34 DIRECTORS’ REPORT Directors’ Report

I. ECONOMIC BACKDROP AND BANKING ENVIRONMENT

GLOBAL ECONOMIC around 3%. No deal-Brexit, lingering of In the industrial sector, GVA decelerated to trade tensions between the US and China 6.4% in H2 FY2019 from 8.1% in H1 and SCENARIO and more than expected tightening of 8.3% a year ago, pulled down by a fall in the global financing conditions remain the key growth of manufacturing activity, as subdued Global economic momentum eased risks to growth prospects. demand was reflected in a moderation moderately in 2018 with GDP growth in sales growth. Activity in the services estimated at 3.6%, as per IMF. Persistent sector picked up and became broad- moderation in China, owing to financial INDIA’S ECONOMIC based in H2 FY2019, boosted by resilience tightening amidst rising shadow banking in construction activity and acceleration and local government debt, coupled with SCENARIO in financial, real estate and professional continuing trade conflict with the US had a After decelerating sharply from 8.2% services and public administration, defence dampening effect on overall emerging market in FY2017 to 7.2% in FY18 and then to and other Services. and developing economies’ performance. 7.0% in FY2019, India’s GDP growth is expected to grow by 7.2% (RBI projection) Headline CPI inflation has declined sharply As far as developed economies were in FY2020. Going forward, several factors since mid-2018, driven by the sustained concerned, US economic activity picked appear crucial regarding economic fall in food inflation, the waning away of the up against the backdrop of fiscal stimulus. growth. First, private consumption is direct impact of house rent allowances for However, there now seems to be a expected to get a fillip from measures central government employees, and more question mark over the continuation of such as public spending in rural areas recently, by a sharp fall in fuel inflation. such momentum. The Euro Area grew less and increase in disposable income of Owing to that the average CPI inflation than expected, with uncertainty over Brexit households due to income tax benefits. for FY2019 stood at 3.43% compared to and threat of US tariffs on EU automobiles Second, resolution of stressed assets 3.58% in FY2018. taking a toll on their manufacturing sector. and decline in the level of nonperforming advances (NPAs) on Bank balance sheets The outlook for inflation may be impacted BRICS countries were also no exception is expected to improve credit flows, which by various upside and downside risks. The to this trend. For example, drag on mining, augurs well for economic activity. Third, major upside risks include: geopolitical construction and agriculture pulled down improving capacity utilisation, tailwinds tensions and supply disruptions in the economic growth in South Africa to a from lower oil prices and rate cuts are global crude oil market, volatility in mere 0.8%. Even economic activity in likely to support economic activity. Fourth, international and domestic financial Brazil remained subdued owing to truck projection of ‘near normal’ monsoon this markets, the risk of a sudden reversal drivers’ strike and restrained public and year with weak El Niño will be helpful for in the prices of volatile perishable food private consumption spending. food grains production and subsequently items, fiscal slippages and possibility of for food inflation. below-normal monsoon this year. Among Global merchandise trade is also the downside risks are: a sharper than expected to have slowed down markedly Nevertheless, a few downside risks also anticipated slowdown in global growth and to around 3.9% in 2018 from 4.7% in persist, both on the domestic and global its softening impact on crude oil and other 2017. Furthermore, as per the world fronts: (i) the slowing down of the global commodity prices, and the persistence of trade outlook indicator, which gives the economy may impact prospects of India’s a food supply glut. For FY2020, we expect “real time” information on the trajectory exports and the risk may get accentuated average inflation would be less than 4%. of world trade relative to recent trends, if trade tensions remain unresolved and (ii) the recent level of 96.3 (the lowest since investment has been supported largely by Against the backdrop of slowing global March 2010) indicates that trade growth government-led infrastructure spending trade and commerce-inhibiting trade in coming months will be below long term and there is now a dire need to boost tensions, India’s merchandise exports averages. private investment across sectors. (Y-o-Y) grew by 9.1% in FY2019 vis-à- vis 10.0% in FY18. An important feature Meanwhile, financial conditions tightened Growth in agriculture and allied activities of India’s export basket in recent years moderately in 2018 with monetary decelerated in H2 FY2019 on account has been a shift away from primary and normalisation in the advanced economies. of a number of factors operating in traditional low value-added exports to The US Fed raised the interest rate four conjunction viz., the poor performance of higher value-added manufacturing and times last year consequent to which capital the southwest and northeast monsoons, technology-driven items. This shift has outflows increased from developing lower water reservoir levels in the eastern imparted a measure of resilience to export economies. However financial volatility and western regions, low prices for demand in a hostile international trading has reduced after the Fed adopted a farm produce depressed by the supply environment. The Current Account Deficit dovish stance. glut caused by two bumper harvests in (CAD) increased to 2.6% of GDP during succession and the lack of agricultural Apr-Dec’18 from 1.8 % during Apr-Dec’17 Going forward, with waning fiscal stimulus markets to deal with large excess due to widening of the trade deficit on in the US and weaker European economy, supplies. As monsoon is projected to be account of higher oil prices. As oil prices global growth slowdown is expected near normal (due to weakening of El Niño), started moderating from November’18, to continue in 2019 with GDP growth of it may have positive impact on agricultural the CAD has moved down from 2.9% in production, going forward. Q2 FY2019 to 2.1% in Q3 FY2019. DIRECTORS’ REPORT 35

BANKING ENVIRONMENT With the sustained efforts, the Bank credit The external environment continues to has picked up momentum in 2018-19, after be challenging. IMF’s latest Financial The Indian banking sector has been remaining depressed for nearly two years, Stability Report observes that rising facing a large overhang of balance sheet and grown by 11.96%, its highest level in financial vulnerabilities point to elevated stress. In the year 2017-18, the persisting the last five years, compared to last year medium-term risks to financial stability. deterioration in asset quality necessitated growth of 10%. Aggregate deposits grew Accordingly, the trend to reorganise sharp increase in provisions and for the by 7.58% in 2018-19, compared to 6.2% foreign business in light of the emerging first time since 1993-94, the banking growth in 2017-18. The incremental credit challenges and new opportunities such system as a whole, particularly driven by flows are also getting increasingly broad- public sector Banks (PSBs), registered based, with services accounting for the as regional trade agreements will shape losses. highest share as against personal loans a the things to come. Your Bank has year ago. Credit growth to industry, which already taken many initiatives in this To manage the crisis, the regulator and has turned positive in November 2017 direction, such as reorganisation of its UK supervisor, RBI, has tried for the revival of after more than a year-long contraction, operations. Close monitoring of risk in all the banking system by following a three- has improved, particularly in respect of overseas operations will be pursued. pronged approach: (i) Through Asset Infrastructure, Chemical and Chemical Quality Reviews (AQRs) a fuller recognition products, Engineering and Petroleum, Lastly, the first quarter of current financial of stressed assets is nearing completion Coal products and Nuclear fuels. The year is punctuated by the results of general and provisioning is being policy-driven; (ii) share of credit to agriculture, however, elections. Once this short-term uncertainty In consonance, the implementation of a moderated. is cleared, the course of policy direction new framework for resolution of stressed will also be visible. With monetary policy assets under the overarching mandate The up-tick in credit growth is likely to be already accommodative, a low inflation of the Insolvency and Bankruptcy Code supported by the progress being made (IBC) is speeding up the de-stressing of under the aegis of the IBC in addressing coupled with manageable fiscal position, balance sheets and (iii) the Government stress on balance sheets of both corporates the future outlook of growth is positive. has undertaken steps for recapitalisation and Banks, recapitalisation of PSBs, and The risks in banking sector is likely to of the PSBs. Reflecting such resolution a positive outlook on the economy. The ebb with the resolution of large ticket IBC efforts, asset quality of the banking sector prevailing negative credit-to-GDP gap cases. This will create room for business currently appears to be on course to indicates that there is sufficient scope for expansion and structural transformation recovery as the load of impaired assets credit absorption and expansion in Bank of Banks. recedes; the first half-yearly decline in lending on a sustained basis. gross NPA ratio since September 2015 and improving Provision Coverage Ratio, being positive signals. Stress test results OUTLOOK suggest further improvement in NPA The last financial year was particularly ratio. Notwithstanding the significant challenging for Banks in India. Operational costs in lieu of enhanced recognition of asset impairment in PSBs, it appears to risk increased and there was considerable have led to a greater discipline in credit market volatility, adversely impacting assessment, higher sensitivity to market treasury operations. Although the risk and better appreciation of operational resolution of stressed assets has reached risks. Meanwhile, the Insolvency and an advanced stage, counter litigations Bankruptcy Code (IBC) has bridged an have elongated the realisation of final leg important institutional gap to strengthen of resolution process. The consolidation in the much-needed credit discipline. Some PSB space has changed the landscape of of the resolutions, however, are lagging competition and this process may gather behind the envisaged timelines. A time- pace in the next financial year. bound resolution of impaired assets will go a long way in unclogging the credit The cumulative effect of policy decisions pipeline, thus improving the allocative over the last five years has been positive efficiency in the economy. in FY2019. Reform measures such as The shift in credit intermediation from GST, IBC, Roads and Inland waterways Banks to non-Banks has given the etc. have stabilised. There is now a corporate sector a diverse choice of larger appreciation of the fact that there financing instruments. Such market- will be greater use of digital technology intermediated credit flows require robust in every sector of the economy. Report supporting infrastructure in the form of of the Taskforce on Artificial Intelligence appropriate valuation regime as also talks about the use of advanced data informative and responsive credit rating and AI techniques in financial services. framework. However, the stress in the The credit growth, which has improved NBFC sector have underscored the in FY2019 and is supported by need for greater prudence in risk-taking. accommodative policy stance articulated While the role of Banks and non-Banks in the First Bi-monthly monetary policy, in supporting the growth needs of an will remain robust in this financial year emerging economy like India is well recognised, emphasis should continue as well. to be on diligent, prudent and sound risk management practices. 36 DIRECTORS’ REPORT

II. FINANCIAL PERFORMANCE ASSETS AND LIABILITIES OPERATING PROFIT RESERVE AND SURPLUS Total assets of your Bank have increased The Operating Profit of your Bank for An amount of `258.67 crore (as against by 6.55% from `34,54,752.00 crore at FY2019 was at `55,436.03 crore as nil in FY2018) was transferred to Statutory the end of March 2018 to `36,80,914.25 compared to `59,510.95 crore in FY2018 Reserves. An amount of `379.21 crore crore as at the end of March 2019. During (including exceptional item of `1,560.55 (as against `3,288.88 crore in FY2018) the period, the loan portfolio increased crore in the FY2018-19 and `5,436.17 was transferred to Capital Reserves. by 12.97% from `19,34,880.19 crore, to crore in FY2017-18). Your Bank posted a An amount of `371.84 crore (as against ` 21,85,876.92 crore. Investments Net Profit of` 862.23 crore for FY2019, as withdrawal of `1,165.14 crore in FY2018) decreased by 8.86% from `10,60,986.71 compared to Net Loss of `6,547.45 crore was transferred to Investment reserve. crore to `9,67,021.95 crore as at the end in FY2018. An Amount of `194.05 crore (as against of March 2019. A major portion of the ` 192.32 crore in FY2018) was transferred investment was in the domestic market in from Revaluation Reserve to General government securities. PROVISIONS AND Reserve. CONTINGENCIES Your Bank’s aggregate liabilities (excluding capital and reserves) rose by Major provisions made in FY2019: PROGRESS ON 6.93% from `32,35,623.44 crore as on Provision of `54,529.06 crore for non- IMPLEMENTATION OF st 31 March 2018 to `34,60,000.42 crore performing assets (as against `70,680.24 st IND AS as on 31 March 2019. The deposits rose crore in FY2018) and a write back of by 7.58% and stood at `29,11,386.01 `762.09 crore towards Investments Steering Committee headed by st crore as on 31 March 2019 against Depreciation (as against provision Managing Director (Stressed Assets, st `27,06,343.28 crore as on 31 March `8,087.57 crore in FY2018) was made Risk & Compliance) has been monitoring 2018. The borrowings also increased by during the year. implementation of Ind AS in the Bank. 11.29% from `3,62,142.07 crore at the Your Bank is already geared up for end of March 2018 to `4,03,017.12 crore implementation of Ind AS. However, as at the end of March 2019. implementation of Ind AS in Banks has been deferred by RBI until further notice. NET INTEREST INCOME Net interest income increased by 18.03% from `74,853.72 crore in FY2018 to `88,348.87 crore in FY2019. Total interest income increased from `2,20,499.31 crore in FY2018 to `2,42,868.65 crore in FY2019 registering a growth of 10.14%.

Total interest expenses increased from `1,45,645.60 crore in FY2018 to `1,54,519.78 crore in FY2019. Interest expenses on deposits during FY2019 recorded an increase of 3.35%, compared to the previous year.

NON INTEREST INCOME AND EXPENSES Non-interest income decreased by 17.55% to `36,774.89 crore in FY2019 as against `44,600.69 crore in FY2018. During the year, your Bank received an income of `348.01 crore (`448.52 crore in FY2018) by way of dividends from subsidiaries and joint ventures in India and abroad, and `3,146.86 crore (`13,423.35 Unveiling of the Plaque of Project ‘Swachh Belur Math’ by Chairman, SBI at Belur, crore in FY2018) by way of profit on sale Kolkata Circle. of investments. DIRECTORS’ REPORT 37

III. CORE A. PERSONAL BANKING Individual Mortgage Business OPERATIONS 1. Home Loans Level (In Crs) As on 31st March 2019, the Home Loan 1. RETAIL & DIGITAL portfolio of your Bank was the largest in BANKING GROUP the country, with a market share of more than 34.51% amongst All Scheduled The Retail and Digital Banking Group is Commercial Banks (ASCB). The total Home the largest business vertical of your Bank, Loan stood at `4,00,377 crore, which was 400377 constituting 97.05% of total Domestic 20.11% of your Bank’s domestic advances. Deposits, and 54.89% of total Domestic 341013 Advances, as of 31st March 2019. The Affordable Housing was a key driver of 298921 Group comprises of eight strategic growth in the overall Housing sector, business units which drive the largest based on the Government’s thrust to 201755 branch network across the country with bridge the massive Demand-Supply gap 167424 its vast human resources. of dwelling houses in India, along with Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 the relaxation of the CLSS (Credit Linked Your Bank’s customer base is steadily Subsidy Scheme) norms under Prime (March’17 figure includes that of merged increasing across the country making Retail Minister’s Awas Yojana (PMAY), covering Associate Banks too) Banking the most critical segment of your more beneficiaries, Government has also Bank, both in terms of deposit mobilization, extended the PMAY MIG Scheme up to zz Home Loans on YONO was a as well as extending customised credit for 31st March 2020. As of 31st March 2019, significant step towards digitisation all basic requirements of Retail customers. State Bank of India has 64.46% of its and provided the registered YONO Simultaneously, to meet the aspirations of Home Loan portfolio under Affordable customers with 24*7 access to Home this growing customer base, retail assets Housing. Your Bank was recognised by the Loan needs, such as exploring SBI are being strategically positioned with a National Housing Board (NHB) as the Best Home Loan products, calculating view to occupy a much larger proportion Home Loan provider in the country, under eligibility, and getting instant In- of total advances. Within the retail the PMAY MIG category, for FY2017-18. principle approval. To meet the portfolio, Home and Auto loans are the personal needs of existing Home major contributors. Your Bank continues During FY2019, various initiatives were Loan customers, Insta Home Top-Up to be the largest Home Loan provider in taken by your Bank to give an additional Loan was also introduced on YONO. the country and the largest dispenser of boost to its Home Loan portfolio, some of Education Loans, which demonstrates its which are: unflinching commitment to serve society at large.

The ever-evolving customer preferences, especially of the younger population, are transforming the retail banking landscape. Your Bank is at the forefront in digital banking domain and maintains a steady stream of technology-driven innovations. State Bank of India has a multi-channel delivery model, which allows it to offer its customers a choice to carry out transactions through any channel, at any time and at any place. In FY2019, your Bank has increased its offerings across various channels - digital, mobile, internet, social media, with additions to its branches, ATMs, YONO Cash Points and Customer Service Points. YONO, the banking and lifestyle app of your Bank is steadily strengthening its base, individually.

With a view to enhance its customers’ experience, your Bank is making continuous efforts in providing a pleasing ambience within customer service areas, with proper seating arrangements, clean and uncluttered surroundings, along with courteous and smartly attired staff at all its branches. 38 DIRECTORS’ REPORT

zz Sanctioning of Home Loans and 3. Education Loans Personal Loans for e-Commerce Home related products from non- Purchases: BPR centre branches through Education is the key prerequisite for centralised Rural Assets Credit creating human capital, as it helps in Your Bank provides EMI based loans to Centres (RACCs), and Loan developing skilled and productive human pre-selected elite customers for purchase Processing Cells (LPCs), has brought resources. Loans provided for this purpose of consumer durable goods worth up to about uniformity in processes contribute to the development of the nation `1,00,000 from online shopping portals and better quality of underwriting, and is a growth driver for any economy. such as Flipkart and Amazon on a real resulting in pan-India growth of Therefore, the financing of up to` 10 lakh time basis. Online e-commerce financing quality assets. The overall fresh NPA under Education Loans is considered as under tie-up with Flipkart was launched during FY2019 was below 1% of the Priority Sector Advance. Your Bank takes in May 2018 and with Amazon in October total Home Loans portfolio. pride in being the largest Education Loan 2018. The portfolio is 19,974 accounts provider in the country, with a market with an outstanding of `19 crore as on zz In order to help and support the flood share of 30%. During FY2019, it helped March 2019. affected people of Kerala, within a more than 66,947 meritorious students to month of the calamity, your Bank realise their dreams by providing financial SBI Debit card holders were empowered introduced Home Loan Schemes assistance to the tune of `6,635 crore. Out to fulfil their shopping needs on POS for Repair and Renovation within of this, 35% of the loans were extended enabled swipe machines with an EMI the Kerala Circle on softer terms, to girl students. To broaden the scope of facility, given to the pre-selected ones irrespective of category, gender, LTV Education Loans, book quality business for purchasing consumer durable goods ratio and risk score of the customers. and enhance customer satisfaction, your from the approved shops, mall, stores, zz Your Bank introduced niche products Bank has taken following steps: and show rooms worth up to `1 lakh. The such as ‘SBI Smart Home Top-Up’ facility was launched during the latter part zz Shortlisted 158 top-rated, premier for existing Home loan customers; of FY2019. SBI ‘Wealth’ for HNI / High-end and reputed institutions to extend Education Loans under the Scholar customers; and Flexible Margin 5. Liability and Investment Schemes for real-estate developers. Loan scheme at relaxed norms and concessional interest rates. Products zz Your Bank is leveraging its vast branch network and the strength of its zz Door-step services were extended The overall P-Domestic CASA Deposits committed staff, with the latest state- for sourcing high-value education of your Bank has grown from `8,36,294 of-the-art technology to improve the loan applications for studying crore as on FY2018 to `9,16,442 crore Home Loan journey of the customer. abroad at select centres. as on FY2019, registering a growth of Namely making it faster, more `80,148 crore (9.58% annualised). The zz To ensure better tracking of the loan CASA improved to 48.49% as on FY2019, transparent and easier. Your Bank applications and faster sanctioning compared to 48.23% as on FY2018. continues to work towards being the of loans, your Bank’s Loan first choice Home Loan provider of Origination System was integrated customers. with Vidya Lakshmi Portal (VLP) of 6. Corporate and the Government of India. Institutional Tie-ups for 2. Auto Loans Salary Package 4. Personal Loans Your Bank is helping with upgrading Salary Accounts of employees of the living standards of its customers by Personal Loan is amongst the most popular Corporates, Central/State Government providing auto loans at competitive rates, products of your Bank, and your Bank is a establishments, Defence, Para Military and by making owning a car an affordable leader in this market segment. Your Bank and, Police personnel amongst others, proposition. The auto loan products of was aggressively catering to the needs are opened/serviced through Key your Bank are available in many variants to of salaried class (both government and Accounts Managers (KAMs), who provide suit the requirements of various customer private), pensioners and self-employed/ personalised service along with a bouquet segments viz. - salaried, businessmen, other customers. During FY2019, your of products under the Corporate Salary self-employed, professionals, senior Bank has provided Personal Loans to Package (CSP) at the customer’s door citizens, NRIs, agriculturists and existing more than 15 lakh customers, amounting step. The total Salary Account customer borrowers, amongst others. Multi-channel to `56,873 crore, while maintaining a base for FY2019 reached 145.93 lakh sourcing of proposals and quick TAT market share of around 30%. With a accounts, registering a growth of 22% has made the auto loan products highly much higher rate of return on parameters over FY2018. popular. This has helped your Bank to such as ROA and RORWA, your Bank’s increase its penetration in financing cars delinquency under this segment is one of sold by various manufacturers such as 7. Digital Personal Loan the lowest in the industry. The products Maruti, Hyundai, TATA Motors, to name are delivered through multiple channels Offerings a few. The Auto Loan portfolio reached a such as Branches, Internet Banking level of `71,884 crore by FY2019, and the While offering products on multiple and through YONO. Utmost caution in market share of Your Bank in Auto Loans platforms for portfolio growth with higher selection of borrowers and careful due rose from 34.97% in FY2018, to 35.45% profit margins, we have kept in mind diligence has made it possible for your in FY2019, amongst All Scheduled the ease of Banking for our Customers, Bank to achieve much lower delinquencies Commercial Banks (ASCBs). Additionally, and have implemented following digital State Bank of India plans to start financing despite aggressive portfolio growth. products: high-value super bikes, a new and fast emerging segment. DIRECTORS’ REPORT 39

zz On the YONO Platform, your Bank zz Missed call and SMS Banking is providing Pre-Approved Personal facilities were launched for NRIs, Loans (PAPLs) to pre-selected in which customers can get their customers through four product latest balance and mini statements lines, viz., Pre-approved Xpress of their accounts via SMS, just by Credits up to `5 lakh, Pre-approved giving a missed call on a predefined Pension loans up to `2.5 lakh, number. This is especially useful for Xpress Credit Insta Top-up up to customers who are not using Internet `3 lakh, and Pre-Approved Personal Banking facilities. Customers can Loans (PAPLs) up to `2 lakh to CSP also block or restrict ATM card and Non-CSP customers. usage through this functionality.

zz Xpress Credit Insta Top-up loans zz NRIs can now plan and secure on INB Platform: Top-up loans up retirement with the National Pension to `3 lakh are being offered to pre- System (NPS) scheme. The product approved Xpress Credit customers is now available to all SBI NRI through INB platform. customers. They can open and maintain NPS account through their zz Tatkal e-Personal Loan: Loans Internet Banking portal as well. up to `1 lakh are being offered to cater to the needs of pre-selected zz SBI Wealth, the wealth management unserved and under- served non- initiative of your Bank, which offers salaried customers, based on a platform to create, preserve and selected parameters. This product grow wealth, is now available to was launched in May 2018 and has NRI clientele from Gulf Cooperation a portfolio of 27,853 accounts worth Council Countries. `122 crore as on March 2019.

zz Personal loans were extended 9. Wealth Management against security of Sovereign Gold Business During the year, your Bank posted Bonds of Government of India. Your Bank’s Wealth Management Services Relationship Managers (NRI Wealth) at Abu are now made available at 44 Centres with Dhabi, Bahrain and Dubai. NRIs residing in 8. NRI Business 121 Wealth Hubs, four e-Wealth Centres Bahrain, Kuwait, Qatar, Sultanate of Oman and UAE are eligible to be on-boarded As on 31st March 2019, your Bank has and a Global e-Wealth Centre by adding as Wealth Clients. They have an option around 37 lakh NRI Customers, who are 31 new Centres and 45 new Wealth- to access Wealth Management Services being catered to by 93 dedicated NRI Hubs during the year. The Wealth-Hubs either through e-Wealth Centres or Wealth branches in India and a well-connected are managed by a team of dedicated Hubs during their visit to India. Your Bank network of foreign offices. We also have Relationship Managers and Investment has also opened a state-of-the-art Global correspondent banking relations with 234 Counsellors who have in-depth e-Wealth Centre at Kochi for extending global Banks and tie- ups with 55 exchange knowledge on products and markets, services to NRIs. houses and six Banks (in the Middle-East) to along with Senior Internal Officials for facilitate remittances. The Indian diaspora, operational roles. Your Bank has conducted Signature spread across the globe, has always Investment Conclaves addressed by reposed immense trust on us. As a result, For greater connect and visibility, your experts from the Financial Industry and a quarter of their deposits (within the Indian Bank re-branded the Wealth Management Markets on prevalent market conditions Banking system) is with us. Business as ‘SBI Wealth’, which was earlier known as ‘SBI EXCLUSiF’. and investment opportunities. These Your Bank has launched the following Conclaves were well attended by existing products/services in FY2019 for the benefit An open Investment Platform, with a and prospective SBI Wealth Clients. of its NRI clientele: state-of-the-art technology and right selling approach based on Risk Profiling, To commemorate the 3rd Anniversary of SBI zz SBI Tax Savings Scheme for NRIs Wealth, the Bank conducted a Signature (NRO Deposits) was introduced provides the best possible experience to Client Engagement Program at Mumbai in which customers can avail Tax the Bank’s clients by offering exclusivity in to build a deeper and valued relationship benefits under section 80C of its services and benefits. with Wealth Clients. It released the 2nd Income Tax Act, 1961 (minimum edition of the Financial Planning reference tenor of deposit is 5 years and tax- Your Bank added a new e-Wealth Centre publication during the launch of its 100th relief is available up to 1,50,000 per at Kolkata during the year. The e-Wealth ` Wealth Hub at Coimbatore. Financial Year). Centres, with extended banking hours, are equipped with transaction execution facilities over voice and video calls. With Your Bank’s Wealth Management Business an endeavour to provide a best in class has shown an exponential growth in terms holistic experience to clients, your Bank of client acquisition and Assets Under has launched a new version of ‘SBI Management during the financial year. The Wealth Mobile App’ enabling investment number of Clients increased from 24,168 transactions. in March 2018 to 55,502 in March 2019 and AUM reached `30,270 crore against `14,284 crore during the period. 40 DIRECTORS’ REPORT

