas- 0+.s< Card<
India&s largest ank is pro#d to offer $o# #nparalleled "on+enien"e +i3( State Bank ATMF
"#mF=eitDCash ,l#sE "ard( 6ith this "ard% there is no need to "arr$ "ash in $o#r !allet(
Yo# "an no! !ithdra! "ash and make p#r"hases an$time $o# !ish to !ith $o#r ATMF
"#mF=eit Card(
1et an ATMF"#mF=eit "ard !ith !hi"h $o# "an transa"t for MREE at an$ of o+er I888
ATMs of State Bank 1ro#p !ithin o#r "o#ntr$(
SBI OL# I"TER"ATIO"AL #EBIT CAR#S
Credit Risk Management in State Bank Of India
E/PA&
Bill ,a$ment at Online SBI DeF,a$E !ill let $o# to pa$ $o#r Telephone% Moile%
Ele"tri"it$% Ins#ran"e and Credit Card ills ele"troni"all$ o+er o#r Online SBI !esite
E/RAIL
B))k ').r Rai+3a's Ti(ket On+ine6
The fa"ilit$ has een la#n"hed !ef Ist Septemer .88/ in asso"iation !ith IRCTC(
The s"heme fa"ilitates Booking of Rail!a$s Ti"ket Online(
T-e sa+ient feat.res )f t-e s(-eme are as .nder$
• All Internet anking "#stomers "an #se the fa"ilit$(
• On gi+ing pa$ment option as SBI% the #ser !ill e redire"ted to onlinesi("om(
After logging on to the site $o# !ill e displa$ed pa$ment amo#nt% TI= ;o( and
Rail!a$ referen"e no(
Credit Risk Management in State Bank Of India
• ( The ti"ket "an e deli+ered or "olle"ted $ the "#stomer(
• The #ser "an "olle"t the ti"ket personall$ at ;e! =elhi reser+ation "o#nter (
• The ,a$ment amo#nt !ill in"l#de ti"ket fare in"l#ding reser+ation "harges%
"o#rier "harges and Bank Ser+i"e fee of Rs -8A( The Bank ser+i"e fee has een
!ai+ed #nto /-st L#l$ .889(
SAFE #EPOSIT LOCKER
Mor the safet$ of $o#r +al#ales !e offer o#r "#stomers safe deposit +a#lt or lo"ker
fa"ilities at a large n#mer of o#r ran"hes( There is a nominal ann#al "harge% !hi"h
depends on the si3e of the lo"ker and the "entre in !hi"h the ran"h is lo"ated(
"RI HOME LOA"
SALIE"T FEAT!RES
P.r0)se )f L)an
?oans to ;RIs 4 ,IOs "an e e'tended for the follo!ing p#rposes(
• To p#r"haseA"onstr#"t a ne! ho#se A flat
• To repair% reno+ate or e'tend an e'isting ho#seAflat
Credit Risk Management in State Bank Of India
• To p#r"hase an e'isting ho#seAflat
• To p#r"hase a plot for "onstr#"tion of a d!elling #nit(
• To p#r"hase f#rnishings and "ons#mer d#rales% as a part of the pro*e"t "ost
ARIC!LT!RE ? R!RAL
State Bank )f India Caters to the needs of agri"#lt#rists and landless agri"#lt#ral
lao#rers thro#gh a net!ork of 9988 r#ral and semiF#ran ran"hes( here are JH.
spe"iali3ed ran"hes !hi"h ha+e een set #p in different parts of the "o#ntr$ e'"l#si+el$
for the de+elopment of agri"#lt#re thro#gh "redit deplo$ment( These ran"hes in"l#de
0.H Agri"#lt#ral =e+elopment Bran"hes DA=BsE and 20H ran"hes !ith =e+elopment
Banking =epartment D=B=sE !hi"h "ater to agri"#lt#rists and . Agri"#lt#ral B#siness
Bran"hes at Chennai and >$deraad "atering to the needs of hite"h "ommer"ial
agri"#lt#ral pro*e"ts(
T>EORETICA? BACG1ROU;= OM CRE=IT RISG MA;A1EME;T
CRE#IT$
The !ord 5"redit& "omes from the ?atin !ord 5"redere&% meaning 5tr#st&( 6hen
sellers transfer his !ealth to a #$er !ho has agreed to pa$ later% there is a "lear
impli"ation of tr#st that the pa$ment !ill e made at the agreed date( The "redit period
and the amo#nt of "redit depend #pon the degree of tr#st(
Credit is an essential marketing tool( It ears a "ost% the "ost of the seller ha+ing to
orro! #ntil the "#stomers pa$ment arri+es( Ideall$% that "ost is the pri"e #t% as most
"#stomers pa$ later than agreed% the e'tra #nplanned "ost erodes the planned net profit(
RISK $
Risk is defined as #n"ertain res#lting in ad+erse o#t "ome% ad+erse in relation to
planned o*e"ti+e or e'pe"tation( It is +er$ diffi"#lt o find a risk free in+estment( An
Credit Risk Management in State Bank Of India
important inp#t to risk management is risk assessment( Man$ p#li" odies s#"h as
ad+isor$ "ommittees "on"erned !ith risk management( There are mainl$ three t$pes
of risk the$ are follo!s
• Market risk
• Credit Risk
• sOperational risk
Risk anal$sis and allo"ation is "entral to the design of an$ pro*e"t finan"e% risk
management is of paramo#nt "on"ern( Th#s )#antif$ing risk along !ith profit
pro*e"tions is #s#all$ the first step in ga#ging the feasiilit$ of the pro*e"t( on"e
risk ha+e een identified the$ "an e allo"ated to parti"ipants and appropriate
me"hanisms p#t in pla"e(
MARKET RISK$
Market risk is the risk of ad+erse de+iation of the mark to market +al#e of the trading
portfolio% d#e to market mo+ement% d#ring the period re)#ired to li)#idate the
transa"tions(
Financial
Risks
Operational Risk
Market Risk
Credit Risk
T$pes of Minan"ial Risks
Credit Risk Management in State Bank Of India
OPERTIO"AL RISK$
Operational risk is one area of risk that is fa"ed $ all organi3ation s( More "omple' the
organi3ation more e'posed it !o#ld e operational risk( This risk arises d#e to de+iation
from normal and planned f#n"tioning of the s$stem pro"ed#res% te"hnolog$ and h#man
fail#re of omission and "ommission( Res#lt of de+iation from normal f#n"tioning is
refle"ted in the re+en#e of the organi3ation% either $ the !a$ of additional e'penses or
$ !a$ of loss of opport#nit$(
CRE#IT RISK$
Credit risk is defined as the potential that a ank orro!er or "o#nterpart$ !ill fail to
meet its oligations in a""ordan"e !ith agreed terms% or in other !ords it is defined as the
risk that a firm&s "#stomer and the parties to !hi"h it has lent mone$ !ill fail to make
promised pa$ments is kno!n as "redit risk
The e'pos#re to the "redit risks large in "ase of finan"ial instit#tions% s#"h "ommer"ial
anks !hen firms orro! mone$ the$ in t#rn e'pose lenders to "redit risk% the risk that
the firm !ill defa#lt on its promised pa$ments( As a "onse)#en"e% orro!ing e'poses the
firm o!ners to the risk that firm !ill e #nale to pa$ its det and th#s e for"ed to
ankr#pt"$(
CO;TRIBUTORS OM CRE=IT RISG<
• Corporate assets
• Retail assets
• ;onFS?R portfolio
• Ma$ res#lt from trading and anking ook
• Inter ank transa"tions
• =eri+ati+es
• Settlement% et"
Credit Risk Management in State Bank Of India
GEY E?EME;TS OM CRE=IT RISG MA;A1EME;T<
• Estalishing appropriate "redit risk en+ironment
• Operating #nder so#nd "redit granting pro"ess
• Maintaining an appropriate "redit administration% meas#rement 4 Monitoring
• Ens#ring ade)#ate "ontrol o+er "redit risk
• Banks sho#ld ha+e a "redit risk strateg$ !hi"h in o#r "ase is "omm#ni"ated
thro#gho#t the organi3ation thro#gh "redit poli"$(
T!o f#ndamental approa"hes to "redit risk managementonest$
? ?e+el of interest A "ommitment in pro*e"t
? Asso"iate "on"erns
Te(-ni(a+ Feasi2i+it' <
? ?o"ation
? Si3e of the ,ro*e"t
? Ma"tor$ #ilding
? ,lant 4 Ma"hiner$
? ,ro"ess 4 Te"hnolog$
? Inp#ts A #tilities
( C)mmer(ia+ %ia2i+it' <
? =emand fore"asting A Anal$sis
? Market s#r+e$
? ,ri"ing poli"ies
? Competition
Credit Risk Management in State Bank Of India
?
