Directors’ Report Including Management Discussion and Analysis

I. Economic Backdrop and Banking Environment Global Economic Global trade witnessed a sub 3% growth in 2015 for the fourth consecutive year After two successive years of deficit Scenario with emerging and developing countries monsoons, the prediction of above The world economy has passed suffering more than the advanced normal monsoon this year at 106% of through yet another difficult year. The economies. Going forward, the trade Long Period Average (LPA) will bring growth in advanced economies has figures will remain sluggish in 2016 cheer. There is a 94% probability that stagnated, while that in emerging and with moderate import demand from monsoon will be normal to excess the developing world has decelerated, developed world. Meanwhile, slowdown this year. It is interesting to note that leading to a slow global growth of 3.1% in China, increase in financial volatility since 1999 (when IMD predicted in 2015. The US economy continues and adverse exchange rate movements 108% rainfall) this is the highest ever to grow below potential with GDP of more vulnerable countries with rainfall projection by IMD. The spatial growth falling to 1.4% in Q4 2015 and large foreign debts may put downward distribution of monsoon will also be 1.9% for the whole year. The Euro pressure on trade dynamics. On the fair with drought-hit states also likely to Area expanded at 1.6% in 2015, again inflation front, divergent trends are receive good rainfall. North-East India driven mainly by private consumption. visible with accelerating consumer and South-East India, particularly Tamil However, economic growth in the prices in EMEs and declining prices in Nadu, may get slightly less than normal region has remained unchanged at advanced countries. rainfall. 1.6% in the last three quarters. The disappointing situation persists in 2016, As far as financial volatility is concerned, The third advance estimates of the with underperformance of the services the role of emerging markets has Ministry of Agriculture indicate that sector in the Eurozone and UK and increased with enhanced spill overs despite low reservoir levels, relatively weak overseas demand taking a toll on from emerging markets to the global warmer winter and a deficient North- German factory orders. equity prices and currency market East monsoon, Rabi foodgrains developments recently. The good thing production increased over levels a year Japan continues to stutter with economic is that after witnessing a turbulent ago and even compensated for the contraction of -1.1% in the last quarter beginning in 2016, market sentiment shortfall in Kharif output. Hence, the of 2015 (0.5% for full year 2015) despite has revived considerably in the recent total foodgrains production during FY16 active intervention of the Government. months. estimated at 252.23 million tonnes will This in turn has pressured the monetary be marginally higher over the production authorities to adopt negative interest of 252.02 million tonnes during FY15. rates in January this year. India’s Economic Scenario For FY17, Government has set the target of 270.10 million tonnes. Meanwhile, growth in emerging market Despite all the headwinds, both domestic and external, the Indian economies (EMEs) has remained tepid Industrial output as measured by the economy remains in a sweet spot and in 2015 at 4.0% with Brazil and Russia Index of Industrial Production (IIP) grew by 7.6% in FY16 compared to 7.2% decelerating more than expected could not sustain the surge in Oct’15 in FY15 and 6.6% in FY14. On Gross amidst sluggish growth in China. The and declined after that. The decline Value Added (GVA) basis, the economy recent firming up of commodity prices in IIP during recent months is mainly grew by 7.2% in FY16 compared to 7.1% will support commodity exporting led by decline in manufacturing. in FY15 and 6.3% in FY14. This growth emerging economies, but domestic Electricity generation has remained is primarily driven by growth in services constraints and weak external demand resilient and is expected to sustain (8.9% in FY16) and industry (7.4% may put downward pressure on its performance backed by thermal growth dynamics. in FY16).

30 State Bank of India | Annual Report 2015-16 supplies, while consumer durables deposits registered a 9.9% growth in Meanwhile, under the Pradhan Mantri continue to gain. The investment FY16 (for the fortnight ended 18 March, Jan Dhan Yojna (PMJDY), banks have climate in the country has improved 2016), compared to FY15 (fortnight opened 21.51 crore of accounts so as the stock of stranded investment in ended 20 March, 2015) growth of far with `36,600 crore deposits. On a stalled projects has started to decline. 10.7%. However, in absolute amount, positive note, zero balance accounts deposits grew by `8.4 lakh crore in under PMJDY have been continuously Inflation, both Wholesale Price Index FY16 compared to `8.2 lakh crore in declining from 45% in Sep’15 to 27% in (WPI) and Consumer Price Index (CPI), FY15. The muted deposit growth may Mar’16. Further, under the Jan Surakshsa remained under control throughout FY16. be due to rise in currency circulation scheme, banks have enrolled a total of Even WPI inflation remained in negative in the system, increasing outward 12.6 crore of applicants cumulatively, territory for the entire fiscal. The average remittances and high base effect. out of which SBI alone has enrolled WPI was -2.5% for FY16 compared to 2.3 crore accounts for the year ending 2.1% for FY15. The sharp decline in Meanwhile, credit growth remained in Mar’16. Taking this initiative forward, fuel prices has led to negative WPI. CPI the range of 9-10% in H1FY16. After Government has been using the banking inflation also declined significantly to the rate cut by RBI (75 bps in total; 25 channels to disburse the subsidy 4.9% (average) in FY16 from 6.0% in & 50 bps in two tranches in Jun’15 and amounts through these accounts, by FY15. Inflation, both WPI and CPI, has Sep’15), banks also reduced their base using the Aadhaar platform. however increased in April 2016, but we rates in the range of 55-70 bps, which expect this to be transitory and seasonal. helped credit demand to pick up in H2 To further increase the penetration of touching the highest growth of 11.6% in financial services in the country, RBI On the external front, the current Feb’16. Overall, YoY credit grew at a has issued a total of 23 new banking account deficit (CAD) narrowed to $7.1 higher rate of 11.3% in FY16 (18 March, licences (2 universal banks, 11 Payment billion (1.3% of GDP) in Q3 FY16 from 2016), compared to FY15 (20 March Banks and 10 Small Finance Banks) $7.7 billion (1.5% of GDP) in Q3 FY15 2015) growth of 9.0%. The incremental in 2015, with an objective to provide and $8.7 billion (1.7% of GDP) in Q2 lending during the financial year has banking facilities to the unbanked FY16. The contraction in CAD was been mostly to the personal loan sections of the people. The 2 universal primarily on account of a lower trade segment, especially housing, and also banks have started their operation in deficit due to decline in both exports Mudra. Interestingly, in a period of one 2015 and Capital Local Area Bank and imports. For the entire fiscal, both year, with the thrust of the Government (CLAB) has launched its operations as exports and imports growth were in and efforts by banks, Mudra loans now India’s first small finance bank (SFB) in negative territory. For FY16, exports account for around 1.7% of the ASCB April 2016. Apart from CLAB, the others fell 15.8% to a five-year low of $261.1 loan portfolio. who have received RBI’s approval to billion due to fragile global demand and start SFBs are preparing to launch by low commodity prices. Imports also Liquidity conditions, which had Sep’16, much ahead of the deadline of dipped 15.3% to $379.6 billion, leaving tightened since mid-Dec’15, were Apr’17. The 11 payment banks which a trade deficit of $118.5 billion. stretched further by the larger-than- got in principle approval are now in usual accumulation of cash balances by the process of getting formal licences the Government, unusually heightened from RBI. However, reports state that 4 Banking of these have decided not to proceed Environment and persistent demand for currency, a pick-up in bank credit and flatter deposit with the venture. In FY16, banking business turned out a mobilisation at this time relative to past mixed bag, due to a number of reasons Further, in line with the Government’s years. However, RBI undertook liquidity like weak economic activity, stress in digital India mission, most banks are operations to quell these pressures and certain sectors and consequent lower endeavouring to make available their supplemented normal operations with credit demand. Despite relatively products and services on the online liquidity being injected through OMOs high real interest rates, aggregate All platform. Apart from this, in a move to and variable rate repo auctions. Schedulad Commercial Bank (ASCB) a step closer towards becoming a less

State Bank of India | Annual Report 2015-16 31 Directors’ Report

cash economy, National Payments at the same time it will significantly expected to further bring down the cost Corporation of India (NPCI) with RBI improve customer experience. The of borrowing in a declining interest rate has launched the Unified Payment adoption of digital technology will scenario. Banks are also expected to interface (UPI). The UPI will allow therefore gather further pace across benefit from the change in RBI’s stance customers to instantaneously transfer all banks – India or abroad. Weather from ‘liquidity in deficit mode’ to ‘liquidity funds across different banks with the events, which had disruptive effect on in neutral mode’. use of a single identifier which will act global growth recovery are abating as a virtual address and eliminate the and El Nino conditions are expected to The passage of the Bankruptcy Law is need to exchange sensitive information wither by the end of 2016. Some models expected to strengthen and speed up such as bank account numbers during are now predicting La Nina conditions in the resolution of stressed loans and a financial transaction. The introduction the later stage of monsoon, which will lead to a more vibrant Corporate Bond of UPI is expected to have a significant increase the probability of better rains market in the country. In a similar vein, impact on the ease of retail payments even further. the Ministry of Micro, Small and Medium at a time when mobile banking is Enterprises, Government of India, has also picking up. Against this background, India’s notified a ‘Framework for Revival and growth fundamentals are intact. Rehabilitation of Micro, Small and The signs of rising stress in the banking Weather related risk is now expected Medium Enterprises’. system appear to have plateaued, as to be contained. The policy space as much of the stress has already been a result has widened and Government Overall, both monetary policy and recognised and remaining expected is expected to foster new investments fiscal policy will be conducive for stable stress in the coming year identified in green field sectors like offshore wind economic growth. RBI has indicated an and put under close watch. All possible and coastal shipping. The policy space accommodative policy stance ahead solutions for resolution of stressed in existing brown field sectors such as and reduced the repo rate by 25 bps accounts are being worked out by capital goods, railways, defence and in Apr’16. We do not see any material the larger corporate lenders. These housing has been rationalised. These departure from either of the policy measures are likely to have a positive measures will open up a significant stance in the current fiscal. impact on the banking system. Due number of opportunities for banks and to elevated NPAs, net profits of most help in diversifying their exposures. banks have declined as a result of higher provisioning. This in turn has Correction in inflation during the last impacted their return on assets (RoA) financial year has resulted in real and return on equity (RoE) adversely. income appreciation for the households. This is expected to boost demand for Outlook banks’ credit in personal segment, which has already shown a healthy The coming financial year will be growth last year. These trends will get challenging yet exciting for a number a further thrust due to the passage of reasons. Global economic growth is of The Real Estate (Regulation and slowly inching towards recovery. Digital Development) Bill, 2016. Banks have technology is continuously creating moved to the marginal cost-based new opportunities in the banking space, lending rate (MCLR) from the base which will not only reduce the cost of rate system w.e.f. 01 Apr’16, which is banking and delivery of services, but

32 State Bank of India | Annual Report 2015-16 II. Financial Performance Assets and in India has slightly decreased from Operating Profit 10.55% in FY2015, to 10.00% in FY2016. Your Bank registered an increase in Liabilities Income from resources deployed in The total assets of your Bank have Operating Profit in the current financial treasury operations in India increased by year, as compared to previous financial increased by 10.30% from `2048079.80 20.17%, mainly due to higher average year. The Operating Profit of your Bank crore at the end of March 2015, to resources deployed. The average yield for FY2016 was at `43257.81 crore ` 2259063.03 crore as at the end of has decreased to 7.92 % in FY2016, as compared to `39537.28 crore in March 2016. During the period, the from 7.98% in FY2015. FY2015, an increase of 9.41%. Your loan portfolio increased by 12.59% from Bank posted a Net Profit of `9950.65 `1300026.39 crore, to `1463700.42 Total interest expenses have increased crore for FY2016, as compared to crore. Investments slightly decreased from `97381.82 crore in FY2015, to `13101.57 crore in FY2015, i.e. a decrease of 24.05% due to higher by 0.97% from `481758.75 crore to `106803.49 crore in FY2016. Interest provisioning requirements on NPA. `477097.28 crore as at the end of expenses on deposits during FY2015- March 2016. A major portion of the 16 recorded an increase of 10.90%, investment was in the domestic market compared to the previous year. The Provisions & in government securities. average cost of deposits (based on Contingencies daily average) in India has decreased Major provisions made in FY2016 were Your Bank’s aggregate liabilities from 6.39% in FY2015, to 6.22% in as under: (excluding capital and reserves) rose FY2016, whereas the average level of `26984.14 crore (net of write-back) by 10.17% from `1919641.57 crore on deposits in India grew by 14.16%. for non-performing assets (as against 31st March 2015 to `2114788.60 crore `17908.06 crore in FY2015), on 31st March 2016. The increase in `2157.55 crore towards Standard liabilities was mainly contributed by Non Interest Assets (as against `2435.38 crore increase in deposits and borrowings. Income and in FY2015), `3823.41 crore towards The deposits rose by 9.76% and stood Expenses Provision for Tax (as against `6212.39 crore in FY2015). An amount of at `1730722.44 crore as on 31st March Non-interest income increased by `149.56 crore was provided for 2016 against `1576793.24 crore as 24.73% to `28158.36 crore in FY2016, depreciation on Investments (as on 31st March 2015. The borrowings as against `22575.89 crore in FY2015. against `590.07 crore written back from increased by 9.28% from `205150.29 During the year, your Bank received an depreciation on investments in FY2015). crore at the end of March 2015, to income of `475.83 crore (`677.03 crore `224190.59 crore as at the end of in the previous year) by way of dividends March 2016 mainly attributable to from Associate Banks/ subsidiaries and Reserve & Surplus Capital Instruments issued in India and joint ventures in India and abroad, and An amount of `2985.20 crore (as against borrowings & refinance outside India. `5168.80 crore (`3618.05 crore in the `4029.08 crore in FY2015) has been previous year) by way of profit on sale transferred to Statutory Reserves. An of investments. amount of `345.27 crore (as against Interest Income `105.50 crore in FY2015) has been transferred to Capital Reserves. An amount and Expenses There was an increase of 6.70% in of 4267.35 crore (as against `5889.06 the Staff Cost from `23537.07 crore in Total Interest income has increased crore in FY2015) has been transferred to from `152397.07 crore in FY2015 FY2015, to `25113.83 crore in FY2016. Revenue and other Reserves. to `163685.31 crore in FY2016 Other Operating Expenses registered registering a growth of 7.41%, due to an increase of 14.82% mainly due to Revenue and other Reserves include higher volumes. The average yield on increase in expenses on rent, taxes, Foreign Currency Translation Reserve of advances (based on daily average) lighting, repairs and maintenance and ` 6056.25 crore as on 31st March 2016 miscellaneous expenditure. (` 6172.35 crore as on 31st March 2015)

State Bank of India | Annual Report 2015-16 33 Directors’ Report

III. core Operations

National Banking Exhibit 01: Branch Expansion Group FY2016 The National Banking Group (NBG) FY2015 is the largest business vertical of 6257 6296 your Bank, anchoring 96.04% of total Domestic Deposits, and 53.57% of total 4497 4642 3006 3137 Domestic Advances, as on 31st March, 2573 2709 2016. The Group comprises six strategic business units and is also the largest Business Vertical in terms of Branch Network and Human Resources.

A steady stream of technology-driven innovations and changing consumer Rural Semi - Urban Urban Metro preferences is rapidly transforming the retail banking landscape. Your Bank has been at the forefront in leveraging Exhibit 02: Branch Expansion Trend technology in banking, through the launch of innovative products and 16784 solutions aimed at making banking more 16333 convenient to customers. Your Bank has 15869 a multi-channel delivery model in line with its strategy to serve its customers 14816 by offering them the choice to transact 14097 through any channel, time and place of their preference. All these initiatives have essentially revamped the Bank’s process and tools, making it easier for the customer to conduct business. Your Bank also strives to anticipate the future FY2012 FY2013 FY2014 FY2015 FY2016 needs of customers and deliver those expectations through technology-based robust growth in the retail deposit base. was launched during the year for online solutions. In FY2016, your Bank scaled Simultaneously, to meet the aspirations sourcing of home loans, auto loans up its offerings across various channels of this growing customer base, Retail and other retail loan applications and – digital branches, mobile, internet and Assets are being strategically positioned thereafter, monitoring follow-up action social media. to grow to form a much larger proportion of such applications. Customers can of total advances. To this end, your Bank now check their eligibility and scheme Retail Banking is also playing an is constantly endeavouring to come up details using the interactive eligibility increasing role in customer acquisition with customer centric products and assessment tool and apply online. and CASA growth on the liabilities side. processes in Retail, using technology to Customers also have the facility to track Your Bank continued to see strong deliver a better customer experience. In the status of their applications till their momentum in acquisition of retail line with our endeavour to be a ‘Smart loan is sanctioned. deposit customers and consequently Bank for India on the Go’, Loans@SBI

34 State Bank of India | Annual Report 2015-16 A. pErsonal Banking While Home Loan portfolio has more thereafter, monitoring follow-up action than doubled during the last 5 years, on such applications. Home Loan 1. Home Loans NPA levels have more than halved in customers can now check their eligibility, State Bank of India has the largest absolute terms and reduced to one- scheme details, etc. using the interactive Home Loan portfolio in the Banking fourth in percentage terms during the eligibility assessment tool and apply Sector and market share of over 25% same period. Total Home Loan and online. Customers also have the facility amongst All Scheduled Commercial Home Related Loan portfolio as on to track the status of their applications till Banks (ASCBs). Home Loan portfolio 31.03.2016 stood at `2,01,755 crore. their Home Loan is sanctioned. constituted 15.33% of Whole Bank

Advances as on 31st March, 2016.

Exhibit 03: (` in crore) Home Loan Levels 190552

159237

140738

119467

102739 89914

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 „„ Griha Tara Campaign launched to During FY2016, several initiatives were encourage every member of the bank taken by your Bank to give an additional staff to market Home Loan proposals. Exhibit 04: Home (` in crore) thrust to its Home Loan portfolio. Some The campaign was very successful Loan Gross NPA Levels of the important initiatives in this regard and about 35% of the staff members are as under:- 2150 Gross NPA participated in the Campaign. Over Levels 1.5 lakh Home Loan proposals valuing 1831 NPA% „„ Project TATkal: A completely 1693 `32,501 crore were mobilised under 2.39 re-vamped structure and processes the Campaign. In addition to business for end to end transformation of Home development, the Campaign has also 1301 Loan delivery was rolled out under 1.78 helped in improving customer service Project TATkal initiative, with a focus 983 976 levels. 1.42 on strengthening delivery of services to customers and bringing about reduction „„ Launch of the following new and 0.92 in the average time taken for delivery of innovative Home Loan products:

0.62 Home Loan sanctions / disbursements. XX FlexiPay Home Loan (Home Loan 0.51 with Flexible Repayment option). „„ Online Customer Acquisition Solution (OCAS) launched for sourcing FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Home Loan applications online and

State Bank of India | Annual Report 2015-16 35 Directors’ Report

XX Corporate Home Loan (Home Online Application system for seamless Loan to Corporates / Institutions Exhibit 05: Growth in (` in crore) delivery. For students going abroad for Auto Loan Advances for creating housing stock for their higher studies, SBI Global Ed-Vantage employees / directors). 38,549 Scheme with limits upto `1.5 crore was „ „ MOUs / Tie-ups with the following 6,400 launched which is rapidly gaining in Home Loan lead aggregators / Service (19,91%) popularity. Providers: 32,149 4,224 (15.13%) XX SBICAP Securities Limited 27,925 4. personal Loans (SSL): Tie up to leverage sales force of Continuing the digital journey and to SSL to expand presence in key markets provide seamless and hassle free by improving feet-on-street and provide banking experience your Bank has door step delivery to valued customers. launched the following initiatives in XX BankBazaar.com & Paisabazaar. FY2016: com: Tie-up for extending our reach on online space and acquisition of good „„ Online Overdraft against Fixed FY2014 FY2015 FY2016 quality Home Loan leads. Deposits through Internet Banking Platform XX PropTiger & Liases Foras: 3. Education Loans Subscription of Research data, property „„ End to end digitised process for Your Bank has a total exposure of listings, granular data on new launches, Loan against Shares wherein customer price movement and inventory position `15,177 crore with a Market share of can avail the loan without visiting the in respect of all ongoing projects in key 23% amongst all scheduled commercial Branch.

Home Loan markets. banks. Government of India has rolled „„ Online Application for Xpress Credit out a Credit Guarantee Scheme for Personal Loan with document upload 2. auto Loans Education Loans upto `7.5 Lakh and & pick up facility with system based computation of Net Monthly Income. SBI’s Car Loan Scheme, which is now Skill Loans scheme and launched the available online, offers the best to Vidya Lakshmi Portal to provide a single „„ Digitisation of Pre and Post sanction our customers - Competitive interest point of service to students. Your Bank Inspection process using Tablets for the rates; Finance “On Road Price”; and has also integrated the portal with its convenience of the customers. the Longest payment period of 7 years, with no prepayment/foreclosure penalty, no advance EMI and with an option for an Overdraft facility. Your Bank has also introduced the Loyalty Car Loan Scheme for existing Housing Loan borrowers, offering concession in interest rate and 100% financing of on-road price. Your Bank has entered into tie-up with SBI Caps Securities Limited (SSL) as our Corporate Agency for marketing Auto Loan products and became the No. 1 financier of Maruti Cars for the year.

36 State Bank of India | Annual Report 2015-16 Following digital services were introduced in FY2016 for customers:

„„ Account opening forms have been A Smart made fully compliant with FATCA, Common Reporting Standard (CRS) and Central KYC Registry (CKYC) Bank norms.

„„ Online Account Application Facility for an was extended to all Savings Bank products including Basic Savings Bank Deposit Account (BSBDA) and Small Aspiring Account. „„ e-Commerce: A Holiday Savings Account (with online end to end India capabilities) in partnership with Thomas Cook launched in February 2016.

„„ Introduction of “SBI Quick”: Missed Consistent focus on streamlining Savings Bank deposits have registered Call Banking facility for balance of processes has resulted in robust a Y-O-Y growth of 13.17% (from 9.51% enquiry, blocking ATM Card, Car/Home performance in Personal Loans, with in FY2015) while Current Account Loan enquiry using mobile phone. More growth of `14152 crore during FY2016 deposits have grown by 9.62%. than 70 lakh customers are already (25% YOY). Despite declining interest rates the registered for this facility and daily calls Term Deposit portfolio has registered are in excess of 4 lakh. a growth of 8.20% during FY2016. Exhibit 06: Growth (` in crore) Your Bank’s Market Share in Deposits in Personal Loan 6. nri Business improved from 17.00 % in March 2015 Advances We enjoy the patronage of 17 lakh to 17.57 % in March 2016. discerning NRI customers who in 14,151 turn take pleasure in being served (25.03%) 70,699 Exhibit 07: Growth (` in crore) through 81 specialised and dedicated in Domestic Deposits 8,931 NRI branches and 100 NRI intensive (18.76%) 56,548 During FY2016 branches as on 31st March, 2016. 47,617 During FY2015

1,81,252 1,49,188 1,23,689

69,616 67,659 FY2014 FY2015 FY2016 44,643

5. domestic Deposits The Domestic deposit portfolio grew Saving Bank Term Domestic by 10.09% during FY2016. Domestic Deposits Deposits Deposits

State Bank of India | Annual Report 2015-16 37 Directors’ Report

„„ Activation of Debit card through contributing `229749 crore average Exhibit 08: (` in crore) INB for NRI customers. deposits as of 31st March, 2016. To NRI Deposits provide an additional, convenient, „„ Fx-out facility for sending outward remittance through all our branches service channel to HNIs beside the has been enabled for NRE and NRO branch, your Bank launched a Priority 1,36,160 accounts. Banking Centre at Bengaluru in November, 2015. This centre offers „ „ Facility of Instant NRI Account personalised services through a opening through our Relationship registered mobile number, enabling 13,762 Managers (RMs) posted at UAE valued customers to conduct all non- (11.24%) Exchange Centre and Al Ansari cash transactions during extended 1,22,398 Exchange in UAE. business hours from 8 a.m. to 8 p.m. Services for the Group’s products such 7. Salary Account Tie-Ups as, Mutual Funds, Insurance and Credit During FY2016, the total Salary Card, are also made available through the Centre. FY2015 FY2016 Account customer base has grown to 82.04 lakh. In addition to the Salary

Packages for the Defence, Para Exhibit 11: (` in crore) Military, Railways, Central Government, Growth of SBI’s HNI Business Exhibit 09: (` in crore) State Governments and Police, NRI Advances Avg. Deposits employees from leading MNCs are No. of HNIs also banking with your Bank. Online application facility for Salary Accounts 5,98,784 was introduced during the year. 5,297 4,63,027

3,17,082 ` 3,786 Exhibit 10: Growth in ( in crore) our Corporate and 1,511 2,29,749 (39.91%) Institutional Tie-up Business 1,19,377 1,75,426 As on FY2016 As on FY2015

91,702

74,946 FY2014 FY2015 FY2016 FY2015 FY 2016 49,925 9. Sovereign Gold Bonds Customer centric measures for NRIs 37,757 33,607 The Government of India launched introduced during FY2016 include: 29,283 the Scheme during FY2016 with an intention to reduce the demand for „„ Online application for loans enabled physical gold as an investment asset. for NRIs. Your Bank participated in all the three CASA Total Total „„ Account opening forms were made Liability Assets tranches issued during the year and fully compliant with FATCA, CRS and mobilised an aggregate amount of CKYC norms. 8. premier Banking `210.85 crore (equivalent to 777 Kgs of The High Networth Individual (HNI) „„ Creation of ‘Overdraft’ against gold) achieving the highest aggregate segment of the Personal Banking NRE/NRO deposit accounts through market share of 15.83% amongst all business registered a growth of 31% Internet Banking (INB). participants.