B. ANYTIME CHANNELS accounts, transfer funds through NEFT/ RTGS, make bill payments/supplier As on ATMs Kiosks ADWMs Total payments, authorise e-cheques /e-STDR, 31st March 2016 42,733 1,231 5,760 49,724 open and operate fixed deposit accounts amongst others. With above 141 Lakh st 31 March 2017 42,222 986 6,980 50,188 registered users, the Mobile Banking 31st March 2018* 51,616 # 7,925 59,541 channel has processed transactions amounting to `2,74,029 crore. 31st March 2019* 50,757 # 7,658 58,415

# Kiosks are scrapped and not in use * Merged Mobile Banking: Market Share in No. of Transactions (in%) 1. ATMs/ ADWMs hours for printing. More than 3.45 crore transactions are recorded at these kiosks Your Bank has one of the largest ATM per month. networks in the world with 58,415 ATMs including Automated Deposit and Withdrawal Machines (ADWMs) as on 31st 3. Green Channel Counter March 2019. To provide 24x7 cash deposit (GCC) 19.94% and withdrawal facilities, it has installed

GCC installed at all retail branches extend 15.1% 7,658 ADWMs and CDMs. services such as cash withdrawal, cash deposit, funds transfer within State Nearly, 36% of the financial transactions Bank of India, balance enquiry, and Mini of your Bank are routed through ATMs/ 7.46% Statement. On an average 8.20 lakh 6.64% ADWMs. With a market share of 28.73% transactions are being routed through SBI ICICI HDFC AXIS (as per RBI Data) in ATM network in India, GCC per day. it transacts 50.81% of the country’s total ATM transactions. On an average, over 6. SBI Pay (BHIM) 1.40 crore transactions per day are routed 4. Green Remit Card (GRC) through your Bank’s ATM network. GRC, especially useful for migrant Your Bank’s Unified Payments Interface depositors, is a card through which one based App is an interoperable offering, Under the Green initiative and cleanliness can remit money using GCC/CDMs/ which provides the convenience of drive, your Bank has discontinued printing ADWMs in a specified account of State transferring funds across different Bank of transaction slips for 43 types of Bank of India. As a daily average, over accounts using - Virtual Payment Address unsuccessful transactions. It has installed 1.50 lakh transactions are being routed (VPA), Bank Account Number + IFSC solar panels on around 2,400 ATM sites. through GRC. and scanning a QR Code. Over 553 lakh users have registered and are availing Your Bank has set up over 2,200 e-Corners 5. Banking on Mobile UPI services, resulting in more than 129 across the country where customers can crore transactions, amounting to more avail the entire gamut of services through YONO Lite - Your Bank’s Mobile Banking than `2.96 lakh crore, processed through ATMs, ADWMs, SWAYAMs, Check deposit App for retail customers, YONO Lite, the SBI UPI channel during FY2019. Kiosk, and online banking kiosk. as it is now known offers Intra and Inter Additionally, users have the convenience Bank funds transfer (NEFT/RTGS/IMPS/ of making bill payments, travel bookings To ensure safety of ATMs and customers’, UPI amongst others.), opening of fixed and ordering food through BHIM SBI Pay coverage under electronic surveillance is deposits, e-MOD Accounts and add / making it an all-in-one UPI App. A facility being enhanced. Your Bank has covered manage beneficiaries etc. Additional to help donation for a variety of noble approximately 13,000 ATMs under value-added services such as Aadhaar causes such as - Clean Ganga Fund and e-surveillance as on 31st March 2019, Linking, Voice Assisted Banking, various Chief Minister’s Relief Funds, has while the next 15,000 ATM sites are slated e-statement subscription/download, Stop also been enabled on the app. to commence shortly. / Revoke cheque instructions, and facility to submit Form 15G/ 15H online for TDS Large multinational corporations 2. SWAYAMs: Barcode exemption and a host of other features are have implemented digital payments also available. bandwagon to help achieve a Less Cash based Passbook Printing India. State Bank of India has partnered Kiosks SBI Anywhere Corporate - Your Bank’s with Google India to offer UPI services to the users of their App - Google Pay under Your Bank installed around 3,200 Mobile Banking App for proprietorship the UPI Multi-Bank Integration Model. SWAYAMs (Barcode based Passbook firms allows businesses to transfer funds Consequently, over 312 lakh Google Pay Printing Kiosks) during FY2019, making across Banks, open and operate fixed users have linked their Bank accounts the total number of SWAYAMs deployed deposit accounts, payment to EPFO, with their @OKSBI handle till 31st, March cross 17,400 units. Using these kiosks, view account statements, schedule 2019. customers can print their own passbooks transactions, and Recharge/bill payment using barcode technology. Your Bank amongst others. Furthermore, it facilitates has also deployed “Through the Wall” large Corporate firms with multiple users SWAYAMs, offering extended working and allows business houses to operate DIRECTORS’ REPORT 41

zz Get advice on and purchase a host As a Remitting Bank Mkt. Share (%) As a Beneficiary Bank of non-banking financial services Mkt. Share (%) products such as mutual funds, life and general insurance, credit cards, SBI SBI among others. 21% 16% zz Get the widest variety and lowest prices on beyond banking products, across 89 merchant partners and 21 categories on the platform.

zz At the same time, our employees can provide the same services to our customers when they need assisted services. Besides, processes that Others Others take up close to 60% of branch 79% 84% activities have been digitised with a view to streamline processes, deliver superior in-branch customer experience and free up capacity for As Payer PSP Mkt. Share (%) As a Payee PSP Mkt. Share (%) value creating activities. YONO Impact achieved: SBI SBI A year since launch, YONO has already 9% 7% generated significant value for the Bank in terms of business growth, new customer on-boarding and customer engagement

YONO has achieved 2 crore downloads and approximately 73.49 lakh registrations till date. Over 10 lakh users login daily.

Significant momentum on new customer on-boarding achieved with approximately Others Others 25,000 digital accounts opened per 91% 93% day, which was over 75% of all eligible accounts being opened by the Bank with 30-40% higher balances than regular SBIePay - Your Bank’s Payment 7. Digital Banking accounts. Aggregator The digital payments landscape in India is SBIePay, started in March 2014, is the evolving rapidly and State Bank of India YONO is the fastest growing major first and only Bank based Payment is playing an effective role in building channel for personal loans. It has crossed Aggregator in India. In its essence, momentum for transforming India through over `300 crore of monthly disbursements SBIePay is a platform for merchants to digitalisation of the economy. In sync with through a completely paper-less process. acquire a Bank agnostic large customer the Government of India to create a less- base and provides a bouquet of online cash economy, your Bank has expanded The non-banking financial services payment options to the merchant’s online its digital footprint across the length and product suite, that is, insurance mutual customers. During last year, SBIePay has breadth of the country. funds, amongst others are achieving all- witnessed exceptional growth, as a result time highs. of an increase in the number of merchants YONO: YONO, our flagship customer- on-boarded, which rose from 125 in facing digital Bank caters to various The market place has also been very FY2018 to 225 in FY2019. Moreover, your banking, financial services, lifestyle successful in getting us engagement from Bank has added four new channels to requirements and delivers world class our customers. 25% of customers who the bouquet of online payment offerings customer experience through distinctive log in on a monthly basis do so to access - NEFT, Prepaid Card, UPI, and SBIePay- omni-channel and seamless customer the marketplace. For these customers, POS and have made direct integration journeys. It is also an employee facing 45% of the time spent on the app is on the with INB of other Banks such as HDFC, platform that enables end-to-end marketplace. ICICI, Bank of Baroda, amongst others. digitisation of regular banking services. This has resulted in a 115% YoY growth On end-to-end digitisation, we have in number of transactions. The value of With YONO our customers today drastically reduced the TAT for account opening from over 50 minutes to less the transactions settled has jumped from can: `24,487 crore in FY2018, to `38,207 crore than 10 minutes and are in process of in FY2019, leading to an increase in the zz Open an account digitally and do all eliminating the back-office for few key commission/revenue earned by your banking transactions on a mobile transactions. Bank. SBIePay has achieved a revenue of app or website. `49.68 crore during FY2019, a growth of 54% over FY2018. 42 DIRECTORS’ REPORT

Various other intangible benefits were zz General insurance policies worth State Bank Foreign Travel Cards (FTC): achieved through YONO, for example `981.46 lakh (No: 3,19,936) The State Bank Foreign Travel Card simplified CKYC process, elimination (SBFTC), is a chip based EMV compliant zz Life Insurance Policies value of paper-based application forms, card and is issued on VISA and MasterCard `1,315.47 lakh (renewal) and automated customer validations, amongst schemes providing safety, security, and `550.93 lakh (New) achieved on the others. convenience to overseas travellers. On YONO platform. VISA it is available as single currency card Awards won by YONO : zz 2.16+ lakh SBI Credit Cards linked; in 8 currencies - US Dollar, British Pound 5.79 lakh card payments worth `678 Sterling, Euro, Canadian Dollar, Australian zz “CSI IT Innovation & Excellence crore done; 1.93 lakh new Card Dollar, Japanese Yen, Saudi Arab Riyal, Awards 2018” - Best BFSI leads generated. and Singapore Dollar. On MasterCard for Implementation of Digital it is available as Multicurrency Card in Trasnformation ( Dec 2018) zz Online lead generation and issuance 7 currencies - US Dollar, British Pound of In-principle approval and sanction zz “ABP News BFSI Award 2018” - Sterling, Euro, Canadian Dollar, Australian of Retail Loans for Home Loan Best Bank in Technology Orientation Dollar, Singapore Dollar, and UAE Dirham. (existing customers), approximately ( November 2018). Your Bank has also introduced corporate 45,475 leads generated, out of variants of SBFTC to cater to varying needs zz “Mobile Banking Initiative of the which around 9,356 in-principle of corporate customers. Additionally, your Year - India” at the Asian Banking approval generated (around `1,402 Bank is aggressively promoting tie-ups with and Finance Retail Banking Awards, crore). FFMCs (Full Fledged Money Changers). Singapore (July 2018). zz Innovative product ‘YONO Cash’ Your Bank has issued more zz Indian Express Award 2018 - - Cardless, paperless withdrawals FASTags: Enterprise Mobility Category (June at ‘YONO cash Points’ (ATM) than six lakh SBI FASTags to customers. 2018). launched Pan India. The innovative Consequently, Toll transactions through YONO Cash feature provides SBI FASTags have crossed a mark of 216 zz ET BFSI Innovation Awards cardless, fast, convenient, and safe lakh with a total transaction amount of over (September 2018). cash withdrawal facility at nearly `395 crore as on 31st March, 2019. State 19,601 ATMs across the country. Bank of India has put onboard, State Road Performance Highlights of YONO The enhanced journey to include Transport Corporations in Uttar Pradesh, as on 31st Mar 2019 : the scope of paperless/cardless Punjab, Uttarakhand, Odisha, Tamil Nadu, cash withdrawal at POS terminals, Karnataka, and West Bengal for FASTag zz 2 crore + application downloads branches, and BC channel under services. zz 73.49 lakh Registrations YONO Cash is under development. Metro and Transit Projects: Your Bank zz App rating on Android is at 3.7 and Debit Cards: State Bank of India has has implemented a first- of-its-kind end to 2.8 on iOS focused on shifting the usage of Debit end ticketing solution for the Noida Metro Project using the National Common Mobility zz 10 lakh+ daily logins Cards by customers from ATMs (for cash withdrawals) to PoS terminals/e- Card (NCMC) specifications based RuPay zz 98.31+ lakh Fund Transfers Commerce websites. Highest one day Prepaid Card. State Bank of India has also (`13,413.64 crore ) executed spends at PoS/e-Commerce was achieved been awarded the Hyderabad and Nagpur metro project for implementation of Open zz 2.40+ lakh Fixed Deposits opened with ~`1,000 crore on Dhanteras. Loop Automatic Fare Collection System zz 13.84+ lakh Bill payments done Additionally, your Bank has launched based on the NCMC card specifications, various innovations and functionalities the work of which is under way. zz 27.50 lakh+ Digital Savings accounts around Debit Cards such as Contactless Debit Cards, Bharat QR, Samsung Pay, Smart City: Your Bank has a dedicated zz `3,800 crore worth disbursals of Visa Checkout, and Personalised Image team to capture the payment eco-system Digital paperless Pre-Approved Debit Card “My Card”. Moreover, it has in the 100 identified Smart-Cities in India. Personal Loans to 3.14+ lakh tied up with various institutions such as The plan is to foray into the transit solution/ customers, having delinquency rate Mumbai Metro, Chennai Metro, College integrated ticketing solution for ‘One City of less than 0.01 %. of Engineering - Pune, IOCL, and others One Card’, which is a payment initiative for for launching co-branded Debit Cards/ the Smart Cities. zz 89 merchant partners live on the B2C Combo Cards. Market Place platform across 21 Cash@PoS: To reach out and facilitate categories, witnessing approximately These initiatives made State Bank of India maximum number of people looking 1,37,000 transactions (around `60 a market leader in terms of share in Debit for convenient cash withdrawal, State crore Gross Merchandise Volume), Card spends, which is at a high of 29.89% Bank of India, provides facilities of cash 1.66 crore merchant clicks, and as on 31st March, 2019. With approximately through ‘Cash@POS’ initiative. Debit card approximately 54,115 IRCTC ticket 29.67 crore actively used Debit Cards as holders of State Bank of India and all bookings. on 31st March, 2019, State Bank of India other Banks can withdraw cash from PoS zz Mutual Funds Gross Sales worth continues to lead in Debit Card issuance in machines installed by your Bank across `8,324.79 lakh the country. various merchant locations. As per the RBI guidelines customer can withdraw `1000 in Tier I and Tier II cities whereas `2000 can be withdrawn in Tier 3 to Tier 6 cities DIRECTORS’ REPORT 43 per day per card. Presently, your Bank is Your Bank continued the efforts to onboard Metro. Your Bank has also initiated the not charging any fee. State Bank of India merchants from premium segments like development of acceptance infrastructure has a total of 5.75 lakh PoS machines of OMCs, retail chains, life style stores, and for NCMC (National Common Mobility which 4.78 lakh PoS machines are enabled holiday resorts apart from consolidating Card) on our PoS terminals to push the to dispense cash to the customers of your the existing business. Your Bank has government initiative of ‘One Nation One Bank and the Banks who have enabled this tied up with major Corporates and with Card’. facility for their customers. Government departments to migrate their operations from cash to digital mode. State Bank of India has transferred Merchant Acquisition: The digital This involve customisation and integration merchant acquiring business to its payments landscape in India is evolving of its systems with those of corporate subsidiary SBI Payment Services Private at a rapid rate and your Bank is playing and Government departments to ensure Limited (SBIPSPL) and has subsequently an effective role in building momentum for seamless flow of digital transactions. inducted Hitachi Payment Services transforming India through digitalisation of Some of the notable integrations are with Private Limited, a domain player as a JV the economy. In sync with the focus of the Indian Railways, SOUTHCO (Odisha), Partner with minority shareholding. This Government of India to create a less-cash APDCL (Assam Power Distribution Co. will enable SBIPSPL to offer innovative economy, your Bank has expanded digital Limited), Goa - GBSS project (Government technology driven products in digital payment acceptance infrastructure across of GOA), Cyber Treasury (Govt of Madhya payment acceptance system, which will the length and breadth of the country. Pradesh), IGR (Inspector General of boost Digital India Initiative and offer During the year, your Bank introduced a Registrar) Pune, Noida, and Nagpur improved merchant experience. multi option payment acceptance device named MOPAD facilitating payments via cards, Bharat QR, UPI, and SBI Buddy (e-wallet) on a PoS terminal. In addition, your Bank continued to expand digital footprint across the country and deployed 5.75 lakh PoS terminals, 4.19 lakh Bharat QR code and on-boarded 6.31 lakh merchants on BHIM-Aadhaar-SBI. In total, the number of merchant payment acceptance touch points crossed 27.91 lakh as on 31st March 2019. Your Bank has acquired nearly 54 crore transactions during FY2019 with 24% increase on Y-o-Y basis. In addition to offering basic acquiring services, your Bank is also providing other services such as:

zz NFC acceptance on PoS terminals

zz DCC-Dynamic Currency Conversion

zz EMI

zz Cash@POS Hon’ble Prime Minister launched National Common Mobility Card (NCMC) on March 6, zz Acceptance of AMEX, DINERS, 2019 at Ahmedabad, in the presence of Chairman, SBI. DFS, JCB, and UPI

8. Customer Value Enhancement Your Bank is the Corporate Agent of SBI Life Insurance Co. Limited and SBI General Insurance Co. Limited and has Distribution Agreement with SBI Mutual Fund, SBI Cards & Payment Services Private Limited and SBI Cap Securities Limited for distributing their products. Your Bank also distributes mutual fund products of UTI Mutual Fund, Tata Mutual Fund, Franklin Templeton Mutual Fund, L&T Mutual Fund, ICICI Mutual Fund, and HDFC Mutual Fund. In addition, all branches are authorised for opening pension accounts under National Pension System. 44 DIRECTORS’ REPORT

Performance Highlights: (Commission on Cross Selling) zz One of the key enablers provided to customers is the facility, which ACTUALS enables them to reply to transaction J Vs YTD March 2018 YTD March 2019 alerts received through SMS (`in crore) (`in crore) and email for instant reporting of SBI LIFE 714.75 951.90 unauthorised transactions. SBI MF 560.51 503.00 zz Mobile registration was made SBI GENERAL 212.57 270.86 mandatory to facilitate receipt of SBI CARDS 135.83 190.69 SMS alerts by customers.

SSL 5.14 6.70 zz Online download of Form 16 A is now NPS 2.44 4.11 made available through OnlineSBI. TOTAL 1631.24 1927.26 C. SMALL AND MEDIUM INITIATIVES AND SUCCESSES 9. Internet Banking and ENTERPRISES SBI LIFE e-Commerce Your Bank is pioneer and market leader zz Digital sale has gone up from 22% State Bank of India continues to grow in SME financing. With over ten lakh to 92% in FY2019. and lead the digital banking space customers, the SME portfolio of `2,88,583 propelled by the enhanced outreach of crore, as on 31st March 2019 accounts zz Number of Specified Person for Life ‘Onlinesbi’ across all customer segments. for nearly 12.58% of your Bank’s total insurance has increased to 54,317 The channel has expanded its footprint advances. State Bank of India has always as on March 19 as against 46,180 in with over 129.23 lakh new user additions held SMEs as an important segment, March 18 (Increase of 17.6%) during the first nine months showing a considering the role being played by them marked increase over the last year’s reach SBI MF in the Indian economy in terms of their (see Table). contribution to manufacturing output, zz SBI has become India’s No.1 Bank exports and employment generation. distributor in terms of AUM (more With introduction of new features and Being committed to providing Simple than `72,000 crore). several add-ons provided in ‘Onlinesbi’ and Innovative Financial Solutions, your to enhance customer comfort and Bank’s approach in driving SME growth zz SBI continues to be the market experience, the platform handled rests on the following three pillars: leader in terms of Live SIP numbers transaction volume exceeding 162 crore (more than 22 lakh) and SIP Book with transaction value of nearly 127.78 a) Customer Convenience, Value as on March 19. lakh crore, recording a quantum jump over b) Risk Mitigation, the last year (see Table). This reflects on c) Technology based digital offerings SBI GENERAL the growing customer confidence on our and process improvements offerings and deliverables. zz Number of Specified Person for General Insurance has increased to 22,034 as on March 19 as against Key Performance Indicators 2017-18 2018-19 20,646 in March 18 (Increase of New User Registration (`in lakh) 94.63 129.23 6.72%) Transaction Volume (`in crore) 156.56 162.06 SBI CARD Transaction Value (`in crore) 95,07,340 127,77,976

zz No of cards issued through Key Enablers: Banca Channel crossed 15 lakh in FY2019. zz Green Password has been launched 1. Customer Convenience during the year to enhance With a view to build and sustain the zz Cards sourced from Banca Channel customers’ ease in joining our has increased from 45% in FY2018 momentum for transforming India, your digital platform with a hassle-free Bank has created the highest units of to 55% of total cards issued by SBI self-registration process. This is set Card in FY2019. touch points in terms of branches and to expand the INB coverage among other modes. With a view to enhance ease existing and new customers. SSL/NPS of business for the Small and Medium zz Launch of Virtual Account Number Enterprises, State Bank of India modified zz Bank continues to maintain its (VAN), a customised collection tool its existing delivery model of Small and dominance in mobilising maximum for big corporates with its unique Medium Enterprises Centre (SMEC) and number of NPS accounts this year alphanumeric code that masks the created Asset Management Teams (AMTs) as well. account details of the corporates to maintain end to end relationship with the customers for micro loans up to `50 lakh. zz Bank was qualified as Top from the remitter, is another big Performing Point of Presence (POP) milestone reached during the year. The SMECs have also been strengthened under various campaigns observed in terms of manpower, which has resulted zz Facility for the non-INB customers by PFRDA. in improvement in the service. to update their email ID in CBS zz Bank has shown a significant growth records by accessing the option in income earned by sourcing ‘Register / Update your E-Mail ID’ Demat accounts and by opening under the tab ‘Useful Links’. NPS accounts. DIRECTORS’ REPORT 45

2. Digital offerings: processed under Project Vivek. Further, quality and environment aspects in their during the year, technical enhancements systems and processes. It is a continual Your Bank is leveraging technology in were done in the project to improve the improvement and rating scheme involving every aspect of the value proposition underwriting process. handholding and certification of MSMEs from sourcing business, designing with financial support from the Government products, streamlining process, improving SBI and QCI sign MoU on Zero Defect of India. Ministry of MSME has nominated delivery to monitoring. Furthermore, it Zero Effect (ZED) Certification for QCI as the National Monitoring and has taken several initiatives to build SME MSMEs: State Bank of India becomes Implementing Unit (NMIU) of this Scheme. portfolio in a risk mitigated manner and the first Bank to sign a Memorandum of has implemented significant changes in Understanding (MoU) with Quality Council So far more than 20,000 MSMEs have (i) Product suite, (ii) Process (iii) Delivery. of India on the Zero Defect Zero Effect registered for ZED and many State (ZED) Certification Scheme of Ministry Governments are already incorporating Loan Life-Cycle Management of Micro, Small and Medium Enterprises, ZED in their Industrial Policies. Government of India. Lead Management System (LMS): Your Trade Receivables Discounting Bank is hosting an online loan application As part of this MoU with QCI, your Bank System (TReDS) and tracking facility for MSME borrowers has decided to offer concessions in on the Corporate Website www.sbi.co.in. Pricing/processing charges for MSMEs State Bank of India was the first among It is an internet-based Credit Proposal having better ZED ratings. State Bank of all PSBs to register as a financier during Tracking System called Lead Management India is also considering incorporating the year on the TReDS platform RXIL and System (LMS), which allows customers ZED rating as a parameter in its Bank’s M1xchange, set up to provide finance to apply for a loan online and receive internal rating system. to MSMEs. With this we now have our an acknowledgement in the form of presence on all the 3 TReDS platforms application reference number. Briefly, this MoU will pave way for in the country. Your Bank was actively a collaborative arrangement on participating in the online biddings on the Customer Relationship Management implementation of ZED on a nation-wide platform and was offering very competitive (CRM): Leads sourced are tracked and scale on specific activities aimed for the rates for the benefit of MSMEs. Your Bank monitored for delivery through this system. benefit of MSMEs. Both your Bank and rediscounted bills worth `72.51 crore, QCI will define a strategic framework to which were discounted by SBI Global Loan Origination Software (LOS-SME) take forward the vision of Hon’ble Prime Factors Limited on the 3 TReDS platforms. and Loan Life Cycle Management System Minister for making our MSMEs adopt (LLMS): With a view to adopt the uniform Zero Defect and Zero Effect practices. standards of credit dispensation for ensuring quality and preserving corporate The ZED Certification Scheme of Ministry memory, loans are processed through of MSME is aimed at enhancing the global LOS and LLMS for small and high value competitiveness of Indian MSMEs on loans respectively.

Contactless Lending Platform State Bank of India is one of the members of SIDBI led PSB consortium and your Bank’s path-breaking initiative, psbloanin59minutes.com, provides easy access for loans to SMEs registered on GST platform and filing income tax. On this Contactless Lending Platform (CLP), in-principle sanction of loans up to `1 crore is processed. 8,377 in-principle sanctions were generated through CLP by FY2019, amounting to `3,250 lakh.

Project Vivek Project Vivek heralded a paradigm shift in your Bank’s appraisal system from traditional Balance Sheet based funding, to a more objective appraisal system of leveraging cash flow and other information sources. It is a promising initiative launched by State Bank of India to implement a new Credit Underwriting Engine (CUE) for the SME segment, thereby bringing objectivity in better risk assessment. Moreover, it reduces Turn Around Time (TAT) resulting in better customer experience. By FY2019, a total of 34,477 proposals were 46 DIRECTORS’ REPORT

Supply Chain Finance: Leveraging state-of-the-art technology and branch network, your Bank has emerged as a major player in Supply Chain Finance by strengthening its relationship with the corporate world.

During the fiscal year, State Bank of India entered into 61 new e-DFS (Electronic Dealer Finance Scheme) and four new e-VFS (Electronic Vendor Finance Scheme) tie-ups covering 351 Industrial Majors, 25,921 of their dealers and 16,572 vendors. The number of oil dealers (Petrol Pumps) on e-DFS crossed 14,806 during the last fiscal.

There was 20.07% Y-O-Y growth in e-DFS portfolio.

State Bank of India was awarded ‘Best MSME Bank Award-Large Bank’ by CIMSME. 25854 21532 18078 14048

Mar-16 Mar-17 Mar-18 Mar-19

4. Risk Mitigation: Your Bank has increasingly been shifting its focus towards Risk Mitigated Products, which include Asset Backed Loans, Overdraft against Bank Deposits/ Government Securities, Bills Discounting facility, and CGTMSE/CGFMU covered loans, amongst others.