? E'port poli"ies
Finan(ia+ %ia2i+it'$
? 6hether ade)#ate f#nds are a+ailale at affordale "ost to implement the pro*e"t
? 6hether s#ffi"ient profits !ill e a+ailale
? 6hether BE, or margin of safet$ are satisfa"tor$
? 6hat !ill e the o+erall finan"ial position of the orro!er in "oming $ears(
Credit in*estigati)n re0)rt
Bran"h prepares Credit in+estigation report in order to a+oid "onse)#en"e in later stage
Credit in+estigation report sho#ld e a part of "redit proposal( Bank has to s#mit the
d#l$ "ompleted "redit in+estigation reports after "ond#"ting a detailed "redit in+estigation
as per g#idelines(
S)me )f t-e g.ide+ines in t-is regards as f)++)3$
? 6here+er a proposal is to e "onsidered ased onl$ on merits of flagships
"on"erns of the gro#p% then s#"h s#pport sho#ld also e "ompiled in respe"t of
s#*e"t flagship in "on"ern esides the appli"ant "ompan$(
? In regard of proposals falling e$ond the po!er of rating offi"er% the ran"h
sho#ld ens#re parti"ipation of rating offi"er in "ompilation of this report(
? The "redit in+estigation report sho#ld a""ompan$ all the proposals !ith the f#nd
ased limit of ao+e .2 ?akhs and or non f#nd ased of ao+e Rs( 28 ?akhs(
Credit Risk Management in State Bank Of India
? The part$ ma$ e s#ital$ kept informed that the "ompilation of this report is one
of the re)#irements in the "onne"tion !ith the pro"essing for "onsideration of the
proposal(
? The ran"h sho#ld otain a "op$ of latest san"tion letter $ e'isting anker or the
finan"ial instit#tion to the part$ and terms and "onditions of the san"tion sho#ld
st#died in detail(
? Comments sho#ld e made !here+er ne"essar$% after making the
oser+ationsAlapses in the follo!ing terms of san"tion(
? Some of the important fa"tors like f#nding of interest% re s"hed#le of loans et"
terms and "onditions sho#ld e highlighted(
? Cop$ of statement of a""o#nts for the latest 9 months period sho#ld e otained
$ the ank( To get the present "ondition of the part$(
? Remarks sho#ld e made $ the ank on ad+erse feat#res oser+ed( De(g(% e'"ess
dra!ings% ret#rn of "he)#es et"E(
? ,ersonal en)#ir$ sho#ld e made $ the ank offi"ial !ith responsile offi"ial of
part$&s present A other ankers and en)#iries sho#ld e made !ith a eli"it
information on "ond#"t of a""o#nt et"(
? Care sho#ld e taken in sele"tion of "#stomers or "reditors !ho a"ts as the
representati+e( The$ sho#ld e inter+ie!ed and "ompilation of opinion sho#ld e
done(
? En)#iries sho#ld e made regarding the )#alit$ of prod#"t% pa$ment terms% and
period of o+erd#e !hi"h sho#ld e mentioned "learl$ in the report( En)#ir$
sho#ld e aimed to as"ertain the stat#s of trading of the appli"ant and to kno!
their "apailit$ to meet their "ommitments in time(
? To kno! the market trend ran"h sho#ld en)#ire the person or ind#str$ that is in
the same line of #siness a"ti+it$(
? In depth oser+ation ma$ e made of the appli"ant as to <
i( !hether the #nit is !orking in f#ll s!ing
ii( n#mer of shifts and n#mer of emplo$ees
iii( an$ osolete sto"ks !ith the #nit
Credit Risk Management in State Bank Of India
i+( "apa"it$ of the #nit
+( nat#re and "onditions of the ma"hiner$ installed
+i( Information on po!er% !ater and poll#tion "ontrol et"(
+ii( information on ind#strial relation and marketing strateg$
CRE#IT FILES$/
It&s the file% !hi"h pro+ides important so#r"e material for loan s#per+ision in regard to
information for internal re+ie! and e'ternal a#dit( Bran"h has to maintain separate "redit
file "omp#lsoril$ in "ase of ?oans e'"eeding Rs 28 ?akhs !hi"h sho#ld e maintained
for )#i"k a""ess of the related information(
C)ntents )f t-e (redit fi+eo! m#"h of that e'pos#re
is the ank going to loseY
/( >o! m#"h of that e'pos#re
is the ank going to loseY
?oss 1i+en =efa#lt
BSe+erit$C
E?
,=
Ea=
?1=
X
X
.( >o! m#"h !ill e the
likel$
e'pos#re in the "ase the ad+an"e
e"omes ;,AY
.( >o! m#"h !ill e the
likel$
e'pos#re in the "ase the ad+an"e
e"omes ;,AY
\
\
Credit Risk Management in State Bank Of India
• Mor E'pos#res !ith a "ontra"t#al mat#rit$ of less than or e)#al to one $ear
;eD(e0t Cas- Credit1 O*erdraft and )t-er Re*)+*ing Credits< ShortFterm
Ratings gi+en $ ECAIs !ill e appli"ale(
• Mor =omesti" Cash Credit% O+erdraft and other Re+ol+ing Credits irrespe"ti+e of
the period and Term ?oan e'pos#res of o+er - $ear% ?ong Term Ratings gi+en $
ECAIs !ill e appli"ale(
• Mor O+erseas e'pos#res% irrespe"ti+e of the "ontra"t#al mat#rit$% ?ong Term
Ratings gi+en $ IRAs !ill e appli"ale(
• Rating assigned to one parti"#lar entit$ !ithin a "orporate gro#p "annot e #sed
to risk !eight other entities !ithin the same gro#p(
COMPETITORS #ETAILS
Credit Risk Management in State Bank Of India
In =har!ad Main "ompetitors of State Bank of India are ICICI Bank in pri+ate
se"tor anks and S$ndi"ate Bank and Corporation Bank In p#li" se"tor(
In SBI% it "an e etter #nderstood !ith gi+en ,ie diagram as follo!s(
The exposure to the credit risks large in case of financial institutions, such commercial banks when firms borrow money they in turn expose lenders to credit risk, the risk that the firm will default on its promised payments
Credit Risk Management in State Bank Of India
EXECUTIVE SUMMARY
Credit Risk Management in State Bank Of India
TITLE OF THE PROJECT
“Credit Risk Management in State Bank Of India”
BACKRO!"# OF PROJECT TOPIC$
Credit risk is defined as the potential that a ank orro!er or "o#nterpart$ !ill
fail to meet its oligations in a""ordan"e !ith agreed terms% or in other !ords it is defined
as the risk that a firm&s "#stomer and the parties to !hi"h it has lent mone$ !ill fail to
make promised pa$ments is kno!n as "redit risk
The e'pos#re to the "redit risks large in "ase of finan"ial instit#tions% s#"h
"ommer"ial anks !hen firms orro! mone$ the$ in t#rn e'pose lenders to "redit risk%
the risk that the firm !ill defa#lt on its promised pa$ments( As a "onse)#en"e% orro!ing
e'poses the firm o!ners to the risk that firm !ill e #nale to pa$ its det and th#s e
for"ed to ankr#pt"$(
IMPORTA"CE OF THE PROJECT
The pro*e"t helps in #nderstanding the "lear meaning of "redit Risk Management In State
Bank Of India( It e'plains ao#t the "redit risk s"oring and Rating of the Bank( And also
St#d$ of "omparati+e st#d$ of Credit ,oli"$ !ith that of its "ompetitor helps in
#nderstanding the fair "redit poli"$ of the Bank and Credit Re"o+er$ management of the
Banks and also its ke$ "ompetitors(
Credit Risk Management in State Bank Of India
OBJECTI%ES OF PROJECT
-( To St#d$ the "omplete str#"t#re and histor$ of State Bank Of India(
.( To kno! the different methods a+ailale for "redit Rating and #nderstanding the
"redit rating pro"ed#re #sed in State Bank Of India(
/( To gain insights into the "redit risk management a"ti+ities of the State Bank Of
India(
0( To kno! the RBI 1#idelines regarding "redit rating and risk anal$sis(
2( St#d$ing the "redit poli"$ adopted Comparati+e anal$ses of ,#li" se"tor and
pri+ate se"tor(
METHO#OLO&$
#ATA COLLECTIO" METHO#
To f#lfill the o*e"ti+es of m$ st#d$% I ha+e taken oth into "onsiderations +i3 primar$ 4
se"ondar$ data(
Primar' data$ ,rimar$ data has een "olle"ted thro#gh personal inter+ie! $ dire"t
"onta"t method( The method !hi"h !as adopted to "olle"t the information is 5,ersonal
Inter+ie!’ method(
,ersonal inter+ie! and dis"#ssion !as made !ith manager and other personnel in
the organi3ation for this p#rpose(
Se()ndar' data$ The data is "olle"ted from the Maga3ines% Ann#al reports% Internet%
Te't ooks(
The +ario#s so#r"es that !ere #sed for the "olle"tion of se"ondar$ data are
Credit Risk Management in State Bank Of India
o Internal files 4 materials
o 6esites 7 Vario#s sites like !!!( sharekhan("om
!!!(indiainfoline("om
!!!(si("o(in
!!!(in+estopedia("om
!!!((!ikepedia("om and other site
Findings$
• ,ro*e"t findings re+eal that SBI is san"tioning less Credit to agri"#lt#re% as
"ompared !ith its ke$ "ompetitor&s +i3(% Canara Bank% Corporation Bank%
S$ndi"ate Bank
• Re()*er' )f Credit$ SBI re"o+er$ of Credit d#ring the $ear .889 is 9.(0:
Compared to other Banks SBI 5s re"o+er$ poli"$ is +er$ good% hen"e this red#"es
;,A
• T)ta+ Ad*an(es$ As "ompared total ad+an"es of SBI is in"reased $ear $ $ear(
• State Bank Of India is granting "redit in all se"tors in an E)#ated Monthl$
Installments so that an$ od$ "an orro! mone$ easil$
• ,ro*e"t findings re+eal that State Bank Of India is lending more "redit or
san"tioning more loans as "ompared to other Banks(
• State ank Of India is e'panding its Credit in the follo!ing fo"#s areas<
-( SBI Term =eposits
.( SBI Re"#rring =eposits
/( SBI >o#sing ?oan
0( SBI Car ?oan
2( SBI Ed#"ational ?oan
Credit Risk Management in State Bank Of India
9( SBI ,ersonal ?oan @et"
• In "ase of indire"t agri"#lt#re ad+an"es% SBI is granting /(-: of ;et Banks
Credit% !hi"h is less as "ompared to Canara Bank% S$ndi"ate Bank and
Corporation Bank( SBI has to entertain indire"t se"tors of agri"#lt#re so that it
"an ha+e more n#mer of orro!ers for the Bank(
• SBI&s dire"t agri"#lt#re ad+an"es as "ompared to other anks is -8(2: of the ;et
Bank&s Credit% !hi"h sho!s that Bank has not lent eno#gh "redit to dire"t
agri"#lt#re se"tor(
• Credit risk management pro"ess of SBI #sed is +er$ effe"ti+e as "ompared !ith
other anks(
RECOMME"#ATIO"S$
• The Bank sho#ld keep on re+ising its Credit ,oli"$ !hi"h !ill help Bank&s effort to
"orre"t the "o#rse of the poli"ies
• The Chairman and Managing =ire"torAE'e"#ti+e =ire"tor sho#ld make
modifi"ations to the pro"ed#ral g#idelines re)#ired for implementation of the
Credit ,oli"$ as the$ ma$ e"ome ne"essar$ from time to time on a""o#nt of
organi3ational needs(
• Banks has to grant the loans for the estalishment of #siness at a moderate rate of
interest( Be"a#se of this% the people "an repa$ the loan amo#nt to ank reg#larl$
and promptl$(
• Bank sho#ld not iss#e entire amo#nt of loan to agri"#lt#re se"tor at a time% it
sho#ld release the loan in installments( If the "limati" "onditions are good then
the$ ha+e to release remaining amo#nt(
• SBI has to red#"e the Interest Rate(
Credit Risk Management in State Bank Of India
• SBI has to entertain indire"t se"tors of agri"#lt#re so that it "an ha+e more n#mer
of orro!ers for the Bank(
CO"CL!SIO"$
The pro*e"t #ndertaken has helped a lot in gaining kno!ledge of the BCredit ,oli"$ and
Credit Risk ManagementC in ;ationali3ed Bank !ith spe"ial referen"e to State Bank Of
India( Credit ,oli"$ and Credit Risk ,oli"$ of the Bank has e"ome +er$ +ital in the
smooth operation of the anking a"ti+ities( Credit ,oli"$ of the Bank pro+ides the
frame!ork to determine DaE !hether or not to e'tend "redit to a "#stomer and DE ho!
