32 Directors’ Report

Directors’ Report

I. ECONOMIC BACKDROP AND BANKING ENVIRONMENT

GLOBAL ECONOMIC European countries including Russia, Italy, with a fair distribution of rainfall across Hungary among others and escalation of major parts of country in 2018. SCENARIO sanction issue in Iran are other key risks Global economic activity gathered that could dampen the growth prospects. As a result of normal rainfall during monsoon momentum in the second half of last year 2017 and various policy initiatives taken by and it continues to grow in 2018. World Another major development having an the Government, the country has witnessed GDP growth recovered to an estimated impact on global economy is the oil record foodgrain production at 279.50 3.8% in 2017 compared to 3.2% in the price which has recovered to over US$ million tonnes for FY2018, 1.6% higher previous year. Both the developed and 80 per barrel recently. Looking ahead, than the previous record achieved in FY2017 the developing countries performed well, geo-political tensions in middle-east with (275.1 million tonnes). The production growing at 2.3% and 4.8% respectively. probable sanctions on Russia may affect of rice, pulses and coarse cereals touched The US economy grew more than expected oil price dynamics. new highs during the year, but wheat against the backdrop of abatement of production declined. past exchange rate appreciation impact and oil price movement coupled with INDIA’S ECONOMIC Gross value added in the industrial sector support from good consumption growth at basic prices decelerated to 6.8% and rebound in investment. Euro area SCENARIO in FY2018 from 9.8% in FY2017. The also surprised positively witnessing its India’s economic growth is expected to slowdown in FY2018 was due to a sharp fastest pace of growth in a decade and gather momentum in FY2019, benefitting deceleration in mining and quarrying. In the surpassing the US growth in 2017. The from a conducive domestic and global mining sector, contraction was on account uncertainty surrounding Brexit weighed environment. The factors that will help in of slowdown in its key constituents such on the UK economy, however it recovered achieving 7.4% GDP growth in FY2019 as coal and natural gas production, and in the final months of the year. In Japan, compared to 6.7% in FY2018 are: (i) the decline in crude oil output. The growth improved global demand for technological troubles relating to implementation of of manufacturing, on the other hand, products stimulated investment in high- the GST have been sorted out, (ii) credit improved with the waning of the transient end sectors including auto, machinery off-take has improved and is becoming effects of GST. including robots and semi-conductors. increasingly broad-based, (iii) large resource mobilisation from the primary On the external front, the current account Among the emerging and developing world, market strengthening investment activity, deficit (CAD) increased to 2% of GDP economic contraction ended in Russia and (iv) the process of recapitalisation of PSBs (US$ 13.5 billion) in Q3 FY2018 from 1.4% Brazil, thereby adding to growth. However, and resolution of distressed assets under of GDP (US$ 8.0 billion) a year ago. For despite improvement in oil dynamics Saudi the Insolvency and Bankruptcy Code may FY2018, we believe CAD would be around Arabia witnessed negative growth owing improve the business and investment 1.8% of GDP compared to 0.7% of GDP to low oil output and sluggish performance environment, (v) global trade growth has in FY2017. This slight increase in CAD of non-oil sector. Even Mexico suffered accelerated, which should encourage during FY2018 is due to US$ 156.8 billion against the backdrop of uncertainty exports and reduce the drag from net trade balance, which is at a 5-year high. surrounding NAFTA and presidential exports, and (vi) the thrust on rural and elections. Meanwhile, China witnessed its infrastructure sectors in the Union Budget BANKING ENVIRONMENT first annual acceleration since 2010 with 2018-19 could rejuvenate rural demand export growing at their quickest pace in and also encourage private investment. FY2018 remained an eventful year for the four years. banking fraternity. Asset quality, resolution Inflation, both CPI and WPI remain under of stressed assets and muted credit growth India’s GDP growth is expected to have control for entire FY2018. Average CPI in H1 continued as major challenges moderated to 6.6% in FY2018. However, was 3.6% in FY2018 compared to 4.5% in for most banks during the current year. this is likely to be transitory. Meanwhile, FY2017, while the corresponding figures Higher NPAs impacted interest income Government reforms continue to provide for WPI are 2.9% and 1.8%, respectively. adversely and led to elevated provisions, support to aggregate demand. Assuming a normal monsoon and no thus putting pressure on the profitability of major exogenous/policy shocks, CPI is banks. Further, some Public Sector Banks Looking ahead, as per IMF projections expected to remain in the range of 4.0- (PSBs) have been put under the Prompt the world economy is poised to grow at 4.5% for FY2019 and even go below 3.5% Corrective Action (PCA) framework of RBI, 3.9% in 2018 as well as 2019. However, for some months in Q3 FY2019. Major which puts restrictions on key areas viz. looming threat of trade wars against the risks to the inflation outlook are crude oil dividend payment, branch expansion, etc. background of increase in tariffs by the US and other commodity prices and fiscal and retaliation by China is one of the risks slippage at both the central and state After remaining depressed for nearly to global growth. World trade is recovering levels. two years, the bank credit built upon the smartly in 2017, registering a growth uptick that started around June, 2017 and of around 10% and 11% for exports For the third consecutive year, Indian expanded in double digits from December, and imports respectively, but rising Meteorological Department (IMD) has 2017. The resurgence in credit growth was protectionism and trade war can threaten forecasted that monsoon would be observed across bank groups, though the trade and economic growth. In addition, “Normal” or around 97% of Long Period pace of growth continues to vary among uncertainty surrounding elections in many Average (LPA) with an error of ± 5% and bank groups. The YoY growth rate of bank 33 credit for ASCBs was 10% as on 30th PSBs for meeting their regulatory capital OUTLOOK March, 2018. Credit extended by private requirement and growth needs. sector banks is higher than PSBs, while The coming years will be very challenging credit extended by foreign banks has State Bank of India has merged its five for the banking system as a whole. The returned to positive territory after a long associate banks and Bharatiya Mahila operating environment has become contraction. Credit to sectors is becoming Bank Ltd. with itself from 1st April, increasingly complex. Although, resolution broad-based, with off-take by industry 2017. This is the first such large scale of stressed assets has progressed turning positive after a protracted period consolidation in the Indian Banking satisfactorily, the final outcome will take of contraction. Due to the continued industry. With this merger, your Bank is some more time to reflect in the P&L. This stress in other sectors, most of the banks ranked at the 54 position among the top delay is mainly because new laws take made efforts to lend to retail sector, which 1,000 global banks, as per the global some time to mature in practice. However, registered reasonably good growth, with ranking by “The Banker” in July 2017. the structural transformation of banks most banks expanding their retail loan This merger helped your Bank to reduce must move beyond the NPA resolution book. However, with resolutions through 1,805 branches and rationalised 244 and address other pressing issues, National Companies Law Tribunal (NCLT) administrative offices, which saves around such as frauds, customer retention and expected to gather momentum and ` 1,099 crore per annum. We believe that servicing, human resource, cyber security global growth and private investment in the long-term benefits of the merger and governance. India beginning to pick up, green shoots will significantly outweigh the near term of credit demand have started appearing. challenges and the efficiencies generated The policy initiatives over the last four On the other hand, the aggregate deposits through the merger will help the Bank to years have gathered momentum with far growth (YoY) continued to decline and is sustain the mission of being an enduring reaching structural transformation in all at 54-year low of 6.2%, due to the base value creator. sectors. GST is moving to the next phase effect and currency withdrawal by public. with the introduction of e-ways module. Meanwhile, under the Pradhan Mantri Infrastructure growth has notably picked During the last quarter of FY2018, the Jan Dhan Yojna (PMJDY), banks have in roads, civil aviation and railways. bond yields continued to firm up which opened 31.4 crore accounts with Digitalisation will gather pace as evident hit severely the banks’ balance sheet, due ` 79,012 crore deposits (around 6% of from the Report of the Taskforce on to the mark-to-market losses incurred the total demand deposits of the ASCBs) Artificial Intelligence. It is unlikely that by the banks in their investments. In the till 4th April, 2018 deposited in their banks will escape these transformations. post-demonetisation period, banks have accounts. Out of the 31.4 crore accounts, Digitalisation of banking process will invested a huge amount of money in PSBs have opened 25.4 crore accounts, continue during the next year creating new Government bonds due to tepid credit RRBs have opened 5.1 crore accounts, improved service experience. With capital growth. In Q3 FY2018 quarterly results, whereas private sector banks (PrSBs) infusion, it is now up to the banks to grab most of the banks have reported a loss have opened only 0.9 crore accounts. the opportunity and deploy technology in due to their higher provisioning against the This indicates that PSBs have accepted addressing some of the pressing issues mark-to-market losses in investments in the responsibility and have fulfilled their mentioned above. Government bonds. To ease the pressure, promises in a record time. On a positive RBI recently has advised the banks to do note, zero balance accounts under The external environment nevertheless the mark-to-market loss provisioning in PMJDY have been continuously declining has become uncertain, despite a positive the next four quarters. from 76.8% in September, 2014 to around outlook on growth. Trade wars, which are 20% now. PMJDY has also helped the a sign of renegotiation of the old order, On a positive note, in the year, the implementation of the Mudra Yojana with have become more acute. The situation Government took a significant step `5.28 lakh crore distributed to 11.96 crore will continue in the same direction in to capitalise PSBs in a front-loaded beneficiaries in the last 3-years. In an in- 2018. Thus, across the world, banks have manner, with a view to support credit house study within your Bank, we have revisited their foreign business strategy growth and job creation. This entails found that there is a traction across Jan in line with growing risks. Such cautions the mobilisation of capital to the tune of Dhan and Mudra accounts. prevails among Indian banks as well. The about ` 2.11 lakh crore over two years, Government of India has advised banks through budgetary provisions of ` 18,139 In regards to competition, while the new to rationalise their foreign branches. crore, recapitalisation bonds to the tune of breed of Payment and Small Finance However, this does not constitute a blanket ` 1.35 lakh crore, and the balance through Banks, which have started functioning, withdrawal but a more realistic strategy in raising of capital by banks from the market are still in the process of fine tuning line with changing trade patterns of the while diluting non-Government equity their business models, the Fintech country. This rationalisation in foreign (estimated potential ` 58,000 crore). The companies with disruptive technologies business will therefore continue. other possibility is to raise funds through and having capabilities to address specific rights issue to maintain parity of holdings. pain-points of financial customers, The coming year will be the last year Going by the MoF (Ministry of Finance) such as remittance, credit and savings, after which general elections are due. estimates, the ` 1.35 lakh crore package have emerged as a challenge to the However, we do not expect that policy seems largely adequate. In FY2018, banking system. direction will markedly turn populist. Government has notified` 80,000 crore The fiscal and monetary conditions will recapitalisation bonds to capitalise 20 continue to remain stable even if there are momentary aberrations. But the challenge will lie in taking a decision amid growing uncertainty. Overall the NPA resolution is in sight and the time is opportune for tough and strategic decision making. 34 Directors’ Report

