STATE BANK OF INDIA...Balance Sheet, Profit & Loss Account & Report of the Auditors of — State...

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State Bank of India > Annual Report 2012-13

STATE BANK OF INDIA(Constituted under the State Bank of India Act, 1955)

The 58th Annual General Meeting of shareholders of State Bank of India will be held at the “Y. B. Chavan Auditorium”, Y. B. Chavan Centre, General Jagannath Bhosale Marg, Nariman Point, Mumbai-400021 (Maharashtra) on Friday, the 21st June 2013 at 03.00 P.M. for transacting the following business:-

‘‘to receive, discuss and adopt the Balance Sheet and the Profit and Loss Account of the State Bank made up to the 31st day of March 2013, the report of the Central Board on the working and activities of the State Bank for the period covered by the Accounts and the Auditor’s Report on the Balance Sheet and Accounts’’.

Corporate Centre, State Bank Bhavan, (PRATIP CHAUDHURI)Madame Cama Road, CHAIRMANMumbai - 400 021

Date: 30th April, 2013

IMPORTANT INFORMATIONDividend Declared: `41.50 per shareDividend Payment Date: 17.06.2013Period of Book Closure: 30.05.2013 TO 03.06.2013RECORD DATE : 29.05.2013

NOTICEmet®evee

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STATE BANK OF INDIA(Constituted under the State Bank of India Act, 1955)

The 58th Annual General Meeting of shareholders of State Bank of India will be held at the “Y. B. Chavan Auditorium”, Y. B. Chavan Centre, General Jagannath Bhosale Marg, Nariman Point, Mumbai-400021 (Maharashtra) on Friday, the 21st June 2013 at 03.00 P.M. for transacting the following business:-

‘‘to receive, discuss and adopt the Balance Sheet and the Profit and Loss Account of the State Bank made up to the 31st day of March 2013, the report of the Central Board on the working and activities of the State Bank for the period covered by the Accounts and the Auditor’s Report on the Balance Sheet and Accounts’’.

Corporate Centre, State Bank Bhavan, (PRATIP CHAUDHURI)Madame Cama Road, CHAIRMANMumbai - 400 021

Date: 30th April, 2013

IMPORTANT INFORMATIONDividend Declared: `41.50 per shareDividend Payment Date: 17.06.2013Period of Book Closure: 30.05.2013 TO 03.06.2013RECORD DATE : 29.05.2013

NOTICEmet®evee

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SmeyeerDeeF& mecetn mebj®evee, efoveebkeÀ 31.03.2013 keÀes SBI GROUP STRUCTURE AS ON 31.03.2013

SmeyeerDeeF&/SBI

SmeyeerDeeF& HeefjJeej Je=#e/ SBI FAMILY TREE

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4


Ratings 05

Financial Highlights for the last 10 Years 07

Performance Indicators, Highlights & ` Earned/Spent 08

Central Board of Directors 10

Committees of the Board, Members of the Local Boards, Members of the Central Management Committee

and the Bank’s Auditors 12

From the Chairman’s Desk 21

Directors’ Report

Economic Backdrop and Banking Environment 31

Financial Performance 35

I. CORE OPERATIONS

I.1 Customer Service 39

I.2 Business Group

Global Markets Operations 41

Corporate Banking Group 45

Mid Corporate Group 49

National Banking Group 53

International Banking Group 73

I.3 Corporate Strategy and New Businesses 77

I.4 NPA Management 81

II. SUPPORT & CONTROL OPERATIONS

II.1 Information Technology 87

II.2 Risk Management & Internal Controls 89

II.3 Vigilance 97

II.4 Human Resources 97

II.5 Strategic Training Unit 101

II.6 Official Language 103

II.7 Corporate Social Responsibility 105

III. ASSOCIATES & SUBSIDIARIES 109

Responsibility Statement, Acknowledgement 119

Corporate Governance 121

Annexures I to V 147

Business Responsibility Report 163

Balance Sheet, Profit & Loss Account &

Report of the Auditors of

— State Bank of India 174

— State Bank Group (Consolidated) 241

New Capital Adequacy Framework (Basel - II)

(Pillar - III) (Market Discipline) Disclosures 297

Proxy Form, Attendance Slip

CONTENTSefJeøe³e-met®eerjsefìbime 05efHeíues 10 Je

5


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INSTRUMENTRATINGSAs on 31.03.2013

RATINGAGENCY

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BANK RATING

Baa3/P3/Stable/D+ Moody’s

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76

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76


2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13Liabilities

Capital (` in crores) 526 526 526 526 631 635 635 635 671 684Reserves & Surplus (` in crores) 19,705 23,546 27,118 30,772 48,401 57,313 65,314 64,351 83,280 98,200Deposits (` in crores) 3,18,619 3,67,048 3,80,046 4,35,521 5,37,404 7,42,073 8,04,116 9,33,933 10,43,647 12,02,739Borrowings (` in crores) 13,431 19,184 30,642 39,704 51,728 53,713 1,03,012 1,19,569 1,27,006 1,69,183

Other’s (` in crores) 55,534 49,579 55,538 60,042 83,362 1,10,698 80,337 1,05,248 80,915 95,455Total (` in crores) 4,07,815 4,59,883 493,870 5,66,565 7,21,526 9,64,432 10,53,414 12,23,736 13,35,519 15,66,261

AssetsInvestments (` in crores) 1,85,676 1,97,098 1,62,534 1,49,149 1,89,501 2,75,954 2,85,790 2,95,601 3,12,198 3,50,927Advances (` in crores) 1,57,934 2,02,374 2,61,642 3,37,337 4,16,768 5,42,503 6,31,914 7,56,719 8,67,579 10,45,616Other Assets (` in crores) 64,205 60,411 69,694 80,079 1,15,257 1,45,975 1,35,710 1,71,416 1,55,742 1,69,718

Total (` in crores) 4,07,815 4,59,883 4,93,870 5,66,565 7,21,526 9,64,432 10,53,414 12,23,736 13,35,519 15,66,261Net Interest income (` in crores) 11,186 13,945 15,589 15,058 17,021 20,873 23,671 32,526 43,291 44,331Provisions for NPA (` in crores) 3,703 1,204 148 1,429 2,001 2,475 5,148 8,792 11,546 11,368Operating Result (` in crores) 9,553 10,990 11,299 10,000 13,108 17,915 18,321 25,336 31,574 31,082Net Profit Before Taxes (` in crores) 4,971 6522 6,906 7,625 10,439 14,181 13,926 14,954 18,483 19,951Net Profit (` in crores) 3,681 4,305 4,407 4,541 6729 9121 9,166 8,265 11,707 14,105Return on Average Assets (%) 0.94 0.99 0.89 0.84 1.01 1.04 0.88 0.71 0.88 0.91Return on Equity (%) 18.19 18.10 15.47 14.24 17.82 15.07 14.04 12.84 14.36 15.94Expenses to Income (%) (Operating Expenses to total Net Income) 49.18 47.83 58.70 54.18 49.03 46.62 52.59 47.60 45.23 48.51Profit Per Employee (` in 000) 177 207 217 237 373 474 446 385 531 645Earnings Per Share (`) 69.94 81.79 83.73 86.10 126.62 143.77 144.37 130.16 184.31 210.06Dividend Per Share (`) 11.00 12.50 14.00 14.00 21.50 29.00 30.00 30.00 35.00 41.50SBI Share (Price on NSE) (`) 605.85 654.80 968.50 994.45 1,600.25 1,067.10 2,078.20 2,765.30 2,096.35 2,072.75Dividend Payout Ratio% (`) 15.72 15.28 16.72 16.22 20.18 20.19 20.78 23.05 20.06 20.12Capital Adequacy Ratio (%)Basel- I (%) 13.53 12.45 11.88 12.34 13.54 12.97 12 10.69 12.05 11.22 Tier I 8.34 8.04 9.36 8.01 9.14 8.53 8.46 6.93 8.50 8.23 Tier II 5.19 4.41 2.52 4.33 4.40 4.44 3.54 3.76 3.55 2.99 (` in crores) 85,393 90,975 98,530 1,16,325 1,29,362Basel- II (%) N.A. N.A. N.A. N.A. N.A. 14.25 13.39 11.98 13.86 12.92 (` in crores) 56,257 64,177 63,901 82,125 94,947 Tier I (%) N.A. N.A. N.A. N.A. N.A. 9.38 9.45 7.77 9.79 9.49 (` in crores) 29,136 26,798 34,629 34,200 34,415 Tier II (%) N.A. N.A. N.A. N.A. N.A. 4.87 3.94 4.21 4.07 3.43Net NPA to Net Advances (%) 3.48 2.65 1.88 1.56 1.78 1.79 1.72 1.63 1.82 2.10Number of Domestic Branches 9,039 9,102 9,177 9,231 10,186 11,448 12,496 13,542 14,097 14,816Number of Foreign Branches/Offices 54 54 70 83 84 92 142 156 173 186