38 State Bank of India | Annual Report 2015-16 B. anytime Channels can avail the entire gamut of services from this Channel, e.g. cash withdrawal, As on ATMs Kiosks Cash Deposit Total cash deposit, mini statement, balance (MFK + SSK) Machines (CDMs), (SBI) enquiry, PIN change, donations, Recyclers payment of fees, passbook printing etc. 31.3.2014 40768 2583 1516 44867 Your Bank has introduced Dynamic 31.3.2015 42454 2595 1849 46898 Currency Conversion (DCC), a value 31.3.2016 42740 2595 5753 51088 added facility for foreign Master Card 1. atms/ Recyclers routed through our ATM network with holders, whereby cardholders get the market currency conversion rate while State Bank of India, along with its an average hit rate of more than 214 withdrawing money at domestic ATMs. Associate Banks has one of the largest transactions per day per ATM. State ATM networks in the world with more Bank group has a Debit Card base of More than 1153 ATMs during FY2016 than 59000 ATMs including Kiosks, 23.34 crore. On an average, the volume have been enabled as Talking ATMs for Cash Deposit Machines and Recyclers of cash that our Group ATMs dispense ` Visually Challenged customers. Thus, as on 31.3.2016. is 3039 crore a day. the total number of Talking ATMs has gone upto 9753 as on 31st March, 2016. Exhibit 13: SBG Share of ATMs Exhibit 12: Every new machine added comes with No. Group ATMs this feature ab initio.

59011 54560 51491 SBG, Care for the physically challenged 29.66% is our priority too. 3734 of our ATMs have ramps to facilitate easy access 31752 Others for the physically challenged persons. 27286 70.34% Wherever possible, ramps and / or side railings are being provided. Over 1156 of our ATMs are on solar power back- up and the count keeps growing. ATM user-safety is our concern too. Apart Exhibit 14: from physical caretaker arrangements, SBG Share in ATM Transactions 3000 ATMs have been brought under FY2012 FY2013 FY2014 FY2015 FY2016 Electronic surveillance during the year. SBG, Your Bank is also planning to cover 50.83% another 8000 ATMs under Electronic During FY2016, your Bank has installed Surveillance during the FY2017. 4220 ATMs and Recyclers. Population group-wise your Bank has a 50:50 ATM Others coverage of Metro/ Urban and Semi- 49.17% 2. SWAYAM: Barcode based Urban/ Rural population groups. The Passbook Printing Kiosks ATM Channel handles 56% of total Your Bank has rolled out more than Alternate Channel transactions and Your Bank has so far installed 4953 6,000 SWAYAMs (Barcode based 43% of the total financial transactions Recyclers (SBG 5768) to provide Passbook Printing Kiosks) at its of your Bank. With a 29.66 % of market customers 24 x 7 cash withdrawal and branches and onsite/offsite lobbies. share as per RBI, State Bank Group’s cash deposit facilities. Using these kiosks, customers can (SBG) ATM network transacts 50.83 % print their passbooks on their own using of the country’s total ATM transactions More than 1200 e-Corners have been set barcode technology. (as on Dec’15). On an average, over up across the country where customers 11.61 millions transactions per day are

State Bank of India | Annual Report 2015-16 39 Directors’ Report

increased from 1.16 lakh in FY2015 to to cater to the e-Tendering, e-Auction, Exhibit 15: (` in crore) 1.37 lakh in FY2016. This initiative won e-Collection and bulk payments related Swayam: Total Transaction 5.02 the SKOCH Award under Technology requirements of the Govt. Depts./PSUs/ Products Category in 2015. Large and Medium Corporates. During FY2016, your Bank had entered into 5. internet Banking & about 18,000 new merchant tie-ups, 3.29 e-Commerce directly or through State Bank Collect or through e-Commerce aggregators Your Bank’s Net Banking website facilitating around 67 crore e-Commerce ‘www.onlinesbi.com’ is the eighth most 2.72 transactions. 1.98 popular online global financial site and the only Financial site from India to figure in the list of Top 10 global 6. contact Centre Q3 FY2016 Q1 FY2016 Q2 FY2016 Q4 FY2016 financial sites (Source IIFL). This highly Customer Service secured and cost-effective channel has Your Bank’s Contact Centre has 3. Green Channel Counter enabled around 124 crore transactions been servicing customers through Green Channel Counter (GCC) facility during FY2016, recording 39% growth toll free numbers 1800 425 3800 or has been rolled out at all retail branches over the previous year. 1800 11 22 11 apart from toll number of your Bank. On an average 7.40 lakh 080-26599990. It has emerged as transactions are being routed through It provides robust and customer a strong delivery channel handling GCC every day. The percentage of friendly net banking services to average call volumes of around 4 lakh GCC transactions has improved from your Bank’s retail and corporate calls per day. The Contact Centre is 20.08% in March 2015 to 27.64% in customers, continuously keeping an operating from multiple locations like March 2016. eye on evolving consumer trends, Vadodara, Bangalore, Agra & Kolkata characterised by increasing adoption of and is servicing in 12 languages to its Exhibit 16: (` in crore) digital channels. In this pursuit, during customers. GCC: Transaction FY2016, your Bank ensured continuous

4.76 upgradation of the ‘onlinesbi’ portal The Contact Centre is also handling 4.58 to offer more user-friendly look & feel calls received from overseas customers 4.25 and features such as, Online over draft at 19 International Toll-Free numbers 3.81 against TDR/STDR, facility to register/ servicing 20 countries. It also has a inquire/cancel nomination online, Digital dedicated toll-free line for queries related Signature Certificate as a Second to the Pension Payments (1800110009) Factor Authentication for Corporate Net & Pradhan Mantri Jan Dhan Yojna banking users, Online registration for (1800110009). It is also responding Retail and Corporate Internet Banking, to e-mails received on SBI Corporate ‘Quick Transfer’ facility up to `5000.00 email ids [email protected] and without registering the beneficiary [email protected]. and ‘State Bank mCASH’ for remitting Q1 FY2016 Q2 FY2016 Q3 FY2016 Q4 FY2016 money through email ID or Mobile Apart from servicing enquiries related Number of the beneficiary, to enrich the to customers’ accounts and Bank’s 4. Green Remit Card digital experience of the customers. products, the Contact Centre is providing Some 3.91 crore transactions were significant support to other technological carried out through the Green Remit In order to rejuvenate the e-Commerce channels for e.g. Debit Card hot-listing Card (GRC) route during FY2016, ecosystem through strategic and status, trouble shooting for Mobile compared to 3.48 crore in FY2015. The partnerships, your Bank’s digital Banking, Internet Banking and Mobile average daily transactions of GRC has offerings are upgraded continuously wallet, status of NEFT/RTGS and

40 State Bank of India | Annual Report 2015-16 SBI Express Remittances, complaint „„ Soft recovery of delinquent Customer Experience Excellence registration. The contact centre is also personal and agri. segment Borrowers Project : During FY2016, your Bank offering transaction services, such as „„ Completion of online application accelerated the roll out of Customer funds transfer within SBI accounts, form of personal segment loans Experience Excellence Project (CEEP). issue of Fixed Deposits, stop payment of Under this initiative, 2674 branches „„ Cross-selling and Lead generation Cheque(s), statement of accounts, to the were covered during the year and the customers registered for Phone-banking. total number of branches under CEEP 7. other Recent Initiatives stands at 3006 as on 31st March, 2016. Your Bank has added the following A Mobile App “State Bank No Queue” The core objective of the CEEP is to services that will go a long way in was launched during the year. This App improve crowd management; achieve enhancing customer convenience and enables customers to self-generate reduction in wait times and reduction support: e-tokens for availing select Banking in the service time (processing time); services at select Branches. This helps migration of customers to the usage of „„ Generation of ATM PIN in reducing waiting time that customers Anytime Channels such as ATM, CDM, Recyclers, Swayam and Electronic „„ Verification of mobile number have to endure. It also reduces update requests received through crowding at a branch as the token is Cheque Deposit Machine; and Internet Banking generated before the customer reaches streamlining the process of Account the branch. Opening. „„ Issue interest certificate of Home Loan, Education Loan and Deposit “SBI Quick” was launched as a one Some key initiatives introduced by accounts stop application for all Non-Financial CEEP include: „„ Statement of Account through transactions. Now a customer can email register/ deregister for Missed call „„ Provision of all Anytime channel Banking, do Balance enquiry, get Mini machines viz. ATM, CDM / Recycler, „„ Phone banking Registration Electronic Cheque Drop Box Machine through the Contact Centre and State Statement, block ATM card, apply for (ECDM), SWAYAM Bar coded Bank ATMs Home/ Car Loan & view PM Social Security schemes by logging into Passbook Printer and Internet enabled „„ Migrating TPIN customers (having SBI Quick. registered Mobile Number) to Phone- banking

The Contact Centre is popular amongst all sections of the society in rural, semi-urban as well as urban areas. In view of this, your Bank is continuously monitoring and reviewing its processes to enhance the simplicity and effectiveness of the Contact Centre. Further, great emphasis has been placed on technology, infrastructure and information security.

In order to utilise the Contact Centre infrastructure to the fullest and generate revenue for your Bank, it has significantly expanded some of its outbound processes by making calls for:

State Bank of India | Annual Report 2015-16 41 Directors’ Report

PC with printer for online opening of „„ Creation of an Account Opening Cell to streamline the account opening process accounts at select Branches which „„ Standardised process for sales management and cross selling have high walk in customers

„„ Provision of integrated Queue Management System (QMS) and a customer Feedback TAB to these Branches for better crowd management through real time monitoring and Branch choreography to tackle peak level crowd. 8. digital Banking - “sbiINTOUCH” „„ Introducing Grahak Mitras to “India on the Go” is epitomised by India’s ever increasing Gen-Y and Gen-Z fast- facilitate issue of tokens and facilitate track population, who are quick to absorb new technologies and who are very migration of customers to Anytime comfortable using digital channels for almost all day-to-day activities in life. Your Channels. Bank’s “SMART” strategy is to provide this Digital Banking experience to such

„„ Standardised Single Window people through our futuristic branches with the sub-brand “sbiINTOUCH”. These Operator (SWO) roles in Branches and branches are equipped with state-of-the-art devices/kiosks, allowing customers creation of Service Desks for non cash to transact on a self-service mode. Besides onsite support, advisory services are transactions available through Remote Expert on hi-definition video conference.

42 State Bank of India | Annual Report 2015-16 These branches provide a consistent experience across omni channels and comprise transaction processing stations (self-service zone), information and interaction stations and advisory A Smart rooms. Right from account opening (including enablement for transacting through alternate channels like Internet Bank for Banking and Mobile Banking and instant issuance of personalised debit cards) to Remote Expert advisory, a Young banking products and services delivery including products and services of SBI subsidiaries viz. Life Insurance, India on General Insurance, Mutual Funds and credit cards. e-Trade through SBI Cap Securities are made available here. the go

9. mobile Banking Your Bank, the Banker to digital India, has changed the way its customers do 115 Banking. Bridging the gap between Customers and Bank, SBI’s innovative “sbiINTOUCH” applications have brought Banking closer to the customer ‘on the go’.

Branches Superior customer experience and trust in your Bank has made us the leader in Opened in Mobile Banking across the banking sector. Your Bank has leaped to the number one position in terms of value of transactions with a quantum jump in market share FY2016 from 9.82% in March 2015 to 35.97% in Dec’15, while consistently maintaining the number 1 position in terms of volumes with 38.44%. market share in December’ 2015. The first set of 7 “sbiINTOUCH” branches, under the sub-brand “sbiINTOUCH” was launched on 1st Exhibit 17: Market share in Mobile Banking % SBI ICICI July, 2014. These were opened as (Number of Transactions) as per RBI HDFC working pilots in New Delhi, Mumbai, AXIS KOTAK Kolkata, Chennai, Ahmedabad and OTHERS 41 39 Bengaluru. During FY2016, your 36 Bank has opened 115 sbiINTOUCH 33 Branches to provide digital experience 22 to customers across the country. These 19 20 16 18 15 15 15 15 Branches are available in 70 districts 13 13 14 11 of the country. Going forward, your 9 9 10 5 Bank intends to continue its journey 3 5 4 of expanding this digital footprint even more widely. Mar - 2015 Jun - 2015 Sep - 2015 Dec - 2015

State Bank of India | Annual Report 2015-16 43 Directors’ Report

as Account Enquiry, Mini Statement, Exhibit 18: Market share in Mobile Banking % SBI Utility Bills payment, EPF Payment, ICICI (Value of Transactions) as per RBI HDFC creation of Fixed Deposits and a lot AXIS more. The Corporate customers get KOTAK 36 36 OTHERS additional features which allow them to

30 initiate payment to suppliers, authorise 31 29 26 e-cheques and enquiry of account 22 20 22 transactions. 18 15 13 12 12 11 10. State Bank Buddy 9 9 10 8 7 7 7 6 4 Latest addition to your Bank’s plethora of technology offerings is its Mobile Wallet

Mar - 2015 Jun - 2015 Sep - 2015 Dec - 2015 “State Bank Buddy”. Within 7 months of launch, Buddy user registration has Your Bank saw astronomical growth in all the facets of its Mobile Banking crossed 26.60 lakh. The wallet has applications during FY2016 over FY2015. The volume of transactions saw a growth seen more than 48 lakh transactions of 86.87% and value of transactions multiplied manifold to grow by 721%. to the tune of `230.71 crore. Out of which `11.47 crore are merchant transactions, upto 31st March, 2016. Exhibit 19: (in crore) During the year, your Bank launched Buddy is the product designed for the Growth in mobile banking applications for Transaction Volumes tech savvy generation, the youth of SME & Corporate customers, “State the country, who are in touch with the 14.41 Bank Anywhere Saral” & “State world through their Mobiles. A user can Bank Anywhere Corporate”. These “Send & Ask Money” by knowing just applications allow customers to do the mobile number of the counter party, all their banking transactions such Recharge mobile/DTH, Pay utility bills, 7.71

FY2015 FY2016

Exhibit 20: (` in crore) Growth in Value of Transactions

95767.67

11661.75

Launch of State Bank Buddy-Mobile Wallet by Sh. Arun Jaitley, the FY2015 FY2016 Hon’ble Finance Minister , Govt. of India

44 State Bank of India | Annual Report 2015-16 Shop online and Book a Flight, Bus, „„ Mutual Funds, gross mobilisation „„ 35,043 accounts were opened Hotel, Movie tickets, online food and increased from `20313 crore in FY2015 under National Pension System in buy gifts through State Bank Buddy to `39577 crore in FY2016. Also, FY2016, in comparison to 13,477 wallet. Buddy marketplace boasts of number of SIPs mobilised increased accounts opened in FY2015. partnership with some of the biggest from 1,57,076 to 2,40,009 in FY2016, and the most popular names in the recording a growth of 52.80% over the 12. Wealth Management e-Commerce industry. corresponding period of the last year. Your Bank has designed, developed „„ Your Bank marketed 1.46 crore and launched, on 14th January, 2016 Your Bank’s various Mobile applications Personal Accident Insurance (PAI) “SBI Exclusif”, a unique suite of Wealth can be viewed and downloaded from policies and 4.88 lakh Health Insurance Management services (WMS) for its the “State Bank App Kart”, which is policies of SBI General in FY2016. high net worth customers. At present, available on both iOS & Android. Number of Health Insurance policies only resident individual customers are issued, increased by 82% and premium eligible, but it will be extended to NRIs 11. Marketing & Cross increased by 43.62 % to `106.06 crore. and Corporate / Trusts shortly.

Selling „„ SBI Card & Payment Services Your Bank is the Corporate Agent of Private Limited: 1.94 lakh credit Some key highlights of the offering: SBI Life Insurance Co. Limited and SBI cards were issued through your Bank „„ India’s first ever e-wealth centre General Insurance Co. Limited and has branches in FY2016. „„ The technology component of Distribution Agreement with SBI Mutual „„ Your Bank earned commission our Wealth Management Initiative is a Fund, SBI Cards & Payment Services income of `0.34 crore in FY2016 major digitisation effort of your Bank. Private Limited and SBI Cap Securities from SBI Cap Securities Limited. 2.87 „„ Dedicated RM available through Limited for distributing their products. lakh Demat accounts were opened in voice/video/chat Your Bank also has tied up for distribution FY2016, in comparison to 2.68 lakh of products of UTI Mutual Fund, Tata accounts opened in the FY2015. Mutual Fund, Franklin Templeton Mutual Fund, L&T Mutual Fund, ICICI Mutual Fund and HDFC Mutual Fund. In addition, all the branches are now authorised to open accounts under National Pension System.

During FY2016 „„ Cross Selling income increased from `388.28 crore in FY2015 to `489.04 crore in FY2016, recording a YoY growth of 25.95%.

„„ Income from SBI Life increased from `244.62 crore in FY2015 to `337.18 crore FY2016, recording a growth of 37.84%.

„„ Income from SBI General increased from `56.64 crore in FY2015 to `73.09 crore in FY2016, recording a growth of 29.04% over the corresponding period Launch of SBI Exclusif at Bangalore by of last year. Smt. Arundhati Bhattacharya, Chairman

State Bank of India | Annual Report 2015-16 45 Directors’ Report

„„ Services available beyond banking In FY2016, Ecosystem Financing products have been introduced to hours (Project Shikhar) has been started by capture top quartile customers in an your Bank to take advantage of growing industry. Your Bank has launched a „„ World Class advisory services Simplified Cash Credit product on pilot available through expert investment e-Commerce footprint in the economy. basis at Chennai & Hyderabad Circles. counsellors Your Bank’s focus had been on digital banking platform and launched various „„ Open platform with a suite of best- facilities for SMEs based on technology (ii) Processes: in-class products like Credit Risk Model to provide Your Bank has introduced detailed „„ Capability to execute MF orders in automated instant sanction of loans Standard Operating Procedure (SOP) over 4,500 schemes across 15 AMCs under e-tailer sellers financing, which for various processes involved in the is a truly disruptive offering, where „„ Asset allocation and one-view delivery of Credit to provide a ready available across all asset classes loan to the seller is given at the click of reference to all operating functionaries. a button. An in-house ‘Digital Tool’ is „„ State-of the art tools like risk being used for instant sanction of loans Your Bank has covered key products profiling, financial planning and portfolio to taxi operators or owners associated under Loan Origination & Loan Life analytics with a taxi aggregator’s platform. Management Software (LOS & LLMS) „„ Robust infrastructure enabling which focus on capturing of pre-sanction highest amount of security Apart from this, your Bank is leveraging process of credit portfolio, ensuring technology for capturing early warning „„ 2-Factor authentication protocols quality and uniform standards of credit signals and has introduced digital to bring enhanced layer of security for dispensation and have robust record inspection of units. Overall, SBI is each transaction. and information retrieval systems. leveraging technology in every facet of „„ Middle Office compliance team to the value chain, be it sourcing business, Under this initiative in FY2016 your maintain tight controls on quality of sales designing products, streamlining Bank has introduced digital inspection processes, improving delivery or application through Tab & Mobiles C. Small & Medium monitoring and follow-up. which is a process of digitisation of pre- Enterprises sanction/ post sanction of SME units & Your Bank has been the pioneer and Your Bank has taken several initiatives collateral securities capturing location market leader for SME financing. With to build its SME portfolio in a risk of the property/ place of business. over 1 million customers, the SME mitigated manner and has brought portfolio of `1,89,534 crore as on 31st about significant changes in (i) Product (iii) Delivery: Suite, (ii) Processes (iii) Delivery. March, 2016 accounts for nearly 12% of Your Bank had undertaken Project your Bank’s total advances. The revival Vijay starting in FY2015 to revamp of business sentiment and growth in (i) product Suite: the delivery model for SME lending GDP has brought the focus sharply on All the products offered to Micro, in order to drive growth and improve the growth and viability of SME units. Small & Medium enterprises have customer engagement, with following The Government’s initiatives – Make been strengthened and made more key features. in India, CGTMSE cover and MUDRA hassle free. Scoring Models have – are providing a significant shot in the been introduced for loans up to `10 „„ Over 1,000 relationship managers arm to the SME segment. Lakh. New products like Asset Backed deployed for serving SME customers Loans (ABL) have been reviewed „„ Leveraging big data and analytics and upgraded suitably. Sector specific Your Bank’s endeavour in driving SME based lead generation for customer products like Construction Equipment growth rests on three pillars: acquisition a) Customer Convenience Loan, Medical Equipment Loan have „„ Improving internal processes been introduced with pricing matrix b) Risk Mitigation and documentation needs to reduce and scoring models. Cluster specific c) Technology based digital offerings customer turn-around time by ~50%

46 State Bank of India | Annual Report 2015-16 „„ Increasing focus on risk mitigated, (` in crore) competitive products; e.g. launch Exhibit 23: (` in crore) Exhibit 25: Growth in eVFS of new Asset backed loan product, Performance under ABL promoting fleet finance, e-DFS and 2873 e-VFS products 15905 2038 „„ Deploying Vijaypath tool for 1742 performance monitoring of relationship managers 7408 1164

Customer engagement has improved significantly with reduced turnaround 595 time, simplified documentation and assignment of dedicated relationship FY2013 FY2014 FY2015 FY2016 managers. Your Bank has been FY2014 FY2015 FY2016 increasingly shifting focus towards risk The diversification in the eDFS mitigated lending. portfolio and the sector-wise portfolio is Supply Chain Finance represented below: Exhibit 21: ABL, SCFU, OD, Bills Leveraging its state of the art CGTMSE technology, your Bank is focusing on Exhibit 26: Balance Sheet further strengthening its relationship Sector Wise % Share eDFS with the corporate world for their supply chain partners. Others Auto 2W 7 8 During the last fiscal your Bank has 31% entered into 57 new eDFS & eVFS Steel Auto CV tie ups taking the overall tie ups with 11 10 63% industry majors to 193. OIl 19 There has been a 40% YoY growth in the eDFS portfolio as a result of the new As on March 2015 6% tie-ups. FMCG Auto PV 38 7

Exhibit 24: (` in crore) Credit flow to Micro and Growth in eDFS Small enterprises under Exhibit 22: ABL, SCFU, OD, Bills CGTMSE CGTMSE & MUDRA Balance Sheet Your Bank has been a pioneer in 14048 supporting MSMEs and for micro and small (MSE) business. Your Bank is extending 10024 collateral free lending up to `1.00 crore under guarantee of CGTMSE. The cost 37% 7338 of guarantee cover for working capital

4781 facilities up to `50 lakh is being borne by 57% your Bank. Your Bank has a portfolio of `11,030 crore under CGTMSE. It was able to achieve `12,281 crore disbursement almost 92% of the target of `13,325 crore As on March 2016 6% disbursement under MUDRA loans set by FY2013 FY2014 FY2015 FY2016 Govt. of India.

State Bank of India | Annual Report 2015-16 47 Directors’ Report

Developments FY2016 Project Shikhar was rolled out to gain first mover advantage in the e-Commerce space. The exponential growth in e-Commerce has thrown open a world of opportunities for MSMEs. New players have entered the market space and B2B & B2C space is growing in demand.

Under this project, your Bank is working on various initiatives to pioneer an ecosystem for lending through partnerships with new business models. Three SME ecosystems have been identified as focus areas e-Commerce, taxi aggregators and franchise finance.

