CHAPTER - Ill
PROFILE OF STATE BANK OF INDIA
MUTUAL FUND
3 1 ORIGIN AND GROWTH OF STATE BANK OF INDIA
3 2 ORGANISATION & SlRlJCTURE OF SBI
3 3 SBI AS A NEW GENERATION BANK
3 4 N P A MANAGEMENT
3 5 SBI MUTUAL FUND -ANOVERVIEW
3 6 SBI MUTUAL FUND SCHEMES 3.1 ORIGIN AND GRONTH OF STATE BANK OF INDIA (S.B.I.)
The orig~nof State Bank of 1r:dia goes back to the first decade of the nineteenth century w~ththe establ~shir~entof Bank of Calcutta in Calcutta on second June 1806 Three years late, the bank received its charter and was redesigned as the Bank of Bengal (2"" :anuary 1809). A unique institution, it was the first jolnt stock bank of B-itish lnd~asponsored by the Government of Bengal
The Bank of Bombay (15"' April 1840! and the Bank of Madras (lS'July 1843; followed the Bank of Bengal These three banks remalned at the apex of modern banking in lndia till 1921
The Presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 27Ih January i921 to form the imperial Bank of lndia.
The new bank took on the triple role of a Commercial bank, a banker's bank and a banker to the Government. But th~s creation was preceded by years of deliberations on the need for 'State Bank of lndia.' lmperial Bank was a halfway house combining the functions of a commercial bank and a quasi central bank.
The establishment of the Reserve Bank of lndia as the Central Bank of the country in 1935 ended th'e quasi-central banking role of the Imperial Bank.
The latter ceased to be banker to the Government of lndia and instead became agent of the Reserve Bank for the transaction of government busmess at centres at which the central bank was not established. But it continued to maintain currency chests and small coiri depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank.
It also acted as a banker's bank by holdlng their surplus cash and granting them advances against authorized s,ecurities The management of the bank clearing houses also cont~nuedw~th it at many places where the Reserve Bank d~dnot have offices The bank was also the b#ggesttenderer at the Treasury b~llauction conducted by the Reserve Bank on behalf of the Government
f?.eserve Bank made certain amendments to the constitution of Imperial
Bank convert~ngct Into a purely comrr~ercialbank. The bank was permitted to undertake foreign exchange business and executor and trustee bus~nessfor the first time The lnlperlal Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices; reserves, depos~ts.investment and advances. The h~ghstarldard of integrity in its operations inspired confidence
In its depositors and enabled the lmper~alBank to acquire a pre-eminent position in the Indian banking ~ndustryand also to secure a v~talplace in the country's economic life.
When lndia attamed freedom, the Imperial Bank had a capital base
(including reserves) of Rs. 11.85 crores, deposits and advances of Rs. 275.14 crores and 72.94 crores respectively and a net work of 172 branches and more than 200 sub offices extending all over the country.
In 1951. when the Frrst Five Year Plan was launched, the development of rural lndia was glven the highest priority The commercial banks of the country including lmper~alBank of lndia had till then confined their operations to the urban sector and were not equrpped to respond to the emergent needs of economic regeneration of the rural areas. Therefore to serve the economy in general and the rural sector in part~cular,the All lndia Rural Credit Survey Committee recommended the creation of a state partnered and state sponsored bank by taking over the Imperial Bank ol' India, integrating with it, the former state owned or state assoc~atebanks. ,4ccordingl! an Act was passed in Parliament in May
1955 and the State Bank crf lndia was constituted on 1'' July 1955. Later. the
State Bank of lnd~a(Subsidiary Banks) Act was passed in 1959, enabl~ngthe
State Bank of lifaia to take over sewn former State assoc~atedbanks as its subsidiaries (late: (lamed Assc~ciatesj S.B.I. holds not less than 55 per cent of the issued caplta c:t each subsidiary bai:k. Subsidiaries are: -
State Barik ot Bikaner & Jaipur State Bank of Hyderabad
State bar^ of indore
State ban^ of Mysore
State Bank of Patlala
State Bank ot Sai~rastitraand State Bank of Travanc.ore
The State Bank of lndia was thus born with a new sense of social purpose aided by 480 offices compri:;ing branches, sub-offices and three Local Head
Ofices inherited from the !rnperial Bank. The concept of banking as mere depositories of the community's savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking by serving the growing and diversified financial needs of planned economic development.