m#"h "redit to e'tend( The ,ro*e"t !ork has "ertainl$ enri"hed the kno!ledge ao#t the
effe"ti+e management of BCredit ,oli"$C and BCredit Risk ManagementC in anking
se"tor(
• BCredit ,oli"$C and BCredit Risk ManagementC is a +ast s#*e"t and it is +er$
diffi"#lt to "o+er all the aspe"ts !ithin a short period( >o!e+er% e+er$ effort has
een made to "o+er most of the important aspe"ts% !hi"h ha+e a dire"t earing
on impro+ing the finan"ial performan"e of Banking Ind#str$
• To s#m #p% it !o#ld not e o#t of !a$ to mention here that the State Bank Of
India has gi+en spe"ial inp#ts on BCredit ,oli"$C and BCredit Risk
ManagementC( In p#rs#an"e of the instr#"tions and g#idelines iss#ed $ the
Reser+e Bank of India% the State ank Of India is granting and e'panding "redit
to all se"tors(
• The "on"erted efforts p#t in $ the Management and Staff of State Bank Of
India has helped the Bank in a"hie+ing remarkale progress in almost all the
important parameters( The Bank is mar"hing ahead in the dire"tion of a"hie+ing
the ;#merF- position in the Banking Ind#s
Credit Risk Management in State Bank Of India
BA;GI;1 I;=USTRY OVERVIE6
Credit Risk Management in State Bank Of India
I"#!STR& O%ER%IE,
Hist)r'$
Banking in India has its origin as "arr$ as the Vedi" period( It is elie+ed that the
transition from mone$ lending to anking m#st ha+e o""#rred e+en efore Man#% the
great >ind# *#rist% !ho has de+oted a se"tion of his !ork to deposits and ad+an"es and
laid do!n r#les relating to the interest( =#ring the mogal period% the indigeno#s ankers
pla$ed a +er$ important role in lending mone$ and finan"ing foreign trade and
"ommer"e( =#ring the da$s of East India Compan$% it !as to t#rn of the agen"$ ho#ses
top "arr$ on the anking #siness( The general ank of India !as the first *oint sto"k ank
to e estalished in the $ear -HI9(The others !hi"h follo!ed !ere the Bank of >ind#stan
and the Bengal Bank( The Bank of >ind#stan is reported to ha+e "ontin#ed till -J89%
!hile the other t!o failed in the meantime( In the first half of the -J
th
Cent#r$ the East
India Compan$ estalished three anksK The Bank of Bengal in -I8J% The Bank of
Boma$ in -I08 and The Bank of Madras in -I0/(These three anks also kno!n as
presiden"$ anks and !ere independent #nits and f#n"tioned !ell( These three anks
!ere amalgamated in -J.8 and The Imperial Bank of India !as estalished on the .H
th
Lan -J.-% !ith the passing of the SBI A"t in -J22% the #ndertaking of The Imperial Bank
of India !as taken o+er $ the ne!l$ "onstit#ted SBI( The Reser+e Bank !hi"h is the
Central Bank !as "reated in -J/2 $ passing of RBI A"t -J/0% in the !ake of s!adeshi
mo+ement% a n#mer of anks !ith Indian Management !ere estalished in the "o#ntr$
namel$ ,#n*a ;ational Bank ?td% Bank of India ?td% Canara Bank ?td% Indian Bank ?td%
The Bank of Baroda ?td% The Central Bank of India ?td (On L#l$ -J
th
-J9J% -0 Ma*or
Banks of the "o#ntr$ !ere nationali3ed and in -2
th
April -JI8 si' more "ommer"ial
pri+ate se"tor anks !ere also taken o+er $ the go+ernment( The Indian Banking
ind#str$% !hi"h is go+erned $ the Banking Reg#lation A"t of India -J0J% "an e roadl$
"lassified into t!o ma*or "ategories% nonFs"hed#led anks and s"hed#led anks(
S"hed#led Banks "omprise "ommer"ial anks and the "oFoperati+e anks(
Credit Risk Management in State Bank Of India
The first phase of finan"ial reforms res#lted in the nationali3ation of -0 ma*or anks in
-J9J and res#lted in a shift from "lass anking to mass anking( This in t#rn res#lted in
the signifi"ant gro!th in the geographi"al "o+erage of anks( E+er$ ank had to earmark
a min per"entage of their loan portfolio to se"tors identified as Bpriorit$ se"torsC the
man#fa"t#ring se"tor also gre! d#ring the -JH8&s in prote"ted en+ironments and the
anking se"tor !as a "riti"al so#r"e( The ne't !a+e of reforms sa! the nationali3ation of
9 more "ommer"ial anks in -JI8 sin"e then the n#mer of s"hed#led "ommer"ial anks
in"reased fo#rF fold and the n#mer of ank ran"hes in"reased to eight fold(
After the se"ond phase of finan"ial se"tor reforms and lierali3ation of the se"tor in the
earl$ nineties( The ,SB&s fo#nd it e'tremel$ diffi"#lt to "omplete !ith the ne! pri+ate
se"tor anks and the foreign anks( The ne! pri+ate se"tor first made their appearan"e
after the g#idelines permitting them !ere iss#ed in Lan#ar$ -JJ/(
T-e Indian Banking S'stem$
Banking in o#r "o#ntr$ is alread$ !itnessing the sea "hanges as the anking se"tor seeks
ne! te"hnolog$ and its appli"ations( The est port is that the enefits are eginning to
rea"h the masses( Earlier this domain !as the preser+e of +er$ fe! organi3ations( Moreign
anks !ith hea+$ in+estments in te"hnolog$ started gi+ing some BO#t of the !orldC
"#stomer ser+i"es( B#t% s#"h ser+i"es !ere a+ailale onl$ to sele"ted fe!F the +er$ large
a""o#nt holders( Then "ame the lierali3ation and !ith it a m#ltit#de of pri+ate anks% a
large segment of the #ran pop#lation no! re)#ires minimal time and spa"e for its
anking needs(
Credit Risk Management in State Bank Of India
A#tomated teller ma"hines or pop#larl$ kno!n as ATM are the three alphaets that ha+e
"hanged the "on"ept of anking like nothing efore( Instead of tellers handling $o#r o!n
"ash% toda$ there are effi"ient ma"hines that don&t talk #t *#st dispense "ash( Under the
Reser+e Bank of India A"t -J/0% anks are "lassified as s"hed#led anks and nonF
s"hed#led anks( The s"hed#led anks are those% !hi"h are entered in the Se"ond
S"hed#le of RBI A"t% -J/0( S#"h anks are those% !hi"h ha+e paidF #p "apital and
reser+es of an aggregate +al#e of not less then Rs(2 la"s and !hi"h satisf$ RBI that their
affairs are "arried o#t in the interest of their depositors( All "ommer"ial anks Indian and
Moreign% regional r#ral anks and state "oFoperati+e anks are S"hed#led anks( ;on
S"hed#led anks are those% !hi"h ha+e not een in"l#ded in the Se"ond S"hed#le of the
RBI A"t% -J/0(
The organi3ed anking s$stem in India "an e roadl$ "lassified into three "ategories< DiE
Commer"ial Banks DiiE Regional R#ral Banks and DiiiE CoFoperati+e anks( The Reser+e
Bank of India is the s#preme monetar$ and anking a#thorit$ in the "o#ntr$ and has the
responsiilit$ to "ontrol the anking s$stem in the "o#ntr$( It keeps the reser+es of all
"ommer"ial anks and hen"e is kno!n as the BReser*e BankC(
C.rrent s(enari)$/
C#rrentl$ D.88HE% the o+erall anking in India is "onsidered as fairl$ mat#re in terms of
s#ppl$% prod#"t range and rea"h F e+en tho#gh rea"h in r#ral India still remains a
"hallenge for the pri+ate se"tor and foreign anks( E+en in terms of )#alit$ of assets and
Capital ade)#a"$% Indian anks are "onsidered to ha+e "lean% strong and transparent
alan"e sheets F as "ompared to other anks in "omparale e"onomies in its region( The
Reser+e Bank of India is an a#tonomo#s od$% !ith minimal press#re from the
1o+ernment
Credit Risk Management in State Bank Of India
6ith the gro!th in the Indian e"onom$ e'pe"ted to e strong for )#ite some time
espe"iall$ in its ser+i"es se"tor% the demand for anking ser+i"es espe"iall$ retail
anking% mortgages and in+estment ser+i"es are e'pe"ted to e strong( Mergers 4
A")#isitions(% takeo+ers% are m#"h more in a"tion in India(
One of the "lassi"al e"onomi" f#n"tions of the anking ind#str$ that has remained
+irt#all$ #n"hanged o+er the "ent#ries is lending( On the one hand% "ompetition has had
"onsiderale ad+erse impa"t on the margins% !hi"h lenders ha+e en*o$ed% #t on the other
hand te"hnolog$ has to some e'tent red#"ed the "ost of deli+er$ of +ario#s prod#"ts and
ser+i"es(
Bank is a finan"ial instit#tion that orro!s mone$ from the p#li" and lends mone$ to the
p#li" for prod#"ti+e p#rposes( The Indian Banking Reg#lation A"t of -J0J defines the
term Banking Compan$ as NAn$ "ompan$ !hi"h transa"ts anking #siness in IndiaN and