FINANCIAL HIGHLIGHTS FOR THE LAST 10 YEARS

8


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120873

135692

2011-12 2012-13

Total Income (` crores)

2011-12 2012-13

11707

14105Net Profit (` crores)

184.31

210.06

2011-12 2012-13

Earning ̀ per Share

1214.78

1394.79

2011-12 2012-13

Book Value Per Share (`)

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2011-12 2012-13

Total Income (` crores)

2011-12 2012-13

11707

14105Net Profit (` crores)

184.31

210.06

2011-12 2012-13

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1214.78

1394.79

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Book Value Per Share (`)

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10


keWÀêer³e efveosMekeÀ yees[&CENTRAL BOARD OF DIRECTORS

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Shri Pratip ChaudhuriChairman

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Shri Hemant G. ContractorManaging Director

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Shri S. VenkatachalamDirector

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Chairman

Shri Pratip Chaudhuri

Managing Directors

Shri Hemant G. Contractor

Shri Diwakar Gupta

Shri A. Krishna Kumar

Shri S. Vishvanathan

Directors elected under Section 19(c) of SBI Act

Shri S. Venkatachalam

Shri D. Sundaram

Shri Parthasarathy Iyengar

Shri Thomas Mathew

Term: 3 years and eligible for re-election for further

period of 3 years

Maximum tenure: 6 years continuously

Director under Section 19(ca) of SBI Act

Shri Jyoti Bhushan Mohapatra

Director under Section 19(cb) of SBI Act

Shri S. K. Mukherjee

Directors under Section 19(d) of SBI Act

Dr. Rajiv Kumar

Shri Deepak Ishwarbhai Amin

Shri Harichandra Bahadur Singh

Term: 3 years and eligible for re-appointment /

re-nomination, subject to a maximum tenure of 6

years

Director under Section 19(e) of SBI Act

Shri Rajiv Takru

Director under Section 19(f) of SBI Act

Dr. Urjit R. Patel

Central Board of Directors(As on 23rd May 2013)

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COMMITTEES OF THE BOARD AS ON 23RD MAY 2013

Executive Committee of the Central Board (ECCB)

Chairman


Managing Directors


Shri Diwakar Gupta



Director nominated under Section 19(f) of the SBI Act

(Reserve Bank of India nominee), viz. Dr. Urjit R.Patel

and all or any of the other Directors who are normally

residents or may for the time being be present at any

place within India where the meeting is held.

Audit Committee of the Board ACB


Director – Chairman of the Committee

Shri D. Sundaram

Director – Member

Shri Thomas Mathew

Director – Member

Dr. Rajiv Kumar

Director -Member

Shri Rajiv Takru

GOI Nominee – Member

Dr. Urjit R. Patel

RBI Nominee – Member


MD&GE(IB) - Member (Ex-Officio)


MD&GE(NB) – Member (Ex-Officio)

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13


Risk Management Committee of the Board RMCB


MD&GE(IB) - Member (Ex-Officio) - Chairman of the

Committee

Shri Diwakar Gupta

MD&CFO-Member (Ex-Officio)


Director – Member

Shri D. Sundaram

Director – Member

Shri Thomas Mathew

Director – Member

Dr. Rajiv Kumar

Director – Member

Shri Deepak I. Amin

Director – Member

Shareholders’ / Investors’ Grievance Committee of

the Board (SIGCB)


Director– Chairman of the Committee

Shri Thomas Mathew

Director – Member

Dr. Rajiv Kumar

Director - Member


Director - Member


MD&GE(IB) – Member (Ex-Officio)


MD&GE(A&S) - Member (Ex-Officio)

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14


Special Committee of the Board for

Monitoring of Large Value Frauds (SCBMF)

Shri Diwakar Gupta

MD&CFO-Member (Ex-Officio) - Chairman of the

Committee

Shri S.Vishvanathan



Director – Member


Director - Member

Shri Thomas Mathew

Director – Member

Dr. Rajiv Kumar

Director – Member

Shri Deepak I. Amin

Director – Member


Director - Member

Customer Service Committee of the Board (CSCB)


MD&GE(NB) – Member (Ex-Officio) - Chairman of the

Committee




Director – Member

Shri Thomas Mathew

Director – Member


Director – Member

Shri Jyoti Bhushan Mohapatra

Director - Member

Shri S. K. Mukherjee

Director - Member

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15


IT Strategy Committee of the Board (ITSC)

Shri D. Sundaram

Director - Chairman of the Committee


Director – Member


Director – Member

Shri Deepak I . Amin

Director - Member

Shri Diwakar Gupta

MD&CFO - Member (Ex-Officio)


MD&GE(NB) – Member (Ex-Officio)

Remuneration Committee of the Board (RCB)

Shri Rajiv Takru

GOI Nominee – Member (Ex-Officio)

Dr. Urjit R. Patel

RBI Nominee – Member (Ex-Officio)


Director – Member

Shri D. Sundaram

Director – Member

Board Committee to Monitor Recovery (BCMR)


Chairman


MD&GE(IB) – Member

Shri Diwakar Gupta

MD&CFO - Member


MD&GE(NB) - Member


MD&GE (A&S) - Member

Shri Rajiv Takru

GOI Nominee – Member (Ex-Officio)

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16


Members of Local Boards, other than Managing Director & Group Executive (National Banking) - Nominated by the Chairman in terms of Section 21(1)(a) of SBI Act,1955 (As on 23rd May 2013)

Ahmedabad

Shri S. A. Ramesh RanganChief General Manager (Ex-Officio)

Bangalore

Shri Ashwini MehraChief General Manager (Ex-Officio)

Bhopal

Shri Dinesh K. KharaChief General Manager (Ex-Officio)Shri Ramesh WarlyaniShri G. P. GuptaShri Manohar Bothra

Bhubaneswar

Shri Praveen Kumar GuptaChief General Manager (Ex-Officio)

Chandigarh

Shri N. KrishnamachariChief General Manager (Ex-Officio)Shri Vinod Bihari SharmaSmt. Ravinder Kaur

Chennai

Smt. Varsha PurandareChief General Manager (Ex-Officio)Shri T. R. Loganathan

Hyderabad

Shri Rakesh SharmaChief General Manager (Ex-Officio)

Kolkata

Shri Sunil SrivastavaChief General Manager (Ex-Officio)

Lucknow

Shri Sudhir DubeyChief General Manager (Ex-Officio)Shri Harichandra Bahadur Singh*Shri Madan Mohan Shukla

Denceoeyeeo

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17


Mumbai

Dr. J. N. MisraChief General Manager (Ex-Officio)Shri S. Venkatachalam*Shri D. Sundaram*Shri Parthasarathy Iyengar*Shri Thomas Mathew*Shri S. M. Lodha

Delhi

Shri Kajal GhoseChief General Manager (Ex-Officio)Dr. Rajiv Kumar*Shri Deepak Ishwarbhai Amin*

North Eastern

Shri Rajnish KumarChief General Manager (Ex-Officio)Shri Ashok Kumar Das

Patna

Shri Jeevandas NarayanChief General Manager (Ex-Officio)Shri Tanvir AkhtarShri Sanjay Mandal

Kerala

Dr. M. Sreenatha SastryChief General Manager (Ex-Officio)Smt. Alphonsa JohnShri Sudhir AbrahamShir Philip Mathew

*Directors on the Central Board nominated on the Local Boards as per Section 21(1)(b) of SBI Act.