3.2 ORGANISATIONS AND STRUCTURE OF SBI
The State Barik of lndia has art authorized capital of Hs.1000 crores, which has been dlvlded ~nto100 'roles shares of Rs. 10 each. The issued capital of State Bank of lndia 1s Rs.526.30 crores The shares are held by the Reserve
Bank, Insurance Companies anli the general public. At the end of March 2000, the paid up capital and resewes of the Bank were Rs. 12,147 crores The management of the SBI 15 under the control of a Central Board of
Directors consisting of twenty lnemberc It consists of a Chairman and a Vlce-
Chairman who are to be appoir~tedby the Central Government in consultation with
Reserve Bank. Two Mariaglrig Direct015are to be appointed by the Central Board with approval of the (;entral Governnif:rlt SIX directors are to be elected by the
private shareholders e~qht cllrecto:: are to be nominated by the Central
Government in c;orisuItatiori wlth the Yeserve Bank to represent territorial and
economic interests (Ine director is t~, De nominated by the Central Government
and one is to be nominated by tlie Reselve Bank
State BanK of lridia is the larilest Commercial bank in India in terms of
profits, assets, aeposits. branches aria employees. On March 31st 2001, the
Bank had total assets ot Rs 3,15,644 crore, total deposits of Rs. 2,42,828 crore,
total advances of Rs 1 13.590 crore total net profit of Rs. 1,604 crore through a
network of 9,026 branches The Bank commanded about one-fifth of deposits and
loans of all scheduled commercial banks in the country. The performance of
S.B.I. for the years 1999-2000 and 2000-2001 is illustrated in Table 3.1.
The bank had total staff strength of 2,14,845 on 31st March 2001. Of this,
52,459 (24.4%) were officers, 1,06.731 (49.7%) belonged to the Award staff
category, and the remalnlng 155 655 (25 9%) were sub-staff.
Three Strategic Bus1n'es:s Units (SBUsl under the Corporate Banking Group have been set up for iocused attentior to very large corporate customers, lease finance and project flnance. all re:)ortlng directly to the corporate oftice.
Distinguishing feature of the SBUs at.! lnteyratlon of operational planning with operations w~th~neach SBU, a 'focused delivery system with appropriate specialist inputs and focused attention on profitab1~:y
Functionaries at various level5 have been delegated higher financial powers to ensure foster dec~sionmak1r-g in credit areas and disposal of a large number of credit proposals tit operating units level. A Committee approach has been adopted, both at the Apex and Clrcle levels, for sanction of large advances
For this purpose, Central Off~ceCredit (Committee and Circle Credit Committees have been streamlined Slmplified anc conclse cred~tappraisal formats have been des~gnedto ensure imprclvement in the quality of credit decisions, better quality of assets and reduction of Non-Performing Assets.
3.2.1 CAPITAL AND SHARE HOLDING PATTERN
The RBI required that S.H.I. and other Indian banks having foreign ofices maintain a total adequacy ratlo of eight per cent by March 31sr 1994 and nine per cent by May 31st, 2000 Subsequently SBI was the first public sector bank to shore up its capital base and its capital adequacy ratio has consistently remained above the minimum eight per cent. In Fiscal Year 1994, the Bank raised Rs.
22,104 million through the issue of shares and Rs.10,000 mrllion through the issue of unsecured redeemable subordinated float~ngrate bonds. In October 1996, the
Bank successfully floated the G'DR issue as the 'Asian Equity issue of the year' for its being a well planned, well priced and well executed issue that continued to perform well for the investors. Dur~ngthe year 1999-2000, th? Bank augmented its Tler II capltal by
prlvate placement of unsecured, non-convertible redeemable, subordinated
bonds in the nature of promls!joly notes aggregatlng to Rs 9 358 70 m~lllon
Reserve Bank of lndla is the stngle largest shareholder c~fthe Bank. SBl's
shares and bonds are ltsted for tradlng on all the major Indian Stock exchanges
namely, Bombay Stock Exchange and Stock Exchanges at New Delhl, Kolkotta,
Chennai and Ahemedabad; at the National Stock exchanges only the Bank':;
shares are llsted S B I has one ot the largest market capltallzation of a.1
companies traded on such exchanges. The total number of shareholders as on
31st March 2001 was 7 37 lakh The ownership pattern of shares and the Market
price datas are explatned in Tabie 3.2 and 3.3.
Table 3.2 Ownership pattern of SBl's Shares
I 1 SI. No. 1 Shareholder's Category 1 % of shares 1
I I 1 1. 1 Reserve Bank of India I 59.73
2. Non-residents (Flls/OCBs/NRls) 18.31
3. Financial Institutions including Insurance Co.s 1 11.58 4. Mutual FundslBankslGovt. Cos ! 1.30 5. Domestic Cos nrusts 6.24 / I
Others lnclud~ngResident - lndivlduals-- 2.84 - .~ -~ - ~ ~.