the term anking as NA((e0ting f)r t-e 0.r0)se )f +ending a++ in*estment )f de0)sits1
)f m)ne' fr)m t-e 0.2+i(1 re0a'a2+e )n demand )r )t-er3ise and 3it-dra3a+ 2'
(-e4.e1 draft )r )t-er3ise56
Banks pla$ important role in e"onomi" de+elopment of a "o#ntr$% like<
• Banks moilise the small sa+ings of the people and make them a+ailale for
prod#"ti+e p#rposes(
• ,romotes the hait of sa+ings among the people there$ offering attra"ti+e rates of
interests on their deposits(
• ,ro+ides safet$ and se"#rit$ to the s#rpl#s mone$ of the depositors and as !ell
pro+ides a "on+enient and e"onomi"al method of pa$ment(
• Banks pro+ide "on+enient means of transfer of f#nd from one pla"e to another(
• >elps the mo+ement of "apital from regions !here it is not +er$ #sef#l to regions
!here it "an e more #sef#l(
Credit Risk Management in State Bank Of India
• Banks ad+an"es e'pos#re in trade and "ommer"e% ind#str$ and agri"#lt#re $
kno!ing their finan"ial re)#irements and prospe"ts(
• Bank a"ts as an intermediar$ et!een the depositors and the in+estors( Bank also a"ts
as mediator et!een e'porter and importer !ho does foreign trades(
Th#s Indian anking has "ome from a long !a$ from eing a sleep$ #siness instit#tion
to a highl$ proFa"ti+e and d$nami" entit$( This transformation has een largel$ ro#ght
ao#t $ the large dose of lierali3ation and e"onomi" reforms that allo!ed anks to
e'plore ne! #siness opport#nities rather than generating re+en#es from "on+entional
streams Di(e( orro!ing and lendingE( The anking in India is highl$ fragmented !ith /8
anking #nits "ontri#ting to almost 28: of deposits and 98: of ad+an"es(
Credit Risk Management in State Bank Of India
T-e Str.(t.re )f Indian Banking$
The Indian anking ind#str$ has Reser+e Bank of India as its Reg#lator$ A#thorit$( This
is a mi' of the ,#li" se"tor% ,ri+ate se"tor% CoFoperati+e anks and foreign anks( The
pri+ate se"tor anks are again split into old anks and ne! anks(
Reser*e Bank )f India
7Centra+ Bank8
S(-ed.+ed Banks
S"hed#led CoFoperati+e Banks
S"hed#led
Commer"ial Banks
,#li" Se"tor
Banks
;ationali3ed
Banks
SBI 4 its
Asso"iates
,ri+ate Se"tor
Banks
Old ,ri+ate
Se"tor Banks
Moreign
Banks
Regional
R#ral Banks
S"hed#led Uran
CoFOperati+e
Banks
S"hed#led State
CoFOperati+e Banks
;e! ,ri+ate
Se"tor Banks
Credit Risk Management in State Bank Of India
Chart Sho!ing Three =ifferent Se"tors of Banks
iE ,#li" Se"tor Banks
iiE ,ri+ate Se"tor Banks
,#li" Se"tor Banks
SBI and ;ationali3ed Regional R#ral
SUBSI=IARIES Banks Banks
SBI and s.2sidiaries
This gro#p "omprises of the State Bank of India and its se+en s#sidiaries +i3(%
State Bank of ,atiala% State Bank of >$deraad% State Bank of Tra+an"ore% State Bank of
Bikaner and Laip#r% State Bank of M$sore% State Bank of Sa#rashtra% State Bank of India
State Bank )f India DSBIE is the largest ank in India( If one meas#res $ the
n#mer of ran"h offi"es and emplo$ees% SBI is the largest ank in the !orld(
Estalished in -I89as Bank of Bengal it is the oldest "ommer"ial ank in the Indian
s#"ontinent( SBI pro+ides +ario#s domesti"% international and ;RI prod#"ts and
ser+i"es% thro#gh its +ast net!ork in India and o+erseas( 6ith an asset ase of O-.9
illion and its rea"h% it is a regional anking ehemoth( The go+ernment nationali3ed the
ank in-J22% !ith the Reser+e ank of India taking a 98: o!nership stake( In re"ent
$ears the ank has fo"#sed on t!o priorities% -E% red#"ing its h#ge staff thro#gh 1olden
handshakes"hemes kno!n as the Vol#ntar$ Retirement S"heme% !hi"h sa! man$ of its
est and rightest defe"t to the pri+ate se"tor% and .E% "omp#teri3ing its operations(
Credit Risk Management in State Bank Of India
The State Bank of India tra"es its roots to the first de"ade of-Jth "ent#r$% !hen the Bank
of "#l"#tta% later renamed theBank of engal% !as estalished on . *#n -I89( The
go+ernment amalgamatted Bank of Bengal and t!o other ,residen"$ anks% namel$% the
Bank of Boma$ and the ank of Madras% and named the reorgani3ed anking entit$ the
Imperial Bank of India( All these ,residen"$ anks !ere in"orporated as"ompanies% and
!ere the res#lt of thero$al "harters( The Imperial Bank of India "ontin#ed to remain a
*oint sto"k "ompan$( Until the estalishment of a "entral ank in India the Imperial Bank
and its earl$ prede"essors ser+ed as the nationPs "entral ank printing "#rren"$(
The State Bank of India A"t -J22% ena"ted $ the parliament of India% a#thori3ed the
Reser+e Bank of India% !hi"h is the "entral Banking Organisationof India% to a")#ire a
"ontrolling interest in the Imperial Bank of India% !hi"h !as renamed the State Bank of
India on/8th April -J22(
In re"ent $ears% the ank has so#ght to e'pand its o+erseas operations $ #$ing foreign
anks( It is the onl$ Indian ank to feat#re in the top -88 !orld anks in the Mort#ne
1loal 288 rating and +ario#s other rankings( A""ording to the Mores .888 listing it tops
all Indian "ompanies(
;ationali3ed anks
This gro#p "onsists of pri+ate se"tor anks that !ere nationali3ed( The 1o+ernment of
India nationali3ed -0 pri+ate anks in -J9J and another 9 in the $ear -JI8( In earl$ -JJ/%
there !ere .I nationali3ed anks i(e(% SBI and its H s#sidiaries pl#s .8 nationali3ed
anks( In -JJ/% the loss making ne! ank of India !as merged !ith profit making
,#n*a ;ational Bank( >en"e% no! onl$ .H nationali3ed anks e'ist in India(
Credit Risk Management in State Bank Of India
Regional R#ral anks
These !ere estalished $ the RBI in the $ear -JH2 of anking "ommission( It !as
estalished to operate e'"l#si+el$ in r#ral areas to pro+ide "redit and other fa"ilities to
small and marginal farmers% agri"#lt#ral laorers% artisans and small entreprene#rs(
Pri*ate Se(t)r Banks
Pri*ate Se(t)r Banks
Old pri+ate ne! pri+ate
Se"tor Banks Se"tor Banks
Old ,ri+ate Se"tor Banks
This gro#p "onsists of the anks that !ere estalishes $ the pri+$ se"tors% "ommittee
organi3ations or $ gro#p of professionals for the "a#se of e"onomi" etterment in their
operations( Initiall$% their operations !ere "on"entrated in a fe! regional areas( >o!e+er%
their ran"hes slo!l$ spread thro#gho#t the nation as the$ gro!(
;e! pri+ate Se"tor Banks
These anks !ere started as profit orient "ompanies after the RBI opened the anking
se"tor to the pri+ate se"tor( These anks are mostl$ te"hnolog$ dri+en and etter managed
than other anks(
Moreign anks
These are the anks that !ere registered o#tside India and had originated in a foreign
"o#ntr$( The ma*or parti"ipants of the Indian finan"ial s$stem are the "ommer"ial anks%
the finan"ial instit#tions DMIsE% en"ompassing termFlending instit#tions% in+estment
Credit Risk Management in State Bank Of India
instit#tions% spe"iali3ed finan"ial instit#tions and the stateFle+el de+elopment anks% ;onF
Bank Minan"ial Companies D;BMCsE and other market intermediaries s#"h as the sto"k
rokers and mone$Flenders( The "ommer"ial anks and "ertain +ariants of ;BMCs are
among the oldest of the market parti"ipants( The MIs% on the other hand% are relati+el$
ne! entities in the finan"ial market pla"e(
IMPORTA"CE OF BA"KI" SECTOR I" A RO,I" ECO"OM&
In the re"ent times !hen the ser+i"e ind#str$ is attaining greater importan"e "ompared to
man#fa"t#ring ind#str$% anking has e+ol+ed as a prime se"tor pro+iding finan"ial
ser+i"es to gro!ing needs of the e"onom$(
Banking ind#str$ has #ndergone a paradigm shift from pro+iding ordinar$ anking
ser+i"es in the past to pro+iding s#"h "ompli"ated and "r#"ial ser+i"es like% mer"hant
anking% ho#sing finan"e% ill dis"o#nting et"( This se"tor has e"ome more a"ti+e !ith
the entr$ of ne! pla$ers like pri+ate and foreign anks( It has also e+ol+ed as a prime
#ilder of the e"onom$ $ #nderstanding the needs of the same and en"o#raging the
de+elopment $ !a$ of gi+ing loans% pro+iding infrastr#"t#re fa"ilities and finan"ing