(i) e-Commerce Shri P. K. Gupta, MD (C&R) at the launch of Your Bank has developed a specialised e-Smart SME e-Commerce Loan offering for startups active in the e-commerce space. A pioneering The seller no longer needs to submit traditional financial statements like Balance innovative product “e-Smart SME” Sheet, P&L or Income tax returns to avail this financing facility. Your Bank has also for financing merchants selling developed a digital tool to identify any early signs of stress through the e-commerce through e-commerce platforms has platform data of the borrower. been designed. Tie-ups with leading e-Commerce companies, Snapdeal and Flipkart, have been established this year. This innovative product moves away from traditional balance sheet based lending to a cash flow based lending program. It uses an in-house developed proprietary credit model based on platform and surrogate data to assess eligibility. The entire process has been automated – ‘at the click of a button’ – from online application, uploading of documents, processing and sanction, all in less than a minute - first time ever in the history of banks A digital credit tool launched in partnership with Uber by the Bank’s in India. The product was launched Chairman & Uber President Asia Pacific by your Bank’s Chairman & CEO of Snapdeal on 15th January 2016. (ii) taxi Aggregators Taxi aggregators have been revolutionising the way Indians commute – and your Bank has tied up with these aggregators to help individual drivers buy a car and become mini-entrepreneurs. Under this, your Bank has tied up with both Ola and Uber India to extend vehicle loans to drivers and operators associated with these

48 State Bank of India | Annual Report 2015-16 platforms. A digital credit tool has been (iv) Debit Cards & Acceptance 60% in value of transactions. With a developed in-house by your Bank to Infrastructure (Merchant Acquiring view to move the larger base of Debit automate the process and enable Businesses) Cardholders to PoS terminals as also instant sanction. The tool was launched Your Bank realised early the need for to e-Commerce websites, awareness in partnership with Uber on 15th March, doing banking the Smart way, in its campaigns are being run on a regular 2016 by your Bank’s Chairman & Uber pursuit towards becoming the ‘Banker basis. These measures zoomed the President Asia Pacific. to digital India. Your Bank has been Debit Card spends over “Point of putting significant efforts to upgrade Sale” and “e-Commerce” for the State Documentation needs have been its technology to the best in class, on Bank Group to ~`41,500 crore for the significantly simplified for enabling an on-going basis and the capability FY2016, an increase of 36% from the faster loan disbursal process. Under the to offer near JIT (Just in Time) service previous year and taking the market OLA cabs tie-up launched in FY2015, delivery environment across its delivery share to over 26%. over 1,000 loans have been disbursed channels. across 5 centres. Various innovations like introduction With over 23 crore State Bank Group of sbiinTouch contactless Debit (iii) Franchise Finance Debit Cards as on 31st March, 2016, Cards, Mumbai Metro Debit Card, A comprehensive product suite has your Bank continues to lead in Debit among others, aggressive marketing been designed to cater to the franchising Card issuance in the country. You will campaigns and Debit Card awareness model that is fast growing in India’s retail be glad to know that 20% of the Banked programme, have placed your Bank in consumer segment. Franchise finance population in India have their accounts the top slot in terms Debit Card spends. along with electronic dealer finance will with your Bank, with ~37% of total provide a comprehensive, competitive Debit Card penetration in the country. In order to go “green” your Bank is now solution for large industry majors. A concerted effort by your Bank to focussing on “paperless” mobile PoS empower the customers to enjoy terminals with 30000+ mPoS terminals. The product suite now offers financing “Anytime Anywhere Banking” through During FY2016, Bank has also launched solutions for the franchisee’s initial Debit Card has propelled this sheer the Contactless (NFC) PoS terminals capex investment, working capital and dominance of your Bank in Debit card with over 30,000 such terminals already transaction related needs. Your Bank is space. You would be happy to note that deployed in the field. Acceptance of tying up with large, reputed franchisors your Bank has also improved its market Amex Card has also been enabled to extend this proposition to their new share in Debit Cards spends from on SBI PoS terminals during FY2016. and existing franchisees. These loans 25.07% (March 15) to 26.29% (March In addition to offering basic acquiring will be risk mitigated through franchisor 16) which is highest amongst the banks services on its terminals, your Bank is affiliation, comfort and repayment as per RBI data. also providing Value Added Services facilitation. Continuous sharing of data such as: by franchisor will enable economic In sync with the focus of Government assessment of business model and of India to create a digital economy, „„ Cash@POS facility for cash identification of early warning signals your Bank has strengthened its Debit dispensation to debit card holders for stressed franchisees. Card acceptance infrastructure by „„ DCC - Dynamic Currency giving a vigorous thrust on installation Conversion Five tie-ups have been launched during of Point of Sale (PoS) terminals, „„ EMI facility the year – Philips, Medplus Pharmacy, thereby taking the numbers to over Anytime Fitness, Lakme salon and 3.02 lakh, up by 50% over last year Your Bank has also partnered with Raymond. with a market share of 21.70% of PoS various Government initiatives for terminals. During the FY2016, your providing payment acceptance Bank has registered a growth of 56% infrastructure at the Customer Service in terms of number of transactions and Centres (CSCs) across all geographies.

State Bank of India | Annual Report 2015-16 49 Directors’ Report

D. rural Banking Bank introduced various technology based solutions and products to make Your Bank has always believed in the potential of rural India as an important farmers’ lives easier, while at the same contributor to India’s economic growth and its progress being integral to ensure a time improving the operational efficiency sustainable and balanced development. Your Bank has endeavoured to meet the for managing agriculture loans. Some financial needs of this segment through several innovative channels, products and key initiatives in this area include: services. The Indian rural market is undergoing a paradigm change with structural shifts in the economy, rising non-farm incomes, changing consumption preferences 1. KCC-ATM-RuPay Cards: For and increasing awareness among the rural consumers. This transformation is ease and operational convenience, supported by several factors including rapidly rising connectivity, infrastructure RuPay cards were issued to over development and emergence of new business opportunities. 26.77 lakh Kisan Credit Card (KCC) borrowers upto 31st March, 2016. KCC Your Bank is serving more than 1.09 crore farmer borrowers under agriculture RuPay Cards work seamlessly with segment and is deeply entrenched in rural banking arena. Always in the forefront in ATMs and PoS machines, enabling ensuring national priorities, your Bank surpassed the Agri credit flow target set by farmers to purchase their day to day Government of India during FY2016, as in the past, as depicted in the table below. farm requirements on 24X7 basis.

Exhibit 27: Flow of Credit to Agriculture Trend (`in crore) 2. New Products for Farmers: The products launched during the year Year Target Disbursement % Achievement include: FY2014 73,500 74,970 102%

FY2015 84,500 86,193 102% „„ Premium Kisan Gold Card (Asset FY2016 89,781 102,423 114% Backed Agri Loan): Aimed at financing emerging Agri Business entrepreneurs engaged in high-tech farming and allied activities, the scheme was rolled out, with competitive interest rates.

„„ Tatkal Tractor Loan: Mortgage free tractor loan, providing 100% of the A Smart cost of the tractor, with no processing charges and with a turn around time of Bank for an 48 hours – was launched. „„ Stree Shakti Tractor Loan Scheme: Mortgage free tractor loan Inclusive for women as co-borrower with lower interest rates.

India 3. Corporate Tie-ups: In order to make agriculture lending more sustainable and to reduce risk in the portfolio, your Bank is focusing on supply chain finance through tie-ups. Smart Approach To Agri Business 4. Warehouse Receipt Financing: To avoid distress sale by the farmers Your Bank is in the forefront of technology enablement for Rural-Semi Urban (RUSU) and to encourage price discovery, areas by providing Core Banking Solutions, coupled with ATMs, Cash Deposit your Bank has entered into tie-ups with Machines, Point of Sale (PoS) machines and Micro ATMs. During FY2016, your

50 State Bank of India | Annual Report 2015-16 Collateral Managers to offer finance to Under the Pradhan Mantri Jan Dhan the rural populace has resulted in farmers against their produce stored in Yojana (PMJDY), your Bank has been the successful launch of several warehouses. amongst the most prolific implementers new initiatives like Aadhaar Enabled of the programme. Your Bank has Payment Systems, automated e-KYC, opened 5.32 crore accounts up to Bonding With Farmers Immediate Payment Service (IMPS), 31st March, 2016 and issued 4.21 Micro ATM rollout, Savings Bank cum To improve the quality of life of India’s crore RuPay debit cards to eligible Overdraft facility under PMJDY and rural population and to achieve total customers. A substantial number of Direct Benefit Transfer (DBT)/Direct financial inclusion, ‘SBI Ka Apna these cards were issued in some of the Benefit Transfer for LPG (DBTL) Gaon’ Scheme of adopting the villages most challenging areas of the country. payments. was initiated in FY2008. By FY2016, The total number of financial inclusion 1,426 villages have been adopted accounts has thus grown from 7.29 crore In the years to come, all these initiatives for their overall development. Your in FY2015, to 9.28 crore in FY2016. are seeds that will eventually usher in a Bank has also been forming Farmers’ The value of transactions handled cashless society ecosystem, promising Clubs at village level, for fostering through Business Correspondents has great social benefit. continued relationship with the farming increased by 49% from `38,973 crore community. Today, the number of such in FY2015, to `58,217 crore in FY2016. Hub-and-Spoke Model with clubs has reached 10,719. The key Bank has actively participated in SHG- initiatives taken in adopted villages Bank Credit linkage programme since Business Correspondent include the construction of community its inception in 1992. As of 31st March, Network vermi-compost units under clean village 2016, your Bank is the market leader in Your Bank has mapped 1,03,565 concept; the construction of hygienic SHG financing with a credit deployment villages to 52,522 rural Customer toilets; installation of Solar lighting in of `5,495 crore to 3.6 lakh SHGs, 91% Service Points (CSPs) for servicing the the villages; and conducting awareness of which are women SHGs. Continued customers with asset-liability products, programmes through melas and focus on the development of innovative, including accepting credits in loan exhibitions. technology enabled channels for accounts from customers residing in delivering banking services among remote unbanked areas. These CSPs Financial Inclusion Your Bank has been at the forefront of Financial Inclusion initiatives in the country. Your Bank is the pioneer in the Business Correspondent (BC) model, an alternative for providing banking services to cater to both urban and rural customers, characterized by small value transactions. The BC model, with over 64,628 Customer Service Points (CSPs) across the country, provides various products and services such as savings, term deposits, micro loans, remittances, loan repayments and micro-pension. Your Bank has successfully leveraged technology for propagating Financial Inclusion by introducing Internet based Kiosk Customer Service Point, SSA Siripalli-East Godavari Banking, Card based and Cell phone District-M Srikanth(5HH8) messaging channels.

State Bank of India | Annual Report 2015-16 51 Directors’ Report

are linked to a nearby branch which Imparting Financial Literacy entrants. Payment systems, of late, is the most sought after aspect of serves as the support and monitoring With the main objective of imparting banking business on account of the point for these CSPs. financial literacy and facilitating growing penetration of smart phones, effective use of financial services by e-commerce and launch of a good Empowering Rural Youth the common man, your Bank has set up number of innovative products/mobile To mitigate unemployment and under 232 Financial Literacy Centres (FLCs). apps. Payments Bank and Small employment problem among rural youth During FY2016, a total of 8,855 financial Finance Banks are on the anvil. The in the country, comprehensive, free of literacy camps at villages across the competitive scenario is getting intense cost residential trainings in personality country were conducted by these FLCs. and changing rapidly. and skill development are being imparted through Bank’s 116 Rural Exhibit 29: Cumulative Data on nos. of Financial Literacy Camps State Bank Aggregator Self Employment Training Institutes Module (SBIePay) (RSETIs). Despite some of these FY2013 FY2014 FY2015 FY2016 2723 7913 28879 37734 Your Bank is the first and only Bank to institutes having been located in the have its own payment aggregator services. socially and geographically challenged Regional Rural Banks (RRBs) As a Bank and a Payment aggregator, areas, these institutes are playing a SBIePay has already partnered with 41 vital role in “Make in India” and “Skill Your Bank has sponsored 14 RRBs banks for providing seamless Internet India” campaigns. Bank’s RSETIs have covering 155 districts in 15 States, Banking options to the customers. PayPal conducted 12,840 programmes, trained with a network of 3955 branches. Your has also been added as a new channel 3,40,688 candidates and 1,60,607 Bank’s investment in equity of 14 RRBs in SBIePay. ` trainees have been gainfully settled. is 479.82 crore and its non-equity investment is `23.62 crore. With its focus on C2G and B2G SBIePay is Exhibit 28: Rural Youth Candidates All RRBs are on CBS platform. Besides, well positioned to support the Govt. on its Trained by RSETIs RRBs have implemented various cash less and less cash society aspirations IT initiatives such as RTGS, NEFT, through Digital India initiatives. FY2013 FY2014 FY2015 FY2016 RuPay Cards, IMPS, Kiosk Banking, Aadhar Payment Bridge System, NTRP (Non Tax Revenue Portal) 160,378 207,419 265,688 340,688 Aadhar Enabled Payment System, of Controller General of Accounts, National Automated Clearing House, enabled by SBIePay for online receipts Cheque Truncation System etc. which Training for Debt Recovery have been implemented in Public of all Central Govt. ministries was Agents (DRAs) Sector Banks. Under PMJDY, RRBs launched on 15th February, 2016 by the To supplement in-house resources have opened 68.68 lakh accounts Honourable Finance Minister. SBIePay and have covered 29.85 lakh account has already provided its aggregator for recovery of your Bank’s dues, your holders under Prime Minister Suraksha services to GRAS (Govt. Receipts and Bank is engaging its BCs/CSPs as Bima Yojna. Payments System) of the States of Debt Recovery Agents (DRAs), after Maharashtra, Rajasthan and entered they pass certificate examination on E. other New into relationship with Assam, Gujarat, completion of mandatory training, which Business Initiatives and Puducherry State governments. is given at Bank’s cost in RSETIs. Close Banking system is witnessing new Indian Railways eProcurement system to 5,000 BCs/CSPs have been imparted challenges in its traditional business has identified SBIePay for their online DRA training during FY2016. domain from new digitally enabled procurement payments.

52 State Bank of India | Annual Report 2015-16 PSUs such as HPCL, IOCL & Gail Gas F. Government Exhibit 30: Government Turnover Limited are some of the major PSU Business Government Commission clients of SBIePay for LPG refill payments (`in crore) Being accredited banker to the & new connections. SBIePay aims to major Central Government Ministries FY2015 FY2016 be the one stop solution for processing & Departments and most State Turnover 3555835 3993377 all online Govt. Receipts and a leading Governments, your Bank continues player in C2G and B2G segment. Commission 1968 2095 to retain its position as the market leader in Government Business. In With a view to facilitate e-Governance & Enterprise Wide Loyalty continuation of its service tradition, bringing in more efficiency, following new Programme: State Bank your bank pioneered in developing initiatives were taken during the year: Rewardz customised e-solutions for The In line with our vision statement to Government of India and several State „„ Pension Payments: Your Bank has keep “Customer first” during the FY Governments, thereby facilitating the been administering pension payment to 2016, your Bank launched Enterprise Central / State Governments to migrate more than 40 lakh pensioners through Wide Loyalty Programme-State Bank their transactions to the online mode its 14 CPPCs. This year your Bank Rewardz to reward its customers for which has brought in more efficiency successfully disbursed first tranche of the unstinted trust reposed, across a and transparency in the system. More OROP arrears to 8.04 lakh defence wide range of services availed by them. than 66% of your Bank’s Government pensioners including family & Galantry Your Bank envisions strengthening Business has been migrated to e-mode, award winning pensioners for which its relationship with its customers by which has resulted in substantial your bank has been appreciated from recognizing their continued faith and reduction in the average settlement all quarters. period, as also in the reduction of cash long term association with your Bank. „„ Migration of Salary/ Vendor transactions. payments to CMP: Migrating Salary/ Now, customers earn reward points Vendor payments of Rajya Sabha, for their various transactions like Railways, State Govt. of Assam , payment through Debit Cards, Internet Manipur & Mizoram to CMP platform Banking transactions, usage of Mobile Banking, Personal Banking, Demat Accounts, Agri Business, Home Loans and Current Accounts. These reward points can be redeemed for a plethora of redemption options such as SBI Gift Card, Merchandise, recharging of phone or D2H, booking tickets for Movies, Buses and Flights.

The most important feature of the Programme is the ease of use through a Mobile App- State Bank Rewardz which can be downloaded from the Google Play Store. To further improve customer experience, the reward points can be redeemed at select Merchant partner outlets as well. NTRP which is enabled by SBI ePay for online receipts of all Central Govt. ministries was launched by the Hon’ble Finance Minister, Govt. of India.

State Bank of India | Annual Report 2015-16 53 Directors’ Report

has brought in more efficiency & G. Efficiency and To attain considerable Cost Control standardisation in handling Govt. cost control and reduction, your Bank has further payments. centralised and rationalised its Your Bank’s Insurance cell was created purchases of registers and forms, „„ Online Fee collection: Your Bank at the Corporate Centre for procuring and the introduction of Outsourcing facilitated online collection of fee of Insurance Policies for your Bank’s own Model for Stationary Management. major recruitment examinations & other assets at competitive prices with better To get the optimum advantage of bulk dues for Govts. of UP, Jharkand, Tamil terms and coverage for enhanced ordering in terms of reduced wastage Nadu, CBSE , Prasaar Bharti etc. efficacy in claim settlements. Your Bank and enhanced efficiency, a switch- „ has also complied with RBI’s instruction „ Non Tax Receipt Portal of Govt. over from in-house supply of stationery on Unique Customer Identification of India: SBI e-Pay has been integrated items to an outsourcing model of web Code (UCIC) to the extent of 99.50%. In with “NTRP Portal” for online collection based stationery management is being terms of operating cost reduction, your of all non tax revenue of Govt. of India. implemented. This initiative is expected Bank has taken up the rationalisation „„ e-Tendering Solutions: have to help in the reduction of costs presently of Currency Chests, under which 105 been provided to Konkan Railways & being incurred on hiring of premises, Currency Chests (CC) have been closed Delhi Metro Rail Corporation. management of storage, obsolescence during FY2016, saving a recurring cost of stationery items, manpower and „„ e-Governance in State of approximately `50 crore per annum. transportation costs. Pilot rollout of the Governments: 29 e-initiatives project was launched in two Circles in launched for various State Govts. Your Bank’s CPCs Redesign & Other March 2016. „„ Visa on arrival: this facility was Projects (erstwhile BPR Projects) has been continuously working on enabled for Japanese nationals at 6 For digitisation and easy retrieval of the process changes and redesigns, centres & e-Tourist Visa facility which Account Opening Forms (AOFs), an including risk assessment and started last year with 44 countries has Electronic Data Management System challenges posed for increasing the since been extended to 150 countries. (EDMS) has been introduced during efficiency and delivery of your Bank’s Visa fee is being collected through SBI the year. The digitisation of AOFs aims e-pay. various products and services.

„„ Direct Benefit Transfer for LPG: Your Bank is the sole banker to process LPG subsidy. During the year, `21769 crore were disbursed through 112.29 crore transactions.

„„ Other Direct Benefit Transfers: Your Bank has processed 12.94 crore subsidy transactions involving `34797 crore during FY2015-16.

„„ Small Savings Schemes: Your Bank services more than 60 lakh PPF, 3.85 lakh Sukanya Samriddhi accounts (Highest among authorised Banks) More than 5 lakh new PPF accounts have been opened during FY2015-16.

Showcasing Bank’s efforts to popularise “ Sukanya Samriddhi Accounts” – a new small savings scheme of Govt. of India on Rahgiri day at Bhubaneswar.

54 State Bank of India | Annual Report 2015-16 to archive the AOFs electronically and challenging economic environment, while continuing to grow its commercial and retrieve the images at all 14 LCPCs. transaction banking business. Going forward, your Bank will look at sourcing This is expected to be completed during new businesses and generating new income streams, while continuing to offer the FY2016-17 on a Pan India basis. comprehensive financial solutions to corporate clients with a focus on profitability and risk mitigation. In order to reduce the printing cost of cheque books and establishment cost Corporate Banking of LCPCs, further centralisation of The Corporate Accounts Group (CAG) is the dedicated vertical handling the “large cheque book printing is in the process credit” portfolio of your Bank. CAG has 8 Offices in 6 regional centers viz. Mumbai, of rollout and has been implemented Delhi, Chennai, Kolkata, Hyderabad and Ahmedabad. The business model of CAG for 8 Circles at 2 centres till date. The is centered on the Relationship Management concept and each client is mapped entire process has been carried out in to a Relationship Manager who leads across-functional Client Service Team. The a secure environment at your Bank’s Relationship strategy is anchored on delivering integrated and comprehensive Base Security Printer, replacing the financial solutions to clients, through structured products, within a strict Turn- present process which involved an Around-Time. The principal objective of the strategy is to make your Bank the first extra layer with two printers. choice of top Corporates.

As a result of the above initiatives, your Exhibit 31: Business Performance of CAG (`in crore.) Bank continues to efficiently manage a continuously increasing volume Facility Mar-15 Mar-16 YTD Growth of customer transactions by taking advantage of standardisation, skill Fund Based + Non-fund based 4,56,138 5,27,970 16% building and economies of scale. Fund Based 2,71,778 3,29,026 21%

Corporate Banking Group The Wholesale Banking business at your Bank focuses on servicing corporate customers through customised financial solutions for enabling business in India and key overseas geographies, specialises in analysing business and financial requirements of its clients and providing solutions through various products, such as working capital finance, export finance, trade, transaction & commercial banking and rupee and foreign currency term loans. The wholesale banking ecosystem at your Bank comprises several teams focused on specific areas to facilitate specialisation and customised product offerings to your Bank’s clients. During FY2016, the Wholesale Banking business was focused on proactive The HNG Float Glass Manufacturing Site monitoring of the portfolio given the

State Bank of India | Annual Report 2015-16 55 Directors’ Report

Fund Based outstanding of the CAG constitutes 22% of total credit portfolio of your Vendor) Finance. The business of the Bank. Around 85% of CAG exposure is to Corporates with ratings of Investment Unit has clocked significant increase Grade and above, while the distribution to a variety of sectors is well balanced. during last three years.

CAG handles about 58% of the domestic forex business of your Bank. During the A. cash Management year, the group handled several high value deals of top clients from both private Product (CMP) and public sectors. The whole spectrum of Cash Management Service encompassing Your Bank has continuously been working on promoting technology initiatives Collections, Payments and Liquidity for operational convenience as also to minimize operational risk. Such initiatives Management are provided by way of include mobile versions of Corporate Internet Banking i.e. State Bank Anywhere cheque and cash collection (including – Corporate, which allow corporate users to initiate and authorize transactions Doorstep Banking), Collection for Public through their mobile. In addition e-trade and various payment solutions are now Issues (IPOs/Bonds), e-Collection available. (including the facility of virtual account number), e-Payments, management of During the year your Bank has also stabilized the LLMS (Loan Lifecycle Management Mandates and other paper instruments System) platform, a web based portal for assessing credit risk in loan proposals like Dividend Warrants, Refund and including internal credit rating exercise. The platform will also be used for other Interest Warrants, Corporate Cheque ancillary activities related to credit management. payable at Par (CCPAP) and Multi- city Cheques. While collection facilities are provided through ‘SBI F.A.S.T’ (Funds Available in Shortest Time) to Corporate and Institutional Customers through a network of 1854 authorised branches across the country by means of a technology driven platform, our entire network of over 16400 branches is also made available to large Mid- Corporates, SMEs, NBFCs, Institutional Customers, Mutual Funds and Insurance Companies for Collections through certain specially designed products such as ‘Easy Collect’, ‘Powerjyoti – Pre Upload’, etc. Your Bank offers various e-Payment products through a secure process of dedicated portal with Host-to-Host facility. The business has been growing over last three years. Arvind Mills financed by the Bank

Transaction Banking Unit (TBU) Transaction Banking Unit (TBU) offers a range of products to Corporates, Government Departments and Financial Institutions comprising of products to facilitate Cash Management Products and Trade Finance and Supply Chain (Dealer/

56 State Bank of India | Annual Report 2015-16 Banking Infrastructure of your Bank undergoing constant improvement to Exhibit 32: Growth (` in crore) in Cash Management Fee Income by providing Centralised e-Payment enhance customer comfort and provide Solutions enabling Government the means to customers to access 369.21 Departments to achieve their objectives trade finance services with speed and under National e-Governance Project efficiency by enabling them to lodge (NeGP). Centralised e-Payment for Letters of Credit, Bank Guarantees 289.39 Railways commenced from CMP with and Bills Collection/negotiation

218.18 Delhi Division of Northern Railways. requirements online from any corner Doorstep cash and cheque pick-up of the world. As on 31st March, 2016, facility for Railway Station under the 2250 Corporates are registered under scheme ‘Rail Shakti’ Project has also e-Trade SBI. been extended to Indian Railways. CMP has also started non-tax collection (b) e-VFS (Electronic Vendor for Government of India through Financing Scheme) Bharatkosh Portal, hosted by Controller Our relationship with the Corporate

FY2014 FY2015 FY2016 General of Accounts. World has been further strengthened by financing their Supply Chain Partners B. trade Finance through the above two products which CMP Centre is the ‘Sole Refund are fully automated, secured and robust. Your Bank has Banker’ for Central Board for Direct (a) e-Trade SBI: As on 31st March, 2016, 182 Industry established an excellent technology Taxes (CBDT). CMP Centre has also Majors (IMs) with 3867 vendors and and operation infrastructure for its brought about integration of payment 12993 dealers across the country have Trade Finance business. e-Trade SBI, a systems of Ministry of Defence, Civil been migrated to the electronic e-VFS/ web-based portal, which was launched Ministries under UMEA, a number e-DFS platform, a growth of 115% and by your Bank in March 2011, has been of State Governments with Core 64%respectively.