Number of ShareholdersJmJakh)~- 7.37
Source : SBI Annual Reoorl :!Otll Reserve Bank of India owns 59 73 per cent shares of SBI. 18.31 per cent
owned by non-res~dents 11 58 per cell1 by Financial institutions, 1.30 per cent by
mutual funds I banks arid Sovernmer>t companies, 6 24 per cent by Domest~c
Compari~esiTrustand 2 84 perc:ent by Resldent lndlv~duals
Market Pr~ce~~Data iClosing Values) (From April 2000-March 01 r---~
Months ~ , .-SBI s -share Prlce (BSE
June '00 -~~~~
October-- '00 November '00
December '00
Source : SBI A~iiiii;llReport 2001
Market prlce at closlng values ot SBI share price at high level of 267 45 on
March 2001 and low level of 155-95 on October 2000 recorded Market prlce data
at BSE sensex, hlgh value recorded at 5,541.54 on April 2000 and low value at
3,5040.65 on March 2001 The Bank prov~desflnanclal ser, f:es through its Non-Banking Subsidiaries,
including merchant banklng services -und management, leasing and factoring
services and prlrrlary deal~ngin govel ment securities. SBICAPS, the Bank's
merchant banklng subsldlary contlnueo ts dom~nancein the capital market. The
Bank's fund management subsldlary IS lidla's second largest asset management company, next to :he Li 71
32.2 DOMESTIC BRANCH ~ETWORK
State Bank of lndla s Comrnerclal bawng business is through its nationwide network of 9.019 branches The Bank's domestic branches represent approximately 14 per cent of all bank branches in India. About 46 per cent of the
Bank's branches are located i~ urbar ,iid metropolitan areas respectively. This wide spread branch network er~ablesthe Bank to raise a substantial and stable deposit base, to prov~dea wide range of lending products and other financial services and to diversify lendin(] risks geographically as well as by type of credit risk and customer The Bank's ability to diversify and enhance the quality of service related to its deposit taking as well as its lending activities and other financial services IS a fundamental strength of the Bank
I) The Nat~onalBanklng Group (NBG)
The NBG commands dbout 59 per cerlt ~f the domest~cdeposlts and 84 per cent of the domest~cadvances of the Bank It prov~desbanklng services to customers spread over the country through two networks, namely, Development and
personal Banking Network and Commercial Network
The Development and Personal Banking Network is sometimes referred to as the bank's 'retail banking' business subgroup. The network represents the backbone of the Bank and encompasses the vast majority of the Bank's assets, loans, deposits branches and employees. The D&PB network focuses on the
Bank's small industr~al agrlc~lturaland :nst~tutionalcustomers, Central and State
Government ent~tlesand per:;onal bank rig customers. It also services the needs of indiv~dualsinciud~ng hlgh net worth ndlv~dualsas well as engages in home finance. The branches iri the D&PB ne1"uork generally provide lending facilities of less than Rs. 2 5 rnlll~onas well as other services such as cash management and personal banklng advlsory services.
The Comnierc~alNetwork focusias on large and medium-sized industrial corporations and services the large accri~ntsamong Bank's small industries, high technology agr~cultural concerns and biose of its corporate customers. This network provides lendlng facilities of Rs '5 million and above.
The NBG glve high prionty to personal banklng The Bank's sixty Personal
Banking Branches targets h~ghnet worth lndlvlduals for the personal segment products Gold Bank~ngHouslr~g finances and Consumer finance are other thrust areas of the Bank ii) The Corporate Bank~ngGroup
The Bank's Corporate Banklng Group consists of three Strategic Business
Units (SBUs) created to service's the Bank's top 150 to 200 corporate customers.
SBUs are the Corporate Accounts Grc~lp.Leasing Group and Project Finance
Grou~.
The Corporate Account Group IS an exclusive unit for top corporate and is characterized by relationship banking and delayered credit process for speedy decision-making The CAG branches are fully computerized with most customers able to access their accour~tsat the dank via computer. The total number of corporates served by the CAG rose to 195 as on 31st March 2000.
The Leas~ng SBU c.aters to -he leasing requirements of the Bank's corporate customers served by the Corporate Banking Group and the National
Banking Group The Group offers all Iypes of f~nanc~allease:<, particularly tax- based structures. each of which is tailored to suit the reauirements of the customer
The Project Finance SBlJ was set up in response to banking deregulation and ensuing growth In Infrastructure projects in lndia. The ~najorclients of SBU are power, petrochem~cal!j, telecommunications. cement steel, metals. automobiles, engineering and similar industries iii) Domestic Busrness
SBI is the largest deposit-taking bank in India, holding approximately one- fifth of all domestlc deposits. About three-fourth of the Bank's deposits are from its retail customers, reflecting its large customer base. Around 14 per cent of its domestic deposits are in the form of interest free current accounts and about 25 per cent are in the form of low interest savings account. This access to millions of small deposits throughout the country provides SBI with a stable funding base for all its o~erations.