a"ti+ities for the promotion of entreprene#rs and other #siness estalishments(
Mor a fast de+eloping e"onom$ like o#rs% presen"e of a so#nd finan"ial s$stem to
moili3e and allo"ate sa+ings of the p#li" to!ards prod#"ti+e a"ti+ities is ne"essar$(
Commer"ial anks pla$ a "r#"ial role in this regard(
The Banking se"tor in re"ent $ears has in"orporated ne! prod#"ts in their #sinesses%
!hi"h are helpf#l for gro!th( The anks ha+e started to pro+ide feeFased ser+i"es like%
treas#r$ operations% managing deri+ati+es% options and f#t#res% a"ting as ankers to the
ind#str$ d#ring the p#li" offering% pro+iding "ons#ltan"$ ser+i"es% a"ting as an
intermediar$ et!een t!oF#siness entities et"(At the same time% the anks are rea"hing
Credit Risk Management in State Bank Of India
o#t to other end of "#stomer re)#irements like% ins#ran"e premi#m pa$ment% ta' pa$ment
et"( It has "hanged itself from transa"tion t$pe of anking into relationship anking%
!here $o# find friendl$ and )#i"k ser+i"e s#ited to $o#r needs( This is possile !ith
#nderstanding the "#stomer needs their +al#e to the ank% et"( This is possile !ith the
help of !ell organi3ed staff% "omp#ter ased net!ork for speed$ transa"tions% prod#"ts
like "redit "ard% deit "ard% health "ard% ATM et"( These are the present trend of ser+i"es(
The "#stomers at present ask for "on+enien"e of anking transa"tions% like .0 ho#rs
anking% !here the$ !ant to #tili3e the ser+i"es !hene+er there is a need( The
relationship anking pla$s a ma*or and important role in gro!th% e"a#se the "#stomers
no! ha+e eno#gh n#mer of opport#nities% and the$ "hoose a""ording to their
satisfa"tion of responses and re"ognition the$ get( So the anks ha+e to pla$ "a#tio#sl$%
else the$ ma$ lose o#t the pla"e in the market d#e to "ompetition% !here slightest of
opport#nities are "apt#red fast(
Another ma*or role pla$ed $ anks is in transnational #siness% transa"tions and
net!orking( Man$ leading Indian anks ha+e spread o#t their net!ork to other "o#ntries%
!hi"h help in "#rren"$ transfer and earn e'"hange o+er it(
These anks pla$ a ma*or role in "ommer"ial import and e'port #siness% et!een parties
of t!o "o#ntries( This foreign presen"e also helps in ringing in the international
standards of operations and ideas( The lierali3ation poli"$ of -JJ- has allo!ed man$
foreign anks to enter the Indian market and estalish their #siness( This has helped
large amo#nt of foreign "apital inflo! 4 in"rease o#r Moreign e'"hange reser+e(
Another emerging "hange happening all o+er the anking ind#str$ is "onsolidation
thro#gh mergers and a")#isitions( This helps the anks in strengthening their empire and
e'panding their net!ork of #siness in terms of +ol#me and effe"ti+eness(
Credit Risk Management in State Bank Of India
EMERI" SCE"ARIO I" THE BA"KI" SECTOR
The Indian anking s$stem has passed thro#gh three distin"t phases from the time of
in"eption( The first !as eing the era of "hara"ter anking% !here $o# !ere re"ogni3ed as
a "redile depositor or orro!er of the s$stem( This era "ome to an end in the si'ties( The
se"ond phase !as the so"ial anking( ;o!here in the demo"rati" de+eloped !orld% !as
anking or the ser+i"e ind#str$ nationali3ed( B#t this !as pra"ti"ed in India( Those !ere
the da$s !hen ankers has no "l#e !hatsoe+er as to ho! to determine the s"ale of finan"e
to ind#str$( The third era of anking !hi"h is in e'isten"e toda$ is "alled the era of
,r#dential Banking( The main fo"#s of this phase is on pr#dential norms a""epted
internationall$(
SBI r).0/
The Bank of Bengal% !hi"h later e"ame the State Bank of India( State Bank of India
!ith its se+en asso"iate anks "ommands the largest anking reso#r"es in India(
"ati)na+isati)n/
The ne't signifi"ant milestone in Indian Banking happened in late -J98s !hen the then
Indira 1andhi go+ernment nationali3ed on -J
th
L#l$ -J0J% -0 ma*or "ommer"ial Indian
anks follo!ed $ nationalisation of 9 more "ommer"ial Indian anks in -JI8(
The stated reason for the nationalisation !as more "ontrol of "redit deli+er$( After this%
#ntil -JJ8s% the nationalised anks gre! at a leis#rel$ pa"e of aro#nd 0: also "alled as
the >ind# gro!th of the Indian e"onom$(After the amalgamation of ;e! Bank of India
!ith ,#n*a ;ational Bank% "#rrentl$ there are -J nationalised anks in India(
Credit Risk Management in State Bank Of India
Li2era+i9ati)n/
In the earl$ -JJ8&s the then ;arasimha rao go+ernment emarked a poli"$ of
lierali3ation and ga+e li"en"es to a small n#mer of pri+ate anks% !hi"h "ame to e
kno!n as ;e! generation te"hFsa++$ anks% !hi"h in"l#ded anks like ICICI and >=MC(
This mo+e along !ith the rapid gro!th of the e"onom$ of India% ki"k started the anking
se"tor in India% !hi"h has seen rapid gro!th !ith strong "ontri#tion from all the se"tors
of anks% namel$ 1o+ernment anks% ,ri+ate Banks and Moreign anks( >o!e+er there
had een a fe! hi""#ps for these ne! anks !ith man$ either eing taken o+er like
1loal Tr#st Bank !hile others like Cent#rion Bank ha+e fo#nd the going to#gh(
The ne't stage for the Indian Banking has een set #p !ith the proposed rela'ation in the
norms for Moreign =ire"t In+estment% !here all Moreign In+estors in Banks ma$ e gi+en
+oting rights !hi"h "o#ld e'"eed the present "ap of -8:% at pesent it has gone #p to 0J:
!ith some restri"tions(
The ne! poli"$ shook the Banking se"tor in India "ompletel$( Bankers% till this time%
!ere #sed to the 0F9F0 method DBorro! at 0:K?end at 9:K1o home at 0E of f#n"tioning(
The ne! !a+e #shered in a modern o#tlook and te"hFsa++$ methods of !orking for
traditional anks(All this led to the retail oom in India( ,eople not *#st demanded more
from their anks #t also re"ei+ed more(
Credit Risk Management in State Bank Of India
C!RRE"T SCE"ARIO/
C#rrentl$ D.88HE% o+erall% anking in India is "onsidered as fairl$ mat#re in terms of
s#ppl$% prod#"t range and rea"hFe+en tho#gh rea"h in r#ral India still remains a "hallenge
for the pri+ate se"tor and foreign anks( E+en in terms of )#alit$ of assets and "apital
ade)#a"$% Indian anks are "onsidered to ha+e "lean% strong and transparent alan"e
sheetsFas "ompared to other anks in "omparale e"onomies in its region( The Reser+e
Bank of India is an a#tonomo#s od$% !ith minimal press#re from the go+ernment( The
stated poli"$ of the Bank on the Indian R#pee is to manage +olatilit$F!itho#t an$ stated
e'"hange rateFand this has mostl$ een tr#e(
6ith the gro!th in the Indian e"onom$ e'pe"ted to e strong for )#ite some timeF
espe"iall$ in its ser+i"es se"tor% the demand for anking ser+i"esFespe"iall$ retail
anking% mortgages and in+estment ser+i"es are e'pe"ted to e strong( M4As% takeo+ers%
asset sales and m#"h more a"tion Das it is #nra+elling in ChinaE !ill happen on this front
in India(
In Mar"h .889% the Reser+e Bank of India allo!ed 6ar#rg ,in"#s to in"rease its stake in
Gotak Mahindra Bank Da pri+ate se"tor ankE to -8
This is the first time an in+estorhas een allo!ed to hold more than 2: in a pri+ate se"tor ank sin"e the RBI anno#n"ed
norms in .882 that an$ stake e'"eeding 2: in the pri+ate se"tor anks !o#ld need to e
+etted $ them( C#rrentl$% India has II s"hed#led "ommer"ial anks DSCBsE F .I p#li"
se"tor anks Dthat is !ith the 1o+ernment of India holding a stakeE% .J pri+ate anks
Dthese do not ha+e go+ernment stakeK the$ ma$ e p#li"l$ listed and traded on sto"k
e'"hangesE and /- foreign anks( The$ ha+e a "omined net!ork of o+er 2/%888
ran"hes and -H%888 ATMs( A""ording to a report $ ICRA ?imited% a rating agen"$% the
p#li" se"tor anks hold o+er H2 per"ent of total assets of the anking ind#str$% !ith the
pri+ate and foreign anks holding -I(.: and 9(2: respe"ti+el$(
Credit Risk Management in State Bank Of India
Banking in India
- Central Bank Reser+e Bank of India
.