State Bank of India | Annual Report 2015-16 57 Directors’ Report

C. Financial Institutions Your Bank’s special business unit more than 5000 kms; Metro Project in Business Unit Project Finance & Leasing (PFSBU) Hyderabad besides a host of projects in deals with the appraisal and steel, cement, Urban Infra, etc. During Financial Institutions Business Unit is a FY2016, fund based and non-fund arrangement of funds for large projects dedicated vertical created for capturing based exposure aggregating `7,249 in infrastructure sectors such as power, potential business opportunities crore (`12,090 crore in FY2015) were telecom, roads, ports and airports. It from financial institutions viz. Banks, disbursed to such projects. also covers other non-infrastructure Mutual Funds, Insurance Companies, projects in sectors like metals, cements, Brokerage firms andN BFCs. In addition oil & gas, among others, with certain to facilitating their Cash Management threshold on minimum project cost. by making available various Collection From the perspective PFSBU also provides support to other and Payment products , Insurance Cos. verticals for vetting their large ticket term of environment have been extended ‘Easy Collect’ loan proposals. In order to strengthen product for collection of premium over sustainability, your the policy and regulatory framework the counter at all Branches and Mutual for financing infrastructure, inputs are Bank focuses on Funds have been provided with ‘Intra- also provided to various ministries of day Limit’ facility for facilitating their projects within both Government of India, Niti Ayog and redemption payments. Capital Market the RBI with respect to lenders’ views infrastructure and Branch (CMB), a Specialized Branch on new policies, Model Concession at Mumbai caters to the Capital Market non-infrastructure Agreements and broader issues being business clients and brokers. During categories. In faced in infrastructure financing. FY2016, CMB has handled 119 Bonds/ FY2016, your Bank FPO/ IPOs issues and mobilised Exhibit 33: Project Finance & Leasing `29,307 crore (CASA) as Bankers to an Business Performance accorded 30 new Issue (BTI). During FY2016, CMB has (`in crore) sanctions aggregating received recognition as one of BSE’s FY2015 FY2016 top 3 performers (for the year FY2015) a total amount of in the Primary Market Segment (Debt Project Cost 167551 77227 `15,848 crore (fund Public Issue Bids-Banks) and Primary Project Debt 112981 59094 Market Segment (Equity –IPO/FPO based and non-fund Bids – Banks) respectively. Sanctioned 19718 18125 based). These were Amt. made to various Project Finance & Syndication 8845 18082 Leasing Amt. sectors such as power The project finance environment (wind, solar, coal, continued to remain challenging during As on 31st March, 2016, the portfolio FY2016 largely due to a slowdown in of infrastructure projects under hydro & transmission), new project commitments by corporates, implementation and control with PFSBU Roads & Bridges, Oil coupled with implementation and include Power projects with aggregate capacity of 43,536.50 MW; Telecom & Gas and fertilizers operational issues affecting ongoing Projects serving more than 190 million projects. among others. subscribers; Road projects covering

58 State Bank of India | Annual Report 2015-16 Mumbai (2), New Delhi (2) and Pune, and has 54 branches as on 31st March, 2016 with 20 branches in metro centres A Smart and 34 branches in other urban centres. MCG Loan Portfolio (Non-Food Bank for a Domestic) (`in crore) FY2015 FY2016 Corporate 2,27,756 2,32,638

India on During the year under review, MCG has grown in investment grade assets mainly in, Textiles, NBFC, CRE, the go Chemicals and Wholesale industries.

The Group continues to partner in growth of its customers in India to Mid Corporate Banking expand their activities and provides them support for acquiring assets or With a view to focussing on midsize units having credit requirement for limit of companies overseas, including by way above `50 crore and upto `500 crore (Fund based and Non-Fund based), your of loans to overseas subsidiaries and Bank’s Mid Corporate Group (MCG) operates through its 14 Regional Offices across JVs (backed by Letters of Comfort or Ahmedabad, Bangalore, Chandigarh, Chennai (2), Hyderabad, Indore, Kolkata (2), Stand-by Letters of Credit).

Industry Wise Advance as on 31.03.2016 Personal 0.54% Mining 0.57% Others 6.52% Cement 0.59% Leather 0.28% Retal1.03% Metal & Metal Products 12.16% Ceramic 1.12% Paper & Paper Products 1.23% Drugs & Pharma 1.83% Transport 2.14% Services 2.17% Power 11.59% Automobiles 2.21% Agriculture 2.29% Sugur 2.33%

Gems & Jewellery 3.30% Textile 10.59% Whole Sale 3.46%

Food Processing 3.99%

NBFC 8.27% Infrastructure 4.81% Chemicals 6.13% CRE 4.96% Engineering 5.89%

State Bank of India | Annual Report 2015-16 59 International Operations International Banking Group (IBG)

20

North America Branches/Other offices Bahamas (1) USA (3)

Subsidiaries California (9) Canada (6) Europe Branches/Other offices Rep Office Belgium (1) Washington France (1) Germany (1) UK (13) Africa Subsidiary Russia (1) Branches/Other offices South 1 Rep Office Africa(8) Italy Turkey Subsidiaries/Investment Mauritius (15) Nigeria (1) Botswana (1)

Rep Office Egypt

South America Rep Office Sao Paulo (1)

60 State Bank of India | Annual Report 2015-16 International Banking Network of 198 Offices in 37 Countries

East and South Asia Branches/Other offices Bangladesh (13) China (2) Hong Kong (2) Japan (2) Maldives (3) Sri Lanka (6) Singapore (7)

Subsidiaries/JV Indonesia (14) Nepal (66) Bhutan (1)

Rep Office Philippines South Korea Myanmar 19 119

26 12

Australia Middle East Branches/Other offices Branches/Other offices 1 Australia (1) Bahrain (4) Israel (1) Oman (1) Qatar (1) Saudi Arabia (1) UAE (2)

Rep Offices Iran

Managed Exchange Cos Oman

State Bank of India | Annual Report 2015-16 61 Directors’ Report

International Exhibit 34: Break-up of foreign offices (No.) Operations FY2015 Offices Offices FY2016 opened during closed during The International Operations of your the year the year Bank are guided by the overarching Branches /Sub-Offices / 69 7 1 75 Other Offices principle of supporting global Indian Subsidiaries / JV (7) (1) - (8) corporates and Indian diaspora spread Offices of Subsidiaries/JV 110 5 2 113 across geographies. In addition, your Representative Offices 8 - 1* 7 Bank also targets the local populace Associates / Managed 4 0 1 3 exchange Cos /Investments in line with its vision to become a truly Total 191 12 5 198 International Bank. * Seoul Rep Office in South Korea was upgraded to Branch. Global Presence The number of foreign offices of your Bank is currently 198. Spread across 37 countries in all the continents, your A Smart Bank offices include 55 Branches, 20 other offices, 7 Representative Offices Bank for a and additional 113 offices of 8 Foreign Subsidiaries. As such, diversity in operating structures is a cornerstone of Globalised your Bank’s expansion activity. During FY2016, your Bank has opened 2 new India on branches in United Kingdom, 4 Indian Visa Application Centres in Bangladesh and upgraded Seoul Representative the go Office into a full fledged branch. Your Bank commenced its Representative Office functions in Sao Paulo, Brazil The Group has dedicated verticals Exhibit 28: Business (In US$ billion) through its subsidiary State Bank of performance of Foreign Offices in Credit and NPA management, March 2015 Compliance, Risk, Treasury, Retail India Servicos Limitada. Nepal SBI Bank 48 50 March 2016 and Overseas Subsidiaries, Human Limited, a subsidiary of SBI has opened 40 Resources, Operations, General 3 branches and 1 extension counter 38 Banking, and Strategy to support the during this period. Dusseldorf Marketing extensive international operations Office of SBI, Bakersfield Branch of SBI of your Bank. International Banking Group supports your Bank as well as its (California) and Abbotsford Branch of 14 14 major stakeholders through its various SBI (Canada) Bank were closed during business functions as detailed below: the year. Net Assets Customer Deposit Credit

62 State Bank of India | Annual Report 2015-16 Corporate Bank also engages in retail banking Highlights activities for both Indian as well as local 1. merchant Banking „„ Redesigning of Financial customers. Institutions Group to consolidate the Your Bank facilitates raising debt in Correspondent Relationship job, which Foreign Currency by Indian corporates Highlights was earlier being handled partly by by way of External Commercial „„ Bank launched USD Travel Card at Global Market Unit Kolkata (GMUK). Borrowings through syndicated deals its Maldives Operations. „„ Relationship Management Concept in conjunction with other Indian and for Banks & Financial Institutions has Foreign Banks, and also through been introduced in line with our strategy bilateral arrangements. 4. Financial Institutions Group to adopt the best international practices. „„ SBI is in the process of acquiring a Highlights The Group facilitates linkages of your CRM solution to have a 360° view of the Bank with international stakeholders viz „„ Premier Mandated Lead Arranger relationship with Banks/FIs and Book Runner during the FY2016 Correspondent Banks, Foreign Govt. Agencies and Developmental Financial „„ 9 Syndications aggregating US$ Institutions, International Chamber of 5. Global Trade Department 2.674 billion Commerce etc. on the one side and Global Trade Department (GTD) „„ 14 Bilateral Loans aggregating facilitates synergy between IBG and facilitates and supports your Bank’s US$ 3.510 billion to Indian corporates other Business Verticals such as Mid Foreign Offices in maintaining a on a bilateral basis Corporate Group, Corporate Banking vibrant Trade Finance portfolio. GTD Group, Global Markets etc. on the formulates policies and innovates new 2. IBG-Credit other side. IBG-Credit is responsible for building a quality loans & advances portfolio in the overseas branches. This is achieved through a range of loan products. The loan products inter alia, include bilateral & syndicated loans.

Highlights „„ Introduction of Loan Lifecycle Management System across Foreign Offices for prompt monitoring and better control and supervision of loan accounts.

„„ Creation of Japan desk at New Delhi to promote Indo-Japanese collaboration

3. ibG Retail & Remittances Through specialized remittance products your Bank enables a ‘window to India’ for NRIs residing in different corners of the world. In some countries Inauguration of our Seoul, South Korea Branch by Shri B. Sriram, MD (CB) with considerable Indian diaspora, your

State Bank of India | Annual Report 2015-16 63 Directors’ Report

products as per changing regulatory Highlights limits are monitored and reviewed on norms and market demands. GTD „„ Tie-up with 31 Exchange regular basis. takes lead in introduction of new Companies and seven Banks in Middle- technologies to improve service quality East Countries for channelizing inward 9. it Initiatives remittances through your Bank. in Trade Product offerings viz., Letters As a truly Digital Bank, your Bank has taken a holistic approach to innovate of Credit, Bank Guarantee and Trade „„ During FY2016, GLS (on behalf of domestic branches) handled 67,577 processes to capture and convert data remittances, plays an important role export bills and 65,619 foreign currency into a simple virtual organisation that in synergizing Domestic and Foreign cheque collections aggregating to US$ appears ubiquitous to every customer, offices for maximizing returns. 14.39 billion. offering tailored products to the likes, needs and preferences. „„ During FY2016, GLS handled Highlights 99,08,361 online inward remittance The initiatives taken at Overseas „„ Trade Finance assets outstanding transactions amounting to US$ 6.69 Offices are: as on 31st March, 2016 was US$ billion received globally.

14.614 billion, accounting for 36.29% „„ Your Bank completed its multi- of IBG’s Net Customer Credit. Non-fund 7. international Banking - country migration from Finacle 7.6 to based business done by our Foreign Domestic Finacle 10.2 in 24 countries, which Offices during FY2016 was US$ 10.377 International Banking - Domestic will support a wide range of APIs (IBD) is a new department under (Application Programming Interface), billion. FIG, which is a single point of contact wealth management and enhanced „„ To combat Trade Based Money for all the Foreign Offices as well as mobile banking solution.

Laundering, rolled out an additional Correspondent Banks for all matters „„ Trade Finance Solution- e-Trade screening solution across all Trade relating to domestic IB business. IBD is from Misys Plc. (UK) was launched in also responsible for monitoring timely Finance intensive Foreign Offices. China and Maldives enabling customer’s submission of all RBI returns and interface with online 24 X7 portal for „„ State-of-the-art Trade Finance fema compliance. all Trade Finance requirements at solution acquired during FY2016. Pilot Foreign Offices Country China and Maldives since 8. Regulators „„ Anti-Money Laundering solution implemented and a complete rollout Your Bank is committed to the policy of (AMLOCK) implemented across across all countries expected by zero tolerance of non-compliance with all geographies which automated December 2016. regulatory guidelines in all its overseas processes through digital alerts. ACE operations. Regulatory concerns Pelican software has integrated/ „„ SBI has been adjudged as The identified by regulators/auditors are automated Watch-List Screening to Best Trade Finance Bank-India by addressed on priority basis. Status of optimize KYC norms. Global Finance Magazine for the fourth remediation is placed before the Audit „„ Bank implemented a predictive tool time in a row in January 2016. Committee of the Board. (FinAssure) covering all 24 geographies which monitors performance of all 6. Global Link Services Your Bank has adopted an Independent critical applications, networks and Risk Governance Structure covering infrastructure to dynamically manage Global Link Services (GLS), a domestic and international operations. unforeseen peak loads. specialised outfit, caters to centralised A country Risk Management Policy in „„ The much admired onlinesbi processing of Export Bills collection, tune with RBI guidelines is in place. (Internet banking solution) extended to Cheque collection and online inward Country-wise and Bank-wise exposure two more geographies viz. Bahrain and remittances. Botswana. Loyalty programme covering

64 State Bank of India | Annual Report 2015-16 debit card usage and Remittance Stressed Assets „„ Cancellation of coal blocks and the through INB was launched in Singapore Management limited off-take of power by Discoms to promote digital stickiness and (Power Distribution Companies) given Management of Non Performing Assets cashless transactions. their reducing purchasing capacity. (NPAs) is one of the biggest challenges „„ Labour laws constraints and the „„ To provide best of security, comfort facing the Banking sector today. Stress in important sectors such as and confidence to customers, Bank Increasing NPAs adversely impacts Textiles, Power, Sugar, Steel and replaced all magnetic stripe cards the bottom line of banks. Banks cannot Aviation. with EMV cum Magnetic Stripe Cards. book income on such assets and they have to make provisions as per IRAC „„ Delay in realisation of receivables Advanced Anti Skimming devices and norms of RBI. due to subdued demand. terminal security, SMS alerts, Out of Rising NPA levels and fresh slippages „ zone concepts and PIN based debit card „ Delay in the resolution of NPAs across sectors can be attributed to the through legal proceedings. authorisation have been implemented following factors: in all geographies. Consequent upon the Asset Quality „„ Reduced market confidence due to Review (AQR) exercise conducted Bank’s Digital Banking strategy is the slowdown in the global economy; by RBI, profits of your Bank reduced continuously reworking to initiate the negative spill overs from global considerably on account of higher various technologies such as Internet of financial markets; and the Less than provisioning. With the economic adequate pick up in domestic growth Everything, Open Banking to enhance recovery prospects appearing weak in and declining exports. the choice, utility and experience, the short term, the stress faced by the Mobility and Wearable. Your Bank has „„ Stalling of projects due to Banking sector is likely to continue for a few more quarters. initiated: infrastructure bottlenecks, delays in obtaining Govt. approvals, problems in land acquisition and supply side „„ Enterprise Project Management constraints. tool where every IT project is tracked. Exhibit 35: The Movement of NPAs and Recovery in Written-off Accounts „„ Bank level CRM solution to improve (`in crore) deep understanding of customer needs and behaviour, requiring very little FY2013 FY2014 FY2015 FY2016 remote support. Gross NPA 51,189 61,605 56,725 98,173

„„ Big data analytics to help deliver Gross NPA% 4.75% 4.95% 4.25% 6.50% products on customer preferences Net NPA% 2.1% 2.57% 2.12% 3.81% and tracking customer stickiness for Fresh Slippages 31,993 41,516 29,444 64,198 successful customer retention. Cash Recoveries / Up-gradations 14,885 17,924 13,011 6,985 „„ Bank has begun using Private Cloud selectively and has plan for Write-Offs 5,594 13,176 21,313 15,763 Document Management Solution to Recoveries in Written-off 1,066 1,543 2,359 2,859 capture its records digitally. Accounts

„„ Generation of regulatory and other reports directly from core data As part of focus on resolution / recoveries of NPAs, Stressed Assets Management Group (SAMG) continues to work as a dedicated and specialised vertical for efficient under ADF (Automatic Data flow) for resolution of high value NPAs. It is headed by a Deputy Managing Director with two International Banking Statistics (IBS), Chief General Managers overseeing the entire effort. With five Regional Offices, Bank Exposure and Country Exposure

State Bank of India | Annual Report 2015-16 65 Directors’ Report

each headed by a General Manager, IBA, among others. Despite these 4. Electronic Document Management a General Manager AUCA exclusively constraints, all actions initiated for System (EDMS) is an electronic for management and resolution of resolution are constantly followed up depository of important documents, Advances Under Collection Account and strategies are periodically reviewed transactions, audit trails, accounting (AUCA) and a General Manager S&R for expeditious resolution of NPAs. reports, workflow processes, & CDR for handling Sale to ARC and compliance documents, etc. It enables evaluating viable CDR proposals, secure, single point storage and timely SAMG has turned into a centre of Taking “SMART” & efficient retrieval of documents. excellence in the NPA resolution effort Initiatives of your Bank. As on March 2016, SAMG The Stressed Assets vertical has taken has 19 Stressed Assets Management the following technology initiatives: 5. The NPA1 PORTAL enables the Branches (SAMBs) and 44 Stressed monitoring of recovery by the Stressed Assets Recovery Branches (SARBs) 1. litigation Management System Asset Branches on daily basis and across the country. Besides initiating (LMS) deals with all the cases that dissemination of comparative recovery hard recovery measures, SAMG position of each branch amongst the have been filed for and against your introduced certain innovative methods entire field force. It also provides a and thus gave first mover advantage Bank in respect of all Loan (NPA/ single point repository of standardised to your Bank in areas like arranging AUCA) accounts. It enables effective information on NPA / AUCA accounts Mega e-Auction of large number of management of existing and new and their movements. properties on Pan-India basis, initiation legal cases, store contact details of of criminal actions, identification of Advocates, Valuers, Recovery Agents ACTION PLAN FOR un-encumbered properties of the etc, and track expenses incurred on borrowers / guarantors and arranging MANAGING NPAs them. The monitoring through LMS for attachment of properties before Your Bank has adopted a twofold system has ensured that all court judgement. The Loan resolution week strategy for controlling fresh accretion hearings are attended by our officials, (LRW), a nationwide Bank Adalat was and resolution of existing NPAs. conducted over a period of one week in advocates and hearings outcome also May 2015 and all over NPA borrowers gets recorded instantaneously. A. controlling Fresh were advised in writing well in advance Accretion to NPAs: to come for negotiated settlement. 2. loan Life-Cycle Management 1. Early diagnosis of the problems and Besides giving wide publicity through System (LLMS) is the online credit analysis of the reasons for irregularity, nationwide advertisement through processing software which handles all print and social media, the event was with appropriate strategies for time credit processes, as prescribed by your internally monitored by setting-up war bound action to prevent slippage as Bank, end-to-end. It has been rolled rooms at administrative offices. NPA. out in all the SAM Branches and helps Despite making concerted efforts to in generating dynamic MIS reports, 2. Industry wise exposure limits expedite recovery and reducing NPAs, monitoring the account right from have been set to diversify profile and your Bank often faces impediments in inception, minimize risk. the form of legal hurdles, unavailability of strategic investors, lack of buyers for 3. Early Warning System (EWS) is a 3. loan portfolio is monitored on an properties put up for auction, among software that enables early identification ongoing basis. others. For the various constraints, your of potential stressed accounts before Bank has approached the concerned they become delinquent so that timely 4. Account Tracking Centres have authorities at appropriate levels and been set up to prevent accounts slipping relevant forums like Gyan Sangam, action can be taken preventing their further deterioration. into NPA category.

66 State Bank of India | Annual Report 2015-16 5. A system of Tele-calling/ personal 7. Review of NPAs at various levels is 18. Your Bank organises “Mega contact/ SMS alert/ sending notices etc. done at regular intervals. e-Auction” every calendar quarter. is being followed on default of overdue 8. BIFR cases are closely followed installments / irregularity in accounts. 19. Properties available for auctions up. are also showcased in “Property Mall”, B. improving Resolution of 9. E-auction has been introduced for wherein, space is taken in shopping NPAs: increased transparency and better price malls in the prominent locations, to 1. In cases where soft recovery realisation. measures do not fructify, legal action is display pictures/videos of properties being put up for auction. initiated like action under SARFAESI, 10. Sale to ARCs is also explored in Filing suits in Debt Recovery Tribunals select cases. and other Courts. Depending on the 20. Your Bank is also positively merits of the case, recourse to higher 11. Identifying and engaging with exploring CIBIL’s proposal of carrying strategic investors for takeover of courts like High Court, Supreme Court, out health check on the existing etc. is also taken. stressed assets. Strategic Debt commercial and consumer portfolio with Restructuring (SDR) option is also explored in select viable cases as per the aim of improving our Asset quality. 2. Involving Business Correspondents, RBI guidelines. Business Facilitators and Self Help 21. AT@M: The web based Assets Groups in recovery of Agricultural 12. Entering into One-Time Settlements Tracking & Monitoring (AT@M) NPAs. with borrowers. software enables all stake holders 3. Arranging Bank Adalat and actively 13. Using Resolution Agents to take to have a common view along with participating in Lok Adalats for recovery. possession of properties mortgaged granular drill down up to account level. to your Bank and arranging for their It covers monitoring of SMA as well as auction. 4. nodal officers monitor DRT Cases Sub Standard accounts in PER, SME and liaise closely with DRT officials. and AGL accounts. An SMS is sent Lawyers’ meets are conducted and the 14. Considering Debt Asset swaps in some cases. to all customers at Risk Grade I level performance of advocates is constantly followed by a reminder by way of an monitored to expedite DRT process. 15. Engaging investigation agencies SMS. to trace out unencumbered assets 5. CLOs / Law Officers / DGMs / of promoters and guarantors and 22. To prevent slippages, your AGMs attend court cases to personally obtaining attachment before judgement monitor advocates performance. It also over these properties. Bank has tied up with GE Capital for signals a strong intent of your Bank proactively making calls to stressed towards battling out the cases while 16. Publishing photographs of accounts (SMAs) in Retail segment and defaulters in newspapers where making last mile recovery efforts. Real Estate sector. warranted. 6. Identifying Companies and 23. Assets Tracking Centres at Circle promoters as Willful Defaulters and 17. Persuading Large Corporate borrowers under stress to sell non- level track and monitor probable NPA arranging for display of their names core assets, dilute their shareholding accounts (SMAs) in SME and agri on the websites of Credit Information and bring in strategic investors thus Companies such as CIBIL, Equifax, segments by making calls on the reducing debt and improving viability. CRIF Highmark, Experian. customers and follow up for recovery.

State Bank of India | Annual Report 2015-16 67 Directors’ Report

Treasury Operations Your Bank’s Global Markets Group is responsible for managing your Domestic Bank’s SLR portfolio, as well as Your Bank’s treasury, has given another creditable performance this year, despite liquidity management which includes relatively unfavourable market conditions. Interest income increased 20.5% YoY maintenance of CRR and HQLAs for in FY2016, while profit from sale of investments also soared 44.19% YoY to over Liquidity Coverage Ratio (LCR). Unlike `4900 crore. Your Bank maintained its preeminent position in the forex segment, last year, the tailwind from falling yields with profit from forex and derivatives growing above 19.5% in FY2016 from the was not available this year for the Bond same period last year. portfolio. Benchmark 10 year G-Sec was trading at 7.78% till as late as 28th February, 2016, compared to 7.76% on 31st March, 2015. It was only in Exhibit 36: 10yr G-Sec Yield (%) the month of March 2016 that yields came down to close the year at 7.46%, down only 30 basis points in FY2016, 8.1 compared to a more than 100 basis 8 points drop in FY2015. Your Bank was 7.9 still able to use the temporary dips to

7.7 book profits in the interest rate portfolio

7.6 recording an increase of 49.27% over FY2015. 7.5

7.4 To improve our portfolio yield and 7.3 to benefit from the opportunities 7.2 available in the Corporate Bonds and Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Commercial Paper markets, your Bank made timely investments in select papers during FY2016. In the area of liquidity management, we continue to save costs through more efficient management of CRR compared to the Exhibit 37: NSE Nifty 50 industry average.