The Bank makes to a ,wide range of public sector and private sector commercial and lndustrlal cuslomers and agricultural customers It extends working capital facilities and short-term ioans. Loans of medium to long maturity are extended to finance capital investment including home loans to individuals. The Bank's retail Dank~ngactivi.ties are wide spread cover among others, housing finance, consumer finance, loans to agriculture, small scale industries, small business finance, retaii traders, professional and other self-employed persons. By the end of March 2000 the Bank's priority sector lending accourlted for 40.42 per cent of its net bank credit
The Bank proposes tc enter intc Insurance business through subs~diary where in it will offel 26 per cent equit) to the foreign partner The Bank has appointed a consultant of international repute to ident~fythe foreign partner The
Bank expects the overseas partner to make important contributron in the areas of technology and product develop~ient
The Bank has entered into a Memorandum of Understanding wit HDFC
Bank, the Dun and Bradstreet and the Trans Union for setting up a world-class credit information Bureau in India. The main objective of the Bureau will be to institute an effective mechanism for mitigating credit risks and enhance the quality of credit decisions in the bankin'g industry iv) SBl's Deposit & Loan Schemes a) Deposit Schemes
I) Current Accounts Ourrent accounts are designed for busine!js transact~ons
No restrict~ons on number of transact~ons Nom~nalservice charges levled annually Standing lnstructrons accepted ii) Savings Bank Accounts designed for depositor of savings 1 surpluses. Cheque book facility available to the customers. Interest allowed at 4.5 per cent p.a. iii) Term Deposrts deslgrlecl for fixed periods. Accepted term deposits for any period ranging from 15 days to 10 years. lnterest payable at desired periodicity
(monthly ! quarterly etc I for deposits of 1 year and above. Earns higher Interest at rates rangrng from 5 per cent to 10.75 per cent. Automatic renewal facility available to the customers lv) Special Term Depos~ts:Reinvestment of interest allowed. Conversion to term deposits and v~ce'versa permitted
V) Recurr~ngDeposits des~gnedfor regular savings Monthly deposits of a fixed amount for a flxed pard
VI) Multi Opt~onDeposit Scheme avablable at computerised bl-anches. A fixed deposit with flexible features, Automatic overdrafts linked. Premature withdrawal of part I full amount allowed withdrawal by cheque. Higher rates of interest allowed. b) Advance Schemes
1) Special Scheme of finance for professionals and self employed for acquisition I renovation 1 exten'sion of business premises, acquisition of vehicles I setting up of clin~csetc Both term loan and working capital facilities available. ir) Housing Loan Schemes for construction / outright purchase of house/flat.
Security-mortgage of property i' third party guarantee required. Lc~wermargins of loan ranging 20%-15% Long repayment schedules up to 20 years allowed. iii) Consumer F~nanceScheme for purchase of consumer durables ranging from computers to carpets including two wheelers. Loan amount up to a rnaxlmum of 2 lakhs allowed Repayment offered by bank as check-off fac~l~ty wherever poss~ble Lower rnarglns of ban ranglng between 20% - 15% Long repayment t~meallowed up to 5 years iv) Car Loan Scheme for pl~rchaseoi' new cars Ijeeps Isecond hand cars not more than 3 years old rriaxim8Jrnloan LC to 8 lakhs. Third party guarantee not required tf check-off facility 1s available Long repayment time up to 7 years allowed by bank
V) Educat~onLoan Scheme for stuales In India and abroasd at recognized schools (colleges/institutions tc meet tult~onfees and other fees, cost of books I equipment / maintenance cost and cost of passage in case of studies abroad.
Loans amount granted ranging from Rs 4,0001- to Rs. 10.00.0001-. Easy repayment terms for loans alloweol. vi) Gold Loan Scheme aga~nctpledge of gold ornaments. Low marglns and low rates of interest offered vii) Demand Loan Scheme against bank's own fixed deposits 1 NSCS 1 KVPS I
IVPS and other acceptable securities. Low rate of interest - 2% above the rate payable on banks own fixed deposits. Easy repayment schemes.