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18


Members of Central Management Committee (As on 23rd May 2013)

Shri Pratip ChaudhuriChairman

Shri Hemant G. ContractorManaging Director & Group Executive(International Banking)

Shri Diwakar GuptaManaging Director & Chief Financial Officer

Shri A. Krishna KumarManaging Director & Group Executive(National Banking)

Shri S. VishvanathanManaging Director & Group Executive(Associates & Subsidiaries)

Shri Shyamal AcharyaDeputy Managing Director & Group Executive(Mid Corporate)

Shri S. B. NayarDeputy Managing Director & Group Executive(Corporate Banking)

Shri R. VenkatachalamDeputy Managing Director & Chief Credit & Risk Officer

Smt. Soundara KumarDeputy Managing Director & Group Executive(Stressed Assets Management)

Shri P. Pradeep KumarDeputy Managing Director & Group Executive(Global Markets)

Shri R. K. SarafDeputy Managing Director(Corporate Strategy & New Businesses)

Shri. B. V. ChaubalDeputy Managing Director & Corporate Development Officer

Shri S. K. MishraDeputy Managing Director & Chief Information Officer

Shri. V. MuraliDeputy Managing Director(Inspection & Management Audit)

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19


THE BANK’S AUDITORS

M/s Todi Tulsyan & Co.,Patna, Patna Circle

M/s SCM Associates,Bhubaneshwar, Bhubaneshwar Circle

M/s Singhi & Co.,Kolkata, North Eastern Circle

M/s S. N. Nanda & Co.,New Delhi, Kerala Circle

M/s T. R. Chadha & Co,New Delhi, Mumbai Circle

M/s S. Venkatram & Co.,Chennai, Chennai Circle

M/s Prakash & Santosh,Kanpur, Bhopal Circle

M/s K. B. Sharma & Co.,Jammu, Chandigarh Circle

M/s Add & Associates,Kolkata, Ahmedabad Circle

M/s V. P. Aditya & Co.,Kanpur, Lucknow Circle

M/s S. Jaykishan,Kolkata, Bengal Circle

M/s Dhamija Sukhija & Co.,Srinagar, Delhi Circle

M/s Sriramamurthy & Co.,Visakhapatnam, Hyderabad Circle

M/s V. Soundararajan & Co.,Chennai, Bangalore Circle

yeQkeÀ kesÀ uesKee-Hejer#ekeÀ

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20


efÒe³e Mes³ejOeejkeÀes,

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meceef

21


Dear Stakeholders,

It is my privilege to present this preface to your Bank’s Annual Report for the Financial Year 2012-13. As detailed in the report, your Bank conti nues to tread the path of sustained growth and maintain its fl agship positi on in the banking space in India. We are confi dent that with the support of all our stakeholders your Bank will conti nue to prosper and achieve greater heights in the ti mes to come.

Macro- Economic Scenario

Outlook for global growth for 2013 looks relati vely bett er than the previous year, with reduced tail risks. On the domesti c front, although growth contracted to around 5% in FY13, India conti nues to remain one of the fastest growing economies in the world. Outlook for the current fi scal with infl ati on now well within tolerance level, appears bett er than the previous year. Additi onally, soft ening of global commodity prices should help reduce the imported infl ati on in domesti c economy. Trends in industrial growth are encouraging. With exports turning positi ve, coupled with higher capital infl ows, managing the current account defi cit may be facilitated in the current year.

Against the above backdrop of a challenging macro-economic environment, the domesti c banking system conti nued to enjoy the confi dence of the banking public. This is refl ected in the aggregate deposits of all scheduled commercial banks (ASCB) growing higher by 14.3% in FY13 against 13.5% growth in FY12. However, there was sharp decelerati on in credit growth to 14.1% in FY 13 from 17.0% in FY12 due to a slow-down in investment demand and overall muted growth. Liquidity positi on was, however, normal as RBI provided refi nance for exports. Since there was litt le head room to reduce the deposit rates, banks NIMs were under pressure.

Due to the downturn, many sectors were severely aff ected impacti ng the quality of assets fi nanced by the banks. Gross NPAs of 40 listed banks went up by 43.1% from levels a year ago. Further the restructured assets book also showed an upward bias with recast assets under CDR around 50% more than the whole of last year.

Your Bank’s performance

Deposits

The deposits of your Bank have risen to `12,02,740 crores with the annual growth at 15.24% over that of last year’s level of `10,43,647 crores. What is noteworthy is that not only is this bett er than last year’s growth, which was 11.75% but your Bank has achieved this against the trend prevailing in the industry. Furthermore, it has come on the back of retail deposits and the deposit profi le of your Bank shows a signifi cant move away from high cost

From the Desk ofthe Chairman

FROM THE DESK OF THE CHAIRMAN

22


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DeeHekeÀes ³en peevekeÀj KegMeer nesieer efkeÀ DeeHekesÀ yeQkeÀ keÀer Kegoje $eÝCeeW keÀer efmLeefle Del³eefOekeÀ GlmeenJeOe&keÀ nw~ Kegoje KeC[ ceW DeefieÏce mebJeÉefà oj 14.95% Deewj DeefieÏceeW keÀer jeefMe `27,267 keÀjesæ[ jner peyeefkeÀ efHeíues Jeøe& FmeceW 10.85% keÀer mebJeÉefà ope& ngF& Leer~ Fme KeC[ ceW ÒecegKe meb®eeuekeÀ nceejs ieÉn $eÝCe Deewj Dee@@ìes $eÝCe jns nQ efpeveceW ¬eÀceMe: 16.28% (`16,728 keÀjesæ[) Deewj 35.47% (`6,494 keÀjesæ[)mebJeÉefà ope& ngF& nw~ oesveeW mebefJeYeeieeW ceW ceevekeÀ Deeefmle³eeW keÀe ÒeefleMele keÀeHeÀer De®íe nw Deewj kesÀJeue 1% kesÀ DeemeHeeme keÀer Deeefmle³eeb neefveiele nes mekeÀleer nQ~ cegPes ³en yeleeles ngS KegMeer nw efkeÀ nceejer ÒeeflemHeOeer& ojeW kesÀ keÀejCe, efpemeves veS Deewj DeefOeieÏnCe ÒemleeJeeW keÀes DeekeÀeføe&le efkeÀ³ee nw, DeeHekeÀe yeQkeÀ yeQefkeÀbie GÐeesie ceW Fve oesveeW KeC[eW ceW Fme mece³e vecyej 1 efmLeefle ceW nw~