MOU with KIA Motors India Private Limited (KMIPL), to finance dealers of KIA Motors un- Pradhan Mantri Mudra Yojana: der Electronic Dealer Financing Scheme (e-DFS) in the gracious presence of MD (R&DB). In line with the initiatives of the Government of India, your Bank has laid considerable 3. Business Partnerships/ Warehouse Receipt Finance: emphasis on extending credit facilities to eligible units under different variants of Tie-ups Your Bank has introduced Warehouse Pradhan Mantri Mudra Yojana and has Your Bank is expanding its portfolio Receipt Financing scheme (WHR) to disbursed `33,612 crore for FY2019 under of Warehouse Receipt Finance and extend finance to traders/owners of PMMY, against a target of `33,550 crore. Supply Chain Finance through Business goods/manufacturers for processing, partnerships/Tie-ups with Collateral provided against Warehouse Receipts Credit Flow to Micro and Small Managers and Industry Majors. issued by Collateral Managers having a Enterprises under CGTMSE: tie-up with State Bank of India. Further, WHR issued by Central Warehousing State Bank of India was a pioneer in Corporation (CWC) and State Warehousing supporting MSMEs and Micro and Small Corporation (SWC) would also be eligible business, by extending collateral free for WHR finance. The WHR portfolio as on lending up to `2 crore under guarantee 31st March, 2019 stands at `6,111 crore. of CGTMSE. Your Bank has a portfolio of `7,830 crore under CGTMSE as on 31st March, 2019. DIRECTORS’ REPORT 47

D. RURAL BANKING A new product designed to meet the general-purpose needs of farmers against 1. Agri Business the collateral of property, called the Asset Backed Agri Loan (ABAL), picked Credit support for agriculture and allied activities gained greater momentum during this up momentum during the year with a year, although the external environment was marred by farm distress and the effects of growth of about 142%, albeit on a lower debt waivers announced by various State Governments. In line with the past trends, base. This product was readily accepted the credit flow to agriculture set by the Government for FY2019 was surpassed by by customers because of the flexibility your Bank. it offers.

FLOW OF CREDIT TO AGRICULTURE Your Bank is de-risking its Agri portfolio YEAR TARGET DISBURSEMENT % ACHIEVEMENT and supporting farmers at the same time by tying up with local and national level FY2016 89,781 1,02,423 114% Agri Corporates, wherein the supply chain FY2017 95,168 1,25,270 132% will ensure cash flows for timely renewal of FY2018 1,05,741 1,66,819 158% loan and better incomes for the farmers. Additionally, it is lending under a Cluster- FY2019 1,16,315 1,56,385 134% based approach to tap opportunities revolving around areas and centres, which have traditionally been known for shrimp farming, dairy, poultry and, higher value horticulture crops such as pineapple and mango.

Micro credit (SHGs Bank Linkage): Your Bank has the highest market share in SHG loans outstanding, among all Banks with outstanding loans of `13,444 crore to 6.09 lakh SHGs as on 31st March, 2019 including more than 50 lakh women members.

Deendayal Antyoday Yojana: National Rural Livelihood - Mission (DAY-NRLM): Since inception of DAY-NRLM on 1st April, 2013, your Bank has financed 14,25,670 SHGs under Bank-SHG Linkage and disbursed `23,939 crore. World Soil Testing Day 05.12.2018 ADB Jaora, Distt. Ratlam (Bhopal). State Bank of India has won the National Award for highest SHG Bank linkages Your Bank has launched nine products for Dairy, Fisheries, Poultry, Sheep rearing, Goat for the year 2018, instituted by Ministry rearing, Piggery, Bee-keeping, Sericulture, and Mushroom Cultivation wherein loans with of Rural Development, New Delhi on 11th a limit up to `10 lakh are being sanctioned without obtaining any collateral security under May, 2018. Your Bank’s market share of the Mudra scheme with liberalised terms, as allied agricultural activities are means of loans under National Rural Livelihood increasing farmers’ income. Mission among PSB is 25.42% as on 31st March, 2019. During the year, the Agri portfolio growth was ahead of the YTD ASCB trends. The YTD growth in total Agri advances, as on 31st March, 2019 is `14,430 crore. The comparative growth in overall Agri Advances portfolio is as under: (`in crore) Year Total Agri YoY Growth YoY Growth Advances Amount % FY2019 2,02,681 14,430 7.67% FY2018 1,88,251 (3014) (1.58%)

Your Bank has witnessed an impressive pickup under Risk Mitigated loans such as Gold Loan, ABAL (Asset Backed Agri Loan) and Portfolio Purchases from MFIs, resulting in an increase in the share of Risk-mitigated loans from 27.6% in FY2018, to 30.3% in FY2019 at a whole Bank level. In Portfolio Purchases from MFIs under Direct Assignments, a total of 29 proposals worth `9,555 crore were sanctioned during FY2019. 48 DIRECTORS’ REPORT

Other Initiatives As part of Kisan Mela, your Bank also No. of PMJDY Accounts offers KCC farmers an enhancement of Recognising the contribution of rural India 10% to their credit limit on renewing the SBI to the nation’s economic growth, your account. In addition to this, State Bank Others PSBs Bank is striving to meet the financial needs of India has taken this initiative to reach 39% of the rural segment through various new out to the farmers to educate about the channels and services. To create focused benefits of renewing KCC account to get attention on the importance of soil health maximum benefits of interest subvention card and advocating for sustainable from Government and coverage under management of soil resources aimed at Pradhan Mantri Fasal Bima Yojana. Your enhanced Agri production, State Bank Bank has also made farmers aware about of India has observed World Soil Testing the benefits of timely renewal of KCC th Day on 5 December, 2018 across the account and usage of KCC Rupay Card country at selected branches by inviting for transactional convenience. Agriculture Scientists and farmers at field level. The programme was themed “Be Furthermore, your Bank will sensitise 61% the Solution to soil pollution” to encourage farmers on various Agri-products of Organic Farming. your Bank like Asset Backed Agri-loan, Mudra Loan and loans on other allied Agri Deposits Accounts (PMJDY) As widely reported, the Agriculture activities. sector saw developments with a few SBI States announcing waiver of farm loans Others PSBs in response to demands made by the 2. Financial Inclusion (FI): 30% farmers. Your Bank realises the role it must play as the largest Bank in the country in Your Bank announced Rinn practicing and promoting FI activities. The Samadhan:2018-19 scheme, covering spread of digital banking channels and farm sector loans and achieved the set expansion of Business Correspondents internal targets. (BC) network is giving your Bank the impetus to further grow its FI activities. Keeping in view the large number of Thus, to achieve inclusive development customers served by your Bank, it and growth, your Bank has worked out organised mass contact programmes strategies and leveraged technology to on five occasions during the year. Under expand financial services to the door 70% this initiative, all Rural and Semi-urban steps of the unbanked with the purpose branches held informal meetings with of bringing them under the ambit of formal farmers to improve customer connect and banking system. spread awareness about your Bank’s and No of Rupay cards issued (PMJDY) Government’s schemes. As estimated, Your Bank has 57,467 operating BCs and SBI at least 14 lakh farmers attended these 22,010 branches across the country to Others PSBs meets. offer banking services. The BC channel, 40% which provides customers in unbanked Other remarkable initiatives taken during areas an access to various banking the year included issuance of 72 lakh KCC- products and services while reducing ATM-RuPay Cards to Kisan Credit Card footfalls in the branches, has recorded (KCC) borrowers for ease and operational 39.75 crore transactions amounting to convenience. KCC RuPay Cards work `1,73,381 crore in FY2019, translating to seamlessly with ATMs and PoS machines, around 15 lakh transactions per day. enabling farmers to purchase their day-to- day farm requirements on 24x7 basis. Under the flagship Pradhan Mantri Jan Dhan Yojana (PMJDY) of Government of State Bank of India, organised Kisan India, State Bank of India has paved the 60% Mela at nearly 14,000 rural and semi- way for universal financial access by being urban branches across the country. It a pioneer in implementing the programme. is an initiative by your Bank to connect Your Bank has opened 10.97 crore To fulfil the needs of Social Security with farmer customers, resolve their accounts by FY2019 and issued 9.20 measures, low cost Micro insurance grievances, and educate them about their crore RuPay debit cards to the eligible products (PMJJBY, PMSBY) and pension rights and your Bank’s initiatives. customers. These initiatives taken under schemes (APY) are provided to the financial inclusion as part of key economic unorganised sector in a big way, covering policy agenda of the Government over the around 3 crore customers. last decade, has ensured access to Bank accounts for the excluded persons. DIRECTORS’ REPORT 49

Imparting Financial Literacy RSETIs have trained over 96,999 rural Your Bank has stepped up the target youth in FY2019. Over 70% of the for purchase of good quality portfolio of With the objective of imparting financial candidates trained are women and assets from NBFCs, as it believes that literacy and facilitating effective use of 92% of the candidates trained belong there is good opportunity to expand its financial services, your Bank has set up to non-general categories (SC/ST/ loan portfolio at attractive rates. Your around 338 Financial Literacy Centres OBC/ Minorities). More than seven lakh Bank is looking for opportunities both in (FLCs) across the country. During FY2019, candidates were trained by SBI-RSETIs priority and non-priority sectors. Your a total of 29,450 financial literacy camps since 2012 of which 69% were settled, in Bank had initially planned for a growth of were conducted by these FLCs across gainful vocation. `15,000 crore through portfolio purchase the country. As a part of the pilot project during the current year, which is now implemented by RBI, your Bank has set up being enhanced. 15 centres for Financial Literacy at Block E. NBFC ALLIANCES level, five each in the state of Maharashtra, Reserve Bank of India has issued F. OTHER NEW BUSINESS Chhattisgarh and Telangana in association guidelines on co-origination of loans with NGOs identified by RBI. with Banks and NBFCs. Based on the INITIATIVES guidelines, your Bank has created a new State Bank of India hosted a panel department ’NBFC Alliances’ in the month 1. Special Projects discussion on ‘India-China: Financial of October, 2018. The main objective of IFSC Banking Unit at GIFT SEZ: The Inclusion - Experiences and Challenges’. the Department is to partner with Non- Chairman, inaugurated your Bank’s IFSC The discussion was attended by a Banking Finance Companies and Micro Unit (IBU) at International Financial Services high-level delegation from China, Financial Institutions across the country Centre (IFSC) located at the GIFT-SEZ, which included Mr. Li Wei, President, in Co-origination of loans for creation of Gandhinagar, Gujarat. Many developed Development Research Centre, PRC, assets under priority sector. countries have financial hubs, which have and Minister. Furthermore, it was centred evolved over a period as International around the initiatives taken by the Indian To achieve this objective, your Bank has Financial Centres (IFC). These centres and Chinese governments towards formulated a detailed policy approved provide suitable regulatory regimes and financial inclusion, the experiences and by The Central Board. Additionally, the create a business environment to attract the challenges thereto. NBFC Alliances Department focuses on talent and capital. Successful IFCs are engaging NBFC/MFIs (other than NBFC- places where business is conducted Rural Self Employment Training Institutes ND-SI) as Business Associates to achieve between organisations from all over the (RSETIs) play an important role in skill a growth in Priority Sector Advances. world using latest financial technologies development by imparting comprehensive Moreover, the Department also facilitates and products. quality training programme to rural youth. portfolio purchase and securitisation of Additionally, it facilitates them in setting loan portfolio with respective Business While the 100% tax concession available up micro enterprises. Your Bank has set Units, viz., ABU, SMEBU, REHBU till 2020 and 50% for the next 5 years till up 151 RSETIs spread across 27 States and PBBU. 2025 are surely an attraction, they are and one Union Territory. not the only reason why your Bank has set up an Office in IFSC. The proceeds of ECBs (External Commercial Borrowings) which were hitherto being parked at high cost jurisdictions like London, New York, Singapore and Hong Kong, are now being parked at IFSC GIFT City, to optimise on the cost.

Initiatives for pilgrims at Kumbh Mela: With an aim to provide banking services to millions of pilgrims and visitors at the Kumbh Mela, State Bank of India undertook various initiatives. For the 50- day Prayagraj Kumbh Mela, your Bank provided all the necessary assistance to the devotees in the form of two 14-hours working State Bank of India branches, four ATMs, three mobile ATMs as well as a forex counter. 50 DIRECTORS’ REPORT

2. Strategy Another strategic initiative taken up by 2. e-Tendering CSO is for Branch Transformation and Following the best global practice, your Re-Imagining of Branch Experience. The Your Bank has implemented the Bank has created the position of Chief objective of the project is to decongest e-Tendering solution for various Strategy Officer (CSO) during 2018-19 the branches, re-design the desks and departments of Maharashtra, Punjab, with the objective of defining journey transform the branches from being Kerala, UP, and Assam State Government. towards realising Mission Statement of transaction oriented to business oriented your Bank and transforming vision of Top and improve service delivery. Besides, 3. PMJAY-Ayushman Bharat Management into reality. The position of several initiatives have been taken up for Settlement accounts under the scheme CSO in your Bank will help in establishing de-cluttering of branches and uniform were successfully opened in nine States/ robust strategy framework for enhancing branch layout for overall improvement in UTs viz Uttar Pradesh, Maharashtra, West value. The CSO’s role also aims for customer experience. strategic synergy amongst all verticals Bengal, Assam, Puducherry, Sikkim, for enhancing value for Customers, Nagaland, Tripura, and Andaman and Shareholders and Employees. G. GOVERNMENT BUSINESS Nicobar Islands. Your Bank has traditionally been the The CSO addresses both the business banker of choice to the Government and is 4. Indian Railways and operational strategy of your Bank. the accredited Banker to the major Central State Bank of India has completed The key areas for CSO organisation have Government Ministries and Departments. integration for collection of Application fee been envisaged as below: Being the market leader in Government for recruitment in Railway Protection Force Business (with a market share of more than through SB MOPS. MOU with Northern Data Analytics - With support of a core 80% in Government commission), your Railways for Cash Pickup through our effective group of Analytics professionals, Bank is at the forefront in the development empanelled agencies was executed in CSO’s role is to churn the Bank’s own of e-Solutions for both Central and State FY2019 covering a Total of nine Railway data as well as external data to prepare Governments. This has facilitated their Zones out of 16. long term insights and actions. The transition to the online mode, resulting CSO and his team also assist the senior in greater efficiency and transparency. management with quick analytics for Your Bank is an active stakeholder in the 5. Direct Benefit Transfer decision making. Government’s latest initiatives namely, (DBT) Government e-Marketplace, and is Market Research, Benchmarking and continuously engaged in developing State Bank of India is the sole Banker Competition - The CSO undertakes customised technology solutions for processing Direct Benefit Transfer market research and analysis of the key such as e-Tendering, e-BG, e-Trade, of LPG subsidy (DBTL). Total number of products, processes and service lines of amongst others, to keep pace with the transactions and amount processed in the competitors on a continuous basis vis- Government’s digital initiatives. FY2019 are as following: a-vis our products. This includes service (`in crore) (`in crore) delivery to formulate responsive and creative strategies, mostly in collaboration Particulars FY2017-18 FY2018-19 Particulars No. of Amount with the leaders of our Business Units and Turnover 55,61,295 57,47,997 transactions (`in crore) Field Operations. (crore) Commission 3,409 3,974 DBTL 128.95 36,653 Key Project Monitoring - CSO work as With a view to facilitate e-Governance, DBT (others) 33.06 2,07,526 a bridge between Top Management and digitisation and bringing in more efficiency Business Unit owners and Field Managers and transparency, the following initiatives to keep key strategic projects on track 6. Auction of items gifted were implemented during the year: and ensure their speedy and timely to Honourable Prime implementation. 1. GeM (Govt. Minister Few of the projects taken up by CSO for e-Marketplace) Your Bank has made its services available comprehensive improvement of Market for collection of proceeds from the auction State Bank of India is the pioneer amongst Share in major cities of the country include of items gifted to Honourable Prime Banks for financial integration of payments Minister at the National Gallery of Modern zz Strategic Tie-up for enhancing the to suppliers for procurement of common Arts, New Delhi. The event was executed Brand value goods and services through GeM by the Ministry of Culture. portal. Five State GeM Pool Accounts zz Marketing and Branding of YONO were opened at Uttar Pradesh, Tamil 7. National Testing Agency zz Realising group synergy Nadu, Himachal Pradesh, Puducherry, and Gujarat. GeM Pool Accounts of more Successful Payment Gateway integration than 70 Autonomous bodies were opened. with National Testing Agency for collection of examination fees. DIRECTORS’ REPORT 51

8. CBSE Your Bank offers a wide range of TBU 2. GLOBAL BANKING products and services to Corporate, SBMOPS was integrated with CBSE Government Departments, Financial The Wholesale Banking Business in your platform for fee collection of CBSE Institutions and SME Clients. While Bank focuses on servicing Corporate affiliated schools. Corporate and Government clients clients through customised financial continue to be the key focus segment, solutions such as working capital finance, 9. Pension Payments Bank is also marketing among existing export finance, trade transactions and clients as well as start-ups in SME sector. foreign currency loans. It comprises of State Bank of India has been administering several teams focused on specific areas pension payment to 55.57 lakh pensioners Keeping in line with market trends, your such as specialisation of product offerings, through its 16 CPPCs making disbursment Bank is continuously updating/evolving acquiring new business and generating of total pension amount of more than the bouquet of TBU products/services new income streams with continuous `1,56,835 crore. During FY2019 2.79 offered to clients to match the competitors’ focus on profitability and risk mitigation. lakh new pension accounts and eight products/services. Autonomous Bodies were on boarded for A. CORPORATE ACCOUNTS Pension payments. A number of pensioner zz TBU Fee Income increased by connect programmes were conducted 48.50% from `893.66 crore in GROUP FY2018 to 1,327.08 crore in across the country. ` The Corporate Accounts Group (CAG) is FY2019. A 30% plus annual growth a dedicated vertical handling the “large has been consistently achieved in 10. Small Savings Schemes credit portfolio” of your Bank through 4 fee income during the last few years. State Bank of India services more than offices in 3 Centres viz., Mumbai with 75.79 lakh PPF and 14.79 lakh SSA zz TBU Float Income increased by two branches and one each in Delhi and accounts making it the highest among all 81.15% from `356.69 crore in FY2018 Chennai. CAG now is a super specialised the authorised Banks. Additionally, 5.78 to `646.15 crore in FY2019. set-up handling 29 top rated Business Group accounts and 66 Non-group lakh PPF accounts and 3.16 lakh SSA zz Turnover registered a Y-o-Y increase accounts were added during this FY. accounts to ensure that the quality of of 78.39% with transactions service for these prioritised relationships amounting to `38,08,314 crore is maintained as the best in the class. 11. Other in FY2019 over `21,34,867 crore in FY2018. Your Bank was accorded an approval for opening 33 Accounts for Enforcement zz Your Bank was recognised as “The Directorate under Ministry of Finance. Your Best Transaction Bank in India” by Bank was chosen as an Aggregator Bank The Asian Banker for the second for collection of tax and non-tax revenue time in a row in 2018. of the Government of West Bengal. Workshops were conducted across the country for training the personnel of Implementing Agencies.

12. Awards Your Bank was awarded First Prize for opening the largest Number of Sukanya Samriddhi Accounts amongst all Banks (Pan India). The award was given at National Savings Institute, New Delhi on 30th October, 2018 to celebrate “World Thrift Day”.

H. TRANSACTION BANKING UNIT Your Bank’s Transaction Banking Unit (TBU) leverages technology to provide comprehensive solutions for bulk transaction requirement of clients, facilitating their efficient funds Mundra UMPP, Coastal Gujarat Power, financed by CAG, Mumbai. management along with other value- added services such as customised MIS, integration with Corporate ERP and dedicated single point Client Support Cell. Transaction Banking services not only facilitate your Bank to maintain close relationship with clients, but also to assess their other Banking requirements such as Credit, Fund Management and Cross Selling. 52 DIRECTORS’ REPORT

The business model of CAG is anchored off and have started contributing to the B. TREASURY OPERATIONS on the Relationship Management Bank’s business growth. Concept wherein each client group is The Global Markets Unit (GMU) performs mapped to a Relationship Manager who Banking technology is revolutionising the the Treasury Operations of your Bank with leads across -functional Client Service way customers engage with their finances. the objective of managing its liquidity in Team. The Account Management Teams Convenience, speed and flexibility are no compliance with regulatory requirements, (AMTs) work on a central strategy of longer considered attractive add-ons, mitigating related risks like liquidity risk, delivering integrated and comprehensive but have become a standard expectation market risk and operational risk. GMU financial solutions to the clients, through of the rapidly changing customer-Bank deploys the surplus funds in various structured products, within a strict Turn- relationship. Towards this end, your investment options based on economic Around-Time. The principal objective of Bank is investing continuously in building research and scenario analysis and the strategy is to make your Bank the first technological capabilities to become more optimises risk and returns. The investment choice of top corporates. agile towards customers’ needs. We are book under Global Markets stood at currently offering cutting edge technology `9,26,651 crore at FY2019 as against To firmly align with the changing Banking products to our Corporate customers and `10,26,438 crore as on FY2018. It also landscape, in June 2018, your Bank are using the latest CRM application for provides Foreign Exchange services and undertook a major revamp of Corporate customer management. hedging instruments to customers across Credit dispensation Structure making it the country. a future ready set-up to drive sustainable Overall, the Corporate Accounts unit has growth. Core objectives of this holistic reoriented itself to focus on the highest (i) INTEREST RATE revamp were, strengthening credit priority and quality individual and group MOVEMENTS & SLR AND risk management function, leveraging relationships with differentiated coverage. analytics, making a paradigm shift of NON-SLR PORTFOLIO OF focus in business from ‘Fund to Fee” The total post revamped outstanding loans THE BANK and Originate to Distribute (O-t-D) so as to clients in the Corporate Accounts unit GMU is responsible for managing to improve Bank’s overall wallet share in stood at `2.33 lakh crore and `1.68 lakh regulatory requirements such as Corporate Banking Business. In addition crore in respect of fund-based and non- your Bank’s SLR/CRR management, st to credit relationship, Bank is now actively fund-based products as on 31 March maintaining HQLAs for LCR, amongst looking at customer 360 requirements 2018 and the corresponding fund based others. As interest rate markets saw especially in credit light sectors viz - and non-fund based outstanding are wild movements during the year, RBI Pharma, FMCG, IT, Auto etc. through its `4.07 lakh crore and `1.75 lakh crore as on increased the overnight repo rates st newly established Credit Light Group 31 March 2019 respectively. twice during the year, on 7th June (CLG) set within the CAG set up. 2018 and 2nd August 2018. After low Corporate Account Group has been CPI prints and easing of crude price, A Specialised Group, FIG (Financial and a partner in the industrial growth of RBI reduced the Repo Rate in its Sixth Institutional Group) to address credit and the country, especially in creation and Bi-Monthly Monetary Policy dated transactional banking needs of Insurance development of critical infrastructure 07th February 2019 along with change Companies, Brokering Firms, Banks viz Roads and Highways, Ports, Power, in stance from Calibrated Tightening (Private and Foreign) and Mutual Funds Telecom, Petrochemicals etc. and your to Neutral. The repo rate stands at has also been created within CAG. Both Bank wishes to continue its contribution 6.25% post February 2019 policy and the newly created groups have taken to Nation’s growth as hitherto. has further been reduced to 6% on 4th April 2019. US Federal Reserve was also on a hiking spree by increasing the Fed Target rates four times during the calendar year 2018. With the last rate hike in December 2018, the Fed rate now stands at 2.50% as on 31st March 2019.