;ationalised Banks
State Bank of India% Allahaad Bank% Andhra Bank%
Bank of Baroda% Bank of India% Bank of
Maharastra%Canara Bank% Central Bank of India%
Corporation Bank% =ena Bank% Indian Bank% Indian
o+erseas Bank%Oriental Bank of Commer"e% ,#n*a and
Sind Bank% ,#n*a ;ational Bank% S$ndi"ate Bank%
Union Bank of India% United Bank of India% UCO
Bank%and Vi*a$a Bank(
/
,ri+ate Banks
Bank of Ra*astan% Bharath o+erseas Bank% Catholi"
S$rian Bank% Cent#rion Bank of ,#n*a% Cit$ Union
Bank% =e+elopment Credit Bank% =hanala'mi Bank%
Mederal Bank% 1anesh Bank of G#r#nd!ad% >=MC
Bank% ICICI Bank% I=BI% Ind#sInd Bank% I;1 V$s$a
Bank% Lamm# and Gashmir Bank% Garnataka Bank
?imited% Gar#r V$s$a Bank% Gotek Mahindra Bank%
?akshmi+ilas Bank% ?ord Grishna Bank% ;ainitak Bank%
Ratnakar Bank%Sangli Bank% SBI Commer"ial and
International Bank% So#th Indian Bank% Tamil ;ad#
Mer"hantile Bank ?td(% United 6estern Bank% UTI
Bank% YES Bank(
Credit Risk Management in State Bank Of India
COM,A;Y ,ROMI?E
Credit Risk Management in State Bank Of India
STATE BA"K OF I"#IA
;ot onl$ man$ finan"ial instit#tion in the !orld toda$ "an "laim the anti)#it$ and
ma*est$ of the State Bank Of India fo#nded nearl$ t!o "ent#ries ago !ith primaril$ intent
of imparting stailit$ to the mone$ market% the ank from its in"eption moili3ed f#nds
for s#pporting oth the p#li" "redit of the "ompanies go+ernments in the three
presiden"ies of British India and the pri+ate "redit of the E#ropean and India mer"hants
from ao#t -I98s !hen the Indian e"onom$ ook a signifi"ant leap for!ard #nder the
imp#lse of )#i"kened !orld "omm#ni"ations and ingenio#s method of ind#strial and
agri"#lt#ral prod#"tion the Bank e"ame intimatel$ in +al#ed in the finan"ing of
pra"ti"all$ and mining a"ti+it$ of the S#F Continent Altho#gh large E#ropean and Indian
mer"hants and man#fa"t#rers !ere #ndo#tedl$ thee prin"ipal enefi"iaries% the small
man ne+er ignored loans as lo! as Rs(-88 !ere dis#rsed in agri"#lt#ral distri"ts against
glad ornaments( Added to these the ank till the "reation of the Reser+e Bank in -J/2
"arried o#t n#mero#s Central 7 Banking f#n"tions(
Adaptation !orld and the needs of the ho#r has een one of the strengths of the Bank% In
the post depression e'e( Mor instan"e 7 !hen #siness opport#nities e"ome e'tremel$
restri"ted% r#les laid do!n in the ook of instr#"tions !ere relined to ens#re that good
#siness did not go post( Yet seldom did the ank "ontra+enes its +al#e as depart from
so#nd anking prin"iples to retain as e'pand its #siness( An inno+ati+e arra$ of offi"e%
#nkno!n to the !orld then% !as de+ised in the form of ran"hes% s# ran"hes% treas#r$
pa$ offi"e% pa$ offi"e% s# pa$ offi"e and o#t st#dents to e'ploit the opport#nities of an
e'panding e"onom$( ;e! #siness strateg$ !as also e+aded !a$ a"k in -J/H to render
the est anking ser+i"e thro#gh prompt and "o#rteo#s attention to "#stomers(
Credit Risk Management in State Bank Of India
A highl$ effi"ient and e'perien"ed management f#n"tioning in a !ell defined
organi3ational str#"t#re did not take long to pla"e the ank an e'e"#ted pedestal in the
areas of #siness% profitailit$% internal dis"ipline and ao+e all "rediilit$ A impe""ale
finan"ial stat#s "onsistent maintenan"e of the loft$ traditions if anking an oser+ation of
a high standard of integrit$ in its operations helped the ank gain a preF eminent stat#s(
;o !onders the administration for the ank !as #ni+ersal as ke$ f#n"tionaries of India
s#""essi+e finan"e minister of independent India Reso#r"e Bank of go+ernors and
representati+es of "hamer of "ommer"ial sho!ered e"onomi"s on it(
Modern da$ management te"hni)#es !ere also +er$ m#"h e+ident in the good old da$s
$ears efore "orporate go+ernan"e had e"ome a p#33led the anks o#nd f#n"tioned
!ith a high degree of responsiilit$ and "on"erns for the shareholders( An #nroken
re"ords of profits and a fairl$ high rate of profit and fairl$ high rate of di+idend all
thro#gh ens#red satisfa"tion% pr#dential management and asset liailit$ management not
onl$ prote"ted the interests of the Bank #t also ens#red that the oligations to "#stomers
!ere not met( The traditions of the past "ontin#ed to e #pheld e+en to this da$ as the
State Bank $ears itself to meet the emerging "hallenges of the millenni#m(
Credit Risk Management in State Bank Of India
ABO!T LOO
THE PLACE TO SHARE THE "E,S 666::
SHARE THE %IE,S ::
Togetherness is the theme of this "orporate loge of SBI !here the !orld of anking
ser+i"es meet the e+er "hanging "#stomers needs and estalishes a link that is like a
"ir"le% it indi"ates "omplete ser+i"es to!ards "#stomers( The logo also denotes a ank
that it has prepared to do an$thing to go to an$ lengths% for "#stomers(
The l#e pointer represent the philosoph$ of the ank that is al!a$s looking for the
gro!th and ne!er% more "hallenging% more promising dire"tion( The ke$ hole indi"ates
safet$ and se"#rit$(
Credit Risk Management in State Bank Of India
MISSIO"1 %ISIO" A"# %AL!ES
MISSIO" STATEME"T$
To retain the Bank&s position as premiere Indian Minan"ial Ser+i"e 1ro#p% !ith !orld
"lass standards and signifi"ant gloal "ommitted to e'"ellen"e in "#stomer% shareholder
and emplo$ee satisfa"tion and to pla$ a leading role in e'panding and di+ersif$ing
finan"ial ser+i"e se"tors !hile "ontaining emphasis on its de+elopment anking r#le(
%ISIO" STATEME"T$
? ,remier Indian Minan"ial Ser+i"e 1ro#p !ith prospe"ti+e !orldF"lass
Standards of effi"ien"$ and professionalism and instit#tional +al#es(
? Retain its position in the "o#ntr$ as pioneers in =e+elopment anking(
? Ma'imi3e the shareholders +al#e thro#gh highFs#stained earnings per
Share(
? An instit#tion !ith "#lt#ral m#t#al "are and "ommitment% satisf$ing and
1ood !ork en+ironment and "ontin#es learning opport#nities(
%AL!ES$
? E'"ellen"e in "#stomer ser+i"e
? ,rofit orientation
? Belonging "ommitment to Bank
? Mairness in all dealings and relations
Credit Risk Management in State Bank Of India
? Risk taking and inno+ati+e
? Team pla$ing
? ?earning and rene!al
? Integrit$
? Transparen"$ and =is"ipline in poli"ies and s$stems(
Credit Risk Management in State Bank Of India
ORA"ISATIO" STR!CT!RE
MA"AI" #IRECTOR
6 M 6M 6 M 6M 6M
;O0erati)ns< ;C=B< ;F=S< ;I< = C%O ;P=#<
9)na+ )ffi(ers
Functional Heads
CHIEF E"ERAL MA"AER
Credit Risk Management in State Bank Of India
Regional offi"ers
,RO=UCTS A;= SERVICES
Credit Risk Management in State Bank Of India
PRO#!CTS$
State Bank Of India renders +arieties of ser+i"es to "#stomers thro#gh the
follo!ing prod#"ts<
,ersonal ?oan ,rod#"t<
• SBI Term =eposits
• SBI Re"#rring =eposits
• SBI >o#sing ?oan
• SBI Car ?oan
• SBI Ed#"ational ?oan
• SBI ,ersonal ?oan
• SBI ?oan Mor ,ensioners
• ?oan Against Mortgage Of ,ropert$
• ?oan Against Shares 4 =eent#res
• Rent ,l#s S"heme
• MediF,l#s S"heme
• Rates Of Interest
SBI H).sing +)an
Credit Risk Management in State Bank Of India
SBI >o#sing loan or Mortgage ?oan s"hemes are designed to make it simple for $o# to
make a "hoi"e at least as far as finan"ing goesQ
>SBI/H)me L)ans>
feat.res$
• ;o "ap on ma'im#m loan amo#nt for p#r"haseA "onstr#"tion of ho#seA flat
• Option to "l# in"ome of $o#r spo#se and "hildren to "omp#te eligile loan
amo#nt
• ,ro+ision to "l# e'pe"ted rent a""r#als from propert$ proposed to "omp#te
eligile loan amo#nt
,ro+ision to finan"e "ost of f#rnishing and "ons#mer d#rales as part of pro*e"t
"ost
• Repa$ment permitted #pto H8 $ears of age
• Mree personal a""ident ins#ran"e "o+er
• Optional 1ro#p Ins#ran"e from SBI ?ife at "on"essional premi#m DUpfront
premi#m finan"ed as part of pro*e"t "ostE
• Interest applied on dail$ diminishing alan"e asis
• P,l#sP s"hemes !hi"h offer attra"ti+e pa"kages !ith "on"essional interest rates to
1o+t( Emplo$ees% Tea"hers% Emplo$ees in ,#li" Se"tor Oil Companies(
• Spe"ial s"heme to grant loans to finan"e Earnest Mone$ =eposits to e paid to
Uran =e+elopment A#thorit$A >o#sing Board% et"( in respe"t of allotment of
sitesA ho#seA flat
• ;o Administrati+e Charges or appli"ation fee
Credit Risk Management in State Bank Of India
• ,repa$ment penalt$ is re"o+ered onl$ if the loan is preF"losed efore half of the
original ten#re Dnot re"o+ered for #lk pa$ments pro+ided the loan is not "losedE
• ,ro+ision for do!n!ard refi'ation of EMI in respe"t of floating rate orro!ers
!ho a+ail >o#sing ?oans of Rs(2 la"s and ao+e% to a+ail the enefit of
do!n!ard re+ision of interest rate $ -: or more
• InFprin"iple appro+al iss#ed to gi+e $o# fle'iilit$ !hile negotiating p#r"hase of a
propert$
• ROption to a+ail loan at the pla"e of emplo$ment or at the pla"e of "onstr#"tion
• Attra"ti+e pa"kages in respe"t of loans granted #nder tieF#p !ith CentralA State
1o+ernmentsA ,SUsA rep#ted "orporates and tieF#p !ith rep#ted #ilders D,lease
"onta"t $o#r nearest ran"h for detailsE
SER%ICES$
? =OMESTIC TREASURY
? SBI VIS>6A YATRA MOREI1; TRAVE? CAR=
? BROGI;1 SERVICES
? REVISE= SERVICE C>AR1ES
? ATM SERVICES
? I;TER;ET BA;GI;1
? EF,AY
? EFRAI?