II. FINANCIAL PERFORMANCE PROVISIONS & CONTINGENCIES ACQUISITION OF ERSTWHILE DOMESTIC BANKING Major provisions made in FY2018 were as under: SUBSIDIARIES (E-DBS) & BHARATIYA MAHILA BANK ` 70,680.24 crore for non-performing assets (as against ` 32,246.69 crore in FY2017), LIMITED: write back of ` 3,603.66 crore towards Your Bank has acquired five domestic banking subsidiaries (DBS) of SBI; namely (i) State Standard Assets (as against provision of Bank of Bikaner & Jaipur (SBBJ), (ii) State Bank of Mysore (SBM), (iii) State Bank of ` 2,499.64 crore in FY2017), ` 8,087.57 Travancore (SBT), (iv) State Bank of Patiala (SBP), (v) State Bank of Hyderabad (SBH); and crore towards Investments Depreciation (as Bharatiya Mahila Bank Limited (BMBL) with effect from 01st April, 2017. against ` 298.39 crore in FY2017).

The merger of DBS & BMBL with SBI, has been accounted under the ‘pooling of interest’ method as per Accounting Standard 14 (AS 14), “Accounting for amalgamation” and the RESERVE & SURPLUS approved Scheme of Acquisition. Pursuant thereto, all assets and liabilities of the transferor Since the Bank has incurred loss in Banks have been recorded in the books of SBI at their existing carrying amounts as on FY2018, no amount (as against ` 3,145.23 effective date. The net difference between share capital of transferor banks of e-DBS & BMBL crore in FY2017) has been transferred and corresponding investments by SBI and cash in lieu of fractional entitlement of shares have to Statutory Reserves. An amount of been transferred to Capital Reserve. ` 3,288.88 crore (as against ` 1,493.39 crore in FY2017) has been transferred to The total assets taken over are as under: Capital Reserves. An amount of ` 1,165.14 (` in crore) crore (as against ` 143.69 crore in FY2017) Particulars Total has been transferred from Investment reserve to Revenue and other Reserves and Cash & balances with RBI 32,743.73 ` 192.32 crore from Revaluation Reserve to Balances with Banks & Money at Call & Short Notice 66,680.19 General Reserve. Investments 1,76,603.55 Advances 2,97,884.25 REVALUATION OF FIXED Fixed Assets 6,987.51 ASSETS Other Assets 38,012.45 Total Assets 6,18,911.68 Your bank has reversed the effect of revaluation amounting to ` 11,210.94 crore Since the figures of the current period include the results of the branches of these Banks, the made in earlier periods in the value of certain leasehold properties, which has resulted figures of the previous period are strictly not comparable. in write back of depreciation charged in previous year amounting to ` 193.24 ASSETS AND LIABILITIES Total interest expenses have increased crore. Consequential effect on capital from ` 1,13,658.50 crore in FY2017 to adequacy ratio arising from the above has The total assets of your Bank have increased ` 1,45,645.60 crore in FY2018. Interest been made in the results for the year ended by 27.67% from ` 27,05,966.30 crore at the expenses on deposits during FY2018 March, 2018. end of March 2017 to ` 34,54,752.00 crore as recorded an increase of 28.53%, compared at the end of March 2018. During the period, to the previous year. the loan portfolio increased by 23.16% from PROGRESS ON ` 15,71,078.38 crore to ` 19,34,880.19 crore. Investments increased by 38.51% from NON INTEREST INCOME IMPLEMENTATION OF ` 7,65,989.63 crore to ` 10,60,986.71 crore as at the end of March 2018. A major portion AND EXPENSES IND AS of the investment was in the domestic market Non-interest income increased by 25.77% RBI, in its press release dated 5th April, in government securities. to ` 44,600.69 crore in FY2018, as against 2018, has deferred implementation of ` 35,460.93 crore in FY2017. During the Ind AS by one year till 1st April, 2019. Your Bank’s aggregate liabilities (excluding year, your Bank received an income of Earlier, RBI had issued a road map for capital and reserves) rose by 28.52% from ` 448.52 crore (` 688.35 crore in FY2017) implementation of Ind AS for Banks in st ` 25,17,680.24 crore as on 31 March, by way of dividends from subsidiaries India for accounting periods beginning 2017 to ` 32,35,623.44 crore as on and joint ventures in India and abroad, from 1st April, 2018. st 31 March 2018. The deposits rose by and ` 13,423.35 crore (` 10,749.62 crore 32.36% and stood at ` 27,06,343.28 in FY2017) by way of profit on sale of A Steering Committee headed by st crore as on 31 March 2018 against investments, an increase of 24.87%. Cost Managing Director (Risk, IT & Subsi- st ` 20,44,751.39 crore as on 31 March to Income ratio is 50.18% in FY2018 as diaries) is monitoring the progress in 2017. The borrowings also increased by compared to 49.54% in FY2017. implementation of Ind AS in the Bank to 13.99% from ` 3,17,693.66 crore, at the ensure a smooth transition to Ind AS as end of March 2017 to ` 3,62,142.07 crore per the time schedule. as at the end of March 2018. OPERATING PROFIT Your Bank registered a growth of 17.04% NET INTEREST INCOME in Operating Profit in the current financial year. The Operating Profit of your Bank Net interest income increased by 21.01% for FY2018 was at ` 59,510.95 crore as from ` 61,859.74 crore in FY2017 to compared to ` 50,847.90 crore in FY2017. ` 74,853.71 crore in FY2018. Total interest Your Bank posted a Net Loss of ` 6,547.45 income has increased from ` 1,75,518.24 crore for FY2018, as compared to profit of crore in FY2017 to ` 2,20,499.31 crore in ` 10,484.10 crore in FY2017 due to higher FY2018 registering a growth of 25.63%. provisioning requirements on NPAs, MTM losses in HFT and AFS portfolio, additional employee benefits provisions etc. 35