On the domestic front, the movement of Interest rates was volatile. The benchmark 10Y security (7.17 CG- Sec 2028), which was trading at 7.40% at the beginning of FY2019 touched a peak of 8.18% on 11th September, 2018 before touching a low of 7.22% on 19th December, 2018. Excess supply in State Development Loans, depreciation in domestic currency, increase in crude prices made the year a roller coaster ride for yields. Due to this volatility, your Bank made provisions on investments. DIRECTORS’ REPORT 53

By the beginning of Q2 FY2019, the (iii) FOREX MARKETS Private Equity/Venture Capital system liquidity turned negative, Fund which got aggravated due to The GMU handles the foreign the NBFC crisis in the month of exchange business of your Bank, The JV setup with Macquarie and IFC in September 2018. The liquidity providing solutions to customers 2008, to manage the US$ 1.2 billion India- shortfall prompted RBI to conduct for managing their currency flows focused PE fund, is currently in the exit Open Market Operations (OMO) to and hedging risks through options, phase and has successfully exited from improve the system liquidity. The swaps and forwards, in addition to two road assets during FY2019. OMO helped to reduce the excess providing liquidity to markets. Your SLR holding of Banks and alleviated Bank is a dominant player in Rupee The Oman India Joint Investment Fund the supply pressures. This resulted in Spot and Rupee Forward markets (OIJIF), a JV set up in 2010 in partnership easing of 10-year G-Sec yield. and has a sufficiently high market with State General Reserve Fund of share in customer foreign exchange Oman, has completed its investments During the year, with the credit growth flows. Your Bank is the leader in for Fund-I of US$ 100 million. Fund-I has outstripping the deposit growth, your providing liquidity in CCIL Fx Clear made two full exits and one partial exit. Bank’s SLR portfolio was brought platform. The volume generated in On the other hand, Fund-II with a target down in a calibrated manner to Currency Futures puts your Bank in corpus of US$300 million launched in generate liquidity. However, in view the bracket of top three client Banks 2017 has raised commitments of US$ of the elevated yield levels, your of exchange houses. 230 million and has deployed `450 crore Bank increased the Corporate Bond across three assets. Fund-II continues to portfolio as a measure of improving GMU manages the FCNR (B) deposit assess various investment opportunities. the overall portfolio yield. Net Interest corpus of your Bank and provides Income stood at `88,349 crore as FCNR (B) loans and Pre and Post During FY2019, your Bank made partial against `74,854 crore for FY2018. shipment Export Finance in foreign divestment from its strategic investment Profit on sale of investments is at currency to its customers. Your Bank in National Stock Exchange. Additionally, `1,023 crore against `12,303 crore also provides funding support to it made investment commitments in its for FY2018. Bank’s Foreign Operations whenever Alternative Investment Funds portfolio required. On technological front, across investment themes such as your Bank keeps pace with the best Special Situations Funds, funds focused (ii) EQUITY MARKETS currently in vogue. on investing in mid-market growth stage The equity markets touched its all- companies and technology. time high levels in FY2019. Post Treasury Marketing Group (TMG) is default by IL&FS and on NBFC the customer engagement arm of Portfolio Management Services liquidity concerns, market saw sharp Global Markets and plays a pivotal (PMS) correction in the Benchmark indices. role in marketing of Treasury Products However, market rallied sharply to Institutional and Corporate clients The Bank is the largest retirement benefit towards the end of the financial year of your Bank. Treasury Marketing fund manager in the country with an due to strong inflows from FIIs and Units located across the country are impeccable track record. The total AUM st Nifty ended with 14.93% gains in the face of Global Markets to the as on 31 March 2019 is `5,08,230 FY2019. The outcome of General customers. They interact with the crore. Major clients include Employees’ elections, Fed Policy actions, customers daily, identify their needs, Provident Fund Organisation, SBI expectation of Global economic and coordinate with other business Retirement Benefit Funds, Coal Mines slowdown and the increasing units for pricing, product structuring Provident Fund Organisation, Kendriya tension on trade war is expected to and delivery. Vidyalaya Sanghthan Employees’ keep volatility on the higher side. Provident Fund and Seamen’s Provident Your Bank has managed its equity Foreign Investments and Institutional Fund Organisation. The Bank also assists portfolio following a strategy of Treasury sales desk is part of TMG. It its RRBs in managing their SLR Portfolio. actively rebalancing the portfolio is responsible for mobilising treasury However, the PMS activity of the Bank is st based on key events, global and business from Foreign Portfolio being closed by 31 March 2019, as per domestic market conditions, Investors (FPI)/Foreign Direct RBI’s directives. quarterly earnings of the companies Investment (FDI) clients and financial and, their future outlook. In addition institutions. to the secondary market, your Bank continues to profitably invest in IPOs to improve the return on the portfolio. 54 DIRECTORS’ REPORT

C. INTERNATIONAL OPERATIONS

18

Branches/Offices Belgium (1) Germany (1) France (1) UK (2) Branches USA (3) Subsidiary Bahamas (1) Russia (1) UK (12) Subsidiaries California (7) Rep office Canada (6) Turkey (1)

Rep Office USA (1) 1

Branches/Offices S Africa (3)

Subsidiary Mauritius (15) Botswana (1)

Investment Rep Office Nigeria (1) Brazil (1) 55

19 135

Branches/Sub Offices China (2) S. Korea (1) Japan (2) India (1) Maldives (4) 14 Sri Lanka (5) Bangladesh (12) Myanmar (1) Singapore (7) Hong Kong (1)

Subsidiary Indonesia (11) 20 Nepal (86) Joint Venture Bhutan (1)

Rep Office Philippines (1)

Branches/Offices Bahrain (3) S. Arabia (1) UAE (2) Oman (1) Israel (1)

Rep Office 1 Iran (1) UAE (2)

Exchange Co. Oman (2) Dubai (1)

Branch Australia (1) 56 DIRECTORS’ REPORT

Global Presence and supported by the Deputy Managing The IBG has contributed immensely in Director (IBG) for its overseas operations. transforming the industry landscape of International Operations of your Bank the country by positioning itself in the were guided by the overarching principle Your Bank’s first global footprint was growth trajectory of the economy with of supporting global Indian corporates with the branch of Bank of Madras in its specialised verticals offering their and Indian diaspora spread across the Colombo, Sri Lanka in July, 1864 (First expertise and services on various fronts, geographies. However, the focus of amongst Indian Banks). With a presence thus playing its part in building the State Bank of India has slowly shifted across all time zones through 208 offices momentum for a transforming India in from its reliance on the India based in 34 countries, State Bank of India has tandem with the following other drivers: business to claim its place in the overseas gradually spread its wings across the local markets, in line with its vision globe and has become a pioneer of 1. Credit Contribution: to become a truly International Bank. International Banking among the Indian Consequently, it has a separate Business PSBs. These offices are being managed Business Driver Unit - International Banking Group (IBG) by the IBG. Your Bank has facilitated Indian corporates headed by the Managing Director (GB&S) in their growth strategy including Green Field ventures by arranging debt in Foreign The breakup of overseas offices of our Bank: Currency by way of External Commercial Borrowings through syndicated deals Overseas Offices Offices Overseas Total in conjunction with other Indian and Offices opened closed Offices Overseas Foreign Banks, and through bilateral as on during during as on Business arrangements. As a recognition of its 31.03.2018 last 12 last 12 31.03.2019 Volume exemplary efforts, your Bank was chosen months months as the “Syndicated Loan House of the Branches /Sub-Offices 73 1 17* 57 USD Year” - India by APLMA (Asia Pacific Loan / Other Offices 57,499 mio Market Association). Subsidiaries (8) (1) (9) Offices of Subsidiaries 122 21 3 140 State Bank of India has sanctioned Representative Offices 7 1 6 Foreign Currency loans to the tune of Net Profit JV/ Associates / 5 5 USD 12.91 billion to Indian corporates USD Managed exchange and USD 10.36 billion loans to overseas 499.31 mio Cos /Investments entities. Your Bank has also funded a top TOTAL 207 22 21 208 Indian pharmaceutical company for its overseas acquisition during the year. In *12 Branches shifted to SBI UK Limited (Subsidiary) the field of Energy, your Bank was active in funding Oil Marketing companies for During FY2019, your Bank has endeavoured Jakarta Main branch and one Sub-branch their working capital requirement after to consolidate and strengthen its overseas Buah Batu was merged with Bandung recent Special Dispensation, which has operations in line with the Public-Sector branch. During this period, a Remittance significant strategic importance to India, Banks Reforms Agenda envisaged by Centre was started in Singapore to both in terms of augmenting India’s Energy the Department of Financial Services, facilitate remittances for expat blue collar Security amid unstable Crude and Forex Government of India, in order to achieve workers. Further, in line with our growth prices. In the field of Power, your Bank capital conservation, cost efficiencies, and strategy in SAARC region, Nepal SBI Bank has always been the leader in providing to build synergies in overseas markets. Limited, a subsidiary of State Bank of the External Commercial Borrowings to As a result, your Bank has rationalised its India has opened ten offices. Furthermore, power sector companies and NBFCs overseas operations by closing two Sub- twelve retail branches of UK were carved engaged in on-lending to power sector. offices- Laudium and Capetown in South out from your Bank’s UK operations to Presently, your Bank offers a wide range Africa, one branch in Jaffna, Sri Lanka, form the overseas Subsidiary- State Bank of products and services to exporters one Representative office in Cairo, Egypt of India (UK) Limited. and importers through an extensive, well and consolidated its India Visa Application equipped branch network that operates Centres (IVACs) in Bangladesh by merging Year after year, your Bank is consistently domestically and internationally. three IVACs at Shyamoli (Previously creating value for investors by generating Dhanmondi), Uttara and Dhaka at Jamuna good returns and profits. The International 2. Retail and Remittances Park. In the overseas subsidiary-SBI Banking arm has consistently been a Strategy Indonesia Limited, two Sub-branches major contributor in profit, even during the Jatinegra, Kebonjeruk were merged with recent troubled times. Your Bank was a “window to India” for NRIs residing in different parts of the world through its specialised retail and remittances products. As IT infrastructure is the bedrock for improving customer offerings in Retail and remittances segment, a detailed IT strategy was put in place for implementation of IT enablers. The highlights of the year are: DIRECTORS’ REPORT 57

zz Remittance business strategy To support Trade Credit for imports to September, 2018 and Standalone Reg-S/ was re-imagined by focusing on India, your Bank has introduced a new 144A USD issuance for USD 1250 million developing various area specific product namely - Non-LC Reimbursement in January, 2019. The green bond was the payment and remittance corridors, Finance (NLRF) to cater import financing first public USD bond issued by an Indian such as Gulf to Nepal and Gulf to for Bank’s domestic branch customers public sector Bank in the fiscal year for Sri Lanka. and also, through its another product which your Bank has received “Green called SBLC backed Buyers Credit, your Bond Pioneer Award” for being the largest zz SBI Rupee Express, which provides Bank renders its trade finance service to new emerging markets Certified Climate real time, convenient, reliable, and importer customers of other Indian Banks. Bond issuer of 2018 by Climate Bond cost saving remittance system to Initiative. These issues were listed on the expatriates for remittance to India, State Bank of India has recently been Singapore Exchange Securities Trading was launched in SBI Indonesia (SBI awarded as “The Best Trade Finance Limited (Singapore SGX) and the India Subsidiary). Provider (India) -2019” for the eighth International Exchange (India INX). Nimble zz Remittance through UPI launched in consecutive year by Global Finance footed transactions were executed in a Singapore Magazine and as the “Best Trade Finance narrow window during a period of currency Bank in South Asia - 2018” by Global and rate market volatility. The successful zz ATM Card Hot listing and ATM Card Trade Review. issuances demonstrate a strong investor requests through Internet Banking base, which the Bank has created for itself (FEBA) installed in 11 identified in offshore capital markets, allowing it to territories. 5. International Banking- Domestic (IBD) efficiently raise funds from world’s leading zz CRM Solution is successfully fixed income investors, even during the launched in 13 identified countries. IB-Domestic department at IBG of your periods of heightened currency and rates Bank, serves as a single point of contact volatility. zz Remittance from USA to India for the Domestic Offices and Foreign through Transfast Remittance LLC, Offices in areas related to Trade Finance Investment book of IBG currently stands USA was launched. and International Banking on domestic at USD 6.80 billion, holding investments in front. A Centralised Co-ordination Cell high rated and liquid scrips, which provide 3. Global Payments and for processing Inward Foreign Bank stable interest income for IBG with low/ Services Guarantee (CCC-FBG) had been set up medium risk. The Treasury Management under the ownership of IB-Domestic group monitors Dealing Rooms at major Global Payments and Services (GP&S), a to provide a single stop solution for centres, to facilitate Money Market, unit of your Bank, facilitates online inward Correspondent Banks/ Foreign Offices Forex and Derivative functions at Foreign remittances from overseas locations seeking Foreign Bank Guarantees based offices. Currently there are four major to India, Foreign Currency Cheque on their counter Guarantees. Recently, dealing rooms at London, New York, Hong collection, Opening and Maintenance of Outward Foreign Bank Guarantee cell has Kong and Bahrain, which work on a hub Vostro Accounts, Asian Clearing Union started functioning under CCC-FBG, with and spoke model to help smaller Foreign (ACU) Transactions, and Bank for Foreign a view to further provide momentum to Offices in their operations. Dealing room Economic Affairs (BFEA) of USSR section. Inward Foreign Bank Guarantee business. operations also provide hedging solutions The highlights of the year are: to the balance sheet in optimum manner.

zz Tie-up with 55 Exchange In order to provide momentum to Companies, and six Banks and Domestic Trade activity and to address 7. Overseas IT Initiatives one Money Service Business the regulatory concerns as well as to keep in line with the market forces, IB-Domestic Your Bank continues to leverage for channelising inward rupee technology solutions to automate remittances from overseas to India is vigorously involved in introducing latest technological tools and product processes, enhance customer experience zz Compliance framework innovations. Moreover, IBD is coordinating and manage risk. The initiatives undertaken strengthened for enhanced post and liaising with trade bodies and ICC at our overseas offices include: transaction monitoring through an subgroups for developing relations 1. YONO (You Only Need One), one application called AMLOCK, related and strengthening ties. It contributes of the most ambitious and secure to remittances. immensely in synergising Forex business digital offerings of your Bank, is flows from Domestic Offices to Foreign being extended to overseas offices 4. Trade Finance Offices / Foreign Correspondent Banks during FY2020. and trade community by acting as a State Bank of India provides a slew of robust link between them and addressing 2. Online Account Opening Facility is Trade Finance products and services regulatory gaps. being extended to customers at to exporters and importers through an overseas offices. extensive, well equipped branch network that operates in all time zones in India 6. Overseas Treasury 3. Additional functionalities were and abroad. The business is monitored Management introduced in Finacle E-Banking Application (FEBA) for a better through a focused Department, Global Treasury Management Group at IBG Trade Department (GTD) in IBG. Trade digital banking experience to the of the State Bank of India, known for customers. Finance forms a significant part of the managing the liquidity, dealing room International Asset portfolio. State Bank operations and investments of foreign of India being one of the top global Banks, offices, has priced your Bank’s inaugural provides low cost trade finance to Indian USD denominated public green bond for corporates for their imports. USD 650 million under MTN Program in 58 DIRECTORS’ REPORT

4. Implementation of a new Anti- zz Focused on creating valuable 3. COMMERCIAL Money Laundering solution (FICO relationships globally by Tonbeller) to efficiently counter collaboration with Financial CLIENTS GROUP money-laundering risks and Institutions for delivering better (CCG) events through online screening of value to our stakeholders in the transactions / SWIFT messages, value chain. Furthermore, your A. COMMERCIAL CLIENTS customer on-boarding, risk scoring, Bank maintains relationship with and transaction monitoring. 235 Banks in 57 countries and The Corporate Credit Structure and periodically reviews its relationship System in your Bank was revamped to set- 5. Enhancing the security of ATM/Debit based on your Bank’s internal up, a future ready organisation to manage Cards by introducing additional policies, local country guidelines the risks and sustain growth. There was card management functionalities in and sanction terms. There has been a reorientation of CAG to focus on the the online banking platform (FEBA an increased focus for FI Business highest priority and quality individual and viz., Hot listing of Cards, New Card by leveraging the relationship with group relationships with differentiated Activation, New Card Request, Major Global and Regional Banks. coverage. The CCG is formed for Green PIN, Limit change). consolidation of select corporate client zz Actively engaged with IT Innovation accounts across CAG, MCG and NBG 6. SWIFT Operational Controls were teams of the Bank for bringing verticals based on a criterion decided by strengthened in tune with regulatory in technological advances in the your Bank. This includes rationalisation of guidelines by implementing Straight correspondent Banking landscape the remaining CAG branches and existing Through Processing between and also by partnering with major MCG branches into 47 CCG branches. Core Banking System and SWIFT Global Banks. The CCG vertical is headed by a MD and messaging system and enforcing supported by a DMD, five CGMs and user restrictions. zz Product focus areas include Trade other functionaries. Finance, Credit, Treasury, Debt 7. Technology Risk Management Capital Markets, Forex Business, initiatives included upgradation CGMs in the CCG are assigned as the Transaction Banking, Remittances, of Networking Equipment, group relationship owners in order to and Currency Clearing. implementation of Standardised improve the quality of coverage and enable Information Security and Incident zz Representative offices of SBI an integrated view on exposure, earnings Management Framework Plans for in Dubai, Abu Dhabi, Istanbul, amongst others, across the entire group. FY2020. Sao Paulo, Tehran, Manila, and Your Bank has set up experienced team Washington are engaged in of ‘Structuring Specialists’ to support 8. The websites of overseas offices marketing activities for assets and deal structuring for large proposals across were standardised to provide a liabilities support for your Bank’s lending, bonds, International Banking, and uniform look and feel for a better Foreign Offices from Financial Structured / Mezzanine Finance. user experience. Institutions and extending support 9. Leveraged Data Analytics for to the local corporates and NRIs. The Non- food domestic advances level Product Innovation and Marketing, in CCG at the end of FY2019 was at zz Your Bank has always been an Fraud Risk Management, Regulatory `4,00,766 crore registering a YoY growth integral part of the growth strategy Reporting, Early Warning Signal for of 3.93 %. The Yield on Advances in CCG of the Indian economy and is on the Loans, and Transaction Monitoring. has improved from 7.50% as on Mar’18 forefront in stimulating growth and to 8.68% as on March 2019 recording facilitating opportunities for building a growth of 118 bps. During the same 8. Financial Institutions momentum towards a transforming period, business per employee has gone Group - Correspondent India. Relations The Group, on one hand, enables linkages of your Bank with international stake- holders viz. Correspondent Banks, Foreign Government Agencies and Developmental Financial Institutions, International Chamber of Commerce amongst others, and on the other hand, facilitates synergy between IBG and other Business Verticals such as Corporate Accounts Group, Commercial Clients Group and Global Markets amongst others. The key highlights during FY2019 were:

5th SBI Banking & Economics Conclave held on 3rd July 2018. DIRECTORS’ REPORT 59 up from `121.73 crore as on March 2018 Hybrid Annuity Model in Road sector were 4. STRESSED ASSETS to `146.72 crore as on March 2019. Profit framed to mitigate the risks involved. The per employee has improved from `1.98 sectors, which showed signs of revival MANAGEMENT crore as on March 2018 to `3.99 crore as were Roads, Oil and Gas, Renewable 1. Over the last few years, there has Power, Cement, Fertiliser amongst others. on March 2019. Cost to Income Ratio has been a significant rise in the Gross The stressed accounts mainly comprising declined by 295 bps during the year going Non-Performing Assets (GNPA) in of Thermal Power, Road sector accounts down from 9.25% as on March 2018 to the Banking Industry. However, in have been transferred to SARG for 6.30 % as on March 2019. On the recovery the first half of FY2019, the GNPA resolution. Experienced officials are front, CCG was successful in recovering of the SCBs declined, which can be being recruited from different industries `1,364 crore in Advance Under Collection attributed to the following factors: Account under IBC / NCLT mechanism to provide Structuring Solutions to our during the said period. clients. Chartered Accountants are being i. Resolution of a few high value employed by your Bank to plug income NPA accounts from the 1st and The group continues to provide a robust leakages to boost fee income. 2nd RBI list of accounts referred platform to its customers for Trade to NCLT under IBC, 2016. Finance and Forex business. Your Bank’s Special Business Unit known as Project Finance and Structuring ii. A revival in economic growth (PFSBU) deals with the appraisal and conditions of India in FY2018, CCG is at a very advanced stage of leading to control in fresh launching YONO for Corporates. This is arrangement of funds for large projects in infrastructure and other sectors such as slippages. going to provide a very user-friendly digital Power, Roads, Ports, Railways, Airports, platform for Corporates for transaction iii. Favourable outlook of steel amongst others. It also covers other banking as well as Trade Finance Business. sector, which was under stress non-infrastructure projects in sectors viz. over past few years. Mainly Metals, Fertilisers, Cements, Oil and Gas driven by increase in demand, B. PROJECT FINANCE AND amongst others, with certain threshold consumption and simultaneous on minimum Project Cost. PFSBU also LEASING imposition of anti-dumping provides support to other verticals safeguard duties as well as In contrast to the challenges faced by for vetting their large ticket term loan minimum import prices, the PFSBU during the previous year, which proposals. In order to strengthen the policy saw stressed accounts becoming NPA, and regulatory framework for financing sector has yielded some good particularly on Thermal Power, Road infrastructure, inputs are provided to recoveries in NPA. sector, Telecom among other sectors, this various Ministries of Government of iv. Strengthening of due diligence, fiscal year 2019 started with a cautious India and the RBI with respect to lenders credit appraisal and loan optimism based on learnings from the views on new policies, Model Concession monitoring systems in the past experiences. Policy for funding Agreements and broader issues being Banking industry. Renewable, City Gas Distribution and faced in infrastructure finance. v. Significant improvement in Project Finance and Structuring Business Performance: the Ease of Doing Business (`in crore) ranking for India at 77th position FY2017 FY2018 FY2019 from 130th rank due to two Project Cost 83,434 81,701 1,99,317 successive jumps i.e., 30 positions in 2017 rankings and Project Debt 51,227 58,754 1,33,115 23 positions in 2018. It reflects Sanctioned Amount 26,557 19,835 51,351 the adoption of global best Syndication Amount 5,809 11,937 31,191 practices in business reforms. vi. Stabilisation after facing short term impacts of demonetisation and implementation of GST. vii. Greater interest evinced by ARCs and NBFCs in purchase of impaired/ stressed assets backed by foreign investments.

Gas Based Power Plant at Dahej SEZ, Bharuch, Gujarat. 60 DIRECTORS’ REPORT

2. According to the Financial Stability Report of RBI for December 2018, in a sign of 4. The Government of India in its possible recovery from the impaired asset load, the asset quality of Banks showed Reforms Agenda for Responsive an improvement with the Gross Non-Performing Assets (GNPA) ratio of SCBs and Responsible PSBs has directed declining from 11.5% in March, 2018 to 10.8% in September, 2018. Further, the creation of a Stressed Assets resilience of the Indian banking system against macroeconomic shocks was tested Management Vertical (SAMV). Your through macro stress tests. The results of macro tests suggest that the GNPA of Bank takes immense pride for being all SCBs may come down from 10.8% in September, 2018 to 10.3% by March, a pioneer in establishing a dedicated 2019. Moreover, sensitivity analysis conducted to study the resilience of SCBs vertical almost decade and a half with respect to credit, interest rate, equity prices and liquidity risks predicts that back by establishing Stressed a severe credit shock is likely to impact the capital adequacy and profitability of a Assets Management Group (SAMG) significant number of Banks, mostly PSBs. during FY2005. In order to focus towards resolution of stressed 3. The movement of NPAs in the Banking industry and recovery in Written-off accounts accounts, SAMG was renamed during the last four years are furnished below: as Stressed Assets Resolution Group (SARG), which continues to (`in crore) work as a specialised vertical for FY2016 FY2017* FY2018 FY2019 efficient resolution of high value Gross NPA 98,173 1,77,866 2,23,427 1,72,750 NPAs. The structure of SARG has Gross NPA% 6.50% 9.11% 10.91% 7.53% been revamped to give focussed approach for resolution of stressed Net NPA% 3.81% 5.19% 5.73% 3.01% assets across various sectors. At Fresh Slippages + 64,198 1,15,932 1,00,287 39,740 present, the vertical is headed by a Increase in O/s Deputy Managing Director and three Chief General Managers overseeing Cash Recoveries / Up- 6,987 32,283 14,530 31,512 the specialised sector, AMTs gradations functioning under the leadership of Write-Offs 15,763 27,757 40,196 58,905 seven General Managers. SARG has Recoveries in AUCA 2,859 3,963 5,333 8,345 turned into a centre of excellence in resolution of NPA and stressed PCR 60.69% 61.53% 66.17% 78.73% assets. As on March 2019, SARG has *After Merger 20 Stressed Assets Management Branches (SAMBs) and 56 Stressed Industry wise distribution of the NPA portfolio is represented as under: Assets Recovery Branches (SARBs) across the country, covering 70.62% and 83.71% of your Bank’s Non-Performing Assets (NPAs) and Industry wise NPA Advances under Collection Account (AUCA) respectively. Power 14.66% 40.75% Iron & Steel 5. Besides initiating hard recovery Engineering Others measures, SARG introduced certain innovative methods and Trading gave first mover advantage to your Roads Bank in areas such as arranging Mega e-Auction of large number Textiles 14.66% of properties on Pan-India basis, Telecom identification of un-encumbered properties of the borrowers / 5.37% Auto Ancillary guarantors and arranging for 3.33% Infra Others attachment of properties before 6.11% 2.07% Others Industry judgement. The cases referred to 4.49% NCLT for resolution are monitored at 3.89% 4.67% a specialised cell at SARG. A total of 442 cases have been referred to NCLT, out of which 350 cases were admitted. Furthermore, 18 cases have been resolved including a few high value cases from the 1st list of 12 accounts. DIRECTORS’ REPORT 61

6. A significant portion of the recovery 7. Today, SARG stands as one of the 8. Enactment of Insolvency and in SARG comes from Compromise most important verticals of your Bankruptcy Code (IBC) 2016 for and Sale of Assets to ARCs. The Bank, when the GNPA of your resolution of Stressed/NPA assets vertical also implements special Bank has already peaked and is has provided Banks with a time OTS schemes (Non-discretionary on course of a downward journey. bound, transparent and effective and Non-discriminatory) from time Though the credit growth is picking mechanism to tackle stressed to time, giving the borrowers a one- up steadily and performance of assets. It has led to an efficient time opportunity to settle their dues. treasury operations is dependent price discovery and transparent A team is set up to look after the sale on market rates, the importance resolution of accounts resulting in of Assets to Asset Reconstruction of NPA resolution/ recovery by unlocking maximum value in the Companies (ARCs) on Cash and SARG is significant as it directly assets charged to your Bank. A Security Receipts (SR) basis. impacts your Bank’s performance. significant portion of recoveries in Resolution of stressed assets by FY2019 have come through this The recovery in NPA and AUCA SARG presents the following latent route. Some of the large accounts accounts in SARG through various income generating avenues for from 1st and 2nd list of accounts modes is represented below: your Bank: referred to NCLT directed by RBI have been resolved and a few more i. Cash recovery in NPAs and are expected with resolution plans Total Recovery (`in Crs) AUCA; already in place. This has helped in ii. Up-gradation of accounts; strengthening your Bank’s balance sheet and provides the opportunity iii. Reduction in loan loss to deploy the realised funds into provisions; income yielding assets. iv. Reduced capital requirement;

3021 All the above stated avenues directly

2719 contribute to your Bank’s bottom-line. 2434 Further, they improve overall asset quality,

1921 laying foundation for credit off-take and indirectly contribute towards generation