? RBIEMT
? SAME =E,OSIT ?OCGER
? 1IMT C>ESUES
? MICR CO=ES
MOREI1; I;6AR= REMITTA;CES
Credit Risk Management in State Bank Of India
ATM SER%ICES
STATE BA"K "ET,ORKE# ATM SER%ICES
State Bank offers $o# the "on+enien"e of o+er I888 ATMs in India% the largest net!ork in
the "o#ntr$ and "ontin#ing to e'pand fastQ This means that $o# "an transa"t free of "ost at
the ATMs of State Bank 1ro#p DThis in"l#des the ATMs of State Bank of India as !ell as
the Asso"iate Banks 7 namel$% State Bank of Bikaner 4 Laip#r% State Bank of >$deraad%
State Bank of Indore% State Bank of M$sore% State Bank of ,atiala% State Bank of
Sa#rashtra% and State Bank of Tra+an"oreE and !holl$ o!ned s#sidiar$ +i3( SBI
Commer"ial and International Bank ?td(% #sing the State Bank ATMF"#mF=eit DCash
,l#sE "ard(
KI"#S OF CAR#S ACCEPTE# AT STATE BA"K ATMs
Besides State Bank ATMFC#mF=eit Card and State Bank International ATMFC#mF=eit
Cards follo!ing "ards are also a""epted at State Bank ATMs< F
-E State Bank Credit Card
.E ATM Cards iss#ed $ Banks #nder ilateral sharing +i3( Andhra Bank%A'is
Bank% Bank of India% The Bank of Ra*asthan ?td(% Canara Bank% Corporation Bank% =ena
Credit Risk Management in State Bank Of India
Bank% >=MC Bank% Indian Bank% Ind#s Ind Bank% ,#n*a ;ational Bank% UCO Bank
and Union Bank of India(
/E Cards iss#ed $ anks Dother than anks #nder ilateral sharingE displa$ing Maestro%
Master Card% Cirr#s% VISA and VISA Ele"tron logos
0E All =eitA Credit Cards iss#ed $ an$ ank o#tside India displa$ing Maestro% Master
Card% Cirr#s% VISA and VISA Ele"tron logos
;ote< If $o# are a "ardholder of ank other than State Bank 1ro#p% kindl$ "onta"t $o#r
Bank for the "harges re"o+erale for #sage of State Bank ATMs(
STATE BA"K I"TER"ATIO"AL ATM/C!M/#EBIT CAR#
E+igi2i+it'$
All Sa+ing Bank and C#rrent A""o#nt holders ha+ing a""o#nts !ith net!orked ran"hes
and are<
Credit Risk Management in State Bank Of India
• -I $ears of age 4 ao+e
• A""o#nt t$pe< Sole or Loint !ith BEither or S#r+i+orC A BAn$one or S#r+i+orC
• ;RE a""o#nt holders are also eligile #t ;RO a""o#nt holders are not(
Benefits$
• TCon+enien"e to the "#stomers tra+eling o+erseas
• TCan e #sed as =omesti" ATMF"#mF=eit Card
• ?A+ailale at a nominal *oining fee of Rs( .88AF
• T=ail$ limit of US O -888 or e)#i+alent at the ATM and US O -888 or e)#i+alent at
,oint of Sale D,OSE terminal for deit transa"tion
• ,#r"hase ,rote"tionU#p to Rs( 2888AF and ,ersonal A""ident "o+erU#p to Rs(
.%88%888AF
• TCharges for #sage aroad< Rs( -28V Ser+i"e Ta' per "ash !ithdra!al Rs( -2 V
Ser+i"e Ta' per en)#ir$(
State Bank ATM/(.m/#e2it ;State Bank Cas- 0+.s< Card<
India&s largest ank is pro#d to offer $o# #nparalleled "on+enien"e +i3( State Bank ATMF
"#mF=eitDCash ,l#sE "ard( 6ith this "ard% there is no need to "arr$ "ash in $o#r !allet(
Yo# "an no! !ithdra! "ash and make p#r"hases an$time $o# !ish to !ith $o#r ATMF
"#mF=eit Card(
1et an ATMF"#mF=eit "ard !ith !hi"h $o# "an transa"t for MREE at an$ of o+er I888
ATMs of State Bank 1ro#p !ithin o#r "o#ntr$(
SBI OL# I"TER"ATIO"AL #EBIT CAR#S
Credit Risk Management in State Bank Of India
E/PA&
Bill ,a$ment at Online SBI DeF,a$E !ill let $o# to pa$ $o#r Telephone% Moile%
Ele"tri"it$% Ins#ran"e and Credit Card ills ele"troni"all$ o+er o#r Online SBI !esite
E/RAIL
B))k ').r Rai+3a's Ti(ket On+ine6
The fa"ilit$ has een la#n"hed !ef Ist Septemer .88/ in asso"iation !ith IRCTC(
The s"heme fa"ilitates Booking of Rail!a$s Ti"ket Online(
T-e sa+ient feat.res )f t-e s(-eme are as .nder$
• All Internet anking "#stomers "an #se the fa"ilit$(
• On gi+ing pa$ment option as SBI% the #ser !ill e redire"ted to onlinesi("om(
After logging on to the site $o# !ill e displa$ed pa$ment amo#nt% TI= ;o( and
Rail!a$ referen"e no(
Credit Risk Management in State Bank Of India
• ( The ti"ket "an e deli+ered or "olle"ted $ the "#stomer(
• The #ser "an "olle"t the ti"ket personall$ at ;e! =elhi reser+ation "o#nter (
• The ,a$ment amo#nt !ill in"l#de ti"ket fare in"l#ding reser+ation "harges%
"o#rier "harges and Bank Ser+i"e fee of Rs -8A( The Bank ser+i"e fee has een
!ai+ed #nto /-st L#l$ .889(
SAFE #EPOSIT LOCKER
Mor the safet$ of $o#r +al#ales !e offer o#r "#stomers safe deposit +a#lt or lo"ker
fa"ilities at a large n#mer of o#r ran"hes( There is a nominal ann#al "harge% !hi"h
depends on the si3e of the lo"ker and the "entre in !hi"h the ran"h is lo"ated(
"RI HOME LOA"
SALIE"T FEAT!RES
P.r0)se )f L)an
?oans to ;RIs 4 ,IOs "an e e'tended for the follo!ing p#rposes(
• To p#r"haseA"onstr#"t a ne! ho#se A flat
• To repair% reno+ate or e'tend an e'isting ho#seAflat
Credit Risk Management in State Bank Of India
• To p#r"hase an e'isting ho#seAflat
• To p#r"hase a plot for "onstr#"tion of a d!elling #nit(
• To p#r"hase f#rnishings and "ons#mer d#rales% as a part of the pro*e"t "ost
ARIC!LT!RE ? R!RAL
State Bank )f India Caters to the needs of agri"#lt#rists and landless agri"#lt#ral
lao#rers thro#gh a net!ork of 9988 r#ral and semiF#ran ran"hes( here are JH.