III. CORE OPERATIONS

1. RETAIL & DIGITAL of containing costs, especially in the During the current financial year, there post-merger scenario, your Bank has were internal challenges with the merger BANKING GROUP conducted various audits like Space of five Associate Banks and Bharatiya The Retail & Digital Banking Group is the Audit, Energy Audit, Telephone Audit and Mahila Bank Ltd. with your Bank. Further, largest business vertical of your Bank, Internet Audit, to name a few, in erstwhile slowdown in project launches, due to anchoring 96% of total Domestic Deposits, Associate Bank (e-ABs’) branches. the teething problems in implementation and 57.53% of total Domestic Advances, as of RERA, impacted business during the of 31st March, 2018. The Group comprises Your Bank accords highest priority first half of the year. Your Bank undertook seven strategic business units and is the towards creating an environment of initiatives to streamline the operations largest in terms of its branch network and increased risk awareness at all levels. It post merger, and the growth revived back human resources. also aims at constantly safeguarding the in second half of the year despite slow appropriate security measures, including down in the Home Loan market. Various Retail Banking is playing an increasing cyber security measures, to ensure initiatives were taken up during the year role in customer acquisition and CASA avoidance or mitigation of various risks. to provide superior experience to a home growth. Your Bank continues to see a Your Bank is equipped with a Disaster buyer and maintain its position of the most strong momentum in the addition of retail Recovery/Business Continuity Plan (BCP) preferred Home Loan provider. Some of deposit customers and consequently, a across all branches and offices to render the key initiatives undertaken during the steady growth in the retail deposits base. uninterrupted services in the event of any year are as under: Simultaneously, to meet the aspirations possible business disruption. of this growing customer base, retail To meet the customer expectations of assets are being strategically positioned A. PERSONAL BANKING better and faster delivery, your Bank with a view to occupying a much larger undertook: The significant transformation of the proportion of total advances. Within the banking industry in India is clearly evident retail portfolio, Home and Auto loans zz Home Loan Customer Connect from the changes that have occurred in the are the major contributors. Your Bank is Programme, through which the financial market. Disruptive innovations also the largest dispenser of education Bank reached out to over 1 lakh in the technological and digital banking loans, which demonstrates its unflinching Home Loan Customers across the products has opened up new vistas for commitment to serve the society at large. country, to thank them for their banks to augment revenues and enhance continued patronage and to offer customer delight. This has entailed greater A steady stream of technology driven after-sales services. competition and consequently greater innovations necessitated by changing risks. Cross-border flows and entry of zz Assured Turn-Around-Time Drive, customer preferences are transforming new products have significantly impacted resulted in reduction of average turn the retail banking landscape. Your Bank the domestic banking sector. This is around time (TAT) of Home Loan has a multi-channel delivery model, paving the way for innovative product Sanction to 9 days for the month of which allows it to offer its customers a mix, and also necessitates rapid changes March 2018. This TAT is comparable choice to carry out transactions through in the process and operations to remain to the best in the industry. any channel, at any time and at any competitive. These developments have place. In FY2018, your Bank increased zz Increased number of feet-on-street facilitated greater choice for consumers, its offerings across various channels – to provide door step service at more and subsequently requires adoption of digital, mobile, internet, social media, in than 25 centres. a strong and transparent, prudential, addition to branches, ATMs and Customer regulatory, supervisory, technological The rise in internet penetration and faster Service Points. and institutional framework in the adoption of internet has necessitated financial sector at par with international easy access to information at the touch With collective efforts across functions, best practices. of customers’ fingertips. To fulfil these especially operational level, your Bank needs, your Bank launched two websites has streamlined a number of key issues Your Bank offers a wide range of services this financial year: surrounding the Bank. Amidst heightened in the Personal Banking Segment as concern on future regulatory requirements, mentioned below: zz SBI Home Loans website cost of funds, fast changing consumer (https://homeloans.sbi): It is an preferences, intensifying competition exclusive website for Home Loans and profitability pressure, your Bank has 1. Home Loans which apprise customers with made a road map towards profitability- Your Bank has the largest Home Loan instant information regarding Bank’s oriented performance management. As portfolio in the country, with a market home loan products. It also provides a way forward to achieve this, your Bank st share of 32.13% as on 31 March 2018, customers with pre and post sales has introduced Return on Risk Weighted amongst All Scheduled Commercial services, including Application Assets (RoRWA) budgeting including Banks (ASCBs). Home Loan portfolio for Disbursement, Statement of bench marking efficiency parameters. constituted 18% of the Whole Bank Accounts, Next Instalment Due st Advances as on 31 March 2018. Date and Interest Rate History, With a view to increase the profitability among others. and Return on Assets (ROA), curtailment Total Home Loan and Home Loan Related of overheads has always been the prime portfolio as on 31st March 2018 stood at focus of your Bank. With this objective ` 3,41,081 crore. 36 Directors’ Report

zz SBI Realty Website (www.sbirealty. zz The launch of “SBI Grih Nirman 2. Auto Loans in): This website showcases your Affordable Housing Project Finance Bank’s approved projects across Scheme” with attractive features India to prospective home buyers. to tap the emerging potential Auto Advances Level (` in crore) It helps to bring together developers for financing affordable Housing and buyers on a single platform, Projects and is especially geared giving buyers the access to the towards first-time home buyers. deals on SBI approved projects. zz Partnered with CREDAI in an event Affordable Housing is a thrust area of the where 375 affordable housing 66,362 Government to bridge the huge demand- projects were launched by builders 57,609 supply gap of houses in India. Your Bank across India. has been working in tandem to fulfil the zz Sanctioned 37,007 home loans mission of “Housing for All” by 2022, by under PMAY scheme, aggregating facilitating affordable housing to home to 7,997 crore during the buyers. Few initiatives in this regard are ` financial year. as follows:

FY 2016-17 FY 2017-18

Your Bank is helping upgrade the living standards of its customers by providing auto loans and making owning a car affordable. These auto loan products of your Bank are available in many variants to suit the requirements of various customer segments - salaried, businessmen, self-employed, professionals, senior citizens, NRIs, agriculturists and existing borrowers, among others. Multi-channel sourcing of proposals and faster TAT has made the auto loan products highly popular. This has helped your Bank to increase its penetration in financing cars sold by various manufacturers such as Maruti, Hyundai, TATA Motors, to name a few. The market share of your Bank in Car Loans has also gone up from 33.77% as on 31st March, 2017 to 34.97% as on 31st March, 2018.

3. Education Loans Education is the key growth driver for any economy as it helps create skilled and productive human resources who contribute to the development of the nation. Your Bank takes pride in being the largest Education Loan provider in the country. It has helped 56,042 meritorious students during the financial year to realise their dreams by providing financial assistance to the tune of ` 4,949 crore (out of which 35% of the loans have been extended to girl students). In order to broaden the scope of Education Loans to book quality business and enhance customer satisfaction as under, your Bank has taken various steps:

zz Provided Education Loans to students of 147 top-rated, premier and reputed institutions identified by the Bank at relaxed norms and concessional interest rates. 37

zz Door-step services are extended for sourcing high-value education loan applications at select centres. zz All courses and institutes approved by the Director General of Civil Aviation (DGCA)/ Director General of Shipping (DGS) in the list of eligible courses covered under Education Loans, have been included for financing by the Bank. zz Bank’s Loan Origination System has been integrated with Vidya Lakshmi Portal (VLP) of Government of India to ensure better tracking of the loan applications and faster sanctioning of loans.

4. Personal Loans Personal Loan is one of the most popular products of your Bank and is amongst the leaders in this segment. Your Shri Rajnish Kumar, Chairman, Inaugurating Global NRI Centre At Ernakulam. Bank has been aggressively catering to the needs of salaried class (both government and private), pensioners and 5. NRI Business to ` 20 lakh. During the year, Bank has other customers. During FY2018, your settled 763 insurance claims amounting to Bank has provided Personal Loans to st As on 31 March, 2018 your Bank has a ` 37.77 crore. 14 lakh customers amounting to ` 50,971 33.34 lakh strong NRI customer base, who crore. The Bank’s delinquency under are being catered to by 150 NRI intensive this segment is one of the lowest in the branches and 95 dedicated branches 7. Wealth Management industry. This has been possible because across India. With an aim of providing all Business - SBI EXCLUSiF of your Bank’s utmost caution in selection the NRI related service at a single point, Your Bank’s Wealth Management Services of borrowers and careful due diligence. your Bank has set up a centralised back are now made available at 13 centres office. This major process innovation with 76 dedicated Wealth Hubs and 3 Your Bank has adopted various undertaken in NRI services will handle e-Wealth centres. An addition of 5 new technological innovations mentioned the entire gamut of non-financial services centres and 55 new wealth hubs were as under, to serve the digital-savvy including customer support and query made during the financial year. The Wealth customers: management. Your Bank has introduced Hubs are managed by a dedicated group a mobile app-based remittance facility of Relationship Managers and Investment zz Top-up Insta Credit loan to existing to the Indian diaspora residing in USA Counsellors having in-depth knowledge Xpress credit Personal Loan to remit the funds to India, with a cap on markets and products along with senior borrowers through internet banking of US$ 10,000. SBI Intelligent Assistant internal staff in operational roles. in an end to end digitised mode. (SIA) also known as Smart Chat Assistant evolved from the cutting-edge technology, zz Pre-approved instant Personal An open platform for investment with which efficiently answers queries, is also Loans to the existing SB account a state-of-the-art technology and right extended to NRIs. holders of the Bank through its selling approach based on Risk Profiling YONO app. provides the best possible experience 6. Corporate and to your Bank customers through the zz Overdraft (OD) facility for select Institutional Tie-ups for EXCLUSiF journey. customers for purchases done Salary Package through online shopping websites The e-Wealth Centres are equipped with like Flipkart. A dedicated Sales Architecture has been on-Video and on-Phone transaction created in your Bank to facilitate opening zz Tatkal e-Personal Loans to cater to execution facilities with extended Banking the needs of unserved and under- of salary accounts of Corporate Employee, Hours. Your Bank’s endeavour is to served non-salaried customers, Armed forces and other Central/ State provide a best in class holistic experience based on selected parameters. Government Employees. A dedicated to Customers. marketing force named Key Accounts zz Personal loan against security Manager (KAM) provides personalised Your Bank also launched Wealth of Sovereign Gold Bonds of service along with a bouquet of products Management Services for Non-Resident Government of India on a pilot under Corporate Salary Package (CSP) at Indians. Clients residing in U.A.E., Bahrain, basis. the door step of the salaried customers. Qatar, Kuwait and Sultanate of Oman are The total Salary account customer base has eligible to onboard as wealth customers. zz Personal loans to non-customers reached 124.07 lakh accounts registering by evaluating credit history of the They can access services through a growth of 38% over FY2017. Under applicants and Credit Information e-Wealth Centres or through Wealth Hub CSP, your Bank offers Complimentary Reports (CIR) of various CICs. during their visit to India. Accident (Death) Insurance cover up 38 Directors’ Report

Your Bank also conducted Signature generation during FY2018. The number of 4. Green Remit Card (GRC) ‘Annual Investment Conclaves’ addressed wealth clients grew 528% during the year by the experts from Financial Industry to reach 24,168 clients as on 31st March, SBI Green Remit Card is a deposit card and Markets on the prevalent market 2018. The Net New Money grew by 566% through which an individual can remit conditions and investment opportunities. to `1,998 crore and AUM increased by money in a specified account of SBI. These Conclaves were well attended by a 390% to `14,284 crore. This is especially useful for the migrant large number of existing and prospective depositors. Money can be deposited EXCLUSiF customers. Your Bank aspires to play a leading role using GRC through GCC, CDMs and in building the momentum for investments Recyclers. The per transaction limit is of Your Bank’s Wealth Management Business by embracing the changes happening ` 25,000 with a monthly cap of ` 1 lakh has shown an exponential growth in terms in the economy and enhancing wealth per remitter. On a daily average, over of client acquisition and Net New Money creation for esteemed customers. 1.50 lakh transactions are being routed through GRC.

B. ANYTIME CHANNELS 5. Banking on Mobile As on ATMs Kiosks Cash Deposit Total State Bank Anywhere Personal: Your (MFK + SSK) Machines(CDMs), (SBI) Bank’s Mobile Banking App for Retail Recyclers customers, offers a wide range of features apart from the general banking. The 31st March 2015 42,454 2,595 1,849 46,898 features include Intra/Inter Bank funds 31st March 2016 42,733 1,231 5,760 49,724 transfer (NEFT/RTGS/IMPS/UPI), opening 31st March 2017 42,222 986 6,980 50,188 of fixed deposits/e-MOD Accounts, add and manage beneficiaries, among others. 31st March 2018* 51,616 # 7,925 59,541 Additional value added services such as Aadhaar Linking, Voice Assisted Banking, # Kiosks are scrapped and not in use * Merged myFitness, e-statement subscription/ download, Stop/ Revoke cheque 1. ATMs/ Recyclers Over 2,000 e-Corners (including 250 hi- instructions and facility to submit Form tech SBI Intouch branches) have been set 15G/ 15H online for TDS exemption are Your Bank has one of the largest ATM up across the country where customers also available. networks in the world with 59,541 ATMs can avail entire gamut of services. To including Cash Deposit Machines and ensure and protect customers’ interest, State Bank Anywhere Saral: Your Bank’s st Recyclers as on 31 March, 2018. During coverage under electronic surveillance is Mobile Banking App for proprietorship FY2018, your Bank replaced 6,793 old being enhanced. firms allows businesses to transfer funds ATMs and installed 3,883 new ATMs, with across Banks, open and operate fixed improved features and equipped with 2. Swayam: Barcode based deposit accounts, make payment to the latest technology. Your Bank has so EPFO, view account statements, schedule far installed 7,925 Recyclers and Cash Passbook Printing Kiosks transactions and recharge/bill payment, Deposit Machines (CDM) to provide 24x7 Your Bank rolled out more than 14,000 among others. cash deposit and withdrawal facilities. Your SWAYAMs (Barcode based Passbook Bank has procured new software which Printing Kiosks) at its branches and State Bank Anywhere Corporate: Your will enrich the Customers’ experience e-lobbies/Intouch. Using these kiosks, Bank’s Mobile Banking App for Large while using the ATM machines. This new customers can print their passbooks Corporate firms with multiple users, allows software will have Hi-resolution graphics on their own using barcode technology. business houses to operate accounts, screens for better user interactions; one- On a monthly basis, more than 3.2 crore transfer funds through NEFT/RTGS, to-one specific advice to customers of transactions are recorded at these kiosks. make bill payments/supplier payments, banking products; real time integration authorise e-cheques /e-STDR, open with other digital channels; and a host of 3. Green Channel Counter and operate fixed deposit accounts, other new features. among others. (GCC) Nearly, 80% of the financial transactions GCC is a POS terminal installed at The Mobile Banking channel now has of your Bank are routed through Alternate counters in retail branches. Transaction over 305 lakh registered users and has Channels. Your Bank has a 28.76% of through GCC is done by swiping ATM/ processed transactions amounting to market share (as per RBI Data) in ATM Debit card followed by PIN validation. The `6,00,000 crore in FY2018. Your Bank network in India. SBI ATM network services extended through GCC are cash has also retained its prime numero-uno transacts 47.21% of the country’s total withdrawal, cash deposit, funds transfer position among Banks, both in terms ATM transactions. On an average, over within SBI. GCC per transaction limit is of volume of transactions (21.20%) and 1 crore transactions per day are routed up to ` 40,000 and daily withdrawal limit value of transactions (19.81%) as per the through our ATM network. is a part of ATM withdrawal limit (card latest RBI Market Share Report. variant wise). On an average 9.35 lakh transactions are being routed through GCC per day. 39

Large multinational corporations have are also being planned among others. Mobile Banking - No. (In Lakh) leaped on to the digital payments Users now have the convenience of of Transactions bandwagon to help India become a less making bill payments, booking flight cash economy. Your Bank has leveraged tickets, recharging and ordering food on this opportunity to provide the through BHIM SBI Pay. latest digital payment offerings through 2,706 various collaboration. Your Bank has Your Bank has also brought digital 2,413 also partnered with Google India to offer payments to the masses to enable UPI PSP services to their UPI App – Google payments for over 37 lakh members of Tez under the UPI Multi-Bank Integration Self Help Groups under the Shri Kshetra 1,456 Model. Over 13 lakh Tez users have Dharmasthala Rural Development linked their Bank accounts with their @ Programme (SKDRDP) in the state of OKSBI handle offered by SBI to transact Karnataka. This was launched in the on the App. In addition, debit card based presence of Hon’ble Prime Minister of payment services, P2P lending services India on 29th October, 2017. FY2016 FY2017 FY2018

Mobile Banking - (` in crore) Value of Transactions

6,12,790 6,00,502

1,04,390

FY2016 FY2017 FY2018 Exchange of MOU between SBI and SKDRDP in the presence of Hon’ble Prime Minister of India

Mobile Banking - Market Share (In %) No. of Transaction 7. SBI Buddy digital service platform “YONO”, an Value of Transactions acronym for ‘You Only Need One’. Your Bank’s Mobile Wallet allows users An integrated omni-channel digital to send and receive money. In addition, platform, YONO offers banking and other users can also shop; book rail, movie financial products along with access to 21.87 or flight tickets; use virtual debit card – 19.50 India’s largest B2C marketplace for its 17.10 17.20 Buddy Card to make payments; withdraw customers to meet their lifestyle needs cash at SBI ATMs using the wallet and 16.84 across 16 categories including Fashion a lot more. Users can now complete the 12.76 & Lifestyle, Electronics, Education, Home full KYC check to enjoy enhanced limits 9.73 & Furnishing, Travel & Hospitality, Cab on the wallet as well. Buddy has seen Booking & Car Rentals, Entertainment, remarkable growth and has reached a Food & Dining, Health & Personal Care user base of 129 lakh as on 31st March, 0.25 and others. Your Bank has partnered with 2018. The wallet has facilitated over 496 SBI ICICI PayTM AXIS 70+ top e-commerce players to provide lakh transactions to the tune of ` 1,505.79 customised offers and discounts to its st crore as on 31 March, 2018. customers. With YONO, customers can: 6. SBI Pay (BHIM) Emergence of Fintech companies has zz Open an SBI bank account digitally Your Bank’s Unified Payments Interface made data the prime point for selectively in 4 minutes based-app provides any registered/on- and effectively targeting customers. boarded user/merchant the convenience Increasingly, digital products from banks zz Avail Pre-approved personal loan of transferring funds across different are being promoted through social sans any paperwork in 4 clicks Bank accounts through multiple modes networking sites and online advertising. zz Get overdraft facility against fixed (Virtual Payment Address, Bank Account Your Bank has established digital solutions deposit instantly online Number, IFSC and scanning QR Code), that offer one of the best all-round omni- making it a truly inter-operable offering. channel experience for its customers. zz Get one view of the banking and 184 lakh users have registered on the SBI financial portfolio of SBI Group UPI system and transactions amounting 8. YONO companies to `68,000 crore have been successfully processed through the SBI UPI channel. On 24th November, 2017, State Bank of zz Benefit from intelligent spend India launched India’s first comprehensive analyser 40 Directors’ Report

zz Utilise Chatbot ‘SIA’ Your Bank’s Mobile App “State Bank by revolutionary Touch Technology. No Queue” enables customers to self- Your Bank’s strategy is to create a zz Create dreams to target and fund generate e-tokens for availing Banking ‘Phygital’ marketplace within these the dreams services at CEEP Branches. This App is futuristic branches, to offer customers zz Access B2C Marketplace available on both Android and iOS phones 1) Banking through self- service kiosks and and it helps in reducing waiting time for 2) Services of other SBI subsidiaries such zz Open a new demat/trading account customers at the branch. It also reduces as Life Insurance, General Insurance, zz Link trading/demat account crowding at a branch as the token is Mutual Funds, Credit Cards and online generated before the customer reaches trading through SBI Cap Securities. zz Apply for credit cards online the branch. This helps customers to skip Financial counselling through hi-definition the queue and avail banking services Audio Video conferencing service is zz Link credit cards and pay credit st card bills seamlessly faster. As on 31 March, 2018, the App provided at select sbiINTOUCH branches, has registered more than 23,66,000 where customers can interact with zz Avail insurance products online. (2.37 million) downloads. The usage of financial experts. the App is increasing on daily basis. The HNI customers are tagged as Priority In August, 2017, your Bank has also Performance highlights of YONO Customers at these branches. launched, the facility of instant issuance as on 31st March 2018 of personalised Photo Debit Card – ‘Quick Your Bank has also undertaken Customer Photo Debit Card’ within five minutes to zz 4.37 Million Application Downloads Service Feedback Survey at select Saving Bank (SB) account holder of any zz 1.36 Lakh Digital and Insta Savings CEEP branches to assess the impact of branch of SBI. Under the facility, an Accounts opened the CEEP initiative on the quality of individual SB account holder who has an customer service. The feedback thus account with SBI and has lost or damaged zz 6.52 Lakh Funds Transfers executed received is being used to improve the his debit card, can visit any sbiINTOUCH zz 17,000+ Fixed Deposits opened customer service and facilities available Branch with his Aadhar Card and for the customers. obtain Instant Photo Debit Card, bearing zz 71,000+ Bill payments done his photograph, through Debit Card zz 77,000+ SBI Credit Cards linked; 10. Digital Banking Printing Kiosk. 41,000 Card payments of ` 43 Your Bank has always been a pioneer crore done; 33,000 new Card leads in innovating new concepts in Banking 11. Cross Selling generated Sector. One such step was setting up the Your Bank is the Corporate Agent of SBI zz 41,000+ SBI Cap Sec portfolios high-tech, one of its kind, sbiINTOUCH Life Insurance Co. Ltd & SBI General linked; 9,000 new demat account branches, which has brought in a new Insurance Co. Ltd. and has Distribution leads generated paradigm in banking. At present, your Agreement with SBI Mutual Fund, SBI Bank has 262 sbiINTOUCH branches Cards & Payment Services Pvt. Ltd & SBI zz 11,000+ SBI Life policies linked equipped with state-of-the-art digital Cap Securities Limited for distributing zz 2,400+ Pre-approved Personal technology. These sbiINTOUCH branches their products. Your Bank also distributes Loans of ` 12 crore disbursed cover more than 148 districts across mutual fund products of UTI Mutual Fund, the country. Tata Mutual Fund, Franklin Templeton Mutual Fund, L&T Mutual Fund, ICICI 9. Customer Experience At the sbiINTOUCH branches, your Mutual Fund, and HDFC Mutual Fund. In Excellence Project Bank provides banking services such addition, all branches are authorised for (CEEP) as the opening of accounts and the opening pension accounts under National printing of personalised Debit Cards in Pension System. The Customer Experience Excellence 15 minutes. This has been made possible Project CEEP has been rolled out at 5,364 branches across the country which are equipped with Self Service machines Performance Highlights (Income) as ATM, CDM/ Recycler, SWAYAM for Passbook Printing, Electronic Cheque (` in crore) Drop Box and Internet enabled PCs. An ACTUALS integrated Queue Management system JVs YTD YTD % YoY change (QMS) is in place at these branches to March, 2017 March, 2018 ensure that the customers are serviced promptly without having to wait in queues SBI LIFE 575.97 714.75 24.10 at the counters. There is a provision MF 185.24 560.51 202.59 of separate token for Senior Citizens/ SBI GENERAL 125.97 212.57 68.74 Disabled persons in QMS to give them preferential service. A Customer SBI CARDS 25.13 135.83 440.51 Feedback Tab is provided at these SSL 2.43 5.14 111.52 branches to enable the customers to give their feedback on the services of NPS - 2.44 - the branch. Real time monitoring and TOTAL 914.74* 1631.24 78.33 Branch choreography are undertaken at these branches to give the customers an *YTD Mar’17 figure inclusive of e ABs data - 776.61 (SBI) + 138.13 (eABs) excellent service experience. 41

The key highlights for FY2018 are (FFR-I & FFR- II) by Vyapaar/Vistaar C. SMALL AND MEDIUM mentioned below: corporate users and creation of e-TDR & ENTERPRISES e-STDR for amount of ` 1 crore and above zz SBI Mutual Fund became 2nd through CINB. This highly secure and Your Bank is pioneer and market largest amongst Bank distributors in cost-effective channel has processed 159 leader in SME financing. With over one the Industry with an AUM of more crore transactions during FY2018, and the million customers, the SME portfolio of than ` 54,000 crore. Your Bank addition of new INB users has registered ` 2,69,875 crore, as on 31st March, 2018 has become India’s number one a growth of 35% over the previous year. accounts for nearly 13.17% of the Bank’s Bank distributor in SIP with 14.6 total advances. lakh live SIPs. Net sales increased To rejuvenate the e-Commerce ecosystem from ` 11,464 crore in March, 2017 proactive initiatives have been taken for Considering the important role being to `24,374 crore YTD March, 2018 technology partnerships with various played by SMEs in the Indian economy reporting an increase of 113%. Government Departments enabling them in terms of their contribution to to leverage their e-Governance channels manufacturing output, exports and zz Cards issued through Banca like e-Auction, e-Tendering, e-Freight and employment generation, your Bank Channel crossed 10 lakh and online collection of tax dues. Over 17,515 has always held SME as an important sourcing has increased from an merchants have been on-boarded under segment. average of 35% upto September, ASVA model during FY2018. BHIM SBI 2017 to 53% in March, 2018. Pay has been added as one of the options Your Bank is committed to providing zz Your Bank received SKOCH Award in SBMOPS. Simple and Innovative Financial Solutions. – Platinum for its National Pension Your Bank’s approach in driving SME growth rests on the following three pillars: System Application and was ranked New INB Users Added (in lakh) No. 1 in Point of Presence (POP) under various log in day campaigns a) Customer Convenience, observed by PFRDA. b) Risk Mitigation, zz Under SBI Life, CIF grew to 46,180 in c) Technology based digital offerings. YTD March, 2018 as against 24,470 in YTD March 2017, reporting an 1) Customer Convenience increase of 89%. The Home Loan Insurance penetration increased 97.12 With a view to building and sustaining the momentum for Transforming India, from 45% to 58%. 74.00 your Bank has created largest number zz Under SBI General, SP number has of touch points in terms of number of increased to 20,646 in YTD March, FY2017 FY2018 branches and other modes, reaching out 2018 as against 14,348 in YTD March, to public at large, which includes RMSEs 2017, reported a growth of 44%. The (866), RMMEs (775), CSOs (900), SMECs number of Health Insurance policies (89), RASMECs (81) and SME Intensive issued increased by 11% to 7.82 No. of INB Transactions (in crore) Branches (1,248). lakh and premium increased by 16% to `179.45 crore over March, 2017. With a view to enhancing Ease of In FY2018, net profit earned by SBI Doing Business to the Small and Micro General Insurance Co. stood at ` 380 Enterprises, your Bank modified its crore out of which `170 crore seeding existing delivery model for Small & commission was earned from Long 158.92 Medium Enterprises Center (SMEC) and Term Home (LTH) reinsurance. created Asset Management Teams (AMT) for providing end to end relationship with the customers for small value loans up 12. Internet Banking and 148.63 e-Commerce to ` 50 lakh. The SMECs have also been strengthened in terms of manpower which Your Bank’s Internet Banking Service brings FY2017 FY2018 has resulted in improvement in service. on board a seamless online experience hosting diverse Banking offerings. Web based loan application and tracking Opening and operation of Fixed Deposits/ system: Your Bank is hosting an online loan PPF accounts, Intra/Inter Bank transfer of Value of INB (` in crore) application and tracking facility for MSME funds through NEFT/RTGS, submission Transactions borrowers on the Corporate Website of Form 15G/15H, Nomination updation www.sbi.co.in. It is an Intranet-based facility, foreign international remittances Credit Proposal Tracking System called are among the many functionalities, being Lead Management system (LMS), which offered. Some of the services/features 98,82,905 allows customers to apply online loan launched during the year, that have made request and receive an acknowledgement Bank’s digital platform more robust and in the form of application reference customer-friendly, are access to CIBIL number. The data of customers is score, Aadhaar linking with CIF, purchase 79,67,967 then automatically forwarded (through of Sovereign Gold Bonds, SMS alerts concerned network in Circles) to in Hindi, GSTN integration, submission relationship points for converting these of 15G/H Form through RINB portal, leads into business. submission of Financial Follow up Report FY2017 FY2018 42 Directors’ Report

Participation in Business Conclaves/ The market segment wise and sector wise diversification of eDFS portfolio is represented Summits: Your Bank has been actively in the pie-chart below: participating in Business Conclaves and Summits to reach out to entrepreneurs and understand and meet their requirements. 11%

2) Risk Mitigation 22% Oil & Petrochem 8% Your Bank has been increasingly shifting focus towards Risk Mitigated Products, Auto PV which includes Supply Chain finance, Others Asset Backed Loans, Overdraft against Bank Deposits/Govt. Securities, Bills 10% FMCG Discounting facility and CGTMSE covered loans, among others. Steel

Auto 2W Supply Chain Finance: Leveraging the 4% state-of-the-art technology and branch Auto CV network, your Bank is further strengthening 32% its relationship with the Corporate World 13% and has emerged as a major player in Supply Chain Finance.

During the fiscal, your Bank entered into 49 new e-DFS (Electronic Dealer Finance Scheme) and 8 new e-VFS (Electronic Vendor Finance Scheme) tie-ups covering 292 Industrial Majors and 22,406 of their dealers and 12,512 vendors. The number of oil dealers (Petrol Pumps) on e-DFS crossed 13,000 during the last fiscal. There has been 19% YoY growth in e-DFS portfolio.

e-DFS (` in crore)

21,532 Shri P. K. Gupta, MD (R&DB), felicitating officials of M/s TATA Motors Ltd. for SBI-TATA Motors Ltd., Tie-up under SBI - Supply Chain Finance (e-DFS & e-VFS) 18,078 Pradhan Mantri Mudra Yojana: In line with Your Bank rolled out a new Product - 14,048 the initiatives of the Government of India, SME ASSIST during the fiscal to finance 10,024 your Bank has laid considerable emphasis pending input credit claims under GST. on extending credit facilities to eligible As on 31st March, 2018, your Bank has units under different variants of Pradhan funded 431 units with a total portfolio of Mantri Mudra Yojana and has disbursed ` 228 crore.

March March March March ` 28,556 crore for FY2018 under PMMY 2015 2016 2017 2018 against a target of ` 28,300 crore. 3) Digital offerings Credit Flow to Micro and Small Your Bank is leveraging technology in Enterprises under CGTMSE: Your Bank every aspect of the value proposition from has been a pioneer in supporting MSMEs sourcing business, designing products, and for Micro and Small business. Your streamlining process, improving delivery Bank is extending collateral free lending up to monitoring. to ` 2 crore under guarantee of CGTMSE. SBI has a portfolio of ` 12,549 crore under Your Bank has taken several initiatives to CGTMSE as on 31st March, 2018. build SME portfolio in a risk mitigated manner and has brought about significant changes in SME ASSIST: Introduction of GST is a (i) Product suite, (ii) Process (iii) Delivery. transformational move by the Government of India. Your Bank conducted GST Ecosystem Financing (Project Shikhar) workshops in 91 modules/centers as a has been introduced by your Bank to part of knowledge dissemination initiative take advantage of growing e-commerce on GST, covering 4,087 SME borrowers. footprint in the economy. Town Hall Meetings were also conducted at all the District Headquarters to bring Cluster Based Funding: Cluster based awareness about GST among MSMEs. approach enables your Bank to deal with well-defined and recognised groups and 43 to tap the growth potential. Since the D. RURAL BANKING units belong to a cluster with same kind of activity, it helps in assessing their needs 1. Agri Business and monitor the overall portfolio. As on Against the background of the Union Government’s goal of doubling farmers’ income st 31 March, 2018, your Bank has helped by 2022, Agriculture and allied activities have got greater focus during the year in your 441 units under Cluster Finance with total Bank’s lending activity. Your Bank serves about 1.35 crore farmer families all over India. portfolio of ` 450 crore. It surpassed the Agri credit flow target set by the Government of India during FY2018, as it has done in the past. This is depicted in the table below: Warehouse Receipt Finance: Your Bank has introduced Warehouse Receipt Financing scheme (WHR) to extend Flow of Credit to Agriculture Trend finance to traders/owners of goods/ (` in crore) manufacturers for own processing against Warehouse Receipts. Warehouse receipt Year Target Disbursement % Achievement is issued by Collateral Managers with FY2015 84,500 86,193 102% whom your Bank has a tie-up (presently NBHC, NCML, Star Agri, Origo). Further, FY2016 89,781 1,02,423 114% WHR issued by Central Warehousing FY2017 95,168 1,25,270 132% Corporation (CWC)/State Warehousing FY2018 1,05,741 1,66,819 158% Corporation (SWC) is also eligible for WHR finance. The WHR portfolio as on 31st March, 2018 stands at ` 5,795 crore. In order to ease the flow of credit for by entering into local level and national Agriculture, your Bank has now raised the level tie-ups with Agri Corporates, wherein limit for renewal of mortgage-free crop the supply chain will ensure cash flows for Project Vivek loans from ` 1 lakh to ` 1.5 lakh. It has timely renewal of loan and better incomes Project Vivek, heralded paradigm shift also introduced a scheme for financing for the farmers. Your Bank is also lending in your Bank’s appraisal system from of dairy units under the Mudra scheme under a Cluster-based approach to tap traditional Balance Sheet based funding with liberalised terms for loans up to opportunities that revolve around areas to a more objective appraisal system of ` 10 lakh, as allied agricultural activity is a and centres which have traditionally been leveraging cash flow and other information mean of increasing farmers’ income. known for activities like shrimp farming, sources. It is a promising initiative taken dairy, poultry and higher value horticulture and launched by your Bank for new Credit A new product which is designed to meet crops like pineapple and mango. Underwriting Engine (CUE) for the SME the general-purpose needs of farmers segment, which brings in objectivity for against the collateral of property called Recognising the contribution of rural India better risk assessment. It also reduces the Asset Backed Agri Loan (ABAL), to the nation’s economic growth, your Turn Around Time (TAT) resulting in better picked up momentum during the year Bank has been striving to meet the financial customer experience. As on 31st March, and the growth under this product was needs of the rural segment through various 2018 , a total 13,713 proposals have been about 200%, albeit on a lower base. This new channels and services. A pilot project processed under Project Vivek. product has been accepted by customers on a hub-and-spoke model for improving because of the flexibility it offers. turn-around time and the quality of credit Trade Receivables Discounting System appraisals in the Rural and Semi-urban (TReDS): TReDS have been set up for Your Bank is de-risking its Agri portfolio branches was rolled out in over 80 Regions flow of finance to MSMEs. Your Bank was and supporting farmers at the same time across the country. first among all PSBs to register on the TReDS platform RXIL and M1xchange. Your Bank has been actively participating in the online biddings on the platform and has been offering very competitive rates to the benefit of MSMEs.

Loan Origination Software (LOS-SME) and Loan Life-Cycle Management System (LLMS): With a view to adopt the uniform standards of credit dispensation and for ensuring quality and preserving corporate memory, LOS & LLMS have been introduced for small and high value loans, respectively.

Digital Inspection Application (DIA- SME): This is a Tab and Mobile based application for recording inspection of SME units as a process of digitalisation of pre-sanction/ post sanction processes Improving Productivity through Soil Testing Programme of SME units. Your Bank also records Branch : Dalgaon, North-East Circle collateral security, location of the properties and place of business with photograph and geo-coordinates through this Digital application. 44 Directors’ Report

As widely reported, the Agriculture sector more than 10 crore accounts up to a. Imparting Financial Literacy saw a number of developments with a few 31st March, 2018 and issued 6.62 crore With the objective of imparting financial States announcing waiver of farm loans RuPay debit cards to eligible customers. literacy and facilitating effective use of in response to demands by the farmers. These initiatives taken under financial financial services, your Bank has set up Your Bank on its own announced two Rinn inclusion are a part of key economic policy 336 Financial Literacy Centres (FLCs) Samadhan schemes, covering farm sector agenda of the Government. Over the last across the country. During FY2018, a loans and the internal targets set under decade, your Bank has a major share in total of 23,962 financial literacy camps both the schemes were achieved. providing access to banking services to were conducted by these FLCs across the the excluded in the ecosystem. country. As part of the pilot project being Keeping in view the large number of implemented by RBI, your Bank has also customers served by your Bank, it took set up 15 centres for Financial Literacy the lead and organised mass contact No. of PMJDY A/Cs at Block level, 5 each in the state of programmes on six occasions during the SBI Maharashtra, Chhattisgarh and Telangana year. Under this initiative, on a pre-fixed Others PSBs in association with NGOs identified by RBI. day, all Rural and Semi-urban branches of your Bank held informal meetings with 59% farmers to improve customer connect and b. Rural Self Employment spread awareness about the Bank’s and Training Institutes (RSETIs) Government’s schemes. It is estimated Rural Self Employment Training Institutes that at least 1.5 million farmers attended (RSETIs) play an important role in skill these meets. development by imparting comprehensive quality training programme to rural youth. Other important initiatives taken during the 41% It also facilitates them in setting up of year included issuance of 71.66 lakh KCC- micro enterprises. Your Bank has set up ATM-RuPay Cards to Kisan Credit Card 151 RSETIs spread across 27 States and (KCC) borrowers for ease and operational one Union Territory. convenience. KCC RuPay Cards work Deposits in A/Cs (PMJDY) seamlessly with ATMs and PoS machines, Your Bank RSETIs have trained more than enabling farmers to purchase their day-to- SBI 1 lakh rural youth during FY2018. Over day farm requirements on 24x7 basis. Others PSBs 63% of the candidates trained are women and 83% of the candidates trained belong 2. Financial Inclusion (FI) 27% to non-general categories (SC/ST/OBC/ Your Bank realises the role it must Minorities). More than 6 lakh candidates play as the largest bank in the country have been trained by SBI-RSETIs over a in practicing and promoting financial period of seven years of which 67% have inclusion activities. The spread of digital been settled, thus building momentum for banking channels and expansion of transforming rural India. Business Correspondents (BC) networks 73% are giving your Bank the impetus to further E. OTHER NEW BUSINESS grow its financial inclusion activities. Thus, INITIATIVES to achieve inclusive development and growth, your Bank has worked out several 1. Payment Solution Vertical strategies and leveraged technology to No. of Rupay Cards Issued (PMJDY) Banking system is witnessing new expand financial services to the door SBI challenges in its traditional business steps of people with the purpose of Others PSBs bringing the excluded under the ambit of domain from new digitally enabled formal banking system. entrants. Payment systems, of late, have 37% become the most sought after aspect Your Bank has 58,274 operating of banking business on account of the Business Correspondents and over growing penetration of smart phones, 22,400 branches across the country to e-commerce and launch of a number of offer banking services. The Business innovative products/mobile apps. Correspondent channel has recorded 31.21 crore transactions amounting to Debit Cards: With approximately 26 63% crore actively used Debit Cards as on 31st ` 1,24,930 crore in FY2018, translating to around 1-1.5 million transactions per day. March, 2018, your Bank continues to lead The Business Correspondent channel in Debit Card issuance in the country. SBI provides customers with access to various has a market share of 32.35% in terms To fulfill the needs of Social Security of Debit Card penetration as on 31st banking products and services, reducing measures, low cost Micro insurance the foot-falls in the branches. March, 2018. In line with the approach products (PMJJBY, PMSBY) and pension of moving towards a digital economy, schemes(APY) to the unorganised sector Under the Pradhan Mantri Jan Dhan your Bank has adopted a focused are also provided in a big way, covering strategy on shifting the usage of Debit Yojana (PMJDY), your Bank has paved over 2 crore of customers. These initiatives the way for universal financial access Cards by customers from ATM (for cash are empowering the population to have withdrawals) to PoS/eCom websites by by being a pioneer in implementing the the benefit of the financial system and programme. Your Bank has opened executing regular promotional/activation move towards a cashless economy. campaigns in collaboration with leading 45 e-comm and retailers. Your Bank has Foray into digitalisation of Mass Transit: 2. Acceptance successfully launched various innovations The advent in digital technology along Infrastructure (Merchant and functionalities around Debit Cards with rapid urbanisation and infrastructure like Contactless Debit Cards, Bharat QR, development, has given a significant boost Acquiring Businesses Samsung Pay and Visa Checkout. to the urban public transportation in India. vertical) With a vision to ‘Be the Bank of Choice Your Bank is playing effective role in In order to increase digital participation for a Transforming India’, your Bank has building momentum for transforming India with customers, your Bank has also tied taken the following steps on its journey of through digitalisation of the economy. In up with various institutions like Mumbai transforming the transit space in India: sync with the focus of the Government Metro, Chennai Metro, IIM Ahmedabad, of India to create a less-cash economy, College of Engineering - Pune and others (a) Your Bank has successfully imp- your Bank has expanded digital payment for launching co-branded Debit Cards/ lemented the ambitious project acceptance infrastructure and rolled out combo Cards. of NHAI - National Electronic Toll new payment acceptance solutions. Collection (NETC). Your Bank is

Such consistent initiatives