937 of interest income. 13

Compromise Sarfaesi DRT Sale to ARC NCLT Others

Chairman’s visit to Darjeeling Branch in Kolkata Circle. 62 DIRECTORS’ REPORT

zz The promotion and transfer process IV. SUPPORT AND CONTROL OPERATIONS have been streamlined and shall be completed in the first quarter of the 1. HUMAN RESOURCES zz Many initiatives have been Financial Year. This will give required undertaken during the year in the AND TRAINING assurance and stability to the Human Resources space in the areas branches and other units to actively of automation and streamlining of A. HUMAN RESOURCES focus on business activities during systems and processes, design and the major part of the year. zz Your Bank has been maintaining its redesign of value preposition that leadership position in the banking each intervention brings to the fore, zz The Career Development System industry by leveraging its core to increase efficiency and create a (CDS) has stabilised and has brought strengths. The Human Resources pleasant environment at the work greater transparency, inclusiveness, of your Bank has been a strategic place. There has been a paradigm accountability, and effectiveness in partner while performing the role shift in the approach of handling the the performance management. The of a catalyst in implementing the increasing aspirations of the Bank’s current CDS system is data backed, various business strategies. This changed workforce demographics where targets are set partnering with has been made possible with with more Millennial and Generation the business units and constant the workforce channelising and Z joining. evaluation of performance has been harnessing their optimum potential made possible. Additionally, the zz The summarised HR Profile of the CDS system has become robust by and profoundly impacting the value Bank as on 31.03.2019 is as under: generation in the desired direction. operating through its five functional Your Bank’s Human Resources has levers- ‘Strategic alignment’, aligned the policy, processes, and ‘Stakeholder Commitment’, systems towards creating enablers ‘SMART goals’, ‘At least one role for achieving your Bank’s ‘Vision’ per employee’, and ’Constant with set ‘Values’. Evaluation’. zz An employee opinion survey on Category 31.03.2018 31.03.2019 CDS was held during the year to understand the perception, Officers 1,07,077 1,08,113 reach, acceptance, familiarity, and Associates 1,10,348 1,05,440 expectations of the employees and Subordinate staff and Others 46,616 43,699 modifications were implemented based on the feedback. Moreover, Total 2,64,041 2,57,252 it helped to bring refinement and transparency to the system. A 1. Vision, Mission and Values implementation, and better control structured feedback mechanism, and quality of key HR functions under as a part of the performance zz Your Bank has been continuously seven project streams- Introduction evaluation, has been introduced in engaged in providing ethical of Organisational Structure in your Bank to develop and drive a awareness in the organisation as HRMS, data cleaning, bringing cultural change. a cultural premise. Your Bank has Employee Payments on HRMS, zz Conscious efforts were made come out with a Code of Ethics efficiency enablers for seamless flow to bring more employees under synchronised around normative of HR operations in HRMS, creating Budgetary/ Measurable roles. As commitments to its stakeholder’s an interface between relevant on date, more than 95% of the viz. values of STEPS (Service, employee information with HRMS, total roles in CDS system are Transparency, Ethics, Politeness and automating HR process through budgetary/measurable. In case of Sustainability) with the purpose of HRMS, and meaningful and timely non-measurable roles, KRAs have articulating your Bank’s new Vision, HR related MIS. been made objective in nature. Mission and Values Statement. Furthermore, your Bank’s goals Your Bank believes that ethics is and corporate concerns are built a perpetual process of infusing 3. Productivity Enhancement on parameters of the Competency excellence in its operational fabric Initiatives mapping framework. Additionally, and will go on making consistent zz Your Bank adopts an objective and competency mapping parameters endeavours to shape the moral data driven model for Manpower were revised to align them with the sensibilities of the rank and file of Planning to ensure optimal organisational goals by finalising the organisation. utilisation of Human Resources. 15 parameters for DGM grade and Around 12 out of 82 work drivers above and 10 parameters for the 2. HR Function Revamp of the model based on Time and AGM grade. Motion study have been modified zz Your Bank has undertaken initiatives for Manpower Planning for the zz Your Bank has formulated a policy in HR Automation to streamline year 2019-20. In addition to this, on Succession Planning for the the Human Resource processes. manpower requests from various Senior Leadership positions to Furthermore, your Bank has taken units are now being validated based ensure smooth transition at the steps towards centralisation of on a footfall study undertaken by critical executive level positions. Human Resources for seamless the Analytics department. Under this, the eligible executives process execution, uniform in the rank of GM and DGM were DIRECTORS’ REPORT 63

evaluated and identified as potential 5. Employee Engagement drew participation of nearly 95% successors for one or more critical of the employees covered. The profiles. In addition to this, identified Initiatives survey results have provided one potential successors are provided zz Employee engagement is critical to with comprehensive information with individual development organisational success. It has been regarding opinions of our and training plans. Likewise, the a constant endeavour of your Bank employees on our performance, framework ensures that your Bank to reduce the pain points and ensure culture, relationships, processes has a necessary talent pipeline for pleasant employee experience and policies and also on how we go smooth transition. during their journey with State Bank about our work. The survey report of India. and its findings have been analysed 4. Recruitment by your Bank under various zz To streamline the on-boarding parameters, in appropriate contexts zz Your Bank has streamlined the process of new recruits, your Bank and engagement scorecards have recruitment process with the has introduced an ‘On boarding been worked out across various implementation of a regular portal’. Consequently, it will employee groups. Employees of recruitment calendar and by improve employee experience as your Bank share a high sense of leveraging Information Technology. they will not be required to provide pride and belongingness with the During FY2019, around 2003 information and documents multiple Bank. It is reassuring to note that Probationary Officers and 7954 times. Also, this will enable the HR most of our employees are aware Junior Associates were recruited. functionaries to access information of the long term vision and values of new joiners onboarding on real of the Bank. The feedback received zz Your Bank is actively recruiting time basis. from the survey will be utilized in specialised talent on lateral and zz ‘Sanjeevani’: State Bank of India’s redesigning the established policies contractual basis in the areas of and to implement key changes in Wealth Management, Information HR helpline introduced in your Bank offers speedy resolutions order to increase the efficiency, Technology, Information Security, output, involvement, dedication and Risk, Credit among others, in order within three days of lodging a productivity of the employees. to meet the demands of the fast- complaint and has addressed over changing business landscape. 20,000 queries and grievances. Additionally, your Bank has 6. Gender Diversity zz Specialised recruitments have been engaged with the services of trained done where requisite skills are not Counsellors at Sanjeevani. With zz Gender Sensitivity and Inclusiveness available and skills development this, the employees may contact have always been the corner stone may take time especially in the the Counsellors to share their issues of your Bank’s HR policy. Women fields of Marketing, Information and concerns, which will help in represent 24.34% of the total work Technology, Credit and Risk, easing stress, coping with work and force. Moreover, women employees Human Resources, Analytics, societal pressures, and enable them are spread across geographies Wealth Management etc. Moreover, to perceive the issue in a better way. and different levels of hierarchy. In domain experts have been hired for addition to this, more than 2,600 the required competitive edge. 692 zz Your Bank launched during the branches are at present headed by specialists have been hired during year Employee Engagement Survey women officers. FY2019. “Abhivyakti”, which is among the largest such surveys held. The zz Your Bank has a Zero Tolerance zz HR specialists in the domains - manpower objective of “Abhivyakti” was to Policy towards sexual harassment planning, recruitment, and internal identify the factors that actually at workplace and has put in place communication have been recruited to drive employees to perform their an appropriate mechanism for enhance HR Management skills. best and also the ones that limit prevention as well as redressal of their performance. The survey complaints of sexual harassment.

Chairman, SBI, along with senior management of SBI and heads of other PSBs at the Corporate Governance Workshop organised by State Bank Institute of Leadership, Kolkata. 64 DIRECTORS’ REPORT

7. Reservations and Equal Opportunity TRANSFORMING BY RE-SKILLING

zz Your Bank meticulously follows the Government of India directives on Reservation With the understanding that in a constantly Policy for SC/ST/OBC/PWD. Your Bank has representation of SC, ST, OBCs and changing world old ways won’t open new differently-abled persons among all the cadres of its work force. Moreover, your doors, the constant endeavour of the Bank has implemented reservation applicable to ’Economically Weaker Sections’ training system is to innovate to overcome in direct recruitment w.e.f. 1st February, 2019 in terms of the Government of India the challenges of an increasingly guidelines. volatile financial ecosystem, rapid digital disruption, changing customer Representation as on 31.03.2019 demographics, and growing competition. Several initiatives have always been conceptualised with the objective of re- S. Cadre Total Out of Which skilling employees to make them future No. SCs STs OBCs DAPs * ready and relevant in the fast-changing 1 Officers 108113 19103 8712 20092 1868 business environment. 2 Clerks 105440 17479 8843 25776 2239 3 Sub-staff 43699 10967 2747 10173 272 1. Radical change in Training TOTAL 257252 47549 20302 56041 4379 System Structure: zz This year, profound changes * Differently Abled Person were implemented in the training system - the ATIs were zz Your Bank has introduced “Equal zz A dedicated online portal for repositioned as caches of high Opportunity Policy” in terms of pensioners was also introduced quality specialty training in areas ‘Rights of Persons with Disabilities during the year with the purpose of of Credit, International Banking, Act, 2016’. Your Bank takes special information sharing. Risk, Marketing, Rural Banking, IT, care in providing basic amenities, Leadership, and Human Resources zz The ‘Sanjeevani’ helpline has also assistive devices, and other amongst others and turned into been extended to cover Bank infrastructure to enable employees umbrella institutes for the SBILDs pensioners from the 2nd quarter of with disabilities to effectively with hand-picked Advisory Councils FY2019. discharge their duties. comprising of top Bank officials and eminent educationists/ experts 8. Industrial Relations and B. STRATEGIC TRAINING from various fields were instituted UNIT to mentor each ATI. Experienced Staff Welfare Bankers with a passion and flair The Bank has always promoted a high- zz Your Bank has a harmonious for teaching with requisite domain performance culture originated in ethically relationship with the Staff and expertise were posted at the ATIs & and financially sound business practices. Officers’ Federations. Your Bank SBILDs. 95% officers of your Bank The quality and competence of the has been continuously emphasising attended at least 1 institutional workforce is most critical for sustainable on good and healthy work training. Training capacity utilization results, hence over the years, it has environment, mutual respect and was more than 100% developed an effective training system empathy at work place and a good which translates your Bank’s vision zz State Bank Institute of Leadership work-life balance to foster a healthy into actionable plans by amplifying the (SBIL), Kolkata: The Bank’s and happy workforce. strengths, bridging the skill gaps and flagship ATI is a fully operational zz Your Bank has taken several unleashing the potential of the employees. leading institut‑e for training senior transformative initiatives during the The training system with a classroom executives in the BFSI sector in year in the area of Staff Welfare. training capacity of 4,200 people per India and neighbouring countries These initiatives are crucial to day, caters to the multifaceted skill and is positioning itself as a centre ensure that your Bank remains in development needs of more than a quarter of global excellence for research the forefront of the banking sector million multi-generational, culturally and training in BFSI sector. In in India and our employees are diverse workforce every year. addition to various Leadership equipped to meet the challenges of Development Programmes for in- tomorrow. State Bank of India has an extensive house participants, several paid training infrastructure comprising of six programmes pertaining to BFSI 9. Care for Retired top-notch Apex Training Institutes (ATIs) sector were launched in association and 50 State Bank Institutes of Learning with State Bank of India’s Employees and Development (SBILDs). This is further Knowledge Partners. All AGMs, zz Well-being of its retired employees augmented by experiential, tech-enabled DGMs and GMs were exposed to continues to be important to online content, Gamification Apps, Power high end customized leadership your Bank and several initiatives talks by eminent experts and Mass trainings at State Bank Institute of were taken during the year for the communication interventions for honing Leadership, Kolkata benefit of the retirees. Membership the expertise of your Bank’s people to Retired Employees Medical capital. Benefit Scheme (REMBS), which was closed a few years ago, was reintroduced. DIRECTORS’ REPORT 65

2. Complete Redesign of the zz Cross-Functional Readiness and zz Developing a High impact learning Training Content Managerial Effectiveness of our culture through self-learning: Our Leaders: Personalised Managerial in-house developed e-learning zz Benchmarking competency: & Leadership development Plan courseware is platform agnostic and Around 47 critical roles were - IDPs, were devised for TEG can be accessed through intra and identified in your Bank, which require Officials under the “Competency internet for convenient and efficient precise skills to enable holistic Assessment and 360degree learning. your Bank has a repertoire customer service, create a digital Feedback Mechanism” for 1142 of 807 e-lessons, 480 e-capsules mindset, and reduce operational Top Executives of DGM and above and 739 mobile nuggets besides and other risks. Hence for each role, grades with course correction being case studies, Research Projects mandatory in-house certification carried out with the aid of reference and e-publications. courses and comprehensive role literature and training interventions. zz Power Talks- Developing a manuals were developed and zz Approach on External Training Global Mindset: As part of “facing implemented. This is over and to all TEG Leaders: Senior outward” initiatives for employees, above the external certifications Functionaries in the grade of Deputy State Bank of India continues to mandated by RBI. General Manager and above need organise Power Talks by eminent zz Linking Knowledge to to be exposed to high end/ focused personalities for its workforce. Performance: With the end-goal external trainings to internalise and These are broadcast to Circles and of exemplary customer service, adopt the latest concepts, thoughts are made accessible on the intranet all employees, from Award staff to and best practices to effectively for future reference. DMD level, must obtain internal/ steer the organisation because zz Reducing logistical challenges, external/edX certifications within their management views, approach expense and workplace stipulated time frame. In FY 18- and ethos have a significant impact disruption: Rather than imparting 19, 93% of our Top Executives on your Bank. Consequently, an role-based training in classrooms, which includes Deputy General approach was instituted for a employees go through the in-house Manager and above completed their planned and systematic external developed role manuals available mandatory learnings. training intervention for these on the intranet before nominating officials. Certifications were linked to themselves for short doubt-clearing performance appraisal and for zz Inclusion with Acceptance- workshops and examination at officials up to AGM grade for Training to Persons with the Training Institutes. 6498 such promotion eligibility. 97% Officers Disabilities(PwD) employees: workshops were organised in FY completed their role relevant your Bank imparts specialised need 2018-19. Case study and Group certifications. based training to differently abled discussion pedagogy was adopted employees. An Inclusion Centre at for classroom training. zz Identify, Engage & Develop the STU operates to facilitate resolution talent of POs/TOs/ Millenials: The of issues and address new 4. Revenue Generation Bank has completely revamped the requirements of differently abled training process for Probationary from surplus classroom staff members. At the instance of and Trainee Officers, wherein a fair capacity the Inclusion Centre, special pre- and holistic evaluation is an ongoing promotion training for your Bank’s Spare capacity at ATIs and SBILDs, process, which incorporates PwD employees was introduced freed up due to a shift to a new immediate feedback. Effectively, from FY2018-19. pedagogy and non-traditional the one-time confirmation test at teaching techniques is being used for the end of probation was replaced 3. Progressive Training revenue generation by designing and with a continuous assessment Techniques marketing of BFSI sector specific mechanism. 6114 POs/TOs of paid programmes. The Bank has subsequent concurrent batches zz Non-conventional training also licensed use of its Learning have been groomed under the new techniques: A Gamification App- Management System and e-content policy. “Play2Learn” was soft launched to to select external organisations. supplement the traditional learning 4579 promotees to officer scale tools for better experience and across the country were also 5. Contribution to Nation enhanced retention. imparted a uniform 3 week training Building at SBILDs zz Leveraging digital technologies: A real time help portal ‘ask SBI’ zz Responsible Corporate Entity: zz External Training to Junior was launched with a document Various Conclaves and Workshops Associates-Developing a Digital repository of over 23,000 to serve such as HR Heads Conclave on Mindset: Today’s young staff can do as a one-stop knowledge source Re-Vitalising our Human Capital much more than manning counters. for all employees whereby they can and PSB Heads workshop on In order to make them future ready access help documents related to Corporate Governance and Media and train them in soft skills, digital operational instructions / guidelines Management was organised at banking and marketing of products at their workstation. More than 4 SBIL, Kolkata to initiate discussions apart from general banking, your lakh queries were originated within on these key issues within the Bank has provided special training 2 weeks of its operationalization. industry. to nearly 7000 newly recruited Junior Associates. 66 DIRECTORS’ REPORT

zz Thought Leader in Executive 9. Developments B. FINANCIAL INCLUSION Education: A workshop on AND GOVERNMENT “Navigating Disruption and Managing State Bank of India entered in a Innovation in the New Economy” aimed Memorandum of understanding (MoU) SCHEMES: with National Banking Institute (NBI), at bringing together the established Being the Banker to the Nation, your Bank Kathmandu (Nepal) to establish a players and young professionals is in the forefront in serving the customers mutually beneficial strategic alliance for with disruptive ideas on a common hitherto left out of formal financial system. development of NBI’s human resources platform for exchange of ideas and Following are the latest developments in in the areas of education, training and gaining perspective, was organised the direction of FI: by your Bank in collaboration with research. Wharton University. It was attended zz Customer Service Points (CSPs) by top Corporate clients and young Your Bank is all set to offer its academic are now offering Banking Services professionals and entrepreneurs. expertise and training infrastructure to (Enquiry, Deposit and Withdrawal) to train personnel of NBI. To this end, SBI FI Customers at their Door Step, by will share its available infrastructure, using Portable Hand Held Devices. 6. R&D administrative facilities, expertise and zz Mobile Number seeding facility zz PDRFs: The Bank has recruited Post- experience in terms of Faculty and has been made available to the FI Doctoral Research Fellows (PDRFs) Research & Development (R&D) in Customer account through the FI for innovative and high-end research organizing press conferences, seminars, Kiosks. activities relevant to the BFSI sector. workshops, study and group discussions Moreover, they will present papers in to help research scholars and members zz Additional Fields have been added National / International conferences of faculty undertake project work and in Kiosk for capturing CSP details and publish their research work in conduct various studies. to effectively monitor functioning of leading international publications CSPs. to establish State Bank of India’s footprint in the domain of BFSI 2. INFORMATION zz Aadhaar Authentication for research. TECHNOLOGY PMJJBY, PMSBY, APY and Green Pin Services have been enabled zz Operational Research at ATIs A. LOAN LIFECYCLE during the year. & SBILDS: In order to create an MANAGEMENT SYSTEM environment for conducting research C. MERCHANT ACQUIRING studies in a focused and meaningful Through LLMS, an in house developed BUSINESS (MAB) manner, Business Units (BUs) were application, the entire life cycle of the made Project Owners for practical, credit process has been automated. A new subsidiary of your Bank, SBI operational research work on Besides improving efficiency and reducing Payment System Private Limited. Banking conducted at the Institutes. TAT of processing of the loan proposals, (SBIPSPL) came into existence on 29th LLMS aims at standardising the credit September 2018 in order to tap the growing process as per the extant instructions, 7. Employee Engagement market opportunities. However, MAB with a view to managing risk, enhancing IT-Operations shall continue to perform Programme- Nayi Disha: user experience and providing useful MIS all the operations (like funds settlement, for better decision making. Your Bank launched “Nayi Disha” an employee engagement program with the objective of imparting the significance of staying agile & relevant, adopting a growth mindset, managing challenges, inculcating the Bank’s values STEPS to improve customer centricity and brand image. 2.40 lakh employees were covered in 90 days under the Nayi Disha Phase-I, themed as “Vision 2030” and all employees will again be taken through the future phases of this programme which has been designed as an ongoing intervention.

8. Awards & Accolades: The Bank has a training culture of over 90 years and it associates with the best institutions and industry experts, both in India and overseas for designing and imparting in-depth training. As a result, the Bank’s training programmes have achieved widespread acceptability and credibility that is acknowledged world- over through accolades namely, the Business World Award for “Excellence in Learning & Development”. DIRECTORS’ REPORT 67 handing chargeback, disputes etc.) that it was performing hitherto, on behalf of SBIPSPL. With 5,75,358 terminals, your Bank ranks 2nd in the country as on 31st March, 2019.

D. SPECIAL PROJECTS Your Bank is working on special projects to bring better banking experience to its customer. Few of the projects are mentioned as under:

zz sbiINTOUCH: Advanced KIOSKs facilitating instant account opening and Debit Card Printing to provide better user experience.

zz Wealth Management Solution: ‘SBI wealth’ for PREMIUM customers offering a complete range of Financial Products. The new SBI Wealth Transactional Mobile App enables the use of Wealth Management services E. ATM Internet Banking Users (in lakh) anytime/ anywhere. During the year, ATM and Switch Users zz CKYC: CKYC Application launched department got PCI-DSS certification, as per Government of India which will ensure adherence to global guidelines, to upload the KYC standards in enhancing security of card documents to the CERSAI site data and related environment. Your Bank and therein generate the CKYC stands in premier position with 50.95 number, which are provided to the cr. Debit cards issued to the customers, customers. out of which 29.67 cr. cards are used 605

actively. A unique facility ‘YONO-Cash’ 479 zz OFSAA: OFSAA enables to measure and meet risk adjusted performance has been made available to our esteemed objectives and facilitates risk- customers for card-less cash withdrawal based decision making with greater through ATM using YONO app. Your Bank 327 transparency and efficiency. is the first Bank to test NCMC (National 263 Common Mobility Card) an initiative 220 zz CMLS: Centralised Litigation of GOI, successfully on 04.03.2019 at 177 130 Management System application Delhi Metro, which was launched by has been installed with centralised Honourable Prime Minister of India, Shri FY13 FY14 FY15 FY16 FY17 FY18 FY19 database of all the legal cases by Narendra Modi. and against the Bank. G. EPAY AND PAYMENT zz ETC FASTag: application facilitates F. INTERNET BANKING GATEWAY issue of FASTag for vehicles, Internet Banking continues to provide Your Bank provides indigenous, unique, making the process faster and more seamless online experience, offering efficient at Toll Plazas. PCIDSS certified secured ePay platform diverse Banking services to 581.76 lakh for facilitating seamless e-Commerce zz GST: Tax and Compliance Retails Users and 23.12 lakh Corporate transactions between business, Engine facilitates timely filing of Users. Many new services like Real merchants, customers and financial GSTR Returns to meet statutory Time Demand Loan for e-Commerce institutions, for various kinds of payment compliance. transactions, UPI Payment Integration modes. It offers large number of payment for SB Collect, Sovereign Gold Bond options to customers to enable them zz Pension Seva: Your Bank serves subscription for Joint Account holders, to pay to the partner Merchant and approximately 55 lakh pensioners facility to download Form 16A, and Partial across the country. The new portal simultaneously provides platform for MOD breaking facility have been added Merchants to acquire Bank agnostic ‘Pension Seva’ facilitates services to RINB portal during the year. Recurring like pension slip, arrear calculation large customer base. The platform is deposit facility for SARAL Users, uploading provided through our Payment Aggregator sheet, Form 16 download among of financial statements by Corporate others. (SBIePay) and Payment Gateway customer, Virtual Account Number (VAN) (SBIPG) applications by integrating with based collection are now being provided thousands of Merchants on the one end Furthermore, major events of your Bank through CINB. Over 9,939 merchants have are telecasted live to the customers and large number of Payment Channels been on-boarded during the year to fuel like Banks, Wallets and Cards at the other through your Bank’s corporate website, the e-Commerce eco system. which caters to the customers and has end. Payment Gateway also processes about 1.50 lakh hits per day. all debit/credit card transactions of SB Collect and SBI-MOPS. 68 DIRECTORS’ REPORT

H. OPERATIONS AND K. AWARDS WON PAYMENT SYSTEM Awards received by your Bank during the year (IT related): GROUP Your Bank continues to hold Numero Uno Name of the award Category positon in NEFT outward remittances with The Asian Banker Financial Tech- Won 53.03 crore transactions with over 17% nology Innovation Awards 2018 1. Best Enterprise Governance Risk and market share. In RTGS, 1.72 crore outward Compliance Initiative, Application or transaction were effected, implying market Programme (O&TS for merger) share of over 13 %. 2. Best Lending Initiative, Application or Programme-(LLMS) I. DATA WAREHOUSE AND 3. The Best Leadership award to DMD & CIO 4. The Risk Data and Analytics Technology ANALYSIS Implementation of the Year(OFASSA) Your Bank has a database, which is a Asian Banking and Finance Retail Won -Mobile Banking initiative of the year- single trusted source of structured data Banking Awards YONO that enables reporting for enhanced Intelligent Enterprise Award 2018 Won in following two categories business decision support across the 1. Enterprise Mobility-YONO, Bank. The database acts as a downstream 2. Enterprise application -Merger, for various applications like Business AI-SIA,SIVA, ARTCEF Intelligence, Analytics, YONO, CRM, IDC (International Data Corporation) Won-NEWS from O&TS under Digital Disruptor OFSAA and many more. Additionally, it category also plays an important role in complying CIO 100 (International Data Group) CIO 100 with regulatory reporting requirement like (for 4 project-YONO,SIA,SIVA,ARTCEF) CRILC, RBS TRANCHE amongst others. ASSOCHAM (The Associated Innovative Solutions for Regulatory Chambers of Commerce and In- Compliances- Merger of eAB’s with State The database is used for analysis of lead dustry of India) Bank of India from (O& TS dept) generation, risk mitigation and improving PMI India Awards 2018 Project-CBS Merger of e-Associate Banks operational efficiency. Additionally, and eBMB (O&TS) predicative analysis is also done to The Economic Times BFSI Innotribe Best Innovation under BFSI -Won detect fraud prone branches and also to Summit and Awards, 2018 (YONO,ARTCEF,SIVA,SIA) find delinquencies prone accounts. Also, ABP News present BFSI Award 2018 Won-Best Bank in Technology Orientation analytics is used to generate lead for pre- -YONO project approved personal loan (PAPL) in YONO. CSI award-IT Innovation & Excel- Won- Best BFSI in terms of Implementations lence Awards (2018) of cognitive technologies. For-i. YONO ii. J. CUSTOMER Block chain iii. Email segregation RELATIONSHIP Finnoviti Award 2019 Most Innovative project-YONO IBA Award (14th Banking Technology 1. The Best Technology Bank of the Year- MANAGEMENT (CRM) Awards 2017-18) Winner (Large Bank) CRM Project, launched in August 2016, 2. The Best Financial Inclusion Initiatives now stands fully implemented in your (Runner up) Bank. It focuses on providing solutions 3. The Most Innovative Project using for integrated management of Sales, Technology-SIVA Services and Marketing activities of our customer by providing their 360-degree L. CUSTOMER SERVICE Several outreach programmes such view. Various functionalities covering as Customer Awareness meets, Staff Lead Management Modules for different Your Bank has put in place a robust Townhall meetings and Customer meets BU’s, Customer Analytics, Reports and online Complaint Management System were conducted during the year. In Dashboards, Contact Centre operations (CMS) where customers can lodge their addition to this, Customer Service Surveys amongst others helps in creating corporate complaints/feedback/suggestion online were organised during the year, the results memory for effective and productive through the website www.sbi.co.in. In of which are being utilised, for improving customer engagement. addition to this, your Bank’s Contact and enhancing customer experience. Centres are functioning 24*7*365 in Additionally, processes were earmarked different geographical areas taking care Your Bank is extending a service through for digitisation in the near future. With this of customers in Hindi, English and 10 which customers can block his/her State structural transformation to the digital age/ major regional languages. For educating Bank of India ATM debit card, RINB banking, your Bank is in the process of customers on various products of credentials by forwarding the transactional leveraging the CRM tool to use analytics electronic banking channels, tech learning SMS or email received from the Bank and intelligence. Your Bank believes that centres were established. Moreover, your on his/her registered email with Bank on these digital tools and technology can Bank has accepted the revised code of designated number 9223008333 / email completely transform the distribution BCSBI in letter and spirit for achieving ID registered with the Bank. Consequently, reach of its services and the customer excellence in customer service. Your Bank the system will immediately block the Debit experience in general. has introduced a system of collecting card/RINB credentials if the customer feedback of customers in its complaint reports an unauthorised transaction. resolution mechanism to improve the Grievance Redressal procedure. DIRECTORS’ REPORT 69