V~II) Personal Loan Scheme to meet personal expenses for travel, marriage, family functrons, hosp~talizat~onetc. Thrs facility is eligible for employees of State
1 Central Government organiz:ations, PSUs. MNCs and reputed Public Ltd., companies. No securlty required and easy repayment terms. ix) Other Schemes such as loan aga~nstmortgage of property, pensloner's loans, loan against approved securit~esetc Table 3 4
Worklng ot SBI for 'the years 1996-97 to 2000-'01
(Rs. in Crores)
~~~ ~p~~ . -~ ~ -. . 1 Year No of Depos~ts Loans lnvestmerlts Net Profit I
1 Brancnes
I i i 1999-00 , 8,996 1,916,821 98,102 92.000 ! 2,051 iI
. -- ~~~ ~ .i i - I - I i 2000-01 , 9 326 :!,42,828 1,13,590 ' 1,22,876 1,604 ( i C.- 1 , ~ ---L
Source : Ar~r?~ia/Reoort of SBI 1:996-97to 2000-01
The deposits and loans Increase from year to year. The Net Profit varied. Last year, the net profit decreased because of the implementation of voluntary
retirement scheme in the Bank. The Table 3.4 shows a satisfactory growth in the business.
3.2.3 INTERNATIONAL BANt The Bank IS also engaged In international banking principally for its Indian customers. The International Banking Group services the needs of the Bank's domestic corporate and other customers in financing import and export transactions An increasln'g number of Bank's corporate customers access international funds through SBl's international branch network as well as its 720 correspondent Banks The kink's products include foreign exchange, letter of credit, guarantees remittances, acceptances and collections. Its loan syndication activity covers arranging, parliclpating and underwriting foreign currency loans. It also provides shoit-term finarlces through buyer and supplier's credit. The Bank has foreign offices In 31 countries wtth a network of 52 branchesioffices The bank's fore~gnoffices trlclude branches at London, New York. Frankfurt, Paris, Hong Ken!; and Tokyc. With the introduction of Euro in January 1999, the Bank's offices in Antweep Fral~kfurtand Parls acquired capability to open accounts and handle transact~onsin Ed)-o 3.2.4 INTERNATIONAL CONSUL'TANCY The Bank is registered as a consultant with several multilateral funding institutions Including the World Baslk, the Common Wealth Fund for Technical Co- operation CIK , The Food and Agriculture Organization, the European Bank for Reconstruction and Development, the Asian Development Bank and the African Development Bank 3.2.5 GLOBAL LINK SERVICES The Bank's new Ilnk office, Global Link Service was set up in 1997 to provide international correspondent banklng services to the Bank's branches as well as to other banks it alms to provide an efficient system for realizing the proceeds of clean and documentary collections drawn on overseas centers. The GLS offers correspondent banking products on matching terms with similar products of foreign banks 3.3. SBI AS A NEW GENERATION BANK "To retain the Bank s ~ositionas the premier Indian Financial Services Group, with the world class standards and significant global business, committed to excellence In ci,sron;rr shareholder -;rid employee satisfaction and to play a leading role in !r~~i continuing ernphas:~or1 its df!velopment bank~ngrole.'' This is the Mission of State Bank of lnd~a The SBl's vis~onsale i) Premier Ind~arlF~nancial Services Group with global perspective, world-class standards of eiticiency and professional~smand core institutional values. ii) Retain position in the country as pioneer in development banking iii) Maximise shareholder value through high-sustained earnings per share iv) Institution with a culture of mutual care and commitment, a satisfying and exciting work environment and continuous learning opportunities. 3.3.1 TECHNOLOGY ORIENTATION The Bank's effort to Improve efficiency and customer service through use of technology 1s retlecrea iri the rapid pact of its branch computerization As at the end of March 2001, the Bank had 2555 fully computerized branches, covering 71 per cent of the Banks businc?ss. The Bank has 139 ATMs, in 52 cities. The Society for Worldw~deInterbank Financial Telecommunication (SWIFT) network of the Bank handling 85 per cent of the Bank's forex remittances, cover 146 branches and the SBI Data net (a PC-Modem telex network) covers 1,120 branches. With a view to helping the customers to have access to the information regarding their accounts round-the-clock through lnternet, the Bank has introduced 'Online SBI' from the 1st August. This is initially being introduced in eight branches, three in Mumbai, two iri New Delhi, and one each in Bangalore, Calcutta and Chenna~ Two lnnovatlve path-breaklng projects, namely, Electronic Nostro Account Reconciliat~on(ELEIVOR) and State Bank Electronic Payments System (STEPS) became operational in December 2000 and January 