keÉÀøekeÀ mecegoe³e keÀes $eÝCe efJelejCe kesÀ Debleie&le, DeeHekesÀ yeQkeÀ ves Fme Jeøe& kesÀ oewjeve `22,303 keÀjesæ[ kesÀ Òel³e#e keÉÀeføe DeefieÏce mebefJeleefjle efkeÀS nQ, FmeceW 11.89 ueeKe veS efkeÀmeeveeW keÀes $eÝCe osvee Yeer Meeefceue nw Deewj pees 25.85% keÀer mebJeÉefà keÀes oMee& jne nw~ 31.03.2013 keÀer efmLeefle kesÀ Devegmeej, yeefn³eeW ceW oMee&S ieS `1,08,584 keÀjesæ[ kesÀ keÀgue Òel³e#e keÉÀeføe DeefieÏceeW ceW mes, 30.77%, DeLee&le `33,409 keÀjesæ[ kesÀ DeefieÏce mJeCe& keÀer mebHeeefée&keÀ ÒeefleYetefle kesÀ DeeOeej Hej efoS ieS nQ~ ieÏeceerCe HeefjJeejeW keÀes GvekeÀer mJeCe& Deeefmle³eeW kesÀ DeeOeej Hej $eÝCe ÒeeHle keÀjves keÀe DeJemej GHeueyOe keÀjeves ceW DeeHekesÀ yeQkeÀ keÀes KegMeer nw~ Henueer yeej Ssmee ngDee nw efkeÀ DeeHekesÀ yeQkeÀ ves Òel³e#e keÉÀeføe DeefieÏceeW kesÀ 13.5% kesÀ efveOee&efjle SSveyeermeer ue#³e mes DeefOekeÀ 14.24% neefmeue keÀj efue³ee nw~ DeeHekesÀ yeQkeÀ ves efkeÀmeeveeW lekeÀ DeHeveer Hengb®e keÀes meg¢æ{ efkeÀ³ee nw Deewj mebYeeJ³e kesÀvêesb ceW Keesueer ieF& 21 keÉÀeføe JeeefCeefp³ekeÀ MeeKeeDeesb keÀes DeHeves vesìJekeÀ& ceW Meeefceue efkeÀ³ee nw efpememes GYejles ngS G®®e jeefMe kesÀ keÉÀeføe Deewj keÉÀeføe mebyeà SmeSceF& DeefieÏceeW kesÀ DeJemejeW keÀes ÒeeHle efkeÀ³ee pee mekesÀ~

GHe³e&gkeÌle efveøHeeove mes yeQkeÀ pecee-jeefMe³eeW kesÀ DeHeves yeepeej DebMe ceW megOeej keÀj mekeÀe Deewj FmekeÀe yeepeej DebMe pecee-jeefMe³eeW ceW efHeíues Jeøe& kesÀ 16.29% mes ye]{keÀj ®eeuet Jeøe& kesÀ oewjeve 16.46% Deewj DeefieÏceeW ceW meceeve DeJeefOe kesÀ 16.09% mes ye]{keÀj 16.66% nes ie³ee~ 31.03.2013 keÀer efmLeefle kesÀ Devegmeej yeQkeÀ keÀe $eÝCe-pecee DevegHeele 82.4 jne peyeefkeÀ meYeer Devegmetef®ele JeeefCeefp³ekeÀ yeQkeÀeW keÀe $eÝCe-pecee DevegHeele 78 jne nw~

Dev³e keÀe³e&keÀueeHe:

Jeøe& kesÀ oewjeve, yeQkeÀ ves DeHeves vesìJekeÀ& ceW 719 MeeKeeDeesb keÀes peesæ[keÀj DeHeveer Hengb®e ceW efJemleej efkeÀ³ee nw~ ³es MeeKeeSb 123 ceneveiejeW ceW, 122 Menjer kesÀvêesb ceW, 170 DeOe&-Menjer kesÀvêesb Deewj 304 ieÏeceerCe #es$eesb ceW Keesueer ieF& nQ~ 31.03.2013 keÀer efmLeefle kesÀ Devegmeej, keÀgue 14,816 MeeKeeDeesb ceW mes, 66% (9851 MeeKeeSb) ieÏeceerCe Deewj DeOe&-Menjer #es$eesb ceW nQ~

efJeÊeer³e meceeJesMeve kesÀ #es$e ceW, DeeHekesÀ yeQkeÀ ves jeä^er³e Deewj #es$eer³e oesveeW mlejeW Hej ieþpeesæ[ kesÀ ceeO³ece mes 38,480 J³eJemee³e ÒeefleefveefOe ieÏenkeÀ mesJee kesÀvê Keesues nQ~ efJeÊe Jeøe& 12-13 kesÀ oewjeve yeermeer ®ewveue kesÀ ceeO³ece mes uesveosveeW keÀer jeefMe ceW efJeÊe Jeøe& 11-12 keÀer leguevee ceW 2.4 iegvee JeÉefà ngF& Deewj FvekeÀer jeefMe `13,033 keÀjesæ[ lekeÀ Hengb®e ieF& nw~

DeO³e#e keÀer keÀuece mes

23


bulk deposits. Out of the total Term Deposits of `6,04,649 crores, retail TDs comprise 78.27% at `4,73,235 crores. Your Bank’s strength lies in its wide reach covering all strata of society and the trust of the people. Due to this the customer acquisiti on growth is also encouraging. I am glad to state that under Savings Bank, 287 lac new accounts came to the books of your Bank representi ng 18.62% growth over last year and in Current Accounts we could clock a growth of 8.43% with new accounts accreti on at 2.20 lacs.

The Bank conti nued to have good domesti c CASA rati o at 46.50% which is bett er than all the major public sector banks and most private sector banks which helped in keeping the cost of funds low at 6.46% as at 31.03.2013.

Advances

On the advances front, I am happy to convey that your Bank has crossed the `10,00,000 crores level and now the advances stand `10,78,557 crores. Like the deposits, the growth of 20.70% over last year is bett er than the growth recorded by All Scheduled Commercial Banks. The growth has come mainly from a surge in advances to large corporates at `50,549 crores, which represents an unprecedented growth of 40.28% during this FY compared to 15.23% (`16,298 crores) achieved last FY. Mid corporate segment too has made a signifi cant contributi on of `31,472 crores giving an 18.15% growth, as against `12,173 crores (8.78% growth) last year. SME segment has, however, seen a lower off -take of `20,383 crores with growth at 12.45% against 17.41% last year refl ecti ng market conditi ons. It may be noted that your bank has been mindful of asset quality and nearly 80% of the incremental exposure is to investment grade assets based on external rati ngs. It was a conscious strategy of your Bank to provide competi ti ve rates of interest to the bett er rated companies. This, along-with CGTSME and ECGC covers, as also fair distributi on across verti cals, has helped to de-risk the portf olio.

You will be glad to note that your Bank’s retail story has been excepti onally encouraging. The retail segment growth has been to the tune of `27,267 crores giving a growth of 14.95% against last year’s 10.85%. Major drivers in this segment have been our Home Loans and Auto loans which have registered a 16.28% (` 16,728 crores) and 35.47% growth (`6,494 crores) respecti vely. Both the portf olios are quite healthy with impaired assets at just around 1% only. I am pleased to convey that because of our competi ti ve rates, which has att racted new and take-over proposals, your Bank is currently ranked at number 1 in both these segments across the industry.

Under fl ow of credit to the farming community, your Bank has disbursed direct Agriculture loans of `22,303 crores during the year, representi ng a growth of 25.85% covering 11.89 lac new farmers. Out of the total direct agriculture advance of `1,08,584 crores standing in the books as at 31.03.2013, 30.77% i.e. `33,409 crores is collateralised by gold. Your Bank was happy to provide an opportunity to the rural households to leverage their gold assets. It was for the fi rst ti me that your Bank exceeded the sti pulated ANBC bench mark of 13.5% in direct agricultural advances by reaching 14.24% as at 31.03.13. Your Bank has strengthened its reach to the agriculturists and added to its network 21 Agriculture Commercial branches opened at potenti al centres to capture emerging high value agriculture and agriculture related SME opportunity.