M. INNOVATION IN IT zz Branch Darpan: Web based Reliance Retail, Jio, partner brands and dashboard for branches and merchants. In addition, with an integration INFRASTRUCTURE controllers for Brand Building and between SBI Rewardz (existing loyalty zz During the Financial Year, your Bank Customer Service program from SBI) and Jio Prime, commissioned its first, advanced customers of SBI will be offered additional zz Centralised Database for Prepaid loyalty reward earning opportunities ‘TIER- 3’, Data Centre at a safe Payment Instruments seismic zone in Hyderabad, with a as well as broader redemption within capacity to host around 1000 racks. Reliance, Jio and other online and physical The Data Centre is designed with O. PROFITABILITY REAPED partner ecosystems. Green Building Design concept THROUGH EFFICIENCY and is equipped with nine layers of Your Bank will be engaging Jio as one security. zz SBI WORKSPACE - Enterprise of its preferred partners for designing Mobility Management (EMM): and providing network and connectivity solutions. Jio’s highest quality network zz Your Bank’s branches are This solution facilitates work from in urban and rural regions will allow SBI equipped with 2 Mbps and 4 Mbps anywhere, anytime enhancing to launch customer centric services such internet connections. Additionally, employee productivity and efficiency. as video banking and other on-demand National Optic fibre Network (NOFN) services. Additionally, Jio Phones will be connectivity will be implemented zz OFFICE 365: Enables employees available on special offers for your Bank’s at 768 branches to improve rural to access the Bank’s email and customers. banking. other services like OneDrive, Skype for Business, Teams, Forms zz Network Access Control (NAC), has among others from anywhere using 3. RISK MANAGEMENT been implemented for protection mobile devices while reducing the from Cyber Attacks in addition to dependency on office desktop. A. RISK MANAGEMENT existing services like Anti-Virus, AD zz In house Centre of Excellence for OVERVIEW among others. NAC prevents access LINUX: IT Departments to resolve to the network by unauthorised and LINUX related issues thereby Risk Management at your Bank includes risk identification, risk assessment, risk non-compliant endpoints or devices. reducing dependency on vendor support system. measurement and risk mitigation with its main objective to minimise negative zz IT Service Management (ITSM) zz SME Gyan and Assist on mobile impact on profitability and capital. processes have been implemented for customer onboarding helps: to manage IT infrastructure. The operating functionaries, Branch Your Bank is exposed to various risks Heads of SME Intensive Branches, that are an inherent part of any banking N. INNOVATION UNLOCKS and SMEC staff can keep abreast business. The major risks are credit risk, NEW VALUES of current Bank Policies, products, market risk, liquidity risk, and operational services, and schemes. risk, which also includes IT risk. zz State Bank Intelligent Voice Assistant (SIVA) is transactional Your Bank is committed towards and FAQ Voice Bot powered by P. COLLABORATION OF SBI creating an environment of increased emerging technologies including AND JIO risk awareness at all levels. It also aims Machine Learning and Natural at constantly upgrading the appropriate Language Processing. The Post operationalisation of Jio Payments security measures, including cyber objective is to provide voice-based Bank (a 70:30 JV between RIL and SBI) Jio security measures, to ensure avoidance simple alternate banking channel for and SBI are deepening their partnership to or mitigation of various risks. Moreover, routine banking needs. bring next generation bilateral frictionless it is equipped with a Disaster Recovery/ experience with exclusive digital Banking, Business Continuity Plan across all zz YONO Cash will enable card less Payments and Commerce journeys for its branches and offices, to render cash withdrawals (with transaction their customers. uninterrupted services, in the event of any limits) from ATMs anywhere in the possible business disruption. country. Jio and SBI are entering into a digital partnership aimed to increase SBI’s digital zz AI based email segregation for Your Bank has policies and procedures in Complaint Resolution, which customer base multi-fold. SBI YONO is place to measure, assess, monitor, and understands and identifiesa revolutionary omni channel platform manage these risks systematically across customer’s queries and directs them offering digital banking, commerce and all its portfolios, which makes it amongst to the targeted desk, using Machine financial superstore services to customers. the leaders to undertake implementation Learning and Natural Language YONO’s digital banking features and of the Advanced Approaches under Credit, processing, is in progress. solutions will be enabled through the Market and Operational risk. Aiming to MyJio platform for a seamless, integrated adopt global best practices, State Bank of zz GPS technology enabled Mobile and superior customer experience. MyJio, India has also undertaken the Enterprise app to provide location based CSP one of India’s largest over-the-top (OTT) and Group Risk Management Projects, Inspection. mobile applications will now bring in which are being implemented with support financial services capabilities of SBI and from external consultants. zz Customer Feedback analytics to get Jio Payments Bank. instant feedback on service quality at the customer home branch. RBI Guidelines on Basel III Capital Jio and SBI customers will benefit from Regulations were implemented, and your Jio Prime, a consumer engagement and Bank is adequately capitalised as per the commerce platform from Reliance. Jio current requirements under Basel III. An Prime will offer exclusive deals from independent Risk Governance Structure, in 70 DIRECTORS’ REPORT line with international best practices, was Credit rating thresholds for each industry RBI has allowed your Bank to participate put in place, in the context of separation are decided based on the outlook. Your in the parallel run process for Foundation of duties and ensuring independence of Bank uses various internal Credit Risk Internal Ratings Based (FIRB) under the Risk Measurement, Monitoring and Control Assessment Models and scorecards Advanced Approaches for Credit Risk. The functions. This framework visualises for assessing borrower wise credit risk. data under parallel run of FIRB is being empowerment of Business Units at the Models for internal credit ratings of the submitted to RBI. Models for estimation operating level, with technology being borrowers were developed in- house. of Probability of Default (PD), Loss Given the key driver, enabling identification They are reviewed through cycles of Default (LGD) and Exposure at Default and management of risk at the place of comprehensive validation and back (EAD) are hosted in Credit Risk Data mart origination. The various risks across your testing frameworks. for computation of IRB capital. Bank and the SBI Group are monitored and reviewed through the Executive Level Committees and the Risk Management It has adopted an IT platform for credit A new role of Portfolio management Committee of the Board (RMCB), which appraisal processes through a Loan was created under Risk Management meets regularly. Risk Management Origination Software/Loan Lifecycle Department. Credit Portfolio Management Committees at Operational unit and Management system (LOS/LLMS). Models function will focus on both, profitability Business unit level are also in place. developed by your Bank are hosted on and risk view while performing portfolio these platforms, which are interfaced with management activities. Key functions CIBIL and RBI defaulters’ lists. comprise portfolio risk appetite and 1. Credit Risk target definition, portfolio packaging, risk Credit Risk is defined as the possibility of Risk Adjusted Return on Capital (RAROC) assessment and review, and portfolio losses associated with the diminution in framework is in place. The Customer optimisation, amongst others. the credit quality of borrowers or counter- level RAROC calculation has also been parties from outright default or from digitised. Further, behavioural models for 2. Market Risk reduction in portfolio value. Credit Risk monitoring and scoring the retail borrower emanates from a Bank’s dealings with performance were developed and hosted Market Risk is the possibility of loss an individual, non-corporate, corporate, on Credit Risk Data Mart. Your Bank has that your Bank may suffer on account of Bank, financial institution or sovereign. procured the ORACLE “OFSAA” platform change in value of its trading portfolio, for the Credit Risk Management System on account of market variables such as Mitigation Measures and the implementation of the system is exchange rate, interest rate and equity being done in phases. price, amongst others. Your Bank has put in strong credit appraisal and risk management frameworks in place State Bank of India has put improved Mitigation Measures for identification, measurement, monitoring mechanism in place to manage Credit and control of the risks in credit exposures. Concentration Risk, by way of risk sensitive Your Bank’s market risk management Industrial environment is scanned, Internal Prudential Exposure Limits consists of identification and measurement researched and analysed in a structured framework for single as well as group of risks, control measures, monitoring, manner by a dedicated team for deciding borrowers. These limits are fixed based on and reporting systems. its outlook and growth appetite for each of the internal risk rating of the borrower. the identified 39 industries/sectors, which Market risks are controlled through various constitute about 71% of your Bank’s total This framework is one step ahead of risk limits, such as Net Overnight Open domestic outstanding (excluding Retail and the regulatory prescription of Prudential Position, Modified Duration, PV01, Stop Agri). Risks in these sectors are monitored Exposure norms, which is ‘one size fits Loss, Upper Management Action Trigger, continuously and wherever warranted, all’ in nature. These exposure norms are Lower Management Action Trigger, the industries concerned are reviewed monitored regularly at a defined periodicity. Concentration, and Exposure Limits. immediately. Impact of events such as the rise in Crude oil prices, policy initiatives Your Bank conducts Stress Tests every Value at Risk (VaR) is a tool used for taken by the Government in respect of half-year on its Credit portfolio. Stress monitoring risk in the Bank’s trading Telecom and Power sectors, impact of Scenarios are regularly updated in line with portfolio. Enterprise level VaR of your Bank increase in production of sugar vis-à-vis RBI guidelines, industry best practices and is calculated daily and back tested daily. reduction in price on the industry, impact changes in macro-economic variables. The Stressed VaR for market risk is also analysis on awarding of Road projects by computed daily. The VaR methodology NHAI, Gems and Jewellery to name a few, Your Bank undertakes specific analytical is supplemented by conducting quarterly were analysed and appropriate responses studies to identify trends in movement of stress tests of the trading portfolio. to these situations were strategised by your NPAs, quarterly review of loan sanction, Bank to mitigate possible risks. Exposure time-to-default etc., in order to keep track Your Bank has Asset class wise risk limits to sensitive/ stressed sectors such as Real of quality of asset portfolio on regular for its trading portfolio and monitors the Estate/Telecom are being reviewed at half- basis. same on an ongoing basis. Currently, yearly intervals. Sectors such as Power, market risk capital is computed under Telecom, Iron and Steel, Textiles, which the Standardised Measurement Method are going through a challenging phase, are (SMM). watched continuously and analysis of new developments are shared with the business Bank undertakes Risk adjusted groups to enable them to make informed performance analysis of its domestic and credit decisions. Knowledge sharing overseas portfolios. It also analyses the sessions are conducted for the benefit of credit rating migration of non SLR bonds the operating staff at various levels. as a tool for decision making. DIRECTORS’ REPORT 71

3. Operational Risk 4. Enterprise Risk 5. Group Risk Operational Risk is the risk of loss Enterprise Risk Management aims to put Group Risk Management aims to put in resulting from inadequate or failed internal in place a comprehensive framework to place standardised risk management processes, people and systems or from manage and align risk with strategy at the processes in Group entities. external events. whole Bank level. It encompasses global best practices such as Risk Appetite, Mitigation Measures Mitigation Measures Material Risk Assessment and Risk Aggregation, amongst others. Policies relating to Group Risk Key elements of your Bank’s Operational Management, Group Liquidity and Contingency Funding Plan (CFP), Arm’s Risk Management Policy, among others, Mitigation Measures include ongoing review of systems Length and Intra Group Transactions and and controls, creation of awareness of As part of your Bank’s vision to transform Exposures are in place. operational risk throughout your Bank, the role of Risk into a Strategic function, timely incident reporting, enhancing a Board approved Enterprise Risk Monitoring of consolidated Prudential operational risk awareness through Management (ERM) Policy is in place. Exposures and Group Risk components is RAW (Risk Awareness Workshop), being done regularly. A quarterly analysis improving early warning information With an objective of maintaining a sound of risk-based parameters for Credit Risk, through implementation of Key Indicators risk profile, your Bank has developed a Market Risk, Operational Risk and Liquidity (comprising of Key Risk Indicators (KRIs), Risk Appetite Framework incorporating Risk, amongst others, is presented to the Key Control Indicators (KCIs) and Key limits for major risk metrics. For Enterprise and Group Risk Management Process Indicators (KPI), the resolution promotion of a strong risk culture in your Committee (EGRMC)/ Risk Management of risk issues by effectively tracking and Bank, Risk Culture Framework is being Committee of the Board (RMCB). follow- up of outcomes of assessment, operationalised in a phased manner. assigning risk ownership, aligning risk The Group Internal Capital Adequacy management activities with business Your Bank conducts a comprehensive Assessment Process (Group ICAAP) document includes an assessment of strategy. Your Bank has a detailed Internal Capital Adequacy Assessment identified risks by Group entities, internal Business Continuity Plan (BCP) in place Process (ICAAP) exercise on a yearly basis controls and mitigation measures, and for ensuring continuity of operations at the with respect to adequacy of Capital under capital assessment, under normal and branches and Offices during disruptions. normal and stressed conditions. In the stressed conditions. All Group entities BCP enabled us to ensure minimum ICAAP, besides the Pillar 1 risks, such as where SBI has 20% or more stake and business disruption during the natural Credit Risk, Market Risk and Operational management control, including Non- disasters such as floods in Kerala and Risk, Pillar 2 Risks, such as Liquidity banking entities, carry out the ICAAP Cyclone in Tamil Nadu, which occurred Risk, Interest Rate Risk in Banking exercise and a Group ICAAP Policy is in during the year. Book (IRRBB), Concentration Risk and place to ensure uniformity. others are also assessed, and capital is All these components ensure better provided if required. New and emerging capital management and improve risks are identified and discussed in 6. Basel Implementation quality of Bank’s services, products, and the ICAAP. Your Bank is identified as D-SIB by processes besides ensuring compliance the Regulator and is required to keep with regulatory requirements. additional Common Equity Tier 1 (CET1) of 0.60% of RWAs applicable from 1st For FY2019, your Bank on a stand- April, 2016 in a phased manner and it alone basis, had assigned capital for will become fully effective from 1st April, Operational Risk as per Basic Indicator 2019. Additionally, it has also started Approach (BIA). maintaining Capital Conservation Buffer (CCB) in a phased manner and will reach Your Bank observes Risk Awareness Risk Management Structure: 2.5% by 31st March, 2020. Day on 1st September every year. As part of Risk Sensitisation, an online Quiz contest was conducted for Staff across Board of Directors Risk Management Committees your Bank. Further, risk culture is being embedded through training to staff at all Credit Risk Management Committee (CRMC) levels through e-learning lessons.

Market Risk Management Asset Liability Risk Management Committee Committee (MRMC) Management of the Board (RMCB) Committee (ALCO) Operational Risk Management MD (SARC) Committee (ORMC)

Enterprise and Group Risk GM (CISO) DMD & CRO Management Committee (EGRMC)

CGM (RM) 72 DIRECTORS’ REPORT

B. INTERNAL CONTROL Branch Audit are subjected to FEMA audit. Branches with high credit exposures as well as Internal Audit (IA) in your Bank is IA Department undertakes critical the centralised trade finance processing independent of the audited activities and review of the operations of auditee units centres are subjected to audit under FEMA has sufficient standing and authority within through RFIA, an adjunct to Risk Based at least once every year. Other AD branches your Bank. The IA Department, headed by Supervision, as per RBI directives. The are audited as per their risk profile within a Deputy Managing Director, works under domestic branches are broadly segregated a maximum period of 21 months. During the guidance and supervision of the Audit into three groups (Group I, II and III) FY2019, around 411 auditee units were Committee of the Board. Your Bank’s IA based on business profile and advances covered under FEMA Audit. function works in close co-ordination with exposures. Your Bank has initiated a the Risk Management and Compliance system driven process for identification Departments to evaluate effectiveness of of branches for audit, whereby, analytical Information System and controls, assess compliance with controls, algorithms are deployed to identify Cyber Security Audit and adherence to internal processes and units displaying significantly different State Bank of India’s branches are procedures. The IA function undertakes behavioural patterns. This enables your subjected to Information System audits a comprehensive risk-based audit of the Bank to step in with a prioritised audit (“IS audits”) to assess the IT-related risks operating units of your Bank, in line with to identify the causative factors at these as part of RFIA of the branch(es). IS audit regulatory guidelines relating to Risk outlier branches and flag the underlying of centralised IT establishments is also Based Supervision. problem areas for early intervention. carried out by a team of qualified officials, which includes IS auditors appointed Keeping pace with rapid digitalisation in During FY2019, IA Department has through lateral recruitment. During your Bank, the IA function has initiated audited around 13,850 domestic branches the period from 1st April, 2018 to 31st technological interventions for providing and BPR entities under the RFIA. March, 2019, IS audits of 48 centralised enhanced efficiency and effectiveness IT establishments were completed. In through system driven and analytics- Credit Audit addition, a cyber-security audit of your based audits. Bank is also executed annually, as per the Credit Audit aims at achieving continuous cyber security policy of your Bank. Some key initiatives include the improvement in the quality of commercial following: credit portfolio of your Bank, through critically examining individual large Foreign Offices Audit zz Web based, online Risk Focused commercial loans with exposures of During FY2019, Foreign Office Audit was Internal Audit (RFIA) for assessing above `20 crore annually. During the year, carried out at 19 Foreign Offices and compliance with controls at a your Bank has revamped the Credit Audit Management Audit was conducted at granular level. process with an introduction of Offsite five Subsidiaries, three Representative Independent Credit Risk Assessment for zz Analytics based, continuous Offices and six Country Head/Regional large value loan accounts. Furthermore, assessment of compliable controls Head Offices. capability of audit was enhanced through remote evaluation of through lateral recruitment of Chartered big data. Accountants for credit audit. Concurrent Audit System zz System driven; analytics based off- Concurrent Audit System in your Bank site monitoring of transactions. The Credit Audit system provides covers advances and other risk exposures feedback to the business units, about the as prescribed by the regulatory authority. zz Concurrent Audit of business quality of advance portfolio in the unit and Additionally, it was revamped by recruiting units to ensure contemporaneous suggests remedial measures. qualified personnel and placing additional scrutiny of compliances. resources at the Central Processing Cells zz Early review of sanctions to assess Early Review of Sanction to identify and rectify shortcomings in quality of loans of `1 crore & above. underwriting and controls at a very early Individual accounts with credit exposure stage of the client relationship. zz Online self-audit by branches for of `1 crore & above are subjected to an off- self-assessment by branches and site early review mechanism (Early Review vetting by controllers. of Sanction) of the pre-sanction processes. Off-Site Transaction The reviews are carried out within three to Monitoring System (OTMS) As part of RFIA, IA Department conducts four weeks of sanction /enhancement/ OTMS in your Bank is a web-based various audits, viz. Credit Audit, renewal to identify the deficiencies, if any, solution, which generates scenario-based Information Systems Audit, Cyber Security in the credit underwriting process at an alerts for monitoring transactions at Audit, Home Office Audit (audit of foreign early stage and initiate remedial measures. branches across the whole Bank and flags offices), Concurrent Audit, FEMA Audit, The ERS system was integrated with loan them to the business units for corrective Audit of Outsourced Activities of your processing software for seamless, real actions. Presently, there are 55 types of Bank, Expenditure Audit and Compliance time flow of sanction proposal to the ERS scenarios embedded in the system against Audit. In addition to this, it undertakes reviewers for online review. which the transactions are scrubbed at Management Audit of business verticals regular periods, wherein inconsistent to assess their strategic effectiveness and FEMA Audit transactions are flagged by the system special audits as per the directions of the for affirmation of the related compliances. Audit Committee or the regulators. The Branches that are authorised to deal (Authorised Dealers) in Foreign currency The scenarios are periodically reviewed transaction, including Trade Finance and enlarged, depending upon the need Centralised Processing Cells-TFCPC and certain triggers. DIRECTORS’ REPORT 73

Legal Audit D. KYC / AML-CFT MEASURES: Monetisation of unused non-banking assets worth `407 crore have been identified for Legal Audit in your Bank covers scrutiny of In order to mitigate risks arising out of sale from different circles, out of which the loan and security related documents non-compliance of KYC norms, AML/CFT assets worth `17.33 crore have been of loans amounting to `5 crore and above. guidelines, your Bank has put in place an monetised during the current financial year Legal audit is a control function, carried out approved Board and transparent Know 2018-19. through a panel of advocates in addition Your Customer (KYC) Policy incorporating to the scrutiny by the in-house team of your Bank’s framework for customer internal auditors, to ensure that there are acceptance, customer identification,4. OFFICIAL LANGUAGE no shortcomings in the documents or monitoring of transactions, Customer Your Bank has taken innovative steps to creation of security in favour of your Bank. Risk categorisation, and reporting of propagate the use of official language in Legal Audit was carried out for 11,602 transactions to Financial Intelligence Unit reaching out to customers and has earned accounts during FY2019. India (FIU-IND). The policy was updated and many laurels for the organisation. subsequent changes, as notified by RBI, Audit of Outsourced Activities are being circulated through e-Circular for Leveraging technology in Branches/ Offices for ensuring meticulous rendering Banking Services in Your Bank recognises the need of service compliance of the same by the operating Hindi and other Indian languages providers engaged with your Bank to be functionaries. Your Bank has put in place a as compliant with the legal and regulatory robust system containing a combination of Your Bank is committed to render requirements as your Bank itself. Audit manual and system enabled methodology banking services in Hindi and other Indian of Outsourced activities is therefore to ensure KYC compliance in your Bank. languages. With a view to build and conducted at regular intervals to gain sustain the momentum, your Bank’s focus a reasonable assurance that adequate Your Bank has allotted Uniform Customer is on leveraging technology to deliver systems and procedures are in place to Identification Code (UCIC) to the individual the product and services. Additionally, to mitigate legal, financial and reputational customers as per RBI guidelines. Periodical boost digital inclusion, content in Hindi and risks that may arise on account of the updating of KYC is undertaken as per RBI other Indian languages is being delivered through ATMs, SMSs, Contact Centre outsourced activities. guidelines. communications among others. Moreover, State Bank Intelligent Assistant (SIA) has Audit of outsourced activities in your Your Bank has taken several initiatives been installed to answer standard queries Bank covers audits of vendors engaged to bring greater awareness amongst its on products and services and responding in providing ATM services, Corporate staff about KYC and AML/CFT to frequently asked questions. SIA is a Business Correspondents (BC), Individual compliances. AML-CFT Day is being multilingual chatbot, which can respond in BCs and CSP, Recovery and Resolution observed on 2nd November every year 14 languages in speech or text. This has agents, Cash Management Services, Door wherein pledge is taken on that day at step Banking, Cheque Book Printing, IT helped in understanding the local needs all branches/processing centres and and bringing more customers to our fold. related Services, Registrar and Transfer Administrative Offices. Similarly, 1st August Agents amongst others. is observed as KYC Compliance and Fraud Delegation to World Hindi Prevention Day. Conference Your Bank has engaged the services of more than 57,000 individual BCs and CSPs E. INSURANCE: 11th World Hindi Conference was held from under financial inclusion plan, of which 18th to 20th August, 2018 at Mauritius. Your 28,245 units were audited by FY2019. State Bank of India has set up an Insurance Bank sent a delegation in which the members Cell for your Bank’s assets and other risks in organised an exhibition with the support Management Audit order to reduce requirement of capital under of your Bank’s subsidiary State Bank of Advance Measurement Approach (AMA) of Mauritius. The theme of the exhibition was Management Audit covers business Basel-II framework. Additionally, insurance “Vishwa Mein Hindi Pahunchai, Yug Yug Jio verticals, Administrative Offices/ policy to cover cyber risks for US$ 100 SBI”. Furthermore, your Bank’s products, Departments and examines the strategy, million is being taken. RBI’s instructions on services, and publications depicting your processes and risk management limiting customer’s liability on Debit Card Bank’s contribution in popularising Hindi practices. It encompasses Corporate and Electronic Banking Transactions are around the globe were showcased in the Centre establishments/Circle Local Head being complied with. Likewise, for covering exhibition. Offices and Regional Rural Banks (RRB) the risk/cost of your Bank, insurance sponsored by your Bank. During FY2019, cover for Debit card/Electronic Banking Hindi Fortnight at national level and 42 establishments/administrative offices Transactions is being taken. World Hindi Day at international level were audited under Management Audit. To popularise the use of Hindi among the F. PREMISES staff members of your Bank in India and C. COMPLIANCE RISK abroad, a Hindi Fortnight was organised Safekeeping of Title Deeds of all the from 14th to 29th September 2018 at MANAGEMENT properties of State Bank of India has been national level and at international level. centralised. Accordingly, Original Title Your Bank operates on the principle of ‘zero Additionally, 10th January, 2019 was deeds have been kept with SBICAP Trustee tolerance’ to regulatory non-compliance observed as World Hindi Day during which Co. Limited for safekeeping and digitalised and has taken initiatives to strengthen different Hindi programs and competitions form shall be available with the Bank. compliance function, which is amongst the were organised. Furthermore, the top most priorities of your Bank. circles, departments, and staff including foreigners who make maximum use of Hindi in the official work, during the year, were awarded. 74 DIRECTORS’ REPORT

Hindi House Magazine PRAYAS bagged GOI Rajbhasha Kirti Prize and 5. MARKETING AND best Hindi journal award from RBI COMMUNICATION Rajbhasha Kirti Award 2017-18 for SBI ‘PRAYAS’ Magazine: State Bank of India bagged first prize under Government of India Rajbhasha Kirti Awards 2017-18 for its Quarterly The Marketing and Communications (M&C) Hindi house magazine PRAYAS. Honourable Vice President of India Shri M. Venkaiah Department is responsible for your Bank’s Naidu conferred the award to SBI Chairman Shri Rajnish Kumar on 14th September 2018 initiatives towards branding, product at Plenary Hall, Vigyan Bhawan, New Delhi. marketing and corporate communications. With the objective of optimising its efforts On this occasion Honourable Union Minister for Home Shri Rajnath Singh and Ministers of State in promoting the products and services for Home Affairs Shri Hansraj Gangaram Ahir and Shri Kiren Rijiju also graced the occasion. by adopting contemporary marketing approach and to give impetus to the digital initiatives to connect with the youth, the M&C Department’s key responsibilities include developing and implementing integrated marketing strategies to address business challenges of different divisions of your Bank including Indian and overseas operations. This department comprises of domain skilled professionals and specialists drawn from various relevant fields - media, marketing communications, digital marketing, advertising, and public relations.