9500 The equity portfolio faced significant headwinds this year as benchmark 9000 Nifty index was down nearly 8.86% 8500 in FY2016 despite a sharp recovery 8000 in the month of March. But your Bank 7500 continued to beat the benchmark

6500 through well timed entry-exits through the year, recording a profit growth of 6000 4.59% YoY in FY2016. Further, in 5500 order to improve transparency and risk 5000 management, SBI has started placing Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 our equity market trades through online

68 State Bank of India | Annual Report 2015-16 trade routing system, which allows outward remittance facility, called Bank has also taken steps to increase monitoring and execution of orders. This “remXout”, has been provided through the use of IT in its Treasury Marketing system enables us to execute orders www.onlinesbi.com for remittances efforts through the implementation of with minimum intervention from brokers in USD, EUR and GBP. Further, to an automated Lead Reporting and which, in turn, helps in risk mitigation. streamline your Bank’s large global Management System. Majority of the deals / transactions have forex operations, an integrated Global been migrated to the online trading Back-Office has been set up in Global In the Private Equity / VCF space, the System. Markets’ Kolkata office. JV set up with Macquarie and IFC in 2008, to manage the US$ 1.2 billion The Global Markets Group provides Our Regional Treasury Marketing India-focused PE fund, has invested foreign exchange solutions to customers Units provide the necessary marketing approximately 96% of its total capital for managing their currency flows and support to our Fixed Income and commitments. The fund invested in hedging risks through options, swaps Foreign Exchange dealers through infrastructure assets viz. Telecom and forwards. The group also manages regular interactions with customers. Tower, Airport, Thermal Power, Hydro FCNR(B) deposit corpus of your Bank They are well supported by our in power and NHAI road assets. and provides FCNR(B) loans and house macro-economic and market Export Finance in foreign currency for research teams and provide customers The Oman India Joint Investment Fund PCFC/EBR to the customers. Foreign with inputs about market developments (OIJIF), set up in 2010 partnering exchange and derivatives business while helping them choose a mix with State General Reserve Fund of continued to contribute handsomely to of products to suit each customer’s Oman, has completed its investments profits of your Bank, reporting a 19.5% specific requirements. This year, your for Fund-I worth US$100 million. increase in profits despite the fall in Bank has formed a new Inter-Bank Moreover, the Fund has made 1 full country’s trade volumes. marketing team and has commenced exit and 1 partial exit from the investee dealing with a number of FPI clients to companies. Based on the success In continuation of our endeavour to leverage our large debt portfolio and of Fund-I, both the partners (SBI improve customer experience through our strengths in the FX market. Your and SGRF) have decided to launch the use of technology, your Bank launched “SBI eforex”, an online forex rate booking platform on 18th June, 2015. The platform enables customers to book forex rates to hedge their exposure in USD, EUR & GBP with inbuilt limit monitoring mechanism. Apart from booking the rates for cash, spot and forwards, the platform also enables customers to view their entire hedging position with your Bank.

As mentioned last year, your Bank has completed the roll-out of ‘FX-Out’ to all its branches in multiple currencies, which will allow them to initiate forex remittance at their end without having to route it through a forex authorised branch. To make it even more State Bank organized “State Bank Synergy Cup 2016” convenient, an internet based Forex

State Bank of India | Annual Report 2015-16 69 Directors’ Report

Fund-II with a corpus of US$ 300 million. Portfolio Management Services borrowings, bilateral loans and loan Till date Sponsors have committed US$ increased SBI’s AUM by 1.69% YoY from supranational entities to replace 200 million to Fund-II and fund raising to `3,22,732 crore. SBI PMS has MTN bonds of about US$ 2.2 billion for tying up the remaining amount is in been re-appointed as fund managers which matured during the year. Some process. With this, Fund-II is expected for Employees’ Provident Fund of the sources of liquidity at Foreign to be launched shortly. Organisation as well as Coal Mines Offices were: Provident Fund Organisation with During the year, SBI has committed highest fund management share „„ Long Term bilateral loans from to invest in the SIDBI-NSCIL (a of 35%. multilateral agencies NSE subsidiary) promoted Trade „„ Medium Term bilateral loans from Receivables e-Discounting System In addition to our continuous efforts in Correspondent Banks. (TReDS). It is a platform that aims making profits, improving processes „ to serve as an exchange to facilitate and reaching out to customers, your „ Medium and Long Term Syndicated MSMEs to convert their receivables to bank has advanced risk management Loans cash before maturity. The proposed systems in place. Your Bank’s internal „„ Repo arrangement platform will support multi-financier auditors have recognised these traits by „„ Lines against Bankers’ Acceptance bidding for invoices through market awarding the Global Markets Group top determined rates for factoring the scores in the recently concluded audit For FY2016, the international treasury invoices. The platform, once set up, will exercise. Investment Portfolio stood at US$ 5,551 provide an opportunity to your Bank to million, earning US$ 192 million Interest bid for financing the Bills put up by the International Income from these investments. Your customers of other banks/FIs as well as During FY2016, adequate liquidity Bank also earned Divestment Income of its own customers on the platform. was arranged through Syndicated US$ 11 million during the same period.

Reception for the dignitaries participating in the Annual World Bank Group – IMF meetings – 2015 at LIMA- SBI Team with RBI Governor, Dr. Raghuram Rajan & guests

70 State Bank of India | Annual Report 2015-16 IV. Support & Control Operations 1. Human Resource them through training interventions, workshops, seminars, video-conferencing; assisting in the career development of the employees by providing a scientific and and Training objective approach to measure their performance; incentivising the top performer; 1.1. People are the putting in place an organised structure for skill and capability building in critical Most Valuable Asset positions and by implementing various measures for talent retention. All these Your Bank believes that Human have contributed significantly to generate a highly satisfying working environment Resources Management is an wherein the employees feel happy, engaged and enthusiastic about their work and important facet of organisation’s take positive action to further your Bank’s business interests and reputation. effectiveness. Accordingly, the Bank has been making constant endeavours Exhibit 38: SBI’s Workforce Strength to improve the functioning of HR as a Category 2013-14 2014-15 2015-16 strategic business partner by nurturing Officers 80531 78540 80818 its loyal and dedicated employees Assistants 101648 94455 88606 who have made significant and lasting Sub-staff other 24799 23404 21477 contributions towards achieving your Watch & Ward 15831 16839 16838 Bank’s goals. Total 222809 213238 207739

Towards this end, your Bank has taken The leadership has been very proactive in employee engagement which is critical some important measures to meet the for your Bank to sustain growth with profit. This has been borne out by initiation of business challenges, which include, a host of important initiatives, as detailed below, during FY2016. recruiting young and highly qualified candidates in large numbers; improving Career Development System (CDS) the working / service conditions of the employees representing a wide During the FY2016, your Bank has introduced a new system of performance diversity of group /interests; re-skilling appraisal (re-named as Career Development System) of individual employees in

an objective and transparent manner. The entire system is IT driven. All the employees of your Bank have been A Smart assigned KRAs and almost 90% of the positions have been made budgetary or measurable. The system extracts Bank for a business data required for the KRAs and calculates scores. All the employees are being judged on the basis of their Passionate performance. These scores provide the input for Promotions and other Rewards workforce and Recognition.

The system also has provision for on the go capturing the developmental needs of the individual employees through competency assessment.

State Bank of India | Annual Report 2015-16 71 Directors’ Report

Manpower Planning & facility has been extended as a welfare in services across branches. This Recruitment measure with the objective of creating has been amply vindicated by the an employee friendly environment and improvement in productivity indicator A scientific model has been developed promoting healthy work life balance. by way of perceptible increase of more to determine the manpower than 14.34% in the level of Business per requirement in branches in order to „„ Chummery accommodation employee of your Bank from `1234 lakh provide optimal staffing across various for women employees : Chummery as on 31st March, 2015 to `1411 lakh types of branches. To strengthen the accommodation has been provided as on 31st March, 2016. Moreover, with human resource pipeline, 160 young to female officers upto the grade of a view to improving productivity and graduates from 23 top ‘B’ schools were Scale V, who are posted in Rural / strengthening employee engagement recruited as Management Trainees on Semi-Urban / Urban areas. This is through enhancing job satisfaction and short term contract. These officers will designed to facilitate their completion pride in one’s own job, clerical cadre support the existing efforts of your Bank of mandatory assignments in a hassle- employees, who constitute nearly 43% to augment skills in specialised area. free environment. of the total workforce in your Bank, Bank is also recruiting on lateral basis „„ Alertness Award: The scope of have been re-designated as Associates in certain specialised positions, such Alertness Award Scheme has been (Customer Support & Sales). as , Wealth Management Specialists, enlarged for Recognition & Rewards Risk Management and Compliance including cash ranging from `5000/- Bi-partite Settlement & Wage specialist and information technology to to `200000/- for alertness of staff enhance in-house knowledge. members in prevention / detection / Settlement foiling of frauds and Near Miss Events On 25th May, 2015, The Indian Banks Employee Engagement which have operational risk with Association (IBA) signed an industry potential to cause serious damage. level Bi-partite settlement / Joint „„ Sabbatical Leave: In view that Note (effective from 1st November, this facility, with its attendant benefits, „„ Group Medical Insurance for 2012) with representative Unions, has already been provided to women retired employees: Two separate Associations of workmen & officers, and Single Men employees, Sabbatical Group Medical Insurance Schemes following which a 15% wage increment Leave has been extended to Differently have been made functional to meet the was decided to be given to employees Abled employees & those having medical needs of Retired Employees. upto the level of General Manager. Differently Abled dependents viz. Policy ‘A’ will cover existing SBI REMBS As part of the settlement, 2nd and 4th children and / or spouse. members with enlarged coverage of Saturdays have been declared holidays diseases and mode of treatment, where „„ Vacation Policy : Vacation Policy and all other Saturdays have been premium will be borne by Bank. Policy has been introduced by making a declared as full working days, providing ‘B’ will cover future retirees and non- stipulation of mandatory availment of much needed relief to employees with members of SBI REMBS with eight leave for ten working days in one go by family responsibilities. the staff members, posted in sensitive plans of insurance ranging from `3 positions, in each financial year. lakh to `25 lakh, where premium will be Representation in This leave will serve the purpose of borne by the members. increasing efficiency, productivity and Employment risk mitigation. Employee Productivity Bank provides reservation to Scheduled Castes, Scheduled Tribes & Persons „„ Flexi-Time Scheme : Your Bank Improvement with Disabilities (PWDs) as per GOI has introduced flexi-timing / flexi- With infusion of new blood by way of directives. In order to deal with issues hour scheme on a limited scale where recruitment of highly qualified Gen-Y relating to reservation policy and the employee is free to select his / employees over the last 4~5 years, there effectively redress the grievances her own work hours within limits laid has been noticeable attitudinal change of the SC / ST employees, Liaison by the management, on grounds of in the employees’ customer interaction looking after family and health. This and corresponding improvement

72 State Bank of India | Annual Report 2015-16 Officers have been designated at allL ocal Head Offices of your Bank as also at the During FY2016, 27 Complaints of Corporate Centre at Mumbai. Sexual Harassment of Women were filed, of which 23 cases were disposed Exhibit 39: SC/ST/PWD Representation in Employment off during the same period. Category Total SC ST DIFFERENTLY ABLED PERSONS Industrial Relations Your Bank held regular consultative OFFICERS 80,818 13,681 5,996 912 (01.13%) meetings with the Associations (16.93%) (07.42%) and the Unions as part of having a ASSISTANTS 88,606 14,018 7,898 1,772 (02.00%) constructive dialogue for understanding (15.82%) (08.91%) and addressing grievances of various categories of employees. These SUB-STAFF 38,315 9 , 9 0 5 2,648 198 (00.52%) consultations are carried out at both (25.85%) (06.91%) the Corporate Centre, as well as at TOTAL 2,07,739 37,604 16,542 2,882 (01.39%) Circles. Various issues raised by the (18.10%) (07.96%) Federations were examined on their merits and necessary actions were taken for their resolution. Women in Total Workforce As on 31st March, 2016, the number of women employees in the total workforce 1.2. Strategic of your Bank is 44,585 (Officers- 12,884, Clerical - 28,944, Sub-staff -2,757) which constitutes 21.46% of the total staff strength of 2,07,739. Training Unit In a quest for becoming an organisation which is a great place to work, our Exhibit 40: Composition of Women Employees Total Bank continues a planned, proactive over last 3 years Total Women Officer (W) training process for individual growth 222809 207739 213238 Clerical (W) and organisational effectiveness. New Sub-staff (W) techniques, and methodologies are being imported from all corners of the globe to establish a virtuous circle of teach/learn/teach/learn to enhance quality, transform employees into knowledge workers so that they can carry 44585 44700 45132 21.46% 21% 20.25% forward our initiatives towards creating 28944 31224 30102 customer delight. The training system 12884 10720 2757 11701 2987 3188 functions under the overall supervision and guidance of the STU. The training 2015-16 2014-15 2013-14 apparatus at present consists of five Apex Training Institutes (ATIs) and 45 State Bank Learning Centres. Sexual Harassment Your Bank has been able to create a Your Bank has a zero tolerance towards sexual harassment at workplaces and has virtual Knowledge university within the put in place an appropriate mechanism for prevention and redressal of complaints institution, with a capacity of classroom of sexual harassment at workplace so as to ensure that women work with dignity training of 3350 employees per day in all and without fear. areas of Banking, Economy, Leadership, Ethics, Marketing, Administration and Soft Skills, in addition to a robust digital learning system.

State Bank of India | Annual Report 2015-16 73 Directors’ Report

Principles that drive learning Harvard University. Our Bank has a Learning Centres (SBLC) in terms of activities: tie-up for business content across 44 Training Resources, Infrastructure and management topics and is mandatory for Academic Activities. This year your „„ A continuous process of learning Senior Executives, which leads to Joint Bank has made tremendous progress from on-boarding – to “Transition to Certification between SBI and HMM. in this endeavour, with the result Retirement”. that, during FY2015, 23 SBLCs were „„ A culture of self-learning in the Mentoring of Branches: accredited with the ISO 9001:2008 organisation, which is more cost Certification, taking the total tally to 27 To ensure continued focus on improving effective and convenient in the long run, accredited centres out of a total of 45 and delivering improved customer is being promoted. SBLCs till date. service on a consistent basis SBI has „„ A robust e-learning platform to drive initiated Mentoring of branches and this efficient e-learning is fully functional. is more than the traditional understanding Training Initiatives „„ Training programmes aligned of Mentoring. In your Bank’s scheme, To evolve a strategy for raising the Bar with current corporate priorities of the top executives of your Bank, Deputy and to reduce the gap between Campus Business Units. General Managers and above, have to Corporate, 138 One Day Workshops „„ Constant upgrades of our training been assigned 4 branches each. on Soft Skills by External Finishing content and delivery, learning to be at Schools / Institutes were arranged par with global best practices being The primary objectives for the first time for Newly Recruited tried. behind branch mentoring are: Associates. This enabled an exposure „ to the challenges and demands of the „ In order to rekindle the energy and „„ to help branches achieve sustained real world. enthusiasm generated during Aarohan, improvement in customer service. our Mass Awareness Programme, „„ to help branches achieve business With technical knowledge, your Bank’s an “Aarohan Continuum Capsule” growth. officers are also being coached to has been designed and programmes „„ develop their physical and financial have been conducted through Visiting to help the team in realizing their full potential. health, so that they can be contributing Faculty Scheme at branches. citizens. Aided with a strong set of During the mentoring process, the Principles and Ethics, the training LEARNING DIGITALLY mentor, notionally steps away from system actively promotes strong values e-Learning: In order to inculcate a his administrative role and looks at in their programmes. Your Bank has culture of self learning amongst our these Branches from a developmental also started a facebook page for new employees, SBI has developed a robust perspective. The mentor also interacts batch of Probationary Officers (2015) e-learning platform “Gyanodaya”. 600 with the customers of the Branch and called “SBI STEPUP”. This is being e-lessons of 50-60 minutes duration, enables the branch team to evolve used for both employee engagement solutions. Currently there are 724 active 412 ‘e-Capsules’ (short duration and also for building a team spirit mentors covering 2869 branches. e-lessons) and 601 ‘Mobile Nuggets’ amongst new recruits. are available on the portal, besides Certification Programme on Credit has the Case Studies, Research Projects A programme called ‘SBI Buddy’- been launched for officers of Scales I and e-publications under the e-library. ‘SAATHI’ has been started to allow to V to develop adequate credit skills During the FY2015-16, 28.48 lakh tests Probationary Officers to clear their doubts and to keep them updated at all times. have been passed by the employees, It focusses on the Commercial Credit related to technical and administrative out of 90 lakh attempts. Skills required to handle the entire Loan activities in the initial days. Life Cycle of Advances. Harvard Manage Mentor is an online During the year, the website of the learning, performance support & Your Bank constantly strives to achieve Strategic Training Unit was completely peer collaboration platform from the quality standards for its State Bank revamped to form the epicenter of where

74 State Bank of India | Annual Report 2015-16 all learning materials are accessible by Vesually Impaired Employees Trained all Apex Training Institutes and SBLCs Exhibit 41: No. VI / HI Employees Trained Hearing Impaired Employees Trained in one place via the Intranet. It was inaugurated by Hon’ble Shri Jayant 500.00 Sinha, Minister of State for Finance 450.00 432 on the occasion of Gyan Sangam II at 400.00 State Bank Academy, Gurgaon. 350.00 300.00 250.00 Your Bank’s training footprint is getting 189 inclusive and global. Your Bank has 200.00 158 opened up its training system to other 150.00 100.00 outside institutions including Public 40 50.00 and Private Sector Bank officers and 20.00 54 0.00 18 other Govt Departments. Using video 2012-13 2013-14 2014-15 2015-16 conferencing, the STU has imparted training sessions on Time Management and Stress Management for Staff members of some of your Bank’s foreign branches.

As part of its role in Nation Building, SBI also contributed to the Sakhshar Bharat / National Literacy Mission, during the year, where the SBLCs took part in imparting sessions on Financial Literacy and Financial Inclusion in various Colleges, Schools and Government Agencies.

1.3. inclusion of visually/hearing impaired employees During the year, an Inclusion Centre for Differently Abled Employees was created. Shri Manab, a Visually Impaired Employee working as an Associate, after The objective is enabling financial undergoing an extensive Institutional Training Programme, his proficiency inclusion, training, empowerment and levels have improved considerably and he now attends to 200 letters a day on upgradation of skills of people with an average, through the Inward/Outward Dak along with other regular work. Different Abilities in a systematic way.

Your Bank has 722 Visually Impaired Helen Keller Award 2015 (VI) and 276 Hearing Impaired (HI) Due to Specialised Training Initiatives for the VI & HI Employees, your Bank has Employees along with Orthopedically been conferred with the “Helen Keller Award 2015” presented by National Centre for Challenged staff. 73% of VI / HI Provision of Employment to Persons with Disabilities (NCPEDP) for the Category Employees (Other than Sub-Staff) have “Role Model Company / NGO / Institution for its commitment towards promoting received training during the year by equal employments for people with disabilities.” partnering with NGOs for this mission.

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2. Information was reduced from 180 minutes to 60 „„ Operational man power reduction minutes by parallelisation of activities could be used for other beneficial Technology and semi-automation of process using operational analysis. State Bank of India is a strong scripts. „„ Instant Money Transfer (IMT) proponent of leveraging information 3. Base 24 ATM Switch Upgradation: Card less Withdrawal- A Beneficiary technology to deliver convenience to its Upgradation of ATM Base 24 Switch Customer who does not possess customers. Your Bank has been offering has been done (with the procurement card can withdraw cash at ATM after innovative and cutting-edge products and installation of CPUs and HSMs receiving PIN from the benefactor. to its customers with the objective of within the timelines) to enable your enabling banking transactions at any „„ Quick Cash- Quick Cash facility to Bank to increase the number of ATMs time and from anywhere. Your Bank’s the end customer has been provided. to the extent of 90000. technology strategy has evolved in This facility shall allow the customer tune with the current consumer trends 4. Chip enabled EMV Card Migration: to withdraw a pre-set favourite amount of social collaboration, mobility, cloud- EMV card migration for all variants every time he visits ATM. completed on 01.12.2015. 1st Bank to based platforms and big data analytics. „„ Display of free transactions - The do so in Indian banking industry against Digitisation and excellence in operations customer shall be informed about the regulatory advisory to complete this has been core to your Bank’s strategy number of free transaction left with him exercise by Feb16. in providing convenience to customers. on ATM machine. It has resulted in a reduction in 5. Tele banking registration through turnaround time and extended benefits ATM has been enabled. to your Bank’s customers. 6. Cash transfer from Card to Account 2. intERNET BANKING through ATM has been introduced. The Corporate Internet Banking (CINB) Your Bank’s Core Banking Solution 7. de-hot listing (Unblocking) of ATM is well suited to Small, Medium and (CBS) environment is based on an Cards through INB has been introduced. Large Corporate. It has also been architecture that supports one billion immensely successful in establishing 8. Green Personal Identification accounts, over 250 million transactions traction with Government Treasury Number (PIN)- State Bank Debit per day and delivering a throughput & Accounts Departments as well. card holder has been facilitated with of over 17,000 transactions per Online collection of fees/funds for a simpler process of Debit card PIN second. Biometric authentication as a Institutions, Corporate and Government generation through various channels second-factor authentication has been Departments is being facilitated through like IVR, INB instantaneously. implemented in branches for all CBS Multi Option Payment System (MOPS), users. The process for systematic State Bank Collect and merchant- and proactive risk identification, The project offers several benefits acquisition through independent assessment, measurement, monitoring including: aggregators. Internet based solutions and mitigation of various risks in the IT also cater to the e-Tendering, e-Auction vertical has been initiated. „„ For Bank - savings of approx. 100 and bulk payments related requirements crore in printing and dispatch cost. of the Government / PSUs / Large and 1. ATMs „„ For customer – convenience, less Medium Corporate. New Developments in ATM waiting time, particularly beneficial for NRI customers. Some of the new features launched in 1. PRM: Proactive Risk Management Net Banking in FY2016 are: tool has been integrated with ATM „„ For Branches – No custody of PINs (risk reduction / mitigation). Switches for Fraud Monitoring. „„ Overdraft against TDR/STDR/e- 2. RTO Reduction: Recovery Time „„ Green Banking - Paperless TDR/e-STDR through onlinesbi.com. Objective (RTO), i.e. time taken for initiative to considerably reduce carbon „„ Registration of PMJJBY & foot print. switching over to Disaster Recovery PMSBY through INB (Furthering Govt. site in case of need, for Base 24 Switch Initiatives).