The above performance enabled the Bank to record an improvement in its market share in deposits from 16.29% last year to 16.46% during current year and in advances from 16.09% to 16.66% in the corresponding period. The Bank’s CD rati o as at 31.03.2013 stood at 82.4 compared to All Scheduled Commercial Banks 78.

Other acti viti es

During the year, the Bank expanded its reach by adding 719 branches to its network comprising 123 in Metros, 122 in Urban, 170 in Semi-Urban and 304 in Rural areas. As at 31.03.13, out of total 14,816 branches, 66% (9851 branches) are in Rural and Semi-urban areas.

On the fi nancial inclusion front, your Bank has rolled out 38,480 Business Correspondent Customer Service Points through alliances both at the nati onal and regional level. Transacti ons volume through BC channel has grown 2.4 ti mes during FY12-13 at `13,033 crores over FY 11-12.


24


31.03.2013 keÀes 32,752 SìerSceeW Jeeuee mìsì yeQkeÀ mecetn efJeée kesÀ meyemes yeæ[s vesìJekeÀeX ceW mes SkeÀ nw~ ³en efmLeefle Deewj Yeer yesnlej nesleer Leer Hejbleg Jeøe& kesÀ oewjeve SìerSce efJemleej Hej yeæ[s ÒeefleyebOe ueieeS ieS efpemeves yeQkeÀ keÀes mecetn kesÀ 136 efceefue³eve [sefyeì keÀe[eX Jeeues yeæ[s [sefyeì keÀe[& DeeOeej ceW Deewj DeefOekeÀ JeÉefà keÀjves mes jeskeÀ efo³ee~ Fme keÀejCe mes, Jeøe& kesÀ Deble ceW yeQkeÀ SkeÀ efveJeue efveie&cekeÀlee& jne Deewj Jeøe& kesÀ oewjeve Gmes `66 keÀjesæ[ kesÀ HejmHej-HeefjJele&ve MegukeÀ keÀe Yegieleeve keÀjvee Heæ[e~

DeeHekesÀ yeQkeÀ ves jeskeÀæ[ (vekeÀoer) pecee ceMeerveeW (meer[erSce) keÀer Meg©Deele keÀer nw efpememes ieÏenkeÀeW keÀes DeHeves SmeyeerDeeF& SìerSce-men-[sefyeì keÀe[& keÀe GHe³eesie keÀjkesÀ DeHeves KeeleeW ceW vekeÀo jeefMe pecee keÀjves ceW Deemeeveer nesieer~ 31.03.2013 lekeÀ ueieeF& ieF& meer[erSce ceMeerveeW keÀer mebK³ee 665 jner~

DeeHekesÀ yeQkeÀ kesÀ keÀejHeesjsì meeceeefpekeÀ oeef³elJe (meerSmeDeej) mebyebOeer keÀe³e&-keÀueeHeeW keÀes efvejblej yeue Deewj mecceeve ÒeeHle neslee jne nw~ meerSmeDeej kesÀ Debleie&le yeQkeÀ mecemle Yeejle ceW ®eueeS ieS DeefYe³eeve kesÀ meeceeefpekeÀ ¢efä mes mebyebefOele DeveskeÀ ³eespeveeDeesb kesÀ efueS mene³elee GHeueyOe keÀjeles nQ~ Fme Jeøe& kesÀ GuuesKeveer³e keÀe³eeX ceX 42,000 mketÀueeW ceW 43,161 Jeeìj H³etefjHeÀe³ejeW keÀer mLeeHevee keÀjkesÀ mJe®í SJeb Megà Hes³e peue keÀer megefJeOee GHeueyOe keÀjevee Meeefceue nw~ Fme megefJeOee mes 84 ueeKe efJeÐeeefLe&³eeW keÀes ueeYe ngDee nw~ 14,000 mkeÀtueeW ceW 1,40,000 HeÀwve keÀer DeeHetefle& keÀjkesÀ HeÀwve GHeueyOe keÀjeves kesÀ keÀe³e&¬eÀce keÀes Yeer peejer jKee ie³ee~ cegPes ³en keÀnles ngS KegMeer nes jner nw efkeÀ DeeHekesÀ yeQkeÀ kesÀ Fefleneme ceW Henueer yeej, meerSmeDeej J³e³e jeefMe `100 keÀjesæ[ keÀes Yeer Heej keÀj ieF& nw Deewj Fme efJeÊe Jeøe& ³en `123 keÀjesæ[ lekeÀ Hengb®e ieF&~

ueeYe Deewj efveJeue y³eepe ceeefpe&ve mebyebOeer ceeHeoC[

³eÐeefHe Hetjer yeQefkeÀbie ÒeCeeueer ceW HeefjJesMe ®egveewefle³eeW keÀe DevegYeJe efkeÀ³ee ie³ee, efHeÀj Yeer DeeHekesÀ yeQkeÀ ves ceneve meceglLeeve-MeefkeÌle keÀes ÒeoefMe&le efkeÀ³ee Deewj keÀe³e&veereflekeÀ SJeb yeepeej GvcegKe HenueeW kesÀ keÀejCe DeefOekeÀebMe ceeveoC[eW kesÀ Debleie&le SkeÀ meg¢æ{ efveøHeeove keÀes yevee jKee nw~ cegPes ³en yeleeles ngS KegMeer nw efkeÀ DeeHekesÀ yeQkeÀ ves kegÀue efceueekeÀj `17,916 keÀjesæ[ kesÀ efveJeue ueeYe kesÀ meeLe efveJeue ueeYe ceW 16.77% keÀer mebJeÉefà ope& keÀer nw~ DeeHekesÀ yeQkeÀ ves DekesÀues Yeer efHeíues Jeøe& kesÀ `11,707 keÀjesæ[ kesÀ efveJeue ueeYe keÀer leguevee ceW Fme Jeøe& 20.48% keÀer JeÉefà neefmeue keÀjles ngS `14,105 keÀjesæ[ keÀe efveJeue ueeYe ope& efkeÀ³ee~ Fmemes DeeHekesÀ yeQkeÀ keÀe mLeeve osMe kesÀ 3 yeæ[s keÀejHeesjsìeW ceW Meeefceue nes ie³ee nw~

keÀgue y³eepe Dee³e ceW 12.33% keÀer JeÉefà ngF& Deewj ³en efHeíues Jeøe& kesÀ `1,06,521 keÀjesæ[ kesÀ mlej mes ye]{keÀj `1,19,657 keÀjesæ[ nes ieF&~ efo³ee ie³ee keÀgue y³eepe Yeer 19.13% keÀer mebJeÉefà kesÀ meeLe Henues mes DeefOekeÀ jne~ Fme keÀejCe efveJeue y³eepe Dee³e efHeíues Jeøe& kesÀ `43,291 keÀjesæ[ mes ye{keÀj Fme Jeøe& `44,331 keÀjesæ[ nes ieF&, pees J³eJemee³e HeefjJesMe keÀes Òeefleefyeefcyele keÀj jner nw~ iewj-y³eepe Dee³e ceW Yeer Fmeer DeeOeej Hej 11.73% keÀer JeÉefà ngF& Deewj ³en efHeíues Jeøe& kesÀ `14,351 keÀjesæ[ mes ye]{keÀj `16,035 keÀjesæ[ lekeÀ Hengb®e ieF&~ leLeeefHe, ³en efmLeefle Hetjer lejn mes legueveelcekeÀ veneR nw keÌ³eeWefkeÀ FmeceW efHeíues Jeøe& keÀer HeWMeve efveefOe mes ÒeeHle Dee³e keÀes Meeefceue efkeÀ³ee ie³ee Lee peyeefkeÀ Fme Jeøe& HeWMeve efveefOe yeQkeÀ mes yeenj nw~ Fme meboYe& ceW, nceejs jepekeÀesøeer³e mebefJeYeeie keÀe efveøHeeove GuuesKeveer³e jne nw Deewj Fmeves SkeÀ cenlJeHetCe& ³eesieoeve efo³ee nw~ Fmemes efHeíues Jeøe& osMeer³e Deewj efJeosMeer efveJesMeeW (F&efkeÌJeìer, c³et®egDeue HeÀC[ Deewj yeeC[)keÀer efye¬eÀer mes mecHetCe& yeQkeÀ mlej Hej ngS `920 keÀjesæ[ kesÀ vegkeÀmeeve keÀer efmLeefle mes yeQkeÀ keÀes Fme efJeÊe Jeøe& ceW `1098 keÀjesæ[ kesÀ ueeYe keÀer efmLeefle ceW uee efo³ee nw~ Fme Òeef¬eÀ³ee ceW, yeQkeÀ ves keÀce efveøHeeove Jeeues efveJesMeeW (mìe@keÀeW) keÀer efye¬eÀer keÀjkesÀ Fme mebefJeYeeie keÀes SkeÀ De®íer efmLeefle ceW uee efo³ee nw~