The focus of this year for your Bank’s M&C team was to promote its flagship product YONO. For this, your Bank undertook initiatives to make the customers aware of YONO and its unique features. During the year, the team also devised various Rajbhasha Kirti Award 2017-18 for SBI ‘PRAYAS’ Magazine : Honourable Vice-President marketing initiatives for YONO such as the of India conferred the award to SBI Chairman on 14th September 2018 at Vigyan Bhawan, YONO Shopping Festival (YSF), a first of New Delhi. its kind shopping festival ever organised by any Bank across the country. Your Bank conducted its maiden thought leadership Publications SBI TOLICS event on fintech called ‘Infinite’. One of the major marketing initiatives, which Your Bank released the prestigious Town Official Language Implementation your Bank launched was the YONO Hindi book ‘Rajbhasha Karyanvayan: Committees chaired by your Bank at 20Under20 concept. This was one of the Anubhav Evam Uplabdhiyaan’ under Bhubaneswar and Hyderabad centres biggest external events conducted and aegis of Department of Financial Services, got 1st and 2nd prizes respectively in appreciated, where your Bank honoured Ministry of Finance, Government of India. Rajbhasha Kirti Awards from Honourable 20 (10 Male + 10 Female) extra ordinary The book was released by Dr. Bhushan Vice President of India. Also, Town Official achievers in 10 different fields. Your Bank Kumar Sinha, Joint Secretary (Financial Language Implementation Committee, has also conducted a 17-city quiz called Inclusion), Government of India on 6th July, Siliguri won 3rd prize by the Regional “Numero Yono”. 2018 at Patna. Implementation Office (East), Kolkata.

Your Bank has also launched out Security Manual, Customer Information Compilation, ATM Manual, RFP, LOS Documents, Ethics Code and a handbook on Digital Banking in Hindi for the use of our operating staff.

Ashirwad Rajbhasha Gaurav Award Dr. Satya Narayan Jatia, Vice-Chairman, Committee of Parliament on Official Language awarded 1st prize to your Bank for the best implementation of O.L. Policy on behalf of renowned literary - social - cultural organisation Ashirwad. He also honoured our GM (O.L. & C.S.) with prestigious ‘Rajbhasha Gaurav Award’. Moreover, our Hindi house magazine Chairman with the Permanent Representative of India to United Nations ‘Prayas’ was awarded with ‘Best Mr. Syed Akbaruddin at United Nations Headquarters in New York. Magazine’. DIRECTORS’ REPORT 75

The Department has further strengthened The Whistle-blower’s identity is protected In order to encourage branches to garner its process on integrating marketing to ensure that the process continues to stable funds and assess their profitability efforts across all Business Units and has be an effective tool against wrongdoings based on cost of funds, a Market Linked set up a suitable process for starting any without fear. Internal Funds Transfer Pricing was marketing campaign. Apart from YONO, implemented by your Bank. the M&C team launched major marketing Branches, where lapses of grave nature campaigns for products such as Home are observed, are identified and suo- The Asset Liability Management Loans, Wealth Management, NRI Services, motu investigations are conducted to Committee (ALCO) of your Bank monitors amongst others. The Department also check possible fraudulent activities and manages the Interest Rate and initiated an integrated approach to drive and to execute remedial measures are Liquidity Risks of the balance sheet. consideration for the range of retail loan undertaken. ALCO inter alia, reviews the Interest Rate products. Different media vehicles were scenarios, pattern of growth of liability used for all these campaigns. During FY2019 a total of 1,505 cases products, credit growth, competitive (1,025 new cases) were taken up for advantages, liquidity management, The M&C team was instrumental in examination, out of which 790 cases have adherence to the regulatory prescriptions changing the brand identity of the Wealth been concluded. and pricing of liabilities and assets from Management Services from Exclusif to SBI time to time. Wealth. The team worked on organising Green Marathon, which was conducted in 7. ASSET AND LIABILITY In order to address the concern of rigidities six cities last year and this year it was taken MANAGEMENT in the Balance Sheet structure and to 15 cities, Bhubaneswar, Trivandrum, address the issue of quick transmission Bhopal, Jaipur, Kolkata, Lucknow, Patna, Efficient Management of Assets and of changes in RBI’s policy rates, effective Guwahati, to name a few in the current Liabilities (ALM) is vital for sustainable and from 1st May 2019, your Bank has taken financial year to accentuate your Bank’s qualitative growth of Banks. ALM aims to the lead in linking its pricing of Savings commitment to sustainability. strengthen Balance Sheet by pro-actively Bank Deposits with balances above reviewing the market dynamics, capturing `1 lakh and Short Term Loans (Cash Going forward, along with the other the signals emanating, therefrom, Credit accounts and Overdrafts with limits marketing initiatives, your Bank plans assessing the regulatory requirements to above `1 lakh) to the Repo Rate of RBI as to further promote its flagship product ensure value creation. an External Benchmark. YONO. The thrust of the department is to stay ahead of the competition and As part of best Risk Management develop brand “State Bank of India’’ into a practices, updated Internal Policies on 8. ETHICS AND more vibrant and competitive brand. ‘Deposits’, ‘Whole Bank Asset and Liability BUSINESS CONDUCT Management’, ‘Whole Bank Stress Testing of Liquidity and Interest Rate Risks’ Your Bank was engaged during the year 6. VIGILANCE were implemented by introducing the with promotion of ethical awareness in MECHANISM latest concepts such as ‘reverse stress the organisation as a cultural premise. testing’. As part of contingency planning, Having put in place a structure for the At your Bank, there are three aspects Contingency Funding Plan (CFP) is in purpose under the Chief Ethics Officer to the vigilance function - Preventive, place and reviewed regularly. and articulation of Bank’s new Vision, Punitive and Participative. Vigilance Mission and Values Statements (VMVS), Awareness Week was observed from Studies are conducted at regular intervals Bank has come out with a Code of Ethics 29th October to 3rd November 2018, with to assess the behavioural pattern of synchronised around the normative the theme “Eradicate Corruption - Build non-contractual assets and liabilities, commitments to its stakeholders viz. a New India”. As a part of observance embedded options available to customers, values of STEPS (Service, Transparency, of Vigilance Awareness Week, “Integrity off-balance sheet exposures, impact of Ethics, Politeness and Sustainability). Pledge” was administered to the staff probable loan losses, and others. The The Code provides staff-members with and public at large. Further, State Bank inputs derived therefrom are used for behavioural guidelines and a moral of India as a Corporate has organised effective management of on-balance compass for conducting a collective Gram Sabhas and undertaken the sheet and off-balance sheet items. journey towards realisation of your Integrity Pledge to create awareness. The Bank’s vision. Sustained efforts were message was disseminated through other The levels of High-Quality Liquid Assets taken to ensure that the essence of the means viz. Alternative Channels, IVR, (HQLA) and cash outflows are effectively VMVS and Code seeps into the sinews Social Media, Walkathon, and Street plays monitored in a highly dynamic environment of organisation and strengthens its moral amongst others. for computing LCR on daily basis. fibre. Activities such as sharing situational Quiz for ethical sensitisation (both, a The concept of Whistle-blower is Your Bank has adopted an advanced general daily quiz to all employees of your another effective tool used for Preventive approach for assessing the impact on Bank and a domain specific weekly quiz Vigilance. To highlight any malpractices Earnings at Risk (EaR) and Market Value for Global Markets, Foreign Offices, GITC, under Whistle-blower Scheme, a portal of Equity (MVE) with pre-defined tolerance MTs amongst others, covering ethical was launched by your Bank wherein a limits that determine the risks associated dilemmas related to their area of work), complaint can be lodged online, and with them and enables the Management broadcasting Ethical Decision Making its progress can be monitored. There to initiate appropriate preventive steps in Guide, posting a motivational weekly blog is an existing well-defined Whistle- a likely scenario of erosion in Net Interest blower policy in your Bank, which acts Income. as a deterrent for the employees to keep themselves away from malicious activities. 76 DIRECTORS’ REPORT namely ‘Coffee with Aristotle’, fortnightly of the society to make sustainable social SBI Children’s Welfare Fund: Your Bank Ethics Tutorials amongst others, are change in their lives. State Bank of India constituted SBI Children’s welfare Fund undertaken. Besides, this regular Ethical always places the interest of the common as a Trust in 1983, which extends grants Awareness Workshops are organised for man, especially the most marginalised, to institutions engaged in the welfare different staff- constituencies ranging at its core. In addition to this, your Bank of underprivileged and downtrodden from messengers, security guards, earmarks 1% of the previous year’s net children like orphans, destitute, Management Trainees to the Deputy profit as the budget for CSR spend for challenged, deprived, amongst others. General Managers including workshops the year. Its CSR activities are widespread The corpus of the fund is made by staff on Procurement Ethics. ‘Code of Conduct and deep-rooted and have made true members and matching contribution is for Expressing Views in Social Media’ difference in the lives of millions from provided by your Bank. During 2018-19, was revised in response to expanding underserved communities. Your Bank is State Bank of India has donated `0.49 reach of social media platforms. Several committed towards the economic and crore to 6 institutions such as Protection measures were initiated for humanising social wellbeing of the downtrodden. of the Rights of Differently Abled Children, the disciplinary eco-system further in Pawan Public School run by Gram Vikas your Bank. Focus areas of our CSR activities: Sanstha, Amcha Ghar, Coochbehar NELC School, Ama Adhikar and Sahrudaya Your Bank believes that ethics is a zz Supporting Healthcare Health, Medical, and Educational Trust. continuous process of infusing excellence zz Supporting Education in its operational fabric and will go on making endeavours unremittingly to zz Skill Development and Livelihood shape the moral sensibilities of rank and Creation file in the organisation. zz Environment Protection. 9. CORPORATE SOCIAL zz Sanitation RESPONSIBILITY CSR spend during 2018-19 Social Responsibility is deeply ingrained During the F.Y. 2018-19, your Bank has in the culture of your Bank. Consequently, made donation of an amount of `5 crore it has been undertaking social welfare towards Chief Minister Distress Relief initiatives much before the formal CSR fund, Kerala for Kerala floods. Apart from concept was coined. Your Bank believes that Bank has also donated the amount that it owes a solemn duty to the less of `1.24 crore under CSR mainly towards fortunate and underprivileged members Healthcare and Sanitation.

Release of Code of Ethics by Chairman, MD (R&DB), MD (CCG & IT), MD (GB & S), DMD & CFO, Chief Ethics Officer in Strategy Retreat at Kolkata on 14.07.2018. DIRECTORS’ REPORT 77

V. SUBSIDIARIES As a part of mission to provide the entire gamut of financial services across India, the State Bank Group, through its various subsidiaries, provides a whole range of financial services, including Life Insurance, Merchant Banking, Trustee Business, Mutual Funds, Credit Card, Factoring, Security Trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

Non- Banking Subsidiaries: (`crore) Sr. Name of the Subsidiary Company Ownership % of Net Profit (Losses) No (SBI interest) Ownership for FY2019 1 SBI Capital Markets Limited (Consolidated) 58.03 100.00 236.27 2 SBI DFHI Limited 131.52 69.04 61.58 3 SBI Mutual Fund Trustee Company Private Limited 0.10 100.00 3.21 4 SBI Global Factors Limited 137.79 86.18 5.35 5 SBI Pension Funds Private Limited 18.00 *60.00 1.89 6. SBI Foundation 3.99 99.72 0.16 7. SBI Infra Management Solutions Private Limited 40.00 100.00 (12.00)

*Group holding of SBI is 100% in SBI Pension Funds Pvt. Ltd. (SBI 60%, SBI MF and SBI Capital Markets 20% each)

Non- Banking Subsidiaries: Joint Ventures (`crore) Sr. Name of the Subsidiary Company Ownership % of Ownership Net Profit (Losses) No (SBI interest) for FY2019 1 SBI Funds Management Private Limited 31.50 63 .00 427.54 2 SBI Cards & Payment Services Private Limited 619.54 74 .00 788 .00 3 SBI Life Insurance Company Limited 621.00 62.04 1327 .00 4 SBI-SG Global Securities Services Private Limited 52.00 65 .00 34.45 5 SBI General Insurance Company Limited 151.00 70 .00 334 .00 6 SBI Business Process Mgt. Services Private Limited* 17.46 74 .00 78 .00 7. SBI Payment Services Private Limited 4.50 74 .00 (48.84)

* Name of “GE Capital Business Process Mgt. Services Pvt. Ltd.” has been changed to “SBI Business Process Mgt. Services Pvt. Ltd.”

1. SBI CAPITAL MARKETS LIMITED (SBICAP)

(`crore) Name of the subsidiary company Ownership % of ownership Net Profit (Loss) (SBI Interest) for FY2019 SBICAP SECURITIES LIMITED (SSL) 96.88 100 .00 57.52 SBICAP VENTURES LIMITED (SVL) 49.98 100 .00 0.52 SBICAP (UK) LIMITED (SUL) 1.72 100 .00 (3.21) SBICAP (SINGAPORE) LIMITED (SSGL) 61.78 100 .00 (1.65) SBICAP TRUSTEE CO. LIMITED (STCL) 1.00 100 .00 14.90

SBICAPs is India’s leading investment banker, offering a bouquet of investment banking and corporate advisory services to diversified clients across three product groups - Project Advisory and Structured Finance, Equity Capital Markets and Debt Capital Markets. These services include Project Advisory, Loan Syndication, Structured Debt Placement, Mergers and Acquisitions, Private Equity, Restructuring Advisory, Stressed Assets Resolution, IPO, FPO, Rights Issues, Debt and Hybrid Capital raising. On a standalone basis, SBICAPs posted a PBT of `242.60 crore during FY2019 as against `336.49 crore during the FY2018 and a PAT of `168.19 crore for FY2019 against `236.26 crore in FY2018. On a consolidated basis it has posted a profit of` 236.73 crore as against `323.53 crore in the previous year. SBICAPS has not declared any dividend for FY2019 as against 225% in FY2018 78 DIRECTORS’ REPORT

A. SBICAP SECURITIES built relationships with FIIs, Financial an NBFC and issues credit cards in India. LIMITED (SSL) Institutions, Law Firms, Accounting Firms, State Bank of India increased its stake amongst others, to market the business in the company in December 2017 from SSL, a wholly owned subsidiary of SBI products of SBICAP. It is specialised in 60% to 74% by buying shares from exiting Capital Markets Limited, besides offering marketing of Foreign Currency Bonds and partner GE Capital. equity broking services to retail and securing clients for SBICAP SEC. institutional clients both in cash as well as During FY2019, the Company’s Card base in Futures and Options segments, is also E. SBICAP TRUSTEE CO. has grown by 32% YoY with total number engaged in sales and distribution of other of credit cards reaching to a level of 82.71 financial products such as Mutual Funds, LIMITED (STCL) lakh as at 31st March 2019. Total Spends Tax Free Bonds, Home Loan, Auto Loan, SBICAP Trustee Co Limited (STCL), is a on card witnessed a YoY growth of 35% Tractor Loan, amongst others. wholly owned subsidiary of SBI Capital to reach a level of `107,350 crore for the Markets Limited. STCL commenced same period. The company is positioned SSL has over 100 branches and offers security trustee business with effect on at Rank #2 with 17.2% Spends Share and Demat, e-broking, e-IPO, and e-MF 1st August, 2008. STCL posted Net Profit 17.4% Cards base as per RBI report for services to both retail and institutional of `14.90 crore during FY2019 as against February 2019 (Previous Year 16.7% in clients. SSL currently has over 15 lakh `11.90 crore during FY2018. Moreover, terms of both Spends and Cards base clients. The Company has booked gross it has launched an Online Will Creation as per RBI report for March 2018). The revenue of `408.36 crore during FY2019 service for the individuals in the name company delivered Profit after Tax of` 788 as against `357.56 crore in FY2018. of ‘My Will Service Online’. In addition crore in FY2019 at YoY growth of 36% to this, ‘Trustee Enterprise Management (Profit after Tax in FY2018 -` 581 crore). B. SBICAP VENTURES System’ - an integrated system to address LIMITED (SVL) all the trustee related operations was New launches during FY2019: implemented, thereby becoming the first zz New cobranded ‘Apollo SBI Card’ SVL is a wholly owned subsidiary of SBI and only Trustee Company in India to have launched offering host of benefits Capital Markets Limited. DFID (Department full automation across all trustee related and privileges on health and for International Development) has joined operations. wellness services. hands with the SBI group to set up the zz ‘SBI Doctors Card’ in association ’Neev Fund’ which is being managed by 2. SBI DFHI LIMITED with Indian Medical Association SBICAP Ventures Limited. SVL is acting launched exclusively for Doctors. as the Asset Management Company. (SBIDHFI) SVL has also launched two funds namely zz Etihad Guest SBI Card offering best- Affordable Housing Fund and SME Fund SBI DFHI Limited is one of the largest in-class value combined with word class travel experience to frequent during the year. standalone Primary Dealers (PD) with a Pan India presence. As a Primary Dealer international travellers First closure of ‘Neev Fund’ was on 10th (PD) it is mandated to support the book zz SME Card offering unmatched value April, 2015 and the final closure happened building process in primary auctions and proposition to Small and Medium on 31st March 2019 with final corpus of provide depth and liquidity to secondary Enterprises (SME) segment markets in G-Sec. Besides Government the Fund being `504.20 crore. Fund has zz Allahabad Bank SBI Card, Co- invested in the infrastructure sectors such securities, it also deals in money market branded Credit Card with Allahabad as renewable energy, water and sanitation, instruments, non G-Sec debt instruments, Bank, catering to the customers of agricultural supply chain in eight identified amongst others. As a PD, its business Allahabad Bank. states of India (Bihar, Chhattisgarh, activities are regulated by RBI. Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh, and West State Bank of India group holds 72.17% Bengal). share in the Company, which posted a Net Profit of` 61.58 crore as on 31st March, 2019 as against `32.07 crore as on C. SBICAP (UK) LIMITED 31st March, 2018. Total balance sheet size (SUL) was `7,206.09 crore as on 31st March, 2019 as against `5,659.46 crore as on SUL, a wholly owned subsidiary of SBI 31st March, 2018. Capital Markets Limited, is positioning itself as a relationship outfit for SBI Capital Markets Limited in UK and Europe. It 3. SBI CARDS & has built relationships with FIIs, Financial Institutions, Law Firms, Accounting Firms, PAYMENTS SERVICES amongst others, to market the business PRIVATE LIMITED products of SBICAP. (SBICPSPL) D. SBICAP (SINGAPORE) SBI Cards and Payment Services Private Limited is a joint venture between State LIMITED (SSGL) Bank of India and the Carlyle Group SSGL, is a wholly owned subsidiary of SBI wherein State Bank of India holds 74% Capital Markets Limited. It commenced stake and CA Rover Holdings (An affiliate Chairman, SBI presented YONO 20 under business in December, 2012. It has of Carlyle) holds 26% stake. SBICPSL is 20 award under ‘Sports Champion-Male’. DIRECTORS’ REPORT 79

Awards received during FY2019: 4. SBI BUSINESS During the year ended March 31, 2019, the Company operated in sound and zz SBI Card received the Reader’s PROCESS AND stable manner, with its sole objective Digest Trusted Brand Award 2018, MANAGEMENT of increasing insurance penetration for the tenth time in the credit card and concentrating on individual regular category. SERVICES PRIVATE business through an active and prudent zz SBI Card won the Best Data Quality LIMITED (SBIBPMSL) strategy, sales team maintaining the Award from CIBIL, for the third quality as well as quantity and established (Formerly GE Capital Business Process consecutive year. a firmer market position. The Company and Management Services Private has proven its market leadership in the zz SBI Card m-Gurukul won Limited) year ended March 31, 2019 with numero- Silver Award in Best Learning, uno position in Individual New Business Performance and Capability SBIBPMSL is a joint venture between Premium among private insurers. Project - Sales Training category by State Bank of India and the Carlyle Group, LEARNX Foundation, Australia. wherein State Bank of India holds 74% Individual business has always been a stake and CA Rover Holdings (An affiliate zz SBI Card won the ‘Excellent part of core strategy of the Company. of Carlyle) holds 26% stake. SBIBPMSL Compliance Performer Award 2018’ The company witnessed a 15% growth provides back end services and solutions at the coveted Compliance 10/10 in Individual New Business Premium to SBICPSL. State Bank of India increased awards. (NBP) vis-à-vis the industry growth of 6%. its stake in the company in December The market share of SBI Life Retail New zz SBI Card was awarded as Best 2017 from 40% to 74% by buying out Business Premium (NBP) among all private Arrangements - Governance & shares from exiting partner GE Capital. players as on 31st March, 2019 is 20.6%. Compliance Awards 2018 at the Total New Business of the Company for Compliance Register Platinum held For FY2019, the Company generated PAT the year ended FY2019 stands at `13,792 at London, UK. of `78 crore at a YoY growth rate of 15% crore; growth of 26%. (Profit after Tax in FY2018 of` 68 crore). zz The SBI Card L&D team was The Company continues to maintain awarded with Learning Innovator Initiatives undertaken during Award at the GP Strategies India, the leadership position amongst private Learning Connect Event held at FY2019: players in number of policies issued, which reflects mass coverage and strong Gurugram. zz Vision Plus migration to India market acceptance across geographies completed amongst life insurer. During the period, zz Excalibur (Collection CRM) Phase-I total 15,25,439 individual new policies Go-Live from Mar’19 were issued and registered growth of 7%.

zz Chat Bot- ELA introduced- 98% During the year, the Company implemented Success rate Employee Stock Option Plan (ESOPs) to encourage employee’s performance and 5. SBI LIFE INSURANCE incentivise employees.

COMPANY LIMITED SBI Life witnessed a PAT of `1,327 crore (SBILIFE) in FY2019 against `1,150 crore in FY2018, growth of 15%. AUM of the Company SBI Life Insurance is a joint venture recorded a growth of 21% at `1,41,024 between State Bank of India (SBI) and crore as on 31st March, 2019 as compared BNP Paribas Cardif S. A. The equity to `1,16,261 crore as on 31st March, 2018. shares of the Company are listed on National Stock Exchange of India Limited Leveraging wider reach achieved through (‘NSE’) and BSE Limited (‘BSE’). its network of 908 offices, SBI Life has systematically brought large rural areas SBI Life has a multi-channel distribution under insurance reach. network comprising an expansive Etihad Guest SBI Card launch event. bancassurance channel, including State Awards and recognitions received Bank, the largest bancassurance partner during the year include: in India, a large and productive individual agent network comprising 123,613 agents 1. For the Financial Year 2018-19, SBI as of March 31, 2019, as well as other Life was awarded the ‘Life Insurer of distribution channels including direct the Year 2018 - India’ by Insurance sales and sales through corporate agents, Asia News Awards for Excellence brokers, insurance marketing firms and 2018. other intermediaries. 2. SBI Life Insurance Company Limited has also been declared as the Winner of the ‘Golden Peacock Award for Risk Management’ for the year 2018. 80 DIRECTORS’ REPORT

3. SBI Life won the 2nd Runner Up in 6. SBI FUNDS 7. SBI GLOBAL the Category of Improvement & Innovation at the 30th Qualtech Prize MANAGEMENT FACTORS LIMITED 2018. PRIVATE LIMITED (SBIGFL) 4. The RIMS India Enterprise RISK SBIGFL is a leading provider of factoring Management (ERM) Award of (SBIFMPL) services for domestic and international Distinction 2018, organised by the SBIFMPL, the Asset Management trade. SBI holds 86.18% share in the Risk & Insurance Management Company of SBI Mutual Fund, is amongst Company. The Company’s services are Society (RIMS), USA, was also the fastest growing AMCs with a growth especially suitable for MSME clients for awarded to SBI Life in 2018. of over 30% against the industry average of 6.20% in 2018-19. In the last three freeing up resources locked in book debts. 5. Awarded ‘ICAI - Gold Shield’ for years, SBIFMPL has achieved a CAGR By virtue of its membership of Factors Excellence in Financial Reporting of 39% against the industry average of Chain International (FCI), the Company is for FY2018 under the Insurance around 22%. The Fund has moved up able to ameliorate credit risk from export category 2 notches in 2018-19 and has achieved receivables under the 2-factor model. rd th 6. SBI Life Insurance Company Limited 3 rank, from being at 5 rank in the beginning of the year as per Quarterly The Company reported a PBT of `9.47 received the ‘Smart Insurer Award in Average Asset Under Management crore during the year ended FY2019 the Life Insurance - Large Category’ (QAAUM). SBIFMPL has one of largest against Previous Year PBT of `2.08 at ET Insurance Summit 2018. investor base with over 95 lakh investors crore. In current FY PAT is `5.35 crore 7. SBI Life Insurance also won the ‘Life with 12 lakh direct investors and over against Previous Year Loss of `3.24 crore. Insurance Provider of the Year 2018’ 47,000 institutional investors including Turnover for 12 months ended FY2019 by Outlook Money in the Silver 1210 retirement funds. SBIFMPL is the is `4,387 crore as compared to turnover Category. Largest ETF manager in the country. of `3,555 crore in previous year (i.e. an increase of 23%). Funds in use (FIU) as on 8. SBI Life Insurance was recognised SBIFMPL posted a PAT of `427.54 crore 31st Mar 2019 is `1,374 crore as compared as ‘The Economic Times Best during the period ended March 2019 as to `1,276 crore as on 31st Mar 2018. Brands 2019’ by The Economic against `335.82 crore earned during the Turnover in Export Factoring -2 Factor Times year ended March 2018 under Indian Model for 12 months ended FY2019 Accounting Standard (Ind AS). The average is equivalent to EUR 54 Mio (Previous 9. SBI Life Insurance won the “Assets Under Management” (AUM) of the Year EUR 59.15 mio). In INR terms, the ‘Intelligent Enterprise’ award in the Company during the quarter ended March EF turnover touched `440 crore for 12 ‘Artificial Intelligence’ category by 2019 were `2,83,807 crore with a market months ended FY2019, as against `452 Express Computers. share of 11.59% as against the average crore in previous year. 10. SBI Life Insurance won the awards assets under management of `2,17,649 crore with a market share of 9.44% for ‘Best Blended Learning Program’ during the quarter ended March, 2018. and ‘Chief Learning Officer of the 8. SBI PENSION FUNDS The Company has a fully owned foreign Year’ at TISS Leapvault CLO Awards subsidiary viz. SBI Funds Management PRIVATE LIMITED 2018. (International) Private Limited, which is (SBIPFPL) 11. SBI Life Insurance won ‘Corporate based at Mauritius and manages Off- Star Award for Best Training for shore Fund. SBIFMPL also provides SBIPFPL has been appointed as the Employees/Associates’ in MICE Portfolio Management services (PMS) and Pension Fund Manager (PFM) along with activities by MTM. Alternative Investment Funds (AIF). seven others to manage the pension corpus under National Pension System (NPS). SBIPFPL is one of the three PFM appointed by the Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the NPS for Central Government (except Armed Forces) and State Government employees and one of the eight PFMs appointed for management of Pension Funds under the Private Sector. The total Assets Under Management (AUM) of the company as on 31st March, 2019 was `1,21,959 crore (YoY growth of 37%) against `89,283 crore on 31st March, 2018.