2001 respectively. Both the projects were conceived, developed and implemented with in-house expertise and success was widely acc.lairned ELENOR dealing with on-line nostro account reconcil~ation(enabled orrline reporting of forex transactions from 444 forex intensive branches. STEPS was launched to facilitate instantaneous electronic transfer of funds at 326 branches. During the year, the project Electronic Reconciliation (e-RtfCON) was extended to 1300 fully computerized branches for electronic transmission of inter-branch data for reconciliation through the lnternet. The significant improvements made by Bank in the field of technologies are:- - Electronic Data interchange projects for handling customer transactions at airport and seaports mada operattonal at eleven centers lntroduction of Computerized Printin9 of Drafts. Opening of MlCR and ECS Centres for Electronic Clearing Services Introduction of extended Business Hours (7 to 12 Hours) and 7 Days Banking. Remote login fac~lit~es'or Corporate Customers Implemented in over 70 branches coverlng about 400 custorners Tele Banking introduced on a P~IOIbass at 38 branches in Mumbai Circle of the Bank Internet Banking started on a p~lc:c-isis on August at eleven branches. The 46 VSATs of the Bank untit: I latan F~nancialNetwork (INFINET) - set up by RBI were merged with 1 li' 'iskls of the Bank under its Corporate Banking Group Network The Bank now has a network covering 161 VSATs in 130 cltles extending the coverage to almost the entire country. During the year, the Bank established 'SBI HELPLINE' at LHO centres, equipped with Toll-Free Telephone Lines, Fax and E-Mail for providing quick and complete information on Bank's products and services, and to enable the customers to have their grievances redressed through Electronic Medla in addition to normal channel of complaints received by mail. The SBI Home Page was thoroughly redesigned and revamped during the year. The site facilities attracted a large number of visitors to the site. 3.4 NPA MANAGEMENT The SBl's NPA management policy lays stress on early identification of problem loans, effective response to early warning signals adherence to the time norms for corrective action and recovery including one-time settlements. Under the RBI guidelines, the Bank approved one-t~mesettlement for Rs. 718 crore in respect of 1 95 lakh accounts with NPAs uoto Rs 5 crore and made cash recovery of Rs 384 crores At the end of March 2001 the Banks gross and net NPA stood at 12 53 per cent and 6 03 per cent respectivrly as aga~nst14 25 per cent and 6 41 per cent respectively in the previous year The Bank actively participated in the rehabilitation of the units having potential for turnaround as also approved by the BlFR The BlFR has identified 512 units (including 59 Public Sector Undertakings) financed by the Bank as sick. Out of these, the BlFR approved rehabilitation packages for 96 units, involving an amount of Rs 763 crore Table 3 5 explains the Net NPA Ratio of SBI for last three years. Table 3.5 Net Non-Performin@sset- ~~~ - ~- iiatio of 1999 to 2001 March Year I -- ~~ -- - -~~- t 1 I 31st March 1999 - 7.25 31-st ~- March- - -~ -2000 - ~~ ,- ~~ 6.41 7 31st March 2001 L- - - -. _ _ _- _ _ _ 6.03 __I Source : SB1 Annual Report 200 1 Figure 3.1 Net NPA Ratio 7.6'T 3lst March 1899 3lst March 2000 31.t March 2001 The State Bank of India has, over the years, richly merlted its status as the flagship of Indian banking and continues with its endeavour to achieve its Mission objective. It has been in the forefront in all areas of banking - traditional, developmental and diversified. In several fields, the Bank has pioneered innovative measures and contributed significantly to the growth of the lndian economy, improving its own profitability over the years and operating efficiently. 1, ., I- 3.5 SBI MUTUAL FUND --AN OVERVIEW .',, 's. ' The State Bank of India is the first public sector bank to start mutual fund:.;/- .- business after the Government of 11id1aissued permission to do mutual fund business. Till 1987 Unit Trust of lnd~aNas the only Mutual Fund operating in the country. In 1987 SBI uec~declto prov~dean alternative for investors and SBI Mutual Fund was horrt SBI Capita! Markets Ltd., a wholly owned subsidiary of State Bank of lnd~awas appoir~tedas Trustees and Managers to the fund. SBI Mutual Fund was the f~rst bank spor.,sored Mutual Fund, the pioneer in an untapped field w~thvast potent~al. The SBI Mutual Furid !aunched !ts first scheme- 'Magnum Regular Income Scheme 87' in 1987 and ~nob~lizedKs !31 crore from 90,000 investors while in 2000, the Fund with an investor base of over 2.8 million spread over 23 schemes mobilized Rs.2079 crores Till 1992, SBI Capital Markets Ltd operated as Trustees and Managers to the Fund The mantle of