76 State Bank of India | Annual Report 2015-16 „„ Mobile number capture / change Home and Auto Loan in-principle DIA - Lite Version for Mobiles & through INB. Approvals Desktop

„„ Resetting of profile password at Tab Apps for giving in-principle sanction The Digital Inspection App Lite version any SBI Branch (only from home branch of Housing loan & Auto loan. Housing for SME has been launched for mobile previously). Loan / Auto Loan sales team visits phones. Field officers can capture the customer’s place, staff capture the the photographs with date, time and „„ Top-Up / recharge through RINB KYC details, particulars of income, geo-coordinates using the Mobile Portal. deductions and details of proposed App and then continue the data entry „„ SBI General Insurance Renewal. property on the tab. Based on data for inspection in the Desktop site. „„ Smart OTP for Retail INB furnished and cost of project, applicant All features provided in the tab are will be advised on approx. housing loan available in the desktop site. „„ Activation of ATM card through INB amount and the EMI amount. „„ SBI Quick Transfer (Without 4. FOREIGN OFFICES Adding Beneficiary) in onlinesbi.com Digital Inspection Application (DIA) (Small transfers) (ITFO) Tab Apps for recording the pre-sanction „„ Finacle Core Migration Project: „„ CINB Online Registration and post-sanction inspections of the Successfully migrated all 26 countries customers has been launched for 7 „„ CINB SARAL – Digital Signature from Finacle version 7.6.1 to latest and products. DIA is integrated with LOS, Certificate enabled online payments powerful version 10.2.13 during FY2016 CBS and HRMS where the customer „„ Thomas Cook Recurring Deposit - data is pre-populated and field staff „„ E-Trade for Foreign Offices (FO): creation of holiday savings account needs to capture the photographs of Successfully launched the separate and „„ SBI Exclusif: Wealth Management - borrowers, collateral, factory, stock etc dedicated software platform for trade access to Miles portal & video assist for with the date, time and geo-coordinates. finance for all FO’s during the FY2016 wealth management customers The inspection reports are automatically „„ Finassure: Launched a dedicated „„ Issuance of debit card through INB mailed to the field staff in their EMS mail proactive monitoring service namely ids. Application also has auto reminders Finassure for monitoring critical „„ Online Overdraft creation for for upcoming post-sanction inspections, applications of Foreign Offices Diamond and platinum variant CSP stock and insurance expiry dates. account holders

„„ Pehla Kadam Pehli Udaan (Allowing minors to create e-TDR / e-STDR / e-RD through INB)

3. tab BANKING Savings Bank Account Opening Your Bank has launched Tab Banking services for opening accounts using Tab in Offline Mode. Staff will complete all account opening formalities by using tab, including taking photograph, uploading of KYC documents. Thereafter the account opening details will be loaded in CBS platform and account number will be advised to Smt. Arundhati Bhattacharya, Chairman, launching a new mobile App customer. “ State Bank no Queue”

State Bank of India | Annual Report 2015-16 77 Directors’ Report

„„ SBI, South Korea: The 194th as well as through internet banking. In 7. DEVELOPMENT foreign branch of SBI went live in addition, NEFT is offered through your CHANNELs FY2016 Bank’s mobile banking services. NEFT Project CBS Roopantar: Bank have and RTGS continue to be the most cost „„ EOD Automation: Launched initiated “CBS Roopantar”, a project effective and time efficient modes for automated solution for EOD operations aimed at reducing data entry and steps remittance. The volume (number) of for Foreign Offices in 12 countries required to perform transactions by outward fund transfers through NEFT „ tellers, with improvement in existing „ Anti Money Laundering Solution increased by 50.84%, in FY2016 processes, thereby increasing their AMLOCK: Successfully rolled out for all compared to that in FY2015 and efficiency and reducing the overheads FO’s increased by 8.17% during 31st March, both in terms of time and resources. „„ Business Continuity Plan (BCP) 2016. In fiscal 2015 and 2016, there ISO 22301: Business Continuity Plan were 187.4 million and 282.7 million Standardisation of Passbook certified for ISO22301 NEFT fund transfers, respectively. narrations: Narrations printed in Your Bank has established itself as a „„ Compliance: Proved higher passbook have been standardised for leader in NEFT, with a market share security standards set by local and the convenience of customers. foreign regulators of 24.60% as of January 31, 2016 (as per latest data by RBI, February and De-duplication of CIFs: On line search March data yet to be published), and facility for duplicate CIFs at the time of 5. paymENT SYSTEM RTGS maintained a market share of creation of a new CIF has been provided GROUP 10.54% as of 29th February, 2016 (as to branches to prevent duplicate CIFs Prepaid Cards: SBI issues Prepaid per latest data by RBI, March data yet from being created. Cards in both INR and Foreign to be published). NEFT fund transfer Currency. Different variants of INR transactions through your Bank’s mobile Linkage with SBI Mutual Fund: Prepaid cards such as EzPay cards, Gift banking service have also increased Facility for collection of Mutual Fund cards, Smart Payout cards, Quick Pay significantly in recent years. investments in CBS provided, by linking Cards, Imprest Cards, Achiever Cards to Mutual Fund server, for fetching etc are issued to individual & corporate 6. NETWORKING investor details. customers. State Bank Foreign Travel State Bank Connect is your Bank’s Cards are available in eight foreign secure and robust principal connectivity currencies namely the Japanese yen, Customer confirmation of high-value platform and is the backbone of its ‘Fetch’ button provided in the Canadian dollar, the Australian cheques: overall technology infrastructure. The the cheque posting screens at Maker dollar, the Saudi riyal, the Singapore State Bank Connect primary point-to- level, along with an additional field for dollar, the U.S. dollar, the Euro and the point links have recently been migrated displaying phone/ mobile number, so British pound, providing safety, security to Multi Protocol Level Switching that the contact numbers of the drawer and convenience to overseas travellers. (MPLS) architecture for ensuring of the cheque available in the system In FY2016, we have issued 27,220 higher uptime and dynamic upgrade of can be viewed by the teller for the Foreign Travel cards and approximately bandwidth. purpose of contacting the customer 2,01,900 INR prepaid cards. / obtaining confirmation while paying To provide a comfortable bandwidth high value cheques. Funds Transfer and Settlement: to all our offices for better customer Your Bank offers Real Time Gross service, Bank have embarked on a Settlement (“RTGS”), National Flagging of ‘Wealth’ customers: bulk bandwidth upgrade project and Development completed for creation Electronic Fund Transfer (“NEFT”) and have so far upgraded bandwidth at of CIF level flag to identify ‘Wealth’ National Electronic Clearing Service 10,235 branches and expect to cover customers, allowing CIF level changes (“NECS”) fund transfer facilities for all branches by December 2016. from remote RM centre and wealth hub qualifying transactions at its branches for all Wealth flagged accounts.

78 State Bank of India | Annual Report 2015-16 Flagging of Fraudsters’ accounts: Accounts of fraudster will be flagged as Your Bank’s YouTube channel leads “Fraudster’s Account” and an alert message “Care - Suspected Fraudster” will be all Indian banks in terms of subscriber flashed on such account whenever these accounts are accessed. base, uploaded more than 220 videos that have garnered over 10 million 8. EXECUTIVE SUPPORT SYSTEMS views, indicating appreciation by the digital users. Social Media

Subsequent to establishing our presence on external social media sites by engaging Your Bank also has a significant with the young generation customers, we have been ranked No.1 globally among presence on Twitter, and Instagram. Top 100 Banks using Social Media by The Financial Brand in their list of “Power 100 Ranks - Banks Q1 2016”. We have adopted an aggressive social media strategy Aspirations which has strengthened our foothold in the social space not just in the Indian market Your Bank also runs a vibrant internal but on a global scale as well. SBI boasts having the highest fan-base on Facebook social media platform—‘SBI Aspirations’ across the globe among banks. It also leads the chart on LinkedIn and Pinterest to promote collaboration among its among Indian banks. employees for better productivity, a symbiotic work culture along with providing solutions to them. In its endeavour to make Bank’s employees more innovative, productive, and knowledgeable,

The platform is also being used by senior functionaries (including the Chairman) as a medium of direct interaction with all the employees.

9. ANALYTICS Your Bank is using analytics extensively to better understand and serve the customer by generating actionable insights to generate business and revenue while at the same time controlling costs. Customer Analytics is carried out to make key business According to an article in Economic times, on 9th July, 2015, your Bank is amongst decisions via market segmentation and the most active banks in addressing customer complaints and queries on social predictive analytics with the objective of media. It also mentioned that our Bank is the most active bank on Facebook, with enhancing customer revenues through the highest number of posts shared per day. cross-sell, up-sell and customer retention. SBI’s Face book Page which was launched on 7th November, 2013 is today the most popular page across all Indian Banks with more than 5 million followers. Integrated Data Strategy, Processing We have leveraged this platform to promote our latest products and services and and Management (IDSPM): Our provided responses to the innumerable comments that we receive on this platform. Data warehouse is state of the art We are the first bank in India to have started live broadcasting of important events and contains over 200 TB of data, on Face book. with 400 GB added daily through 50 million transactions. The data is used

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across Your Bank for reports and infrastructure. Each IT Application is 11. Core banking returns monitoring and is provided in designed to have an alternative IT automation in a graphical and intuitive manner to infrastructure arrangement identical Setting up of Alternate Disaster business users including interactive to their production environment. The Recovery Site (HOT Site): In view of and visualisation dashboard. processes of movement between criticality of Core Banking application, primary and alternative sites are tested your Bank has setup an Alternate Business Intelligence: At SBI, regularly to ensure the readiness. Disaster Recovery Site (Hot Site) with Business Intelligence is at the heart all the processing environment and in of decision making and also helps Project Single Sign On (SSO): Your closer proximity to production site for optimise risk weighted capital to asset Bank is leveraging Active Directory resuming the Core Banking Operations ratio. It turns data into ultimate value Federation Services (ADFS) using the in a short time span of 1 hour. and, is the source of major reporting Active Directory Services infrastructure and analyses in your Bank. Centralised for implementation of Single Sign On DB Layer Refresh & All-Flash Project Ganga is the data cleansing (SSO), in a phased manner. SSO Storage: We have refreshed the utility of your Bank which has enabled enables the user to have single set of Database layer of Core banking us rectify 97% errors reported, thereby user ID and password across multiple application with the latest processor improving the data quality significantly. applications. Intel chip 9560 Superdome at both Project Command Centre: The primary and DR site. We also migrated IT-Budgeting & Cost Control: Your Command Centre gives your Bank the the production environment with all- Bank has automated a large part of its capability to monitor all transactions flash-storage replacing the old spinning IT-Budgeting and is ensuring optimal end-to-end, starting from the customer disks. The benefits of introducing new utilisation of scarce resources for engagement, processing by your Bank’s technology of all-flash storage gave efficient management and financial IT application and acknowledgement to 30% gain in batch jobs; around 40% control. The vertical has also introduced the customer on fulfilment of transaction. gain in transaction response time; and Charge Back Model with a view to The Command Centre is a state of the new setup can cater to the business further ingrain ROI in the corporate art setup with 18 LED display panels for need of 750+million accounts for SBI. culture. current use and future requirements.

10. Back office automation Project it- asset management solution (itams): Your Bank has implemented an IT Asset Management Solution (ITAMS), which is an important business practice to maintain an accurate inventory, licensing information, maintenance and protection of hardware & software assets utilised across the organisation.

Data Centre & DR Centre: Availability of IT Infrastructure to support business operations is a critical aspect of technology adoption. Bank has built a robust disaster recovery architecture to ensure business operations in case of non-availability of primary IT

80 State Bank of India | Annual Report 2015-16 Exhibit 42: List of Technology Awards received during FY2016 3. risk Management Award Category A. risk Management IMC IT Awards 2015 • Analytics Overview IDRBT Banking Technology Excellence • Electronic Payment Systems (among Awards FY2015 large Public & Private Sector Banks) Your Bank has an evolving and robust • Managing IT Infrastructure (among risk management model of proven large Public and Private Sector Banks) effectiveness, aligned with regulatory 2015 Gartner Financial Services Cool • Most Innovative Digital Customer standards and international best Business Awards Service Enhancement SBI InTouch practices, and proportional to the scale (Winner) - Digital Branch and complexity of its activities. Your • Most Innovative New Digital Product - SBI Quick (Runner Up) Bank is exposed to various risks that are an inherent part of any banking Skoch Smart Technology Awards 2015 • Best Smart Technology 2015 (SSK & GRC) 2 awards business. The major risks are credit • Best Digital Banking 2015 (SBI Digital risk, market risk, liquidity risk and In-touch Branch) operational risk which includes IT risk. • Best Financial Inclusion Technology Your Bank has policies and procedures 2015 (Kiosk Banking & Direct Benefit Transfer ) 2 awards in place to measure, assess, monitor and manage these risks systematically IDC Insights Award • Excellence in Innovation (Quick Overdraft facility through Internet across all its portfolios. Your Bank Banking) is amongst the leaders to undertake IBA Banking Technology Awards 2016 • Best Financial Inclusion Initiative implementation of the Advanced • Best Risk Management, Fraud and Approaches under Credit, Market and Cyber Security Initiatives Operational risk. Your Bank has also • Best Technology Bank of the Year undertaken the Enterprise and Group (Runner-up) Risk Management Projects which aim to adopt global best practices. The projects are being implemented with support from external consultants.

RBI Guidelines on Basel III Capital Regulations have been implemented and your Bank is adequately capitalised as per the current requirements under Basel III. An independent Risk Governance Structure, in line with international best practices, has been put in place, in the context of separation of duties and ensuring independence of Risk Measurement, Monitoring and Control functions. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management Bank received the IDRBT Banking Technology Excellence Award 2014-15 for ‘Managing IT Infrastructure’ in Large Banks category from Dr. Raghuram G of risk at the place of origination. Rajan, Governor, Reserve Bank of India.

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The various risks across Bank and the SBI Group are monitored and reviewed „„ Risk Awareness Workshops were through the Executive level committees and the Risk Management Committee conducted across your Bank by the Risk of the Board (RMCB) which meets regularly. Risk Management Committees at Management department covering 1.97 Operational unit and Business unit level are also in place. lakh employees at the operating level, to effectively implement risk monitoring Exhibit 43: Risk Management Structure and mitigation practices in the day to Risk Management day functioning, especially in the areas Committees Board of Directors of Credit & Operational Risks. Credit Risk Management „„ 1st September was celebrated as Committee (CRMC) Risk Awareness Day. Asset Liability Risk Management Management Committee of the Market Risk „„ Your Bank strengthened its Committiee (Alco) Board (RMCB) Management Committee (MRMC) internal control environment around MD Operational Risk pre-screening and post sanction (Compliance & Risk) Management compliance, through digitisation and Committee (ORMC) DMD & CRO centralised monitoring Enterprise and Group Risk Management „„ Risk culture is being embedded CGM (RM) Committee (EGRMC) through training of staff at all levels through e-learning lessons.

„„ An Independent Risk Advisory New initiatives in Risk „„ In order to focus on capital is being established to ensure Management conservation and maximisation of return independent reviews of high value on capital, your Bank has introduced Your bank has taken several new risk credit proposals. Risk Based Budgeting (RBB). initiatives towards enhancing its risk Reduction in risk and return on Capital „„ Group Risk is being measured management. Some key actions taken is measured based on Return on Credit through Contagion Risk, Concentration include: Risk Capital (RoCrC). Achievement Risk, Strategic Risk and Reputation „„ Adoption of an IT platform for credit of the budgeted advances levels will Risk Indices. appraisal process through a Loan be subject to achievements under the „„ Data from all source systems (CBS/ Originating Software/Loan Lifecycle specified levers. Risk Adjusted Return MUREX/Finnacle) have been integrated Management system (LOS/LLMS). on Capital (RAROC) framework has to one platform to facilitate capital This is steadily being augmented to been implemented from FY2016. computation under the Standardised cover the entire credit portfolio, which Customer level RAROC calculation Measurement Method. are interfaced with CIBIL’s and RBI’s has also been digitised.Behavioral defaulters list. models for monitoring and scoring the „„ The reporting and MIS capabilities retail borrower performance have been 1. crEDIT RISK of the LOS/LLMS system are being developed and hosted on Credit Risk Credit Risk is defined as the possibility augmented, in order to allow the Data Mart. of losses associated with the diminution monitoring of your Bank’s industry/ in the credit quality of borrowers or „„ Internal loss data, external loss exposure limit to be on a real time basis. counter-parties from outright default or data, RCSA (Risk and Control Self- from reduction in portfolio value. Credit „„ An independent, second look is Assessment) KRIs (Key Risk Indicators) Risk emanates from a bank’s dealings being given on all the sanctions through and Scenario analysis are now an with an individual, non-corporate, an Early Sanction Review for all loans integral part of Bank’s Operational corporate, Bank, financial institution or having exposure between `1.00 crore. Risk Management project for eventual sovereign. and `5 crore., and through the Loan migration to AMA, subject to RBI’s final Review Mechanism (LRM) for loans approval. above `5 crore.

82 State Bank of India | Annual Report 2015-16 Mitigation Measures for Credit Risk. The data under parallel Mitigation Measures run of FIRB is being submitted to RBI. „„ Your bank has strong credit „„ Your Bank’s market risk appraisal and risk assessment „„ Models for estimation of Probability management consists of identification practices in place for identification, of Default (PD), Loss Given Default and measurement of risks, control measurement, monitoring and control (LGD) and Exposure at Default (EAD) measures, monitoring and reporting of the credit risk exposures. Your Bank are hosted in Credit Risk Data mart for systems. uses internal Credit Risk Assessment computation of IRB capital. „„ Board approved policies for Market Models and score cards for assessing „„ The monitoring of Prudential Risk Management, Trading in Foreign credit risk under different exposure Exposure norms for Single and Group Exchange, Derivatives, Interest Rate segments. Internal ratings of your Bank borrowers, Substantial Exposure Securities, Equities, Mutual Fund and are subject to comprehensive rating Norms and unsecured Exposures is Review of Market Risk Limits for Trading validation framework. being done regularly. Book among others are in place. „„ Your Bank’s business units are „„ Bank regularly conducts Stress Test „„ Market risks are controlled through armed with inputs on the developments, on its Credit portfolio. Stress Scenarios various risk limits, such as Net Overnight prospects and risks in the industries/ are regularly updated in line with RBI Open Position, Modified Duration, sectors tracked by the Industries Study guidelines, Industry best practices and PV01, Stop Loss, Upper Management team. The current status and near to changes in macro economic variables. Action Trigger, Lower Management medium term prospects of 37 major Action Trigger, Concentration and industries/sectors and are monitored 2. markET RISK Exposure Limits. by this team. Industry-wise exposure ceilings are worked out on the basis Market Risk is the possibility of loss a „„ Your Bank has Asset class wise of the industry prospects and the Bank may suffer on account of changes risk limits for its trading portfolio and performance of your Bank’s exposures in values of its trading portfolio, due monitors the same on an ongoing basis. to the industry concerned. to change in market variables, such „„ Currently, market risk capital is as exchange rates, interest rates and computed under the Standardized „„ Analysis of industry developments is equity price, among others. shared with the operating functionaries Measurement Method (SMM). Your by way of Annual Reviews, Quarterly Bank has submitted Letter of Intent to updates, and monthly snapshots of the industries/ sectors. Research papers are prepared to assess the impact of major developments e.g. drop in crude oil prices, devaluation of Yuan, fall in Baltic Dry Index, spectrum trading, Ujwal Discom Assurance Yojana (UDAY) among others. A periodical named ‘Commodity Watch’ was launched this year for internal circulation, specifically to share developments in the commodity market (Oil, Steel, Aluminum, Sugar, Cotton, Edible oil) and their possible impact on your Bank’s exposure.

„„ RBI has allowed your Bank to participate in the parallel run process for Foundation Internal Ratings Based (FIRB) under the Advanced Approaches

State Bank of India | Annual Report 2015-16 83 Directors’ Report

the Reserve Bank of India for migration Framework (ORMF) for eventual Mitigation Measures to Internal Models Approach (IMA) migration to AMA are in place. „„ Policies relating to Group Risk under the Advanced Approaches for „„ For FY2016, Bank on a stand- Management, Arms Length and Intra market risk. alone basis, had assigned capital for Group Transactions & Exposures are „„ Value at Risk (VaR) is a tool for Operational Risk as per Basic Indicator in place. monitoring risk in your Bank’s trading Approach (BIA). Capital charge as per „„ Exposure limits for Large Borrower portfolio. The VaR methodology is AMA has also been calculated as part Exposure and Capital Market Exposure supplemented by conducting quarterly of Parallel Run. as per RBI have been adopted for the stress tests of the trading portfolio. Group. In addition, limits for Unsecured „„ The VaR and Stressed VaR for 4. ENTERPRISE RISK Exposures, Real Estate and Intra- market risk are computed on a daily Group Exposures have been set by Enterprise Risk Management Project basis. your Bank. aims to put in place a comprehensive „„ Enterprise level VaR is calculated framework to manage various risks. It „„ Monitoring of consolidated on a daily basis and back testing is also encompasses Global best practices like Prudential Exposures and Group conducted daily. Risk Appetite, Risk Aggregation and Risk components is also being done Material Risk Assessment. regularly.

3. opERATIONAL RISK „„ A quarterly analysis of risk-based Operational Risk is the risk of loss Mitigation Measures parameters for Credit Risk, Market resulting from inadequate or failed As part of your Bank’s Vision to transform Risk, Operational Risk and Liquidity internal processes, people and systems the role of Risk into a Strategic function, Risk, among others, is presented or from external events. aligned with Business Objectives, to the Enterprise & Group Risk Bank has initiated the Enterprise Risk Management Committee (EGRMC) / Mitigation Measures Management (ERM) module. Board Risk Management Committee of the approved ERM Policy delineates the Board (RMCB). „„ The ntinuously review systems and control mechanisms, create awareness roles and responsibilities of various „„ The Group Internal Capital of operational risk throughout your Committees /Functionaries to manage Adequacy Assessment Process Bank, assign risk ownership, align risk risks. (Group ICAAP) document includes an management activities with business assessment of identified risks by Group strategy, to ensure better capital Your Bank has a comprehensive entities, internal controls and mitigation management, to improve quality of Internal Capital Adequacy Assessment measures, and capital assessment, Bank’s Services/Products/Processes Process (ICAAP) Policy. The Pillar 2 under normal and stressed conditions. and ensure compliance with regulatory risks, such as Liquidity Risk, Interest All Group entities where SBI has 20% requirements, which are the key Rate Risk in Banking Book (IRRBB), or more stake and management control elements of your Bank’s Operational Concentration Risk etc, and overall , including Nonbanking entities, carry Risk Management Policy. Risk Management practices as well as out the ICAAP exercise and a Group adequacy of Capital under both normal ICAAP Policy is in place to ensure „„ RBI has granted In-Principle and stressed conditions are assessed uniformity. approval to your Bank (on a solo as per the Policy. basis) to migrate to AMA (Advanced Measurement Approach) for 6. inFORMATION SECURITY 5. GROUP RISK computation of operational risk capital RISK Group Risk Management aims to put in charge on Parallel Run basis. Information Security risk seeks to place standardized risk management „„ Policies, manuals and framework establish stringent information security processes in Group entities. documents in line with RBI guidelines structure to prevent data loss and on Operational Risk Management threats.

84 State Bank of India | Annual Report 2015-16 Mitigation Measures „„ SBI also gives a lot of importance to Awareness campaigns for staff as well as general public. In addition to planning Newspaper advertisements& TV & Radio „„ Your Bank has implemented a robust IT Policy & Information Security campaigns, SBI has run focussed citizen awareness campaigns in collaboration Policy. These policies are in line with with Mumbai Police and Navi Mumbai Police. international best practices. They are reviewed periodically and suitably strengthened to address emerging threats.

„„ Regular security drills and employee awareness programmes are conducted to ensure security and increase awareness. Business Continuity Management Systems (BCMS) have been implemented at your Bank’s Global IT Centre. SBI is a forerunner in setting up of an in-house Security Operations Centre (SOC) for 24 x 7 monitoring of various attacks and threats on its IT infrastructure.

„„ Bank’s SOC is one of the largest in the Global Banking sector as it covers all 20,000+ strong network of Bank’s offices (Domestic and Foreign) and Bank organized a citizen awareness campaign in collaboration with Mumbai Associate Banks. The SOC has the Police and Navi Mumbai Police following attributes:

„„ Capability of handling 60,000 B. internal Controls Events Per Second(EPS) which is Keeping pace with the rapid digitalisation, your Bank has initiated technology driven scalable up to 5 Lakh EPS intervention in conducting various audits and moving towards automation in your Bank’s audit processes. Some key initiatives include the following: „„ Visibility over the security threats from within and outside your Bank and improves Incident Reporting and „„ Your Bank’s Concurrent Audit System has been redesigned incorporating fully Management. automated web based platform SBI eTHIC. „„ Web based Internal Verification Audit has been introduced replacing the „„ Disaster Recovery Drills are conducted regularly as part of the manual Circle Audit. implementation of the Business „„ Offsite Transaction Monitoring System(OTMS) to monitor exceptions observed Continuity Management System in transactions. (BCMS). Critical IT Systems of your „„ Web based Loan Review Mechanism to review the sanction process of loans Bank are compliant with the International above `5 crore and Early Sanction Review (ESR) of loan proposals with exposure BCMS Standard – ISO 22301:2012. of above `50 lakh and up to & including `5 crore have been introduced. „„ The application setups undergo „„ Web based Modular Structure which is flexible, scalable and expandable security reviews before launching as with enhanced level of automation and more granular risk assessment is being also are reviewed periodically. introduced for Risk Focussed Internal Audit from 2016-17.