Heefj®eeueve J³e³eeW ceW 12.33% keÀer JeÉefà ngF& Deewj ³es efHeíues Jeøe& kesÀ `26,069 keÀjesæ[ keÀer leguevee ceW `29,285 keÀjesæ[ kesÀ mlej lekeÀ Hengb®e ieS~ FmekeÀe cegK³e keÀejCe MeeKee HeefjJesMe keÀe #es$e efJemleej SJeb yesnlej meepe meppee kesÀ keÀejCe THejer J³e³eeW ceW JeÉefà nesvee Lee, efpemekeÀe ueeYe nceW Deeves Jeeues JeøeeX ceW Oeer&js-Oeerjs ÒeeHle nesiee~ cegK³e ªHe mes cegêemHeÀerefle ceW meYeer lejn mes JeÉefà nesves kesÀ keÀejCe DeefOeJeeføe&lee ueeYeeW kesÀ efueS ÒeeJeOeeve meefnle mìeHeÀ ueeieleeW ceW 8.29% keÀer JeÉefà ngF& Deewj FvekeÀer jeefMe ye]{keÀj `16,974 keÀjesæ[ mes `18,381 keÀjesæ[ lekeÀ nes ieF&~ leLeeefHe, Heefj®eeueve J³e³e kesÀ SkeÀ DevegHeele kesÀ ªHe ceW mìeHeÀ J³e³eeW ceW efiejeJeì DeeF& nw Deewj ³es efHeíues Jeøe& kesÀ 65.11% mes IeìkeÀj 62.77% jn ieS nQ~

mecHetCe& yeQkeÀ keÀe efveJeue y³eepe ceeefpe&ve (SveDeeF&Sce) ceeie&oMe&ve kesÀ Devegmeej Deewj Deewmele DeewÐeesefiekeÀ ceeveob[ mes yesnlej nw~ keÀæ[er ÒeeflemHeOee& Deewj SveHeerS efmLeefle keÀes osKeles ngS, SveDeeF&Sce oyeeJe ceW jne nw~ ³eÐeefHe ³en efHeíues efJeÊe Jeøe& ceW neefmeue efkeÀS ieS mlej keÀer leguevee ceW keÀce nw, efHeÀj Yeer 3.34% kesÀ mlej Hej DeeHekeÀe yeQkeÀ DeHeves mecekeÀ#e yeQkeÀeW ceW meyemes De®íer efmLeefle ceW nw~ Iejsuet mlej Hej SveDeeF&Sce 3.66% Deewj efJeosMe efmLele keÀe³ee&ue³eeW ceW ³en 1.50% jne nw~ ³eefo lejue c³et®egDeue HeÀC[eW kesÀ y³eepe keÀes O³eeve ceW jKee peelee nw, lees Iejsuet SveDeeF&Sce ye]{keÀj 3.71% lekeÀ nes peelee nw~

Deeefmle iegCeJeÊee

Ûeefmele Deeefmle³eeW kesÀ mlej ceW SkeÀ TOJe&ieeceer JeÉefà ngF& nw, pees DeLe&J³eJemLee keÀer efmLeefle kesÀ keÀejCe nw~ nceves yekeÀe³ee jeefMe³eeW kesÀ SkeÀ DeYetleHetJe& mlej keÀe DevegYeJe efkeÀ³ee nw~ DeLe&J³eJemLee ceW oyeeJe Jeeues #es$eesb, DeLee&le keÀeiepe, HueeefmìkeÀ, ueesne SJeb mìerue, metleer Jeðe, Fbpeerefve³eefjbie meeceeve, HeefjJenve Deeefo #es$eesb kesÀ efce[ keÀejHeesjsì DeefieÏceeW ceW ³en efmLeefle Kejeye ngF& nw~ 2.10% kesÀ efveJeue SveHeerS mlej kesÀ meeLe Fme mece³e mekeÀue SveHeerS 4.75% kesÀ mlej Hej jner nQ~ SveHeerS ÒeyebOeve keÀer efoMee ceW Jeøe& kesÀ oewjeve, efJeMesøe ªHe mes efJeÊe Jeøe&-13 keÀer ®eewLeer efleceener kesÀ oewjeve efkeÀS ieS efJeMesøe Òe³eemeeW mes De®íe HeÀe³eoe ngDee nw efpememes DeeefKejer efleceener ceW Fve Hej efve³eb$eCe efkeÀ³ee pee mekeÀe~ efmLeefle ceW Del³eefOekeÀ megOeej ngDee nw Deewj ³en Hetjer lejn mes nceejs efve³eb$eCe ceW jner~ DeeHekesÀ yeQkeÀ ves Jeøe& kesÀ oewjeve SveHeerS kesÀ efueS

DeO³e#e keÀer keÀuece mes

25


State Bank group has one of the largest ATM networks in the world with 32,752 ATMs as on 31.03.13. The positi on would have been much bett er but for signifi cant restricti ons during the year on expanding ATM network which prevented the Bank from fully leveraging the group’s large debit card base of 136 million debit cards. On account of this, the Bank ended the year as a net issuer and paid out inter-change fees of `66 crores during the year.

Your Bank has introduced Cash Deposit Machines to facilitate customers to deposit cash in their accounts by swiping their SBI ATM cum Debit card. As on 31.03.13, the number of CDMs installed was 665.

The Corporate Social Responsibility(CSR) acti viti es of your Bank conti nue to gain momentum and earn accolades. The Bank’s pan India campaigns under CSR provide support to a host of socially relevant schemes and this year’s highlights included providing safe and clean drinking water facility through installati on of 43,161 water purifi ers to 42,000 schools benefi tti ng 84 lac students. The programme of providing fans was also conti nued with supply of 1,40,000 fans to 14,000 schools. I am happy to convey that for the fi rst ti me in the history of your Bank, the CSR spend has crossed the milestone of ` 100 crores touching ` 123 crores in this fi scal.

Profi t and NIM parameters

Though the challenges of the environment were felt across the banking system, your Bank displayed great resilience and could sustain a sound performance under most parameters due to strategic and market oriented initi ati ves. I am happy to report that your Bank, on a consolidated basis, recorded a 16.77% growth in net profi ts standing at `17,916 crores. On a stand-alone basis also, your Bank recorded a Net Profi t of `14,105 crores, up by 20.48% over `11,707 crores achieved last year. This places your Bank amongst the top 3 corporates in the country.