management has now passed on to SBI Fund Management Ltd., another wholly owned subsidiary of the State Bank of lndia, which was incorporated on 7tP February 1992. This company took over the management of the Fund witn effect from 14th May 1993. State Bank of lndia now operates as F'r~nclpal Trustee to the fund The Board of Trustees headed by Dr. A.M. Khusro. Edltor of Financial Express and former Member of the Planning Commission, includes dlstlng~rishedpersonalities like Prof. S.K. Barua, Smt. (Dr) Malati Anagol, Shrr M.M. Chltale and Shrr Vepa Kamesam. The Board of Directorlj of SBI Fund Management Ltd. includes reputed personalities like Shri. Janaki Ballabh as Chairman, Shri. Niamatulla as Managing Director, Shri. S L Rao. Shri. RG Kare. Shri. (Dr) Ajay Shah, Shri Manu Chadha, Shrr. DP Roy and Shri. B~redraKumar as Directors. 3.6 SBI MUTUAL FUND SCHEMES 36.1 Regular lncome Scher'es Magnum Regular lncorne Scbe,*~i87 iMRlS 1987) was the first scheme , launched by the fund ano it comnie~>i+dfrom 1st January 1988. This was followed by three others h4agnurr regular lncome Scheme 1989, which commenced from 1st Aprll 1989. Magnor, Regular lncome Scheme 1990 which commenced from 1st August 1990 and MRlS 1993 launched on 15th February 1993. The investment objective of the Regular Income Scheme is to achieve a combination of income and growth and to provide a regular income to the investor. The target return spec~fiedIS a mlnimum of 12 per cent along with some capital appreciation. To achieve the investment objective, the scheme follows a policy of investing predominantly in fixed income securlt~es 3 6 2 Monthly lncome Schemes There are four schemes wl-rlch fall under thls head, namely, Magnum Monthly lncome Scheme 89 (MMlS 89) whlch commenced from 1st September, 1989, MMlS 91, wh~chcommenced from 1st July 1991. MMlS 98(1) whlch commenced from 3rd February 1 498 and MMlS 98(11)whlch commenced from 31st October 1998 The investnient objective of the scheme as the name suggests IS to provide a monthly return on indestment to the investor MMlS 89 offered a target return of a mlnlmurn of 12 per cent per annum monthly pay out Scheme, whlch was to be redeemed cn 31st March 1993, has been extended up - to 31st December 1996 at a h~gherrnonthly pay out of 15 per cent per annum for those investors who have ex~srcisedthii option of extension. MMlS 91 targets at a return of 13 per cent per al?n!Jm with monthly pay out. MMlS 98(i) assured a monthly income of 12 5 per cent per ai-num MMlS 98(1i)offered monthly income combining the safety of higt- quality aebt instrument and return on equity. The investment policy followed by the scheme is to invest mainly in fixed income securities 3.6.3 80 CC Schemes Magnum Tax Saving C;cheme 8889 MTSS 88-89 which commenced from 1st April 1989, and MTSS 90 are the schemes falling into this category. MTSS 88-89 were redeemed on 31s:: Marcn 1954 at Rs. 2221- with a capital appreciation of 122 per cent and MTSS 90. redeemed on 31st March 95 at Rs. 1721- with a capital appreciation of 72 per cent. The investment objective of these schemes was to enable subscribers to benefit urtder Sec 80 CC of the lncome Tax Act 1961. The policy followed was to invest in eligible issues of the capital under Section 80 CC and other seci~ritiesas were permitted. Investors were therefore saved the trouble of seek~ngIssues el~g~bleunder section 80CC of the Income Tax act 1961 3.6.4 80 C:C B Schemes The 80 CC B Schemelj are Magnum Equity Linked Saving Scheme 91 (MELS 91), which commenced from ';st Apr11 1991 and Magnum Growing Investment from Tax Sav~ngS'zherne Plan A, 1992 (Magnum GIFTS-92 Plan A). which commenced from 1st April 1992, offer benefits to investors under Sec 80 CC €3 of lncome Tax Act Magnum GIFTS Plan 0, 1992 launched in 1992 also offer benefits to Investors urder Sec YO CCB of Income Tax Act. MELS-95 launched in 1st April 1995 and MELS-96 launched in 1996 offer benefits under Sec 88 of IT Act The investment otljective is to enable subscribers to benefit under Sec 80CC I3 and 88 of lnco.n+, tax Act 1961 and aims at achieving substantial realized incorne arid capital (-ippreciation. To achieve the investment objective, investments are niainly rriade if! equltles and equity related instruments and also in money rnarket or other liquid iristrurnents 3.6.5 Growth Schemes Magnum Multiplier Scheme, 1990 (MMS-90) which commenced fromlst January 1991, Magnum Express (MEX-9' which commenced from 1st April 1991, Magnum Multiplier 'Plus Schernf 1993 jllllMPS-93) which commenced operations on 1st March1993 as close-ended growth scheme, Magnum Global Fund Scheme, 1994 (MGF-94) which was launched onlst October 1994 are the growth schemes of the fund. These four schemes aim at providing long-term capital appreciation to the investor The policy followed is to invest primarily in equities related instruments. 