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Your Bank has in-built internal Risk Focused Internal Audit exposures of `10 crore and above control systems with well-defined (RFIA) annually. The Credit Audit System responsibilities at each level. It also provides feedback to the business I&MA Department undertakes a critical conducts internal audit through its unit by way of warning signals about review of the entire operations of Inspection & Management Audit (I&MA) the quality of advance portfolio in the audited units through RFIA, an adjunct Department. Audit Committee of the unit and suggests remedial measures. to Risk Based Supervision as per RBI Board (ACB) exercises supervision and During the period FY2016, During the directives. The domestic branches control over the functioning of I & MA period FY2016 8,879 accounts were have been broadly segregated into Department. The inspection system subjected to on-site Credit Audit. three groups (Group I, II & III) on the plays an important and critical role in basis of business profile and risk identification, control and management exposures. While audit of Group I Loan Review Mechanism of risks through the internal audit branches is administrated by the (LRM) function, which is regarded as one Central Audit Unit (CAU) headed by a of the most important components Audit in high value credit area also General Manager, audit of branches in of Risk Management Process. Your has an off-site review mechanism Group II and III category and Business Bank carries out mainly two streams (Loan Review Mechanism) of all the Process Re-engineering (BPR) entities of audits – Risk Focused Internal pre-sanction and sanction process are conducted by 13 Zonal Inspection ` Audit (RFIA) and Management Audit, of individual advances above 5 Offices, each of which is headed by a covering different facets of Internal crore within 6 months of sanction / General Manager. Audit requirement. Your Bank’s enhancement / renewal. accounting units are subjected to RFIA. Your Bank’s Management Audit covers FEMA Audit Early Sanction Review (ESR) administrative offices and examines FEMA Audit which is being done as Early Sanction Review [ESR] has policies and procedures, besides part of RFIA has been made a separate been introduced in audit system since quality of execution thereof. audit. September, 2014 to review sanctions of more than `50 lakh up to `5 crore. The Besides, the department conducts Management Audit objectives of ESR are: Credit Audit, Information Systems Management Audit encompasses Audit (Centralised IT establishments „ Corporate Centre establishments „ To capture the critical risks in the & Branches), Home Office Audit (audit / Circle Local Head Offices / Apex proposals sanctioned, at an early stage of foreign offices), Internal Verification Training Institutions, Associate Banks and apprise the Controllers of such risks Audit, Audit of Outsourced Activities and Regional Rural Banks (RRB) for mitigation thereof at the earliest. of your Bank and Expenditure Audit sponsored by your Bank. To enhance „„ Improve the quality of pre-sanction (at administrative offices) and also the effectiveness of Management process / sanctions in respect of oversee policy and implementation of Audit, periodicity has been reduced to exposures falling in this category. Concurrent Audit (domestic and foreign once in two years. 50 establishments offices). To verify the level of rectification „„ Improve the quality of sourcing / administrative offices were audited of irregularities by branches, audit of of loan proposals. under Management Audit During the compliance at select branches is also „ period FY2016. „ During the period up to 31st March, undertaken. During the period FY2016, 2016, a total number of 9650 accounts I & MA has audited 9,888 domestic were reviewed under ESR. branches/BPR entities under the Risk Credit Audit Credit Audit aims at achieving Focused Internal Audit. Information System Audit (IS continuous improvement in the quality of Commercial Credit portfolio of your Audit) Bank through critically examining All Branches are being subjected to individual large commercial loans with Information System (IS) Audit to assess

86 State Bank of India | Annual Report 2015-16 the IT related risks as part of RFIA of better prepared for the RFIA. During 4. Official the branch. IS Audit of centralised IT the period FY2016, 9,094 units were establishments is carried out by a team audited by the Internal Verification Audit Language of qualified officials/ outside experts. Department. Your Bank is committed to the During the period FY2016, IS audits of implementation of different provisions of the Annual Programme formulated by 99 centralised IT establishments were Off-Site Transaction completed. the Government of India. We continued Monitoring System (OTMS) our efforts to use Hindi and other Indian Off-Site Transaction Monitoring System languages in your Bank. Some of the Foreign Offices Audit – Home (OTMS), a web based solution, has highlights are given below: Office Audit been introduced to capture deviations During the period FY2016, Home Office and take corrective actions. Exception New Website of OL Dept. launched Audit was carried out at 3 branches, data is being generated by Data A new website of Rajbhasha Dept. Management Audit at 9 Representative Warehouse (DW), based on certain has been developed by our bank’s offices / Country Head Offices and4 business rules. At Present, 14 types Rajbhasha & System officers. This Subsidiaries / Joint Ventures. of exceptions are being monitored and website is launched by our Chairman flagged to the branches for verification recently through video conferencing Concurrent Audit System by them. during All India Rajbhasha Adhikari Concurrent Audit System is essentially Vaarshik Sammelan held at SBIRD, a control process, integral to the Legal Audit Hyderabad. establishment of sound internal Legal Audit was rolled out in all the accounting functions, effective controls Business Verticals in June, 2014 to ‘Sugam Marathi’ etc. books and overseeing of operations on a cover all loan and Mortgage related published continuous basis. Concurrent Audit documents pertaining to accounts with In the changed scenario Government System is reviewed on an on-going aggregate exposure of `5 crore and of India is expecting from us that we basis in accordance with RBI directives, above. As on 31st March, 2016, Legal shall make our staff conversant with so as to cover your Bank’s Advances Audit was commenced in 8696 eligible the regional language also so that and other risk exposures as prescribed accounts and has been completed in they can interact with the local people by the regulatory authority. I&MA 7997 cases. in their language and have a better department prescribes the processes, understanding of their needs and guidelines and formats for the conduct Audit of Outsourced achieve better results. Keeping in view, of concurrent audit at branches and Activities this need our Rajbhasha Dept has BPR entities. Concurrent Audit System brought out following publications: Bank has outsourced 56 groups has been revamped, along with the of activities to approximately 6014 introduction of a web-based solution, 1. ’Aaiyey Seekhein’ (To learn vendors. I&MA has a policy approved by with external auditors appointed Bangla through Hindi) the Audit Committee of the Board and as Concurrent Auditors (External audit has been completed in 37 entities 2. ’Sugam Marathi’ (To learn Marathi Chartered Accountant Firms). covering 12 activities. A full fledged through Hindi) outsourced audit department headed 3. ’Hamara Raasta Grahak ka Internal Verification Audit by a General Manager is being set Raasta, Hamari Bhasha Grahak ki Internal Verification Audit, which was a up to oversee the audit of outsourced Bhasha’ (To learn Tamil through Hindi) delegated audit till last year, has been activities of your Bank. 4. ’Chalo Seekhein Gujarati’ (To taken over by I&MA to make it more learn Gujarati through Hindi) effective. It covers low value credit areas, and is conducted between two Other Circles have also been instructed RFIAs. This enables auditee unit to be to bring out similar books to learn

State Bank of India | Annual Report 2015-16 87 Directors’ Report

Telugu, Oriya, Assamese, Punjabi and World Hindi Day Security Repossession, Depositors Kannada through Hindi. As a responsible Corporate, all offices Rights, Customers Rights, The Code of of your Bank abroad celebrated 11th Bank’s Commitment to Customers and Thought of the day in Hindi January 2016 (10th January 2016 detection and impounding of Counterfeit A new initiative has been taken during being a holiday) as World Hindi Notes etc. brought out during the year. the year to present a thought in Hindi on Day. The objective of this day is to Public Address System every day at 11 create a conducive environment for Publication of ‘Banking Briefs’ in A.M. in your Bank. progressive use of Hindi there and bilingual also to encourage and motivate our With the objective of bilingualisation Hindi Sentence Formation staff members to use Hindi in their day of Bank’s training material our Staff Competition for Non-Hindi knowing to day work according to the target College brought out a 1040 pages staff set in the Annual Programme. Among ‘Banking Briefs’ (A Compendium of During the year we have introduced the highlights participation of foreign Articles Relevant to Bankers). ‘Banking a bi-monthly sentence formation nationals is a very encouraging sign Briefs’ is freely used by all the Apex competition in Hindi for other than Hindi for the propagation of Hindi in those Training Institutes and Learning knowing staff. countries. Many foreign staff members Centres as training hand outs. won prizes in the competitions held on Web application for online this day. ‘StateBankBuddy’ in 13 major Indian submission of Quarterly Progress languages Report RBI Banking Terminology Honourable Union Minister for Finance, Committee Meeting A new application has been developed Corporate Affairs and Information & and implemented by our own System A meeting of the standing committee Broadcasting launched State Bank and Rajbhasha Officers for online set up under the aegis of Reserve Bank Buddy the mobile app of your Bank in submission of the quarterly progress of India to ensure uniformity in banking 13 major Indian languages. report. terminology in the banking industry was hosted by us at our Corporate Centre SBI QUICK service launched in Renowned Lyricist Neeraj & Late at Mumbai on 28th and 29th January Hindi also Poet Nida Fazli Felicitated 2016. The meeting concluded with During the year your Bank has launched finalization of 737 Hindi equivalents September month celebrated as SBI QUICK service in Hindi also. of banking terms. On this occasion Rajbhasha Month in Region ‘A’ & ‘B’ Customer can register himself for SBI a demonstration of online banking and a Rajbhasha week from 7th to 14th QUICK service and after registration glossary portal of RBI was also made. In September 2015 celebrated in Region SMS Hindi from his/her registered the opening session booklet published ‘C’ i.e. other than Hindi Speaking areas. mobile number and enquire about his/ by your Bank named ‘Aaiyey Seekhein’ Renowned Hindi poet Dr. Gopal Das her balance in the account and get a (Bangla through Hindi) presented to the Neeraj and renowned Hindi–Urdu poet Mini statement through SMS in Hindi. Chief Guest and other participants Late Shri Nida Fazli felicitated on the eve of Hindi day at Corporate Centre of Awards – Compendium of Customer your Bank. - Bank’s Quarterly Hindi house journal Information in bilingual PRAYAS Adjudged among best All India online Hindi Quiz The staff members are required to refer magazines by the RBI. different procedural literature in their From this year, we have started an All - Aashirwad a literary – social - cultural day to day working in your Bank. A India online Hindi Quiz in the Rajbhasha organization awarded best magazine Compendium of Customer Information Month with different elimination rounds. award to your Bank for its quarterly in bilingual comprising of policy More than 11,000 staff members from Hindi house magazine ‘Prayas’. documents viz. Cheque Collection all over your Bank participated with lot -Shailaja Nair Foundation’s In house Policy, Policy on Grievance redressal, of enthusiasm. Communication Excellence Award 2015

88 State Bank of India | Annual Report 2015-16 honour us for Hindi house magazine so that possible fraudulent activities are checked and remedial measures taken. ‘Prayas’. During the FY2015-16, a total of 1459 cases (993 new cases) were taken up for - Many of the Town Level Official examination, out of which 1049 cases have since been concluded. Language Implementation Committees convened by our Bank were awarded 6. corporate Social Responsibility by Honourable Governors of respective State Bank of India has been a pioneer in the space of Corporate Social Responsibility states.” within the Indian Banking ecosystem. Your Bank believes that it owes a solemn duty to the less fortunate and underprivileged members of the society to make 5. Vigilance sustainable social change in their lives. Social Responsibility is an integral part of Mechanism its business and a key aspect of its corporate strategy since 1973. Your Bank has At SBI, there are three aspects to the been setting aside 1% of its net profit for CSR initiatives and its CSR initiatives vigilance function – Preventive, Punitive have made a true difference in the lives of millions from underserved communities. and Participative. In line with this year’s Your Bank is committed to the economic and social wellbeing of the socially and theme “Preventive Vigilance as a tool economically impoverished. of Good Governance” and having observed Vigilance Awareness Week from the 26th to 31st October, 2015, Preventive Vigilance is being given more importance as it inculcates a A Caring sense of honesty and integrity among its employees and reinforce internal Bank for Systems and Procedures to control malafide activities. In this connection, Preventive Vigilance Committee Aspirational meetings are being held at the branches and at regular quarterly intervals. Society on The concept of Whistleblower is another effective tool for Preventive Vigilance. There is a well-defined Whistle Blower the go policy in our Bank, which acts as a deterrent for employees that may be prone to carrying out malicious activities. The Whistleblower is generally an FY2016 saw the CSR activities of your Bank scale new heights of achievements. insider, who has near full knowledge of the misdeeds of fellow worker or Focus areas of SBI’s CSR activities higher official, can provide evidence „„ Supporting Health against the delinquent employees. We „„ Supporting Education keep the secrecy of the whistleblower and give protection to them so that „„ Supporting Persons with Disabilities they continued proving an effective tool „„ Skill Development and Livelihood Creation against wrongdoings without fear. „„ Environment Protection.

Where certain lapses of grave nature The CSR spend of your Bank for the FY2016 stood at `143.92 crore. This is the are observed, such branches are fourth successive year, where its CSR spend has crossed the milestone of `1000 earmarked for Suo-motu investigations million. The sector wise spend during the FY2016 is as under:

State Bank of India | Annual Report 2015-16 89 Directors’ Report

Exhibit 44: Focus Area wise Spend Amount Supporting Healthcare: Health No. Category Amt. (`in crore) and hygiene are critical elements to 1 Healthcare 56.00 enhance the quality of life. Healthcare 2 Education 19.50 in India is a neglected area. It is still inaccessible to many sections of the 3 Skill development 44.66 society, especially the most vulnerable 4 Sanitation 4.04 and depressed section of the society. 5 Disability 5.41 Lack of affordability, unavailability 6 Environment 4.78 and lack of awareness are the major 7 Sports 2.21 reasons for a low healthcare index in 8 Culture 1.20 India. 9 Natural calamities 2.16 10 Others 1.98 The primary focus has always remained 11 R & D Fund 1.98 to provide the basic infrastructure to Total 143.92 ameliorate the conditions of the common man. To deliver quality healthcare to those belonging to underprivileged and ` Exhibit 45: Amount ( In crore) economically weaker sections of the 11.41 2.16 society, your Bank has supported large Culture, Sports, National Donations Sanitation, 19.50 number of hospitals. R & D and others Education

4.78 Your Bank has donated 18,761 Environment Wheel Chairs & 17,958 Stretcher Trolleys to large number of hospitals

44.66 56.00 across the country. Your Bank has Skill Development Health also donated `8.24 crore to over 50 charitable organisations for acquiring 57 Ambulances and Medical Vans. 5.41 PWD Your Bank has donated `24.20 crore to 63 charitable organisations/hospitals for acquiring various medical/surgical equipments. This has improved the Exhibit 46: Focus area wise spending in % 38.91 capacity and potential of the Hospitals to serve more & more needy patients. 31.03 Your Bank has supported surgeries for poor and underprivileged section of the society by sponsoring 150 heart 13.55 surgeries through Rotary Charitable 7.93 trust Bangalore and Needy heart 3.32 3.99 1.50 foundation.Your Bank has also donated `98 lakh for supporting the old age homes.

National Environ- PWD Culture, Education Skill Devel- Health Donations ment Sports, opment Sanitation, R&D

90 State Bank of India | Annual Report 2015-16 Women’s Health: Your Bank organised vocational training, hand holding, periodic skill up-gradation, capacity building, a Community Outreach Programme sustainable income generation, providing forward and backward credit linkages. under the title “Vanita Arogya Sampada” The aim of training is to equip the rural youth to get employment or start a profitable by conducting over 100 FREE health micro-enterprise. Your Bank has spent `9.60 crore for the construction of 9 RSETI check-up cum awareness camps for buildings and for providing other infrastructure to 12 RSETIs. The expenditure women across the country. incurred for conducting skill development programs for youth was `28.69 crore at 116 RSETIs of your Bank across the country. Your Bank also donated `3.03 crore It is commonly said “A healthy nation to reputed NGOs in this field for acquiring various equipment for skill development is always a wealthy nation”. Sport is an such as Sewing & knitting machines, buses and vans, computers, laptops, important part of our national culture. projectors, utility vehicles for welfare activities and also for setting up a call centre An Amount of `2.21 crore was spent training facility for blind girls. for development of sport especially in North eastern region of the country.

Supporting Education: Education plays a vital role in improving the standard of life of an individual and is SBI Youth for India Fellowship program: To bridge the widening urban-rural viewed as an effective tool for bringing divide and to organize and galvanize the youth, a unique CSR Programme was social change through community initiated by your Bank in 2011-12. It entails the urban educated youth to voluntarily development. State Bank of India get involved in various developmental projects in rural areas. Under the initiative, always strives to support for education your Bank partnered with reputed NGOs that are engaged in development work in of a weaker social group in remote, rural areas, for conceiving and working on innovative projects in which the enrolled unreachable & underdeveloped areas. youths take part. These youth were supported by a monthly fellowship from your bank. The fellow of the fourth batch are currently working at 23 locations in 12 Holistic Support: Your Bank spent states. `2.59 crore in holistically supporting for food, shelter and sponsoring the cost of education. Your Bank also spent an amount of `3.22 crore on Computers, Equipments, Furniture support for Setting up Science Centres to rural schools; and the printing and distribution of one lakh note books among destitute girl students. Your Bank also donated `8.24 crore for acquiring 63 School buses/vehicles to help schools in rural areas to provide easy transportation to underprivileged children.

Rural Self Development Training Institutes (RSETIs): has 116 Rural Self Employment Training Institutes (RSETIs) across the country to mitigate the unemployment and underemployment problem among the Shri Rajnish Kumar, Managing Director (NBG) Corporate Centre, Mumbai youth in the country. This imparts formal distributing donation to flood affected schools in Chennai.

State Bank of India | Annual Report 2015-16 91 Directors’ Report

Swachh Bharat: To support the Global Warming & Renewable states affected by natural calamities. National mission towards mass Energy: Your Bank continues to remain The following donations were made movement for cleanliness, your Bank committed to issues pertaining to global during the year. has extended its support to the ‘Swachh warming and renewable energy. To this Bharat – Swachh Vidyalaya Abhiyan’ end, your Bank has made significant „„ Chief Minister’s Relief Fund initiative. SBI has spent `3.90 crore contribution in several ways, by way of Assam for Assam Flood Relief during FY2016 for Construction of over of financial support and initiatives in measures – `1.00 crore. 278 toilets and additional water facilities the area of renewable energy, as well „„ Chief Minister’s Relief Fund of in rural schools of India. as adoption of various measures that Tamil Nadu for Chennai Flood relief reflect the importance attached to measures - `1.16 crore. Support to Persons with Disabilities environmental concerns and energy (PwDs): Your Bank always remain in the conservation. Notable in this regard Bank forefront for Protection and Promotion of are installation of Windmill capacity Research & Development Fund: had set up a chair at the Asia Research the Rights and Dignity of Persons with aggregating 15 MW for captive use of Centre, London School of Economics Disabilities (PwD). Some specific actions clean power by your Bank’s branches/ (LSE) jointly with Reserve Bank of India take were: offices in Maharashtra, Gujarat and in the year 2007 under the name “India „„ An Amount of `5.41 crore was Tamil Nadu, and several other in- Observatory & IG Patel Chair”. An donated to reputed NGOs in this field house energy efficiency initiatives like amount GBP 200,000 was contributed for switchover to LED lights, installation during the year. of star rated ACs, solar powered water „„ Distribution of artificial limbs, heating among others. Other measures calipers, crutches, wheel chairs among Your include adoption of green building norms, SBI Children’s Welfare Fund: others. to approx.4200 beneficiaries. Bank constituted SBI Children’s rain water harvesting, management „„ Distribution of tricycles & Hearing welfare Fund as a Trust in 1983, of waste disposal, composting among aids to disabled women and children which extends grants to Educational others. in your Bank’s premises. In line Institutions engaged in the welfare „„ Community Based Rehabilitation with the approach and commitment in of underprivileged children such as project for mentally /physically the Renewable Energy space, your orphans and the destitute. The corpus challenged persons. Bank has endorsed the International of the fund is made by staff members Financial Institutions’ Statement on and matching contribution provided Environment & Sustainability: Energy Efficiency Finance which was by your Bank. During FY2016 Bank Environmental sustainability is defined presented at the Climate Change has donated `29.52 lakh to various as responsible interaction with the Conference in Paris, in November – educational institutes. environment to avoid depletion and December 2015 by the European Bank degradation of natural resources for Reconstruction & Development. and maintain long term quality of the In recognition of the leading role in environment. Your Bank has spent `4.78 Renewable Energy financing, your Bank crore for acquiring, commissioning and received the Outstanding Performance maintaining of a number of Solar power Award – 2015 from the Government of plants, Solar lamp, Solar water heater, India”. and Solar street lamps. It has also provided an animal ambulance and National Donations (Assistance set up an operation theatre for injured during natural calamities): Bank has animals. always been in the forefront to help the

92 State Bank of India | Annual Report 2015-16 Awards: Your Bank has won 10 awards for its CSR initiatives during FY2016: Sr. Name of the Award Category Award Instituted By No. 1 National Award for Excellence in CSR & Best Overall Excellence in CSR World HRD Congress Sustainability 2 National Award for Excellence in CSR & Best Overall Sustainability Performance World HRD Congress Sustainability 3 Asian Banking, Financial Services & Insurance Best CSR Practices World HRD Congress (BFSI) Excellence Awards 4 Asian Banking, Financial Services & Insurance Business Sustainability Initiative of the Year World HRD Congress (BFSI) Excellence Awards 5 Lokmat Banking, Financial Services & Best Bank (Public Sector) World CSR Day Insurance (BFSI) Excellence Awards 6 ABP News CSR Leadership Awards Best CSR Practices to SBI Foundation World CSR Day 7 10th INDY’s Awards Best CSR Practices to SBI Foundation Fun & Joy at Work 8 ABP News Banking, Financial Services & Banks with Best CSR Practices to SBI World CSR Day Insurance (BFSI) Awards Foundation 9 Blue Star: Global CSR Excellence & Best CSR Practices World CSR Day Leadership Awards 10 Golden Globe Tiger Award for Excellence & Best CSR Practices World CSR Day Leadership in CSR

Shri V.G. Kannan, Managing Director (A&S) , Corporate Centre, Mumbai handing over cheque to Hon’ble Chief Minister of Assam Shri Tarun Gogoi.

State Bank of India | Annual Report 2015-16 93 Directors’ Report

V. aSSociates & Subsidiaries Introduction & range of financial services, including Associate Banks Life Insurance, Merchant Banking, The five Associate Banks of SBI had Performance Trustee Business, Mutual Funds, Credit a Market share of around 5.30% in Highlights Card, Factoring, Security Trading, deposits and 5.33% in advances as As a part of mission to provide the entire Pension Fund Management, Custodial on 31st March, 2016. Associate Banks gamut of financial services across Services, General Insurance (Non Life together have 6,798 branches and India, the State Bank Group, through its Insurance) and Primary Dealership in 8,964 number of ATMs. various subsidiaries, provides a whole the Money Market.

Exhibit 47: The performance highlights of the Associate Banks as on 31.03.2016: (`in crore) S . Name of the SBI Total Agg. Total Op. Net CD CAR Gross Net Return on No Bank Share of Ownership Assets Deposits Advances Profit Profit Ratio % NPAs% NPA % Equity %

Investment %

1 State Bank of Bikaner & Jaipur 676.12 75.07 110336 93320 74743 2305.03 850.60 80.09 11.06 4.82 2.75 13.34

2 State Bank of Hyderabad 367.55 100.00 164597 139334 114369 3292.66 1064.93 81.56 11.62 5.75 3.37 10.65

3 State Bank of Mysore 628.63 90.00 82975 70244 55418 1251.53 357.85 78.89 12.43 6.56 4.18 7.92

4 State Bank of Patiala 2459.10 100.00 131036 105806 85941 1827.64 -972.39 81.22 11.50 7.87 3.98 -12.85

5 State Bank of Travancore 885.11 79.09 114507 100473 67004 1798.33 337.73 66.69 11.60 4.78 2.77 6.24

Awards and Accolades Some key Social Initiatives taken by State Bank of Bikaner & Jaipur during the year include the extending of financial support for constructing 88 toilets for girl students and 78 general toilets in schools across Rajasthan; and .extending help to the earthquake affected people of Nepal and the flood affected people in Chennai. The awards won by State Bank of Bikaner & Jaipur during the year include ranking 5th in “Best MID Size Indian Banks” by “Business Today”; Runner Up under “Best MSME Bank Award for Emerging Bank” by Chamber of Indian Micro, Small & Medium Enterprises {CIMSME}, awarded by Shri Piyush Chairman Smt Arundhati Bhattacharya on behalf of SBT donated equipment Goyal, MoS for Power, Coal, New and to Rotary Institute of Children in Need of Special Care, Thiruvananthapuram Renewable Energy, Govt. of India.