The Company maintained lead position amongst PFMs in terms of AUM in both Government and Private Sectors. The overall AUM market share in Private Sector was 59%, while in the Government Sector it was 35%.

The Company was adjudged “Silver Award” Winner as the Pension Manager of the year 2018 by Outlook Money. Awards by Outlook money have been adjudged to the Company for 4th consecutive year in a row. DIRECTORS’ REPORT 81

9. SBI GENERAL SBI General was awarded “Best General 11. SBI INFRA Insurance Company” and “Best Growth INSURANCE in General Insurance” at the Emerging MANAGEMENT COMPANY LIMITED Asia Insurance Awards 2018 organised SOLUTIONS PRIVATE by Indian Chamber of Commerce at (SBIGIC) Bangkok. SBI General has been conferred LIMITED (SBIIMS) SBIGIC is a joint venture between State the title “General Insurance Company of The SBIIMS is a wholly owned subsidiary Bank of India and IAG Australia in which the Year” at the India Insurance Summit incorporated on 17th June 2016. The State Bank of India holds a 70% stake. At & Awards 2019, which is the biggest Company has since expanded its its Executive Committee meeting of the strategic business summit for the entire operation pan India w.e.f., 1st July 2018 by Board, your Bank has approved the sale insurance industry in India. SBI General setting 17 Circles Infra Offices at all SBI of 86.2 Lakh shares of `10 each, equaling has won the Gold Award in the category LHO Centres. Its Head Office is located to 4% stake in its subsidiary SBI General ‘Non-Life Insurance Provider of the at Raheja Chamber, Ground Floor Free th Insurance Company Limited (SBIGIC) for Year 2018’ at the 17 edition of Outlook Press Journal Marg Mumbai 400021.The `482 crore. The proposed transaction Money Awards. SBI General newsletters, Company is in the process of stabilising values SBIGIC at over `12,000 crore. ‘Network’ and ‘Connect’, have received its operation at pan India level. The transaction completion is subject to an award for “Best Content in Email regulatory approvals. Marketing Campaign for E-Newsletters” at The aim of the company is to give the India Content Leadership conference specialised services on Civil, Construction, The cornerstone of the Company’s growth and awards 2018, organised by Inkspell Electrical, Facility Management, Leasing aspiration is focused on the Banca Media. The Company Chief Risk Officer of Premises etc. It also aims at relieving channel whilst developing other channels was awarded the ‘CRO of the year’ in the SBI Officials from dealing with Premise nd and products that meet business 2 Edition CRO Leadership Summit and and Facility related issues and compliment objectives and drive profitable growth. Awards 2019. it by giving specialised inputs. The The Company has entered in to strategic company also instrumental in saving cost, tie-ups with four large car manufactures to 10. SBI SG GLOBAL manpower, time, and energy used to be drive growth in the Motor portfolio. Gross consumed by SBI. Written Premium (GWP) stood at `4,717 SECURITIES for FY2019. SERVICES PRIVATE 12. SBI PAYMENT In the ninth year of operation, SBIGIC had LIMITED (SBI-SG) SERVICES PRIVATE achieved a profit, to the tune of` 334 crore. SBI-SG, a joint venture between State LIMITED (SBIPSPL) The Company recorded 32.83% of growth Bank of India and Societe Generale with in GWP YoY against an industry growth of 65% holding by SBI. The Company was SBI Payment Services Private Limited 12.95% including crop whereas excluding set up to offer high quality custodial (“SBIPSPL”) was incorporated on Crop, SBIGIC recorded growth of 12.4% and fund administration services to February 12, 2010 as a wholly owned against Industry growth of 12.6% for complete the bouquet of premier financial subsidiary of State Bank of India (“SBI”) FY2019. SBIGIC has grown by 115.6% in services offered by the SBI Group. SBI- and was supporting SBI in conducting Crop Insurance in FY2019 by participating SG commenced commercial operations Merchant Acquiring Business (“MAB”). In in the PMFBY schemes and extending its in 2010. The Company’s Net Profit was order to build state-of- the-art technology geographies. The overall market share `34.45 crore as on 31st March 2019 as platform domain expertise, innovation among all general insurance companies against `26.03 crore as on 31st March centre to design new products, improve stands at 2.77% and 5.77% among 2018. Accumulated profit is` 79.90 crore. customer service and to be future ready, private insurers (Excluding Standalone SBI initiated the process to induct a global Health Insurers). The Company’s market Assets Under Custody as on March 2019 domain player in SBIPSPL. th ranking stands 13 in the industry rose to `5,40,919 crore from `4,65,231 th and 8 among the private players crore as on March 2018, while the Average During the year, SBI transferred MAB to (Excluding Standalone Health Insurers) in Assets Under Administration were at SBIPSPL and selected Hitachi Payment nd FY2019. SBIGIC occupies 2 position in `3,18,197 crore in March 2019 as against Services Private Limited (“HPY”), indirect “Personal Accident” both amongst private `2,53,867 crore in March 2018. wholly owned subsidiary of Hitachi insurers and overall in the industry in Limited Japan, as its Joint Venture partner rd FY2019. The company ranks 3 in “Fire” SBI-SG has been rated as one of the with 26% stake. th among private insurers and 6 position leading custodians in India in the Global in the industry in FY2019. Share of health Custodian magazine’s Agent Banks and business decreased from 13.3% to Emerging Markets Survey 2017. SBI-SG 10.9%. However, there is a growth to the has also been rated #1 custodian in India tune of 8.6% for FY2019. in the Global Investor/ISF Sub - Custody survey for 2017. 82 DIRECTORS’ REPORT

SBI Foundation is presently working on various projects to build a momentum for a transforming India by creating an inclusive development paradigm that serves all Indians without any discrimination based on region, language, caste, creed, religion amongst others. The total CSR spend of SBI Foundation for FY2019 was `16.46 crore. The grants received from Bank’s subsidiaries amounted to `16.66 crore.

The Foundation undertook CSR activities in the following focus areas:

A. HEALTHCARE SBI Foundation is committed towards contributing positively to United Nation’s Sustainable Development Goals (SDGs)- Goal#3: Good Health and Well Being by bringing about positive change in the lives of underprivileged sections of society by providing free access to quality healthcare. Announcement of MAB JV between SBI and Hitachi by Hon’ble Prime Minister of India To contribute towards improving the at Tokyo. health scenario, your Bank has continued the support to following CSR projects through SBI Foundation: The digital payments landscape in India zz NFC acceptance on PoS terminals zz Life: An initiative to prevent and is evolving at a rapid rate and SBIPSPL zz Acceptance of AMEX/DINERS/DFS/ control Thalassemia disease by is playing an effective role in building JCB/UPI Cards. conducting free tests for around momentum for transforming India through 20,000 people. 5.9% of the tested digitalisation of the economy. In sync with zz Electronic Toll Collection. people were found to be positive. the focus of the Government of India to create a less-cash economy, SBIPSPL’s SBIPSPL is providing customised zz Gift Hope, Gift Life: An initiative to digital payment acceptance infrastructure solutions to premium customers to suit augment deceased Organ Donation is spread across the length and breadth of their requirements by integrating with in India with a 24/7 toll free national the country. During the year, a multi option their technology platforms. Some of helpline. Moreover, healthcare payment acceptance device i.e., MOPAD the notable integrations are with Indian professionals (Doctors, Nurses, was launched for facilitating payments via Railways, SOUTHCO (Odisha), APDCL Surgeons amongst others.) were Cards/Bharat QR/UPI on a PoS terminal. (Assam Power Distribution Co. Limited), trained and massive awareness Goa - GBSS project (Government of GOA), programs were conducted during As on 31st March, 2019, SBIPSPL has Cyber Treasury (Govt of Madhya Pradesh), the year. deployed 5.75 lakh PoS terminals, 4.18 IGR (Inspector General of Registrar) Pune, zz Cancer Care: An initiative to lakh Bharat QR code and on-boarded 6.31 Noida and Nagpur Metro. prevent and control Breast, lakh merchants on BHIM-Aadhaar-SBI Cervical and Oral Cancer among and acquired nearly 54 crore transactions women by conducting free Biopsy, during FY2019 with 24% Y-o-Y growth. 13. SBI FOUNDATION Mammography and Colposcopy The number of merchant payment SBI Foundation was established by State tests. acceptance touch points crossed 16.2 Bank of India in 2015 as a Section VIII lakh. SBIPSPL has reported an EBITDA of company under Companies Act (2013) to zz Darpan: An initiative to mitigate `14.19 crore as on March 31, 2019 undertake the CSR activities of SBI and damages of Sickle Cell Anaemia its Subsidiaries in a planned and focused disease by conducting free tests. Following services are also being offered manner. by SBIPSPL to cater to the requirements zz Anugraha: An initiative to provide of various merchants: support for home-based Hospice With an aim to give back to the society and Palliative Care services for the zz DCC-Dynamic Currency Conversion by working towards the socio-economic rural poor community. well-being of the marginalised and zz EMI (Equal Monthly Installments) vulnerable communities, your Bank is zz Umeed: An initiative to provide actively working towards impacting crucial preventive care information zz Cash@POS people on grassroots level across PAN for safe motherhood from gestation India with a vision to provide ‘Service period to delivery and safe Beyond Banking’. childhood for new born babies up to one year of age by use of mMitra- a free mobile voice call service. DIRECTORS’ REPORT 83

B. EDUCATION Beat Plastic Pollution: State Bank of India’s Local head Office (LHO) Mumbai organised Cleanliness Drive with the theme ‘Beat Plastic Pollution’, on the eve of “World Education is one of the most powerful and Environment Day” at Dadar Beach near Chaitya bhoomi. More than 125 staff members proven vehicles to bring transformational actively participated under the leadership of Mr P. K. Gupta, MD (Retail and Digital change in the development of marginal Banking) and cleaned the plastics and other wastes on Dadar Beach and collected 2 segment. It plays a vital role in improving tractor load of garbage. the standard of living of an individual and is viewed as an effective tool for bringing socio-economic changes. However, scarcity of resources and lack of infrastructure are the major hindrances in the education sector in India. SBI Foundation is committed to contribute positively to United Nation’s Sustainable Development Goals (SDGs) Goal#4: Quality Education. Through SBI Foundation, your Bank has initiated various projects as mentioned below:

Peepul School Adoption Program: Under this project, a Model school is set up in a public private partnership (PPP) aiming to raise the standard of education and improving learning outcomes in government schools through a total school transformation approach.

Khelwadi: Under this project, 20 Khelwadis are being operated focusing on the aspects of education such as personality building, creative thinking amongst others, for an all-round development of students. MD - Retail and Digital Banking, SBI, along with other staff of the bank cleaning the C. ENVIRONMENT AND Dadar Beach to beat plastic pollution on World Environment Day. SUSTAINABILITY

State Bank of India is committed towards Plastic free organisation: State Bank zz Swachh Iconic CSMT: To achieve environment protection and to reduce of India announced to be a plastic free the dual goals of preservation of its carbon footprints. Hence, your Bank organisation as part of Bank’s sustainability culture and heritage and contribute prioritises responsible interaction with commitment. This major initiative by your to “The Swachh Iconic Places” environment to avoid depletion and Bank is in sync with the Honourable initiative, your Bank has initiated a degeneration of natural resources to Prime Minister’s Swachh Bharat Abhiyan project named “SBI Swachh Iconic maintain its long-term quality. and the national commitment to abolish CST”, an initiative for Conservation single use plastic by the year 2022. In the and Restoration of South and East Waste to gold: An initiative to motivate next 12 months, SBI will be undertaking Façade of the Heritage Building and develop the skills of vulnerable youth phase wise steps to become plastic free. at Chhatrapati Shivaji Maharaj to address waste management in the city; PET water bottles will be replaced with Terminus Mumbai, A UNESCO and develop small sustainable businesses water dispensers at all its offices and World Heritage Site. for their livelihood. meetings. Your Bank will also start using zz SBI Eklavya: An initiative to provide standardised paper folders replacing the basic sports facility to the children SBI Corbett: An initiative to provide plastic ones. Moreover, it will replace studying in ashram schools. villages a sustainable waste management single use plastic cutleries and containers system and conduct trainings of SHG in its canteens with those made from Workers to spread awareness in nearby biodegradable substances. E. FLAGSHIP PROGRAMS schools and hotels. SBI Youth for India Fellowship program: D. ARTS, CULTURE, SBI Youth for India (YFI) is a Fellowship Swachh Belur Math: SBI Foundation program initiated, funded and managed by supported Ramkrishna Mission for HERITAGE AND OTHERS the SBI Foundation, SBI Capital Markets construction of 201 toilets at new Pilgrims India has a rich legacy of arts, culture and and SBI General Insurance. It provides a Abode in Belur Math that will serve 13 lakh heritage and your Bank is committed to framework for India’s best young minds visitors each year. To provide sanitation preserve them. to join hands with rural communities, facilities to visitors of the holy Ramkrishna empathises with their struggles and Mission that witnesses thousands of connects with their aspirations. pilgrims a day, SBI Foundation contributed `1.67 crore to this project. 84 DIRECTORS’ REPORT

Under the initiative, SBI Foundation CoE has set up a skill centre under its Name of the Category has partnered with the reputed NGOs, ‘Swabhiman’ project for placement Award engaged in the developmental work of linked skill development of PwDs. It has rural areas, to deploy the youth enrolling also initiated project ‘Shravan Shakti’ to SKOCH CSR Best CSR Practices for the fellowship, for conceiving and support surgery for fitment of Cochlear Awards (Gold) - For Gift Hope, working on innovative projects. YFI has implants for hearing impaired children. Gift Life project an alumni base of 254 passionate change ICC Social Empowering Rural makers, 70% (approximately) of Alumni Gram Seva: Impact Population- For Gram are associated with the development Awards Seva project sector after the fellowship. For the holistic development of the villages, SBI Foundation has adopted Centre of Excellence for Persons 10 Gram panchayats covering 50 of 14. REGIONAL RURAL villages in six states of India. Integrated with Disabilities (PwDs) (CoE): village development is aimed to promote BANKS (RRBs) Majority of differently abled persons can education for all, environment protection, Ownership Percentage of SBI In lead a better quality of life if they have livelihood development, digitisation in RRBs sponsored by SBI equal opportunities and effective access Gram Panchayat, skill development and improvement of preventive and primary to rehabilitation measures. There was 35.00% 1. Andhra Pradesh health care in villages. Over 11,000 an increasing recognition of the abilities Grameena Vikas Bank and emphasis on mainstreaming them in families are benefiting from this project. the society based on their capabilities. 35.00% 2. Arunachal Pradesh Rural CoE, conceptualised with an aim to be a The objectives of the flagship Bank centralised support centre for differently program are: 35.00% 3. Chhattisgarh Rajya able persons, works on empowering zz To link and leverage the specific Gramin Bank PwDs through skill enhancement to make government schemes/services to a significant and measurable improvement 35.00% 4. Ellaquai Dehati Bank villages that enables a more productive and 35.00% 5. Langpi Dehangi Rural satisfying life by optimising their zz To lay emphasis on digitalisation Bank cognitive, physical, social, and vocational and create awareness about online functioning. banking 40.37% 6. Madhyanchal Gramin Bank CoE has conducted 11 inclusive training zz Improve the basic infrastructure of 35.00% programs for employees with disabilities villages 7. Meghalaya Rural Bank and their trainers having 10 public sector zz Encourage Panchayat/Village self- 35.00% 8. Mizoram Rural Bank Banks as participants. CoE has also governance and create environment 35.00% 9. Nagaland Rural Bank signed MoUs with Bank of Baroda, Union for participatory efforts by the Bank of India, Vijaya Bank and State people for rural asset creation and 35.00% 10. Purvanchal Bank Bank of India for the institutionalisation of community development. inclusion and empowerment of employees 35.00% 11. Saurashtra Gramin Bank with disabilities. SBI Foundation has won two national 37.15% 12. Utkal Grameen Bank level awards during this year for its CSR 35.00% initiatives. 13. Uttarakhand Gramin Bank 35.00% 14. Vananchal Gramin Bank 35.00% 15. Rajasthan Marudhara Gramin Bank 35.00% 16. Telangana Grameena Bank 35.00% 17. Kaveri Grameena Bank

RRBs Sponsored by SBI With more than 2/3rds of our country’s population living in Rural - India, it presents a huge yet under tapped opportunity for the Indian Banking Sector. Our large network of sponsored Regional Rural Banks (RRBs) is well placed, to play a larger role and have a great potential to address this scenario. Regional Rural Banks have a distinct competitive advantage, due to their large account base and decades of trust-earning service The Asian Banker Financial Technology Innovation Awards 2018. tradition, resulting in close proximity to the rural customers. DIRECTORS’ REPORT 85

zz The State Bank has sponsored (17) strengthening the fee income zz Similarly, Govt. of India has issued Regional Rural Banks operating streams, and maintaining control on notification for amalgamating two of at regional levels in (17) different operating costs. our RRBs namely Kaveri Grameena States. These RRBs have a Bank and Langpi Dehangi Rural zz The combined Gross Non- combined branch strength of (5,647) Bank with RRBs sponsored by other Performing Assets ratio of the RRBs spread across (215) Districts. (as on Banks w.e.f. 01.04.2019. has improved to (6.92%) in current 31st March 2019). Financial year as against 8.60% in zz The 17 RRBs marginally expanded zz State Bank of India holds 35% stake the previous FY. Net NPA stands at their branch network to reach in each of them except Madhyanchal (3.35%) as against (4.53%) in the 5,647 branches, as against 5,620 Gramin Bank (40.37%) and Utkal previous FY. branches at the beginning of the Grameen Bank (37.15%) as on year. The existing Branch network is zz Business per employee during the 31.03.2019 due to delayed infusion expected to work more efficiently in FYimproved to (`7.48 Crs) (as on of proportionate share capital by the upcoming years, thanks to the 31st March 2019) as against `6.78 Govt of India, with Government introduction of Asset Management Crs in the previous FY. of India holding 50% and the Hubs (AMHs) - a Centralised Credit respective State Governments Processing system. holding the remaining 15% stakes. Major Developments in FY2019: zz The RRBs have opened 168 Asset zz The Sponsored RRBs of SBI are The year under review witnessed several Management Hubs (AMHs) in the on CBS platform and offer banking significant events, some of which are Financial Year, which will henceforth services on par with any other listed below: facilitate in processing and sanction commercial Banks operating in the of quality loan proposals, thus country. The Banks have adopted zz In January 2019, in line with a helping to improve the asset quality the best practices and are well Government of India decision to of the Banks. placed to handle the ever-evolving amalgamate all RRBs operating zz An RRB IT Tech Cell has been demands of customers, particularly in the state of Punjab, ‘Malwa established at Hyderabad. This in Rural and Semi-urban space, Gramin Bank’, an RRB in which hub will act as a single point through their customer centric the Bank had 35% stake, was ‘solution center’ for undertaking approach. amalgamated with Punjab Gramin Bank, an RRB sponsored by Punjab and responding promptly to the Business Highlights of FY2019 National Bank, through a scheme IT requirements/challenges faced (As on 31.03.2019): of arrangement as facilitated by at the RRBs. Several of the RRBs Ministry of Finance, Government of have well established in-house zz The aggregate deposits and India. This event brought down the IT cells and the Hub will act as a advances of the (17) RRBs number of Sponsored RRBs in our control center for standardising, (sponsored by the Bank) as on fold from 18 to 17. exchanging and facilitating (31st March 2019) stood at (`103,258 collaborative development of IT cr) and (`61,741 cr) respectively. products and solutions between the RRBs. zz During the year under review, despite the persistently challenging macroeconomic environment, the Schedule V, Part B - Management Discussion and Analysis: Bank improved its business, with Deposits growing by (10.80%) and In terms of compliance with the SEBI (Listing Obligations & Disclosure Requirements) Advances by (10.64%) over the (Amendment) Regulations 2018, following ratios have changed by more than 25%, as previous year. (up to 31st March per details given below: 2019). As a planned strategy to diversify to the portfolio, RRBs (In %) Mar-18 Mar-19 Variation (bps) % Change expanded their Housing Loan Net Profit Margin -2.47 0.31 278 +112.55 exposure by 26% to take the portfolio to `6599.00 cr. Return on Net -3.78 0.48 426 +112.70 worth zz During FY2019, the RRBs together have posted a Net-Loss of (`113.81 Net Profit Margin: crs) due to substantial provision of Pension. RRBs have generated The Net Profit has registered YoY growth of 113.17% (from Loss of` 6,547 Cr in FY18 to gross profit of` 1846.75 cr (Profit Net Profit of` 862 Cr during FY19) as against YoY growth of only 5.49% in Total Income before Tax and Pension provisions) (from `2,65,100 Cr in FY18 to `2,79,644 Cr in FY19). which was 88% higher than the previous year. However, on account Return on Net worth: of Provisions towards Pension The Net Profit has registered YoY growth of 113.17% (from Loss of` 6,547 Cr in FY18 to liability (`1811.76 cr), the Post Tax Net Profit of` 862 Cr during FY19) as against a meager YoY growth of 0.77% in Net worth Net Profit slid to (-)` 113.81 cr as of the Bank (from `1,77,191 crore in FY18 to `1,78,552 crore in FY19). against Net Profit of` 584.03 crs in FY20118. The Banks continue to focus on improving earnings from their core banking business, 86 DIRECTORS’ REPORT

VI. RESPONSIBILITY VII. ACKNOWLEDGEMENT STATEMENT The Board of Directors hereby During the year, Shri B. Venugopal was elected by the Shareholders as Director on the states: Board u/s 19(c) of the SBI Act, 1955 w.e.f. from 7th June 2018. i. that in the preparation of the annual accounts, the applicable accounting Shri Arijit Basu was appointed as Managing Director on the Board w.e.f. 25th June 2018 standards have been followed along and Shri B. Sriram resigned from the Board w.e.f. 29th June 2018. Smt Anshula Kant was with proper explanation relating to appointed as Managing Director on the Board w.e.f. 7th September 2018. material departures; Dr Girish Ahuja and Dr Pushpendra Rai have been re-nominated by GOI as Directors u/s ii. that they have selected such 19(d) of the SBI Act, 1955 w.e.f. 6th February 2019. accounting policies and applied them consistently and made The Directors place on record their appreciation for the contributions made by the judgements and estimates as are outgoing Managing Director, Shri B. Sriram to the deliberations of the Board. The reasonable and prudent, so as to Directors welcome the new Managing Directors, Shri Arijit Basu and Smt Anshula Kant give a true and fair view of the state and Director, Shri B Venugopal on the Board. of affairs of your Bank as on the 31st March 2019, and of the profit and The Directors also express their gratitude for the guidance and co-operation received loss of Your Bank for the year ended from the Government of India, RBI, SEBI, IRDA and other government and regulatory on that date; agencies. iii. that they have taken proper and The Directors also thank all the valued clients, shareholders, Banks and financial sufficient care for the maintenance institutions, stock exchanges, rating agencies and other stakeholders for their patronage of adequate accounting records in and support and take this opportunity to express their appreciation for the dedicated and accordance with the provisions of committed team of employees of the Bank. the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of your Bank and preventing and detecting frauds and other irregularities; For and on behalf of the Central Board of Directors iv. that they have prepared the annual accounts on a going concern basis; Chairman v. that the internal financial controls Date: 10th May 2019 had been laid down, to be followed by your Bank and that such internal financial controls are adequate and were operating effectively; and vi. that proper system had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.