3.6.6. Cumulative Income Schemes Magnum Triple IS the only cumulative Income scheme of the Fund. It commenced from 20th November 199: ihe investment objective of the scheme is that the investor recelves a surn equal to thrice the amount initially invested or more at the end of 90 months from the date of allotment To achieve the objective, the funds are malnly ~nvestediri equlties and equ~tyrelated instruments as well as in money market instruments The other schemes exlsting are 3.6 7 Magnum Equ~tyFund Magnum Equlty Fuqd was converted into open-end scheme with effect fromlst January 1998 The illrrl of this fund 1s to provlde capital appreciation through the investment in equittes 36.8 Magnum Liqu~Bontl Fund Magnum L~quiBond IS a hu[ia~edper cent debt fund that provides investors superior r~sksadjusted return5 The fund offers h~ghdegree of safety is 80 per cent of the investments are made in Government Securities and Triple-A rated papers. Maximum market liquidity !s the objective of the fund. This fund was launched in December 1998 3.6.9 Magnum Tax Gain Scheme MTGS-93 IS a tax saving scheme whlch was launched to offer tax benefits to Investors under Sec 88 of the lr~comeTax Act This was converted Into open- ended scheme from November 1999 3.6.10 Magnum Balanced Fund MBALF-95 was launched on 31st August 1995. The main objective 3f the scheme is to provide growth through appreciation of capital. It may also provide periodic income through declaration of div~dends 3.6.1IMagnurn Sector Fund Umbrella MSFU-99 is an umbrella fl~n'3,which covers under its fold four sub-funds. devoted to Information Technology, Pharma. Fast Moving Consumer Goods, and Contra fund. Investors will have the option of choosing one or more sector for investing and will be able to freely switch across sectors, without any load. A sector comprises of companies that manufacture or offer products of a srmilar nature Some sectois have a h~ghergrowth potentlal because of the nature of busmess thev are rn A sector fund focuses on invest~ngin shares of such a sector which has high growth potential It provrdes an opportunity to the cornrnon investor to participate in the growth of such sector wrth an investrble an?ount within his range The four important funds under MSFU are- 1) IT FUND IS a part of sec'ror fund umbrella launched w~ththe objective to provide investors with capital appreciation through equrty investment in the IT sertor 1) Pharma fund IS the part 01 the sector fund umbrella whlch alms at long term capital galns by investment in tile pharmaceutical sector 1i.l FMCG Fund is a part of sector fund umbrella launched with the objective to provide investors with cap~talappreciation through equity investment in the Fast Moving Consumer Goods Sector iii) Contra Fund is the part of sector fund umbrella, with a view to providing investors with long-term gains in stocks, which are currently out of favour but are likely to gain returns in long term. 36.12 Magnum lnsta Cash Fund Magnum lnsta Cash Fund 'was launcned onl3th May 1999. The main objective of the scheme is to activate the short-term money investment providing superior returns consistent with a high degree of liquidity. This fund offers two options to investors - Cash Plan and Dividend Plan. Cash Plan is h~ghlyIlquld ncome sctleme The main objective is to provide investors with an investment opportunity lhkely to be superior to returns offered by comparable investment avenues, through nvestment in debt and money market Instruments. Dividend Plan, the average maturltv of assets IS longer than that of cash plan appreciation in net asset value. ~f arif is distributed by way of div~dendor reinvested. The oblect~veof the scheme 1s similar to that of cash plan 3 6.13 Magnum Rising lncome Sch,eme 1993 (MRIS-93) The Scheme commenced operation from December 1993. Its objective is to provide the Investors regular income through dividend. MRIS-89 and MRIS-90 were also regular Income schemes but these schemes redeemed on 30th June 1993 and 31st July 1995 respectively. The Scheme-wise Distrit)ution of SBI Mutual as on 2000-2001 illustrated in Table 3.6 Table 3 6 Scheme-wise Distribution of SBI MF as on 2000-2001 7- Scheme Commencement Face Value 1 Growth 01/01/98 10 t ~- MMPS-93 01104/98 10 4" ~~ MGLF-94 ' " 01I1 0194 10 ~ MELS-91 :Tax Si3vinl-- 22/02/91 100 MGIFTS-92-A '' 01/01/92 100 .- 1 ~ - . ~ 4 I rlE:rwthl. . . ,LDI ebt ~ ~- ~ 22/02/2001 10 Monthly~~ ,I ~ -. I Quarterl'r ~~ . ~ - t-- annual , ~~-.~ - ~- ~-~ I Source. S,5/Mciic;c:: 1~1114c: Ailnlral Report 2000-2001 Tt-~eTable shows that there are three Regular Income Schemes, five Growth Schemes $ever?1 ax Sav~ngSchemes, one Balanced Fund, two Open- ended Funds and two Debt Funds existed as on 31.03.2001