94 State Bank of India | Annual Report 2015-16 The notable awards won by State Bank Subsidiaries of Hyderabad during the year include Exhibit 48: Non Banking Subsidiaries (`in crore) the SKOCH ‘order-of-merit’ award at Sr. Name of the Subsidiary Ownership % of Net Profit the Smart Technology Awards 2015 No Company (State Bank Ownership (Losses) for for the e-payment solution provided interest) FY2016 to Government of Maharashtra in the 1 SBI Capital Markets Limited 58.03 100 278.88 Marathawada Region; the ‘Drop Folder’ (Consolidated) utility project award under “Economic 2 SBI DFHI Limited 139.15 63.78 * 72.19 Value Add” category at the same event; 3 SBI Mutual Fund Trustee 0.10 100 0.33 and the Second Best Public Sector Company Bank award by the Kerala Bankers Private Limited Club. 4 SBI Global 137.79 86.18 0.86 Factors Limited The notable achievements by State 5 SBI Pension Funds Private 18.00 60* 0.51 Bank of Patiala during the year include Limited reaching 100% coverage of all their villages by engaging 752 Business *Group holding of SBI is 100% in SBI Pension Funds Private Limited (SBI 60%, SBI Correspondents; the opening of more MF and SBI Capital 20% each) and in SBI DFHI State Bank holding is 72.17% (SBI than 12 lakh accounts under the PMJDY 63.78%, ABs 5.27% and SBI Capital 3.12%). scheme, mobilising deposits of `161.30 crore from these accounts; the issue Exhibit 49: Non Banking Subsidiaries: Joint Ventures (`in crore) of RuPay Debit cards to more than Sr. Name of the Subsidiary Ownership % of Net Profit 94% of the accounts opened under the No Company (State Bank Ownership (Losses) for same scheme; and the “Run Against interest) FY2016 Drugs” across Punjab. Haryana and 1 SBI Funds Management 31.50 63 165.36 Chandigarh organised on the occasion Private Limited of 99th Foundation Day of your Bank. 2 SBI Cards & Payment Services 471.00 60 283.96 Private Limited The notable achievements by State 3 SBI Life Insurance Company 740.00 74 861.00 Bank of Travancore during the year Limited include ranking 1st among PSBs on the 4 SBI-SG Global Securities 52.00 65 8.66 basis of support given to NHGs in the Services Private Limited form of linkage loan in Kerala award 5 SBI General Insurance 150.22 74 (120) given by Kerala State Kudumbasree Company Limited Mission; Eco-Tech Savvy Bank for 6 GE Capital Business Process 9.44 40 38.52 Emerging Bank – Winner for “MSME Mgt. Services Private Limited Banking Excellence Awards-2015”; CSR & Business Responsibility Award A. Sbi Capital Markets Limited (Sbicap) for Emerging Bank- Winner for “MSME Banking Excellence Awards-2015”; SBICAPs is India’s leading investment bank, offering entire bouquet of investment SKOCH Awards for a) Kerala banking and corporate advisory services to varied client base across three product Government e-Tender / e-Procurement, groups – Infrastructure, Equity Capital Markets and Debt Capital Markets. These b) Corporate Social Responsibility- services include Project Advisory, Loan Syndication, Structured Debt Placement, Social Circle, c) Rural Self Employment Mergers & Acquisitions, Private Equity, Restructuring Advisory, Stressed Assets Training Institute and d) OFAC Filtering Resolution, IPO, FPO, Rights Issues, Debt and Hybrid Capital raising. in Remittances.

State Bank of India | Annual Report 2015-16 95 Directors’ Report

On a standalone basis, SBICAPs clients. SSL currently has more than 10 Firms, etc. to market the business posted a PBT of `425.29 crore during lakh clients. The Company has booked products of SBICAP. It has been the period ended 31st March, 2016 gross revenue of `160.82 crore during specialising in marketing of Foreign as against `507.90 crore during the the period ended 31st March, 2016 as Currency Bonds and securing clients FY2015 and a PAT of 283.39 crore against 114.02 crore in FY2015. for SBICAP SEC. period ended 31st March, 2016 against `338 crore in FY2015. 2. SBICAP Ventures Limited (SVL) 5. SBICAP TRUSTEE CO. LIMITED SVL is a wholly owned subsidiary (STCL) SBICAPs declared 320% dividend of SBI Capital Markets Limited. SBICAP Trustee Co Limited (STCL), during the period ended 31st March, DFID (Department for International is a wholly owned subsidiary of 2016 against 430% in FY2015. Development) has joined hands with SBI Capital Markets Limited. STCL the SBI group to set up the “Neev Fund” commenced security trustee business As a leader in its space, SBICAPs has which is being managed by SBICAP with effect from 1st August, 2008. STCL attained recognition in the form of some Ventures Limited. SVL is acting as the posted Net Profit of` 13.35 crore during of the most prestigious awards in the Asset Management Company. the period ended 31st March, 2016 as industry namely, against `11.16 crore during FY2015. The Neev Fund had its Initial close on STCL successfully launched an Online „„ Aban Holdings Limited (7) and 10th April, 2015 and current corpus of Will Creation service for the individuals ONGC Petro Additions Limited (OPaL) the Fund is `469.39 crore. Funds will in the name of ‘My Will Service Online’. (9) listed in the top ten deals in Asia- be invested in Infrastructure sectors It also launched its ‘Trustee Enterprise Pac ex-Japan such as renewable energy, water and Management System’ – an integrated „„ OPaL deal also listed (5) in the top sanitation, agricultural supply chain system to address all the trustee related ten Asia-Pac ex-Japan Loans: Largest in 8 identified states of India (Bihar, operations and thus has become the Deals by Country Chhattisgarh, Jharkhand, Madhya first and only Trustee Company in Pradesh, Odisha, Rajasthan, Uttar India to have full automation across all „„ Aircel Group 137.29 billion rupee Pradesh and West Bengal). SVL has trustee related operations. funding facility deal bagged Telecom started earning Management Fee. deal of the year award by ASSET TRIPLE A ASIA Infrastructure Awards B. Sbi Dfhi Limited (Sbi 3. SBICAP (UK) LIMITED (SUL) 2015 Dfhi) SUL is a wholly owned subsidiary of SBI DFHI Limited is one of the largest SBI Capital Markets Limited. SUL is standalone Primary Dealers (PD) with 1. SBICAP Securities Limited (SSL) positioning itself as a relationship outfit a pan India presence. As a Primary SSL, a wholly owned subsidiary of for SBI Capital Markets Limited in UK Dealer (PD) it is mandated to support SBI Capital Markets Limited, besides and Europe. Relationships are being the book building process in primary offering equity broking services to built with FIIs, Financial Institutions, Law auctions and provide depth and liquidity retail and institutional clients both in Firms, Accounting Firms, etc to market to secondary markets in G-Sec. cash as well as in Futures and Options the business products of SBICAP. Besides Government securities, it also segments, is also engaged in sales and deals in money market instruments, distribution of other financial products 4. SBICAP (SINGAPORE) LIMITED non G-Sec debt instruments, etc. As a like Mutual Funds, Tax Free Bonds, (SSGL) PD, its business activities are regulated Home Loan, Auto Loan, Tractor Loan, SSGL, is a wholly owned subsidiary by RBI. among others. of SBI Capital Markets Limited. SSGL commenced business with effect SSL has over 100 branches and offers from December 2012. Relationships Demat, e-broking, e-IPO and e-MF are being built with FIIs, Financial services to both retail and institutional Institutions, Law Firms, Accounting

96 State Bank of India | Annual Report 2015-16 SBI group holds 72.17 % share in the `54.1 crore in FY2014-15 post wiping „„ SBI Card was awarded for its Company. The Company posted Net out accumulated losses in the year. competitive and market leading Profit of `72.19 crore in the FY ended The company has proposed dividend @ practices in ‘ Talent Management ‘ 31st March, 2016 as against `92.55 10% for FY2015-16 vs 5 % in previous by Delhi Management Association in crore in FY2015. year. Annual Awards ceremony in 2015

„„ SBI Card’s learning tool ‘Little The market share of SBI DFHI was In the current year, the company has Master’ won National IT excellence 3.46% amongst all market participants launched the “Simply Click” Card to tap Award under the category of ‘Leveraging and 20.37% amongst Standalone PDs into the e-commerce focussed younger IT for Business Performance’ as on 31st March, 2016. generation, Co-branded Cards with „ Federal Bank, Lakshmi Vilas Bank, „ SBI Card awarded ‘Best Data Capital One and Mumbai Metro. Quality’ in NBFC segment for 2015- C. Sbi Cards & 16 at Eighth Annual Credit Information Payments Services In terms of new technology, the company Conference. Private Limited has launched Pay-Wave Signature „„ SBI Card - Flexipay campaign has (Sbicpsl) Card based on NFC technology for been selected as an ECHO leader at SBICPSL, the stand-alone credit card contactless usage. the 2015 DMA Asia ECHO™ Awards issuing company in India, is a joint „„ SBI Card awarded Most Trusted venture between State Bank of India SBI Cards received the following Brand by Reader’s Digest Trusted and GE Capital Corporation, wherein awards during the current year: Brand Awards 2015 SBI holds 60% stake. „„ SBI Card won International „„ ‘Simply CLICK Card’ awarded ‘Best SBICPSL is 3rd largest in the industry Card Product/Program’ of the year at Gartner Award for the “Most Innovative in terms of Cards in force with 15% the Customer Fest Awards 2016 & Technology Legacy Transformation” for market share with a base of 34.68 lakh ‘Best credit Card Program’ by Master its Card One CRM tool. as at Dec, 2015. The card base has Card Innovations awards 2016. grown by 17% over the last financial year. In terms of spends, the company has moved from 5th to 4th position in the current financial year with ~ 12% market share. The growth in spends continues to be amongst one of the highest in the industry @ 35% vs 26% growth in Industry.

The company is firmly on the path of profitable growth and has been in profits since FY2010-11. In FY2015- 16, the company has reported PBT of `438 crore at a growth rate of 21% (Excluding one-off accounting adjustments in FY2014-15). Profit after Tax stands at `284 crore in FY2015- 16 against `267 crore in FY2014-15. Lower growth in Profit after Tax is due Chairman, Smt. Arundhati Bhattacharya and Chief Executive Officer of SBI Card Shri. Vijay Jasuja during launch of Paywave Contactless SBI to one-time deferred tax catch up of Card and SBI Intouch Debit Card.

State Bank of India | Annual Report 2015-16 97 Directors’ Report

D. Sbi Life Insurance social sector. The Company has been the lives of more than one lakh Company limited substantially exceeding the minimum children and extended support to social and rural regulatory norms. over 500 educational institutions and (Sbilife) organisations across the nation. SBI Life Insurance Company Limited BNP Paribas Cardif have given their is a Joint Venture between State Bank intention for dial-up to increase their The various awards received are of India and BNP Paribas Cardif in stake by 10% by buying the same from a testimony to SBI Life’s quality which SBI holds 74% stake. SBI Life SBI. The proposed divestment by SBI and commitment towards customer has a unique multi–distribution model has been approved by SBI. centricity and professional excellence. comprising Bancassurance, Retail Awards and recognitions received Agency, Alternate, Group Corporate SBI Life has reinforced its outreach during the year include: and Online Channels for distribution of initiatives in the realm of child welfare, insurance products. across different parts of the country, „„ Won the ‘The Indian Insurance in line with its avowed CSR goals. Awards 2015’ for under-served Market The Company has proven its market SBI Life continues to remain focused Penetration, Life Insurance (Large leadership again in FY16 with a growth on contributing towards improving the Companies Category). rate higher than the growth of the quality of life of children and engaging „„ Adjudged the Best Life Insurance industry. The company witnessed a communities through healthcare Company (Private Sector) at the 29% growth in New Business Premium facilities, educational and infrastructural Lokmat BFSI Awards 2015 by World (NBP) vis-à-vis the private industry improvement and rural development. HRD Congress. growth of 18%. The market share of The Company has engaged in societal SBI Life New Business Premium (NBP) sustainability through its partnership „„ Won ‘Marketing Campaign of the among all private players as on March, programmes with national and local Year’ award for Excellence in Branding 2016 is 17.3% vis-a-vis 15.9% last year. organisations and has impacted and Marketing at 6th CMO Asia Awards. The Company has been ranked No. 1 in New Business Premium among the private industry. Further, the Company has achieved 37% growth in Individual Adjusted Premium Equivalent (APE) vis-a-vis 14% growth for private industry.

SBI Life witnessed a PAT of `861 crore in FY2016 against `820 crore in FY2015. Assets held as on 31st March, 2016 recorded a Y-o-Y growth of 13% at `83,429 crore.

Leveraging wider reach achieved through its network of 774 offices, SBI Life has systematically brought large rural areas under insurance. The company has sold 24% of total policies in this segment in FY2016. A total of 285,027 lives covered by the company are from the underprivileged

98 State Bank of India | Annual Report 2015-16 „„ Won TISS Leapvault CLO Award In FY2016, the focus was on designing products that cater to the changing market 2015 for Best Program for Sales requirements and regulatory requirements. Based on an analysis of the customer Enablement. needs and current product portfolio, new segments were identified and the products listed below were launched. Each of them is aimed to address a specific need and „„ Won Knowledge Management Leadership Award 2015 for “Use of to contribute to comprehensiveness of the product portfolio. Best Training Methods for Knowledge Management at the 14th Asia Pacific HRM Congress. E. Sbi Funds Management Private Limited

„„ Adjudged the ‘Most Trusted Private (Sbifmpl) Life Insurance Brand’ by The Economic SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 5th largest Times, Brand Equity and Nielsen Fund House in terms of Average “Assets Under Management” and a leading Survey 2015 for the fifth consecutive player in the market with over 4.7 million investors. SBIFMPL posted a PAT of year. `165.36 crore in FY2016 as against `163.43 crore earned during FY2015. The „„ Won IndIAA Awards 2015 for ‘Best average “Assets Under Management” (AUM) of the company during the quarter Advertisement’ under the ‘insurance ended March 2016 were `1,06,781 crore with a market share of 7.89% as against category’. the average assets under management of `72,942 crore with a market share of „„ Won Brand Excellence Award, 6.30% during the quarter ended March, 2015. The Company has a fully owned 2015 in Life Insurance (Private foreign subsidiary namely SBI Funds Management (International) Private Limited, Sector)’ presented by World Marketing which is based at Mauritius and manages Off-shore Fund. SBI Funds Management Congress. (International) Private Limited is a 100% subsidiary of SBIFMPL. „„ Won the ‘Golden Peacock Award for Risk Management’ for the year 2015. SBI FMAwards „„ Won award in ‘Best HR Technology’ category at ‘Inspiring Work Places Conference 2015’. . The Best Fund House in India . The Best Long Term Equity Asset Management House „„ Achieved ‘Gold’ level of recognition in the Aarogya Healthy Workplace . Runner up for Best Debt fund house Award 2015. . Lipper Award (Best Group Over 3 Years) . SBI FM has won a Fund Family Award for the mixed asset „„ Adjudged the “The Economic Times classes. Best Corporate Brands 2016”. . Lipper Fund Awards . SBI Magnum Gilt Fund-Long Term-Growth won the Best Bond Award in the 3 years in Bond Indian Rupee – „„ SBI Life won the Prime Time Government Award 2015 (Bronze) for the Great Dad . SBI Small & Midcap-Growth won the best Equity Award in the 3 years category in Equity India advertising campaign under the ‘Best . Morningstar Fund Category Award Creative Advertising – Single Ad or . SBI Bluechip is the winner in the Large Cap Category. The Campaign’ category in the BFSI sector. award recognizes the fund for strong 3 year and 5 year returns after adjusting for risk, in addition to outperformance of its peers in 1 year. „„ SBI Life wins ‘Stars Of The Industry Award for Excellence In Life Insurance’

„„ SBI Life was awarded ‘Golden Peacock National Quality Award’ for the year 2015 at IOD India’s ‘26th World Congress on Leadership For Business Excellence & Innovation’.

State Bank of India | Annual Report 2015-16 99 Directors’ Report

F. SBI GLOBAL FACTORS crore) during 14-15, a growth of 76.82%. H. SBI GENERAL LIMITED (SBIGFL) SBIGFL received 2015 Certificate of INSURANCE COMPANY Recognition for “Best Service Quality SBIGFL is a leading provider of factoring Improvement as Export Factor” from LIMITED (SBIGIC) services for domestic and international Factors Chain International (FCI) in SBIGIC is a joint venture between trade. SBI holds 86.18% share in the June 2015 at Singapore. State Bank of India and IAG Australia Company. Company’s services are in which SBI holds 74% stake. The especially suitable for MSME clients The Company is adequately capitalized company’s strong focus is on disciplined for freeing up resources locked in book with AAA / A1+ ratings from reputed pricing and fair and transparent debts. By virtue of it’s membership of rating agencies for its borrowing claims management practices. The Factors Chain International (FCI), the programmes. cornerstone of the company’s growth Company is able to ameliorate credit aspiration is focussed on the Banca risk from export receivables under the channel whilst selectively developing 2 factor model. G. SBI PENSION FUNDS other channels and products that meet PRIVATE LIMITED (SBIPF) business objectives and drive profitable The Company has turned around in SBIPF is one of the three Pension Fund growth. The Company has entered in FY2015-16. Company has achieved Managers (PFM) appointed by Pension to strategic tie-ups with three large car PBT of `2.53 crore (as compared to Fund Regulatory &Development manufactures to drive growth in the loss of `59.21 crore last year) and PAT Motor portfolio. of `0.86 crore (as compared to loss of Authority (PFRDA) for management `46.23 crore last year). Turnover of the of Pension Funds under the National Gross Written Premium (GWP) stood Company crossed `2,500 crore during Pension System (NPS) for Central at `2039.8 crore in FY2016. The FY2015-16 and was at `2,532 crore Government (except Armed Forces) Company recorded 29.4% growth in as compared to last year’s turnover of and State Government employees. GWP YOY against an industry growth `2,226 crore, representing a growth SBIPF, a wholly owned subsidiary of of 13.8%. Overall market share among of 13.75%. FIU Level crossed `1,000 the State Bank Group, commenced its all general insurance companies crore as of 31st March, 2016 and was at operations from April 2008. The total increased from 1.9% to 2.1% and from `1,008 crore as compared to last year 4.5% to 5.1% among Private Insurers in level of `921 crore, a growth of 9.45%. “Assets Under Management” of the FY2016 as compared to FY2015. The company as on 31st March, 2016 were Company’s market ranking is 13th in Gross NPA level of the Company was 46,019 crore (YOY growth of 47 %) the industry and 8th among the private brought down to `297 crore and Net against 31,407 crore in March 2015. players in FY2016. SBIGIC occupies NPA level to `30 crore as on 31.03.2016 2nd position in “Personal Accident” in against Gross NPA level of `363 crore The Company maintained lead position the industry and private insurers. The and Net NPA level of `91 crore as on amongst Pension Fund Managers in company ranks 2nd in “Fire” among 31.03.2015. Net NPA level is below 3% terms of AUM in both Government private insurers and 6th position in the of total FIU as on 31.03.2016.. Fresh and Private Sectors. The overall AUM industry in FY2016. IAG has given their Slippages during FY2015-16 were intention for dial-up to increase their contained at `3.79 crore against much market share in Private sector was stake by 23% by buying the same from higher slippages during the last 2 years 69%, while in the Government sector SBI. The proposed divestment by SBI i.e. `85.02 crore in FY2014-15 and it was 35%. The company maintained has been approved by SBI. `108.83 crore in FY2013-14. its number 1 rank in both Private Sector and Government Sector. The Company Export Factoring Turnover under was adjudged the “Best Pension Fund 2-Factor model went upto EUR 32.80 House under NPS for the year 2015 by Mio (INR 238 crore) during FY15-16 as Outlook Money. compared to EUR 18.55 Mio (INR 138

100 State Bank of India | Annual Report 2015-16 Awards and recognitions include J. SBI Foundation (SBIF) making entities in the social and Marketing Initiative of the Year 2015 by development sector to create inclusive In order to consolidate the CSR India Insurance Awards; and 50 Most sustainable development in the most activities of your Bank, its associates Influential Digital Media Professionals transparent way. and subsidiaries and carrying out the 2015 by World Marketing Congress. same in a structured, planned and an The foundation will place its focus on impactful manner, an idea to establish the following areas: I. SBI SG GLOBAL a separate entity in the form of a SECURITIES SERVICES Section 8 Company was conceived. „„ Healthcare & Sanitation PRIVATE LIMITED (SBISG) SBI Foundation has been set up as a 100% subsidiary of State Bank of „„ Education, Livelihood & Skill SBISG, a joint venture between State India as a Section 8 Company under Development Bank of India and Societe Generale, the Companies Act 2013 for carrying was set up to offer high quality custody „„ Women Empowerment and Care out CSR activities for the State Bank and fund administration services to for Senior Citizens Group. While forming the Foundation, complete the bouquet of financial „„ Sustainability & Environment it was envisaged that all the SBI services on offer by a financial Group entities would contribute to the „„ Rural Development conglomerate. SBISG commenced Foundation for carrying out their CSR commercial operations in Custody activities. The Foundation has received in May 2010 and Fund Accounting necessary approvals from RBI and Services in Sept 2010. The Company’s registration with MoCA for carrying Net profits was `8.66 crore in FY2016 out its activities. It has also recently as against `5.69 crore in FY2015. received registration under section 12A & section 80G of the Income The Assets Under Custody as on 31st Tax Act, 1961. March, 2016 rose to `2,20,902 crore as against `,69,587 crore as on 31st The aim of your Bank’s CSR philosophy March, 2015, while the Assets Under is to make a meaningful and measurable Administration were at `1,32,152 crore in impact in the lives of economically, March 2016 as against `79,090 crore in physically and socially deprived March 2015. communities. Your Bank also aims to promote initiatives that preserve, restore SBI-SG has improved its ranking on and enhance environment, ecological the Global Investor Survey in the balance, and natural resources, and unweighted category from 3rd to 2nd improve sanitation and hygiene. Your in the 2016 survey for sub-custodians Bank recognises the importance of good in India. SBI-SG was adjudged the best corporate governance and corporate sub-custodian for India in the World’s social responsibility in promoting Best Sub Custodian Awards by Global and strengthening the trust of its Finance Magazine 2015. SBI-SG stakeholders and community at large. Its participated in the Global Custodian mission is to make available resources survey for sub-custodians in Emerging to the most vulnerable sections of the markets for the first time and was society directly and through strategic ranked 2nd best for technology and partnerships/collaborations with impact 3rd best for reporting.

State Bank of India | Annual Report 2015-16 101 Directors’ Report

VI. Responsibility VII. AcknowledgementS Statement During the year, Dr. Rajiv Kumar, Shri Harichandra Bahadur Singh and Shri The Board of Directors hereby states: S.K.Mukherjee retired from the Board w.e.f. 5th August, 23rd September & 3rd i. that in the preparation of the annual October, 2015 respectively, consequent upon completion of their terms. Shri P. accounts, the applicable accounting Pradeep Kumar, Managing Director - CBG retired on attaining superannuation standards have been followed along on 31st October, 2015. Dr. Hasmukh Adhia, retired from the Board w.e.f. 2nd with proper explanation relating to September, 2015 and Ms. Anjuly Chib Duggal, was nominated as GoI Nominee material departures; Director in his place w.e.f. 3rd September, 2015. ii. that they have selected such Shri Rajnish Kumar and Shri P.K.Gupta were appointed as Managing Directors accounting policies and applied them under section 19(b) w.e.f. 26th May and 2nd November, 2015 respectively and Dr. consistently and made judgements Girish K. Ahuja and Dr.Pushpendra Rai were nominated as Directors under section and estimates as are reasonable and 19(d) w.e.f. 28th January, 2016 on the Board. prudent, so as to give a true and fair view of the state of affairs of your Bank The Directors place on record their appreciation for the contributions as on the 31st March, 2016, and of the made by the respective outgoing Directors, namely, Dr. Rajiv Kumar, profit and loss of Your Bank for the year Shri Harichandra Bahadur Singh, Shri S.K. Mukherjee, Dr. Hasmukh ended on that date; Adhia and Shri P. Pradeep Kumar to the deliberations of the Board. The iii. that they have taken proper and Directors welcomed the new Directors Ms. Anjuly Chib Duggal, Shri Rajnish sufficient care for the maintenance Kumar, Shri P.K. Gupta, Dr. Girish K. Ahuja and Dr.Pushpendra Rai on of adequate accounting records in the Board. accordance with the provisions of the Banking Regulation Act, 1949 The Directors expressed their gratitude for the guidance and co-operation received and State Bank of India Act, 1955 for from the Government of India, RBI, SEBI, IRDA and other government and safeguarding the assets of your Bank regulatory agencies. and preventing and detecting frauds and other irregularities; Above all, the Directors thank all the valued clients, shareholders, banks and iv. that they have prepared the annual financial institutions, stock exchanges, rating agencies and other stakeholders for accounts on a going concern basis; their patronage and support, and take this opportunity to express their appreciation v. that the internal financial controls for the dedicated and committed team of employees of your Bank. had been laid down, to be followed by your Bank and that such internal For and on behalf of the financial controls are adequate and were operating effectively; and Central Board of Directors vi. that proper system had been devised to ensure compliance with the Chairman provisions of all applicable laws and that such systems were adequate and Date: 27th May, 2016 operating effectively.

102 State Bank of India | Annual Report 2015-16