Total Interest income grew by 12.33% to a level of ̀ 1,19,657 crores up from ̀ 1,06,521 crores last year, total interest expenses were on a higher trajectory with a growth of 19.13%. Consequently, the Net Interest Income increased from `43,291crores last year to `44,331 crores this year, refl ecti ng the business environment. Non- interest income growth too was on similar lines gaining 11.73% and increased to a level of `16,035 crores from `14,351 crores last year. This positi on is, however, not strictly comparable as last year income from Pension Fund was included while this year the Pension Fund is outside the Bank. In this context, the performance of our Treasury portf olio has been outstanding and has made a signifi cant contributi on moving from a whole bank loss positi on of `920 crores on sale of domesti c and foreign investments (Equity, MF and Bonds) last year to a profi t of `1098 crores this fi nancial. In the process the Bank has churned the portf olio to exit out of poor quality stock. Currently, Bank’s investment policy envisages subscribing only to indexed stocks.

Operati ng expenses increased by 12.33% to a level of `29,285 crores against last year’s `26,069 crores mainly on account of overhead expenses due to signifi cant increase in the physical spread and up gradati on of branch ambience, results from which will fl ow-in in the coming years. Staff costs, including provision for superannuati on benefi ts, have increased from `16,974 crores to `18,381 crores an increase of 8.29% primarily due to all round increase in infl ati on. However, as a proporti on of Operati ng expenses, staff expenses have declined to 62.77% from last year’s 65.11%.

The Net Interest Margin (NIM) for whole bank is in line with the guidance and bett er than the average industry norm. Looking to the severe competi ti on and NPA positi on, the NIM was under pressure. Though this is lower than that achieved last FY, at the level of 3.34% your Bank conti nues to rank high amongst peers. On the domesti c book the NIM stands at 3.66% and for the foreign offi ces it is at 1.50%. If interest from liquid Mutual funds is considered, the domesti c NIM improves to 3.71%.

Asset Quality

The level of impaired assets has shown an upward bias, symptomati c of the state of the economy, and we experienced an unprecedented level of delinquencies. The deteriorati on has occurred in the mid-corporate space in sectors under stress in the economy namely Paper and Plasti cs, Iron and Steel, Texti les, Engineering Goods, Transport, etc. Gross NPAs are currently at 4.75% with Net NPA level of 2.10%. Special eff orts made during the course of the year, especially during Q4 FY13, in the directi on of NPA management paid good dividends which enabled control,


26


`11,368 keÀjesæ[ kesÀ ÒeeJeOeeve kesÀ meeLe DeHesef#ele ÒeeJeOeeve efkeÀS nQ~ ÒeeJeOeeve megj#ee DevegHeele 66.58% jne~ keÀgue Hegveme¥jef®ele Deeefmle³eeW keÀer jeefMe `43,111 keÀjesæ[ jner, efpemeceW mes ceevekeÀ ÞesCeer keÀer Deeefmle³eeW keÀer jeefMe `32,228 keÀjesæ[ Deewj SveHeerS ÞesCeer keÀer Deeefmle³eeW keÀer jeefMe `10,883 keÀjesæ[ jner nQ~

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27


signifi cant improvement in the last quarter and prevented the positi on from getti ng out of hand. Your Bank has done the requisite provisioning with provision for NPAs during the year at ` 11,368 crores. The Provision Coverage rati o stands at 66.58%. The total restructured assets book stood at ` 43,111 crores of which ` 32,228 crores are in the standard category and ` 10,883 crores in the NPA category .While external factors had a large bearing on the growth of NPAs, special eff orts were made by your Bank to contain the impact through stringent loan screening, close follow-up and interacti on with the borrowers, setti ng up of special teams for recovery, re-structuring and re-scheduling on a case to case basis and merits, recourse to SARFAESI, real ti me monitoring through account tracking centres and related ground level resoluti on strategies. In fact in the last quarter of the FY 2012-13, there was a signifi cant contracti on of Gross NPAs from ` 53,458 crores (5.30%) in Q3FY12-13 to ` 51,189 crores (4.75%)at the end of Q4FY12-13. Overall, the eff ort saw Upgradati on of ` 10,119 crores and Cash Recovery of ` 4,766 crores in the NPA accounts. Recovery in Writt en Off /AUCA accounts was to the tune of ` 1066 crores during the year. In the ti mes ahead and supported by the growth in the real economy, we are not going to allow any let up in our eff orts at resolving the impaired assets through ti mely and proacti ve measures.

Capital structure

The Capital Adequacy Rati o of your Bank stands at 12.92%, against RBI sti pulati on of 9%, with Tier1 capital at 9.49% and Tier II at 3.43%. The CAR remains strong and the strength comes from the following three factors:

a) Robust internal generati on and plough back of profi ts of `10,890 crores;b) Capital infusion of `3004 crores by the Government; andc) Conti nuous and on-going eff orts at opti mizing capital

Looking to the fact that the rules for Tier II capital have become quite sti ff and challenging, your Bank did not think it opti mum to raise ti er II capital.

Your Bank conti nues to enjoy very good market valuati ons and is currently ranked 8th amongst top 10 market cap companies and number 1 amongst Public Sector banks.

The Bank on a consolidated basis conti nues to be amongst the top tax payers of the country with tax payout during FY12-13 at `7,559 crores against `8,639 crores last FY, the reducti on coming about on account of prudent and effi cient tax planning measures.

Dividend

I am happy to announce that the Board of Directors of your Bank has declared a dividend of `41.50 per share (415%) for the year ended 31st March 2013.

New Business Drivers

1. Low cost (`100) Personal Accident Cover of `4 lacs for all SB account holders of the Bank;2. Inter core charges for transfer transacti ons made NIL;

3. Pre-payment penalti es abolished;

4. No minimum balance requirement for SB accounts;

5. SME Insta Deposit Card for MSME segment, State Bank Business Debit Card and State Bank Virtual Card launched;

6. Introducti on of on-line Savings Bank account opening facility;

7. Multi city cheque books provided to all our customers.

Associates and Subsidiaries

I am happy to convey that your Bank’s Associates and Subsidiaries conti nue to achieve good growth tracti on.

During the year, the 5 Associate banks saw their consolidated PAT at ` 3,678 crores. Their Operati ng profi t increased from `8,214 crores to `8,802 crores in current FY. All these banks are profi table and well capitalized with average NIM at 3.13% and CAR averaging 11.85% as at 31.03.13.


28


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29


Of the non-banking subsidiaries, SBI Life Insurance Company Ltd. posted a PAT of ` 622.20 crores, a YOY growth of 11.87% and has emerged as the private market leader in new business premium for FY 12-13. SBI Capital Market Ltd. has registered a YOY growth of 17.92% in PAT reaching a level of `296 crores. SBI Cards and Payment Services (Pvt.) Ltd., the only stand-alone card issuing company in India,conti nues to excel with a PAT of ` 136.30 crores representi ng a YOY growth of 258%. SBI General Insurance Company Ltd. has issued 7.28 lac policies across Retail, SME and Corporate segments garnering premium of ` 771 crores, a rise of 208% over previous fi scal. SBI DFHI registered an excellent growth of 84% in their profi t over that of last year improving from a level of `43.50 crores to ` 80.29 crores.

Honours and Awards

Your Bank’s achievements in various fi elds have received nati onal and internati onal recogniti on as enumerated below:

FE Best Banks Award-Award for Initi ati ves

Nati onal Award- 2011-12 Best Bank for Excellence in the fi eld of Khadi & Village Industries (PMEGP)

“Agriculture Leadership Award 2012” from Agriculture Today under Development Leadership category.

“Best IT driven Innovati on Award in Banking” in the Country from NASSCOM was awarded to APGVB, RRB sponsored by SBI.