spe"iali3ed ran"hes !hi"h ha+e een set #p in different parts of the "o#ntr$ e'"l#si+el$
for the de+elopment of agri"#lt#re thro#gh "redit deplo$ment( These ran"hes in"l#de
0.H Agri"#lt#ral =e+elopment Bran"hes DA=BsE and 20H ran"hes !ith =e+elopment
Banking =epartment D=B=sE !hi"h "ater to agri"#lt#rists and . Agri"#lt#ral B#siness
Bran"hes at Chennai and >$deraad "atering to the needs of hite"h "ommer"ial
agri"#lt#ral pro*e"ts(
T>EORETICA? BACG1ROU;= OM CRE=IT RISG MA;A1EME;T
CRE#IT$
The !ord 5"redit& "omes from the ?atin !ord 5"redere&% meaning 5tr#st&( 6hen
sellers transfer his !ealth to a #$er !ho has agreed to pa$ later% there is a "lear
impli"ation of tr#st that the pa$ment !ill e made at the agreed date( The "redit period
and the amo#nt of "redit depend #pon the degree of tr#st(
Credit is an essential marketing tool( It ears a "ost% the "ost of the seller ha+ing to
orro! #ntil the "#stomers pa$ment arri+es( Ideall$% that "ost is the pri"e #t% as most
"#stomers pa$ later than agreed% the e'tra #nplanned "ost erodes the planned net profit(
RISK $
Risk is defined as #n"ertain res#lting in ad+erse o#t "ome% ad+erse in relation to
planned o*e"ti+e or e'pe"tation( It is +er$ diffi"#lt o find a risk free in+estment( An
Credit Risk Management in State Bank Of India
important inp#t to risk management is risk assessment( Man$ p#li" odies s#"h as
ad+isor$ "ommittees "on"erned !ith risk management( There are mainl$ three t$pes
of risk the$ are follo!s
• Market risk
• Credit Risk
• sOperational risk
Risk anal$sis and allo"ation is "entral to the design of an$ pro*e"t finan"e% risk
management is of paramo#nt "on"ern( Th#s )#antif$ing risk along !ith profit
pro*e"tions is #s#all$ the first step in ga#ging the feasiilit$ of the pro*e"t( on"e
risk ha+e een identified the$ "an e allo"ated to parti"ipants and appropriate
me"hanisms p#t in pla"e(
MARKET RISK$
Market risk is the risk of ad+erse de+iation of the mark to market +al#e of the trading
portfolio% d#e to market mo+ement% d#ring the period re)#ired to li)#idate the
transa"tions(
Financial
Risks
Operational Risk
Market Risk
Credit Risk
T$pes of Minan"ial Risks
Credit Risk Management in State Bank Of India
OPERTIO"AL RISK$
Operational risk is one area of risk that is fa"ed $ all organi3ation s( More "omple' the
organi3ation more e'posed it !o#ld e operational risk( This risk arises d#e to de+iation
from normal and planned f#n"tioning of the s$stem pro"ed#res% te"hnolog$ and h#man
fail#re of omission and "ommission( Res#lt of de+iation from normal f#n"tioning is
refle"ted in the re+en#e of the organi3ation% either $ the !a$ of additional e'penses or
$ !a$ of loss of opport#nit$(
CRE#IT RISK$
Credit risk is defined as the potential that a ank orro!er or "o#nterpart$ !ill fail to
meet its oligations in a""ordan"e !ith agreed terms% or in other !ords it is defined as the
risk that a firm&s "#stomer and the parties to !hi"h it has lent mone$ !ill fail to make
promised pa$ments is kno!n as "redit risk
The e'pos#re to the "redit risks large in "ase of finan"ial instit#tions% s#"h "ommer"ial
anks !hen firms orro! mone$ the$ in t#rn e'pose lenders to "redit risk% the risk that
the firm !ill defa#lt on its promised pa$ments( As a "onse)#en"e% orro!ing e'poses the
firm o!ners to the risk that firm !ill e #nale to pa$ its det and th#s e for"ed to
ankr#pt"$(
CO;TRIBUTORS OM CRE=IT RISG<
• Corporate assets
• Retail assets
• ;onFS?R portfolio
• Ma$ res#lt from trading and anking ook
• Inter ank transa"tions
• =eri+ati+es
• Settlement% et"
Credit Risk Management in State Bank Of India
GEY E?EME;TS OM CRE=IT RISG MA;A1EME;T<
• Estalishing appropriate "redit risk en+ironment
• Operating #nder so#nd "redit granting pro"ess
• Maintaining an appropriate "redit administration% meas#rement 4 Monitoring
• Ens#ring ade)#ate "ontrol o+er "redit risk
• Banks sho#ld ha+e a "redit risk strateg$ !hi"h in o#r "ase is "omm#ni"ated
thro#gho#t the organi3ation thro#gh "redit poli"$(
T!o f#ndamental approa"hes to "redit risk managementonest$
? ?e+el of interest A "ommitment in pro*e"t
? Asso"iate "on"erns
Te(-ni(a+ Feasi2i+it' <
? ?o"ation
? Si3e of the ,ro*e"t
? Ma"tor$ #ilding
? ,lant 4 Ma"hiner$
? ,ro"ess 4 Te"hnolog$
? Inp#ts A #tilities
( C)mmer(ia+ %ia2i+it' <
? =emand fore"asting A Anal$sis
? Market s#r+e$
? ,ri"ing poli"ies
? Competition
Credit Risk Management in State Bank Of India
?
? E'port poli"ies
Finan(ia+ %ia2i+it'$
? 6hether ade)#ate f#nds are a+ailale at affordale "ost to implement the pro*e"t
? 6hether s#ffi"ient profits !ill e a+ailale
? 6hether BE, or margin of safet$ are satisfa"tor$
? 6hat !ill e the o+erall finan"ial position of the orro!er in "oming $ears(
Credit in*estigati)n re0)rt
Bran"h prepares Credit in+estigation report in order to a+oid "onse)#en"e in later stage
Credit in+estigation report sho#ld e a part of "redit proposal( Bank has to s#mit the
d#l$ "ompleted "redit in+estigation reports after "ond#"ting a detailed "redit in+estigation
as per g#idelines(
S)me )f t-e g.ide+ines in t-is regards as f)++)3$
? 6here+er a proposal is to e "onsidered ased onl$ on merits of flagships
"on"erns of the gro#p% then s#"h s#pport sho#ld also e "ompiled in respe"t of
s#*e"t flagship in "on"ern esides the appli"ant "ompan$(
? In regard of proposals falling e$ond the po!er of rating offi"er% the ran"h
sho#ld ens#re parti"ipation of rating offi"er in "ompilation of this report(
? The "redit in+estigation report sho#ld a""ompan$ all the proposals !ith the f#nd
ased limit of ao+e .2 ?akhs and or non f#nd ased of ao+e Rs( 28 ?akhs(
Credit Risk Management in State Bank Of India
? The part$ ma$ e s#ital$ kept informed that the "ompilation of this report is one
of the re)#irements in the "onne"tion !ith the pro"essing for "onsideration of the
proposal(
? The ran"h sho#ld otain a "op$ of latest san"tion letter $ e'isting anker or the
finan"ial instit#tion to the part$ and terms and "onditions of the san"tion sho#ld
st#died in detail(
? Comments sho#ld e made !here+er ne"essar$% after making the
oser+ationsAlapses in the follo!ing terms of san"tion(
? Some of the important fa"tors like f#nding of interest% re s"hed#le of loans et"
terms and "onditions sho#ld e highlighted(
? Cop$ of statement of a""o#nts for the latest 9 months period sho#ld e otained
$ the ank( To get the present "ondition of the part$(
? Remarks sho#ld e made $ the ank on ad+erse feat#res oser+ed( De(g(% e'"ess
dra!ings% ret#rn of "he)#es et"E(
? ,ersonal en)#ir$ sho#ld e made $ the ank offi"ial !ith responsile offi"ial of
part$&s present A other ankers and en)#iries sho#ld e made !ith a eli"it
information on "ond#"t of a""o#nt et"(
? Care sho#ld e taken in sele"tion of "#stomers or "reditors !ho a"ts as the
representati+e( The$ sho#ld e inter+ie!ed and "ompilation of opinion sho#ld e
done(
? En)#iries sho#ld e made regarding the )#alit$ of prod#"t% pa$ment terms% and
period of o+erd#e !hi"h sho#ld e mentioned "learl$ in the report( En)#ir$
sho#ld e aimed to as"ertain the stat#s of trading of the appli"ant and to kno!
their "apailit$ to meet their "ommitments in time(
? To kno! the market trend ran"h sho#ld en)#ire the person or ind#str$ that is in
the same line of #siness a"ti+it$(
? In depth oser+ation ma$ e made of the appli"ant as to <
i( !hether the #nit is !orking in f#ll s!ing
ii( n#mer of shifts and n#mer of emplo$ees
iii( an$ osolete sto"ks !ith the #nit
Credit Risk Management in State Bank Of India
i+( "apa"it$ of the #nit
+( nat#re and "onditions of the ma"hiner$ installed
+i( Information on po!er% !ater and poll#tion "ontrol et"(
+ii( information on ind#strial relation and marketing strateg$
CRE#IT FILES$/
It&s the file% !hi"h pro+ides important so#r"e material for loan s#per+ision in regard to
information for internal re+ie! and e'ternal a#dit( Bran"h has to maintain separate "redit
file "omp#lsoril$ in "ase of ?oans e'"eeding Rs 28 ?akhs !hi"h sho#ld e maintained
for )#i"k a""ess of the related information(
C)ntents )f t-e (redit fi+eo! m#"h of that e'pos#re
is the ank going to loseY
/( >o! m#"h of that e'pos#re
is the ank going to loseY
?oss 1i+en =efa#lt
BSe+erit$C
E?
,=
Ea=
?1=
X
X
.( >o! m#"h !ill e the
likel$
e'pos#re in the "ase the ad+an"e
e"omes ;,AY
.( >o! m#"h !ill e the
likel$
e'pos#re in the "ase the ad+an"e
e"omes ;,AY
\
\
Credit Risk Management in State Bank Of India
• Mor E'pos#res !ith a "ontra"t#al mat#rit$ of less than or e)#al to one $ear
;eD(e0t Cas- Credit1 O*erdraft and )t-er Re*)+*ing Credits< ShortFterm
Ratings gi+en $ ECAIs !ill e appli"ale(
• Mor =omesti" Cash Credit% O+erdraft and other Re+ol+ing Credits irrespe"ti+e of
the period and Term ?oan e'pos#res of o+er - $ear% ?ong Term Ratings gi+en $
ECAIs !ill e appli"ale(
• Mor O+erseas e'pos#res% irrespe"ti+e of the "ontra"t#al mat#rit$% ?ong Term
Ratings gi+en $ IRAs !ill e appli"ale(
• Rating assigned to one parti"#lar entit$ !ithin a "orporate gro#p "annot e #sed
to risk !eight other entities !ithin the same gro#p(
COMPETITORS #ETAILS
Credit Risk Management in State Bank Of India
In =har!ad Main "ompetitors of State Bank of India are ICICI Bank in pri+ate
se"tor anks and S$ndi"ate Bank and Corporation Bank In p#li" se"tor(
In SBI% it "an e etter #nderstood !ith gi+en ,ie diagram as follo!s(