Ministry of Rural Development, GOI, awarded “Certi fi cate of Excellence” for Bank’s proacti ve role in establishing Rural Self Employment Training Insti tutes across the country during the year 2011-12.

Asia’s Best CSR Practi ce Award insti tuted by CMO Asia has been awarded to the Bank in Singapore.

‘Asian CSR Leadership Award 2012’ has been conferred to the Bank in Dubai.

IPE Best CSR Award – 2012.

Most Caring Companies of India Award – 2012.

Star of the Industry Award for excellence in Banking (PSU) – 2012.

Golden Peacock Award 2012’ in Corporate Governance by the Insti tute of Directors on 11th October 2012

Golden Peacock Nati onal Training Award-2012.

The Road Ahead

The economy appears to have bott omed out and we can look forward with enthusiasm to exciti ng ti mes ahead. Challenges remain and in a dynamic and growing economy new ones will surface but we are hopeful that with the fresh thrust to balanced growth initi ati ves by the Government and support from RBI with appropriate monetary policies, the banking industry shall achieve greater heights. Your Bank has demonstrated its resilience in the current challenging environment and I am confi dent that we have the strength and resources which, along with the trust our customers have reposed in us, will enable us to withstand any adversity and emerge stronger.

I would like to thank each and everyone of our employees without whose eff orts and commitment your Bank would not have been in the strong positi on it is in.

I would also like to thank all our shareholders for their belief in us and their support in our endeavor towards progressive growth.

With warm regards,

Yours sincerely,

(Prati p Chaudhuri)


30


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31


ECONOMIC BACKDROP AND BANKING ENVIRONMENT

Global Economy

The global economy has entered 2013 with reduced downside risks, as the US fi scal cliff and a fl are up of the euro area crisis being averted. With downside risks receding, it is now worth considering the prospects for an improvement in global growth. As per the IMF forecast, global economy is forecast to grow by 3.3% in 2013 (vis-a-vis 3.2% in 2012). The housing sector in the US economy – the epicentre of the downturn - has made considerable progress in repairing its balance sheet. Policy makers in the euro zone area have reconfi rmed their commitment to resoluti on of the euro crisis by working on a common euro area integrati on framework. Going forward, US economy is supposed to gain conti nued tracti on, even though a sustained pick-up in euro area may take a while to materialize. Growth in emerging market and developing economies is projected at 5.3% in 2013 (vis-a-vis 5.1% in 2012). On the whole, an environment of progressively lower global tail risks and conti nued structural reforms in various economies will favourably impact global growth outlook in 2013.

Indian Economy

India’s economic growth touched 5% in FY13-a decadal low. This was mainly due to the protracted weakness

in industrial acti vity aggravated by domesti c supply bott lenecks (manufacturing sector expanded at 1% in FY13 vis-a-vis 2.7% in FY12), and slowdown in the services sector refl ecti ng weak external demand.

Agricultural producti on was impacted during the year refl ecti ng defi ciency and uneven distributi on of rainfall (agricultural sector expanded at 1.9% in

DIRECTORS’ REPORTManagement Discussion and Analysis

FY13 vis-a-vis 3.6% in FY12). It dented Kharif sowing, however, recovery of rainfall from September 2012 onwards helped maintain soil moisture during the rabi season. The third advance esti mates of crop producti on for FY13 indicate a marginal decline of 1.5% in overall food grain producti on to 255.4 million tonnes from 259.3 mt in the previous year. The current stock of foodgrains 59.7 million tonnes at end-March 2013 is suffi cient to meet the requirement of the country.

Headline infl ati on aft er progressively rising from 7.5% in Apr’12 to over 8% ti ll Sept’12, has now declined to 4.9% in April 13, a 41 month low and within the RBI comfort zone. Core infl ati on has also declined to 2.8% in Apr’13, a 39 month low. The CPI -Rural Urban (CPI-RU) has eased to 9.4% in Apr’13. This was the lowest CPI infl ati on in 13 months. Various other CPI indicators support the contenti on that consumer infl ati on may have peaked out. Interesti ngly, rural infl ati on is coming down at a faster rate than urban areas indicati ng some decelerati on in rural demand as well. Moreover, the calibrated increase in diesel prices are not likely to conti nue over the enti re fi scal, with the current under-recovery on diesel at lower levels. This will further reduce the prospects of an upturn in infl ati on over FY14.

The growth of industrial producti on decelerated to 1% during FY13 (vis-a-vis 2.9% in FY12). Even though, there has been a pick-up in industrial acti vity in March 2013, contracti on in capital goods and mining sector conti nues to pose a downside risk.

India’s current account defi cit (CAD) touched a sharp 6.7% of GDP in the third quarter of FY13. The widening in CAD was in part att ributed to a decelerati on in India’s exports (decline of 1.8% in FY13). With regards to the concerns regarding the widening current account defi cit, we believe soft global commodity prices, reduced volati lity in Indian rupee and Government’s export promoti on measures will facilitate a reducti on in trade defi cit and subsequently CAD over the medium term.

However, the good news is that a look at the directi on of Indian exports, reveal a shift ing trend with exports to Asia, Africa and Lati n America during FY13 touching 65% of our total export basket. This is indeed a development with signifi cant import as Asia’s accelerati ng economic growth has been shift ing the global economic and industrial centres of gravity away from the US and EU, raising the importance of Asia in world trade and boosti ng the prospects of South-South trade.

On the hindsight, India sti ll remains one of the fastest growing economies in the world, and conti nues to be a favoured desti nati on for investment. The foreign investment fl ows into the debt markets have increased

India’s

economic

growth is

expected to

improve in

the current

fi nancial year

2014.

DIRECTORS’ REPORT

32


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33


in the recent months, with a cumulati ve fl ow of $3.1 bn during the calendar year 2013 (ti ll May’17). Moreover, the recent decision to reduce the withholding tax on Government and INR-denominated corporate debt has boosted the FII debt fl ows. On the whole, portf olio capital infl ows increased to $27.5 billion during FY13 (vis-a-vis $16.8 bn in FY12). Net FDI infl ows increased to $22.9 bn in FY13 (vis-a-vis $21.8 bn in FY12).

Banking Environment

The slowdown in the economy and monetary ti ghtening has aff ected banks’ business in 2012-13. Aggregate deposit growth of All Scheduled Commercial Banks (ASCB) grew higher by 14.3% in FY13 against 13.5% growth in FY12, while growth in credit decelerated sharply to 14.1% in FY13 from 17.0% in FY12.

RBI kept the key interest rates unchanged ti ll the end of third quarter of FY13. However, to ease pressure on liquidity, RBI has cut CRR by 75 bps from 4.75% to 4.0% and slashed SLR by 100 bps to 23%. As a part of monetary transmission, deposit rate of major banks for more than one year maturity soft ened from 8.50-9.25% in FY’12 to 7.5-9.0% in FY’13, and base rate of major banks fell from 10.0-10.75% to 9.70-10.25% in the same period. Growth decelerati on impinging on corporate profi tability and move to system-driven identi fi cati on of NPAs, non-performing assets of banks increased during the year.

In a new development, RBI is likely to issue new bank licenses during FY14, which apart from providing an impetus to fi nancial inclusion, is expected to intensify competi ti on in banking sector in medium term. Meanwhile, with the implementati on of Basel III norms by March 2018, Indian banks will be required to raise signifi cant capital from the market.

The other policy initi ati ves taken by RBI during the last fi scal, include among others (a) Banks to provide “CTS-2010” standard cheques to customers, (b) Enhanced provisioning requirement on certain categories of non-performing advances and restructured advances, (c) Revised guidelines for electronic payment transacti ons and (d) Internati onal use of debit and credit cards.

In the Monetary Policy announced in May 2013, RBI reduced the repo rate by 25 bps. Depending upon growth infl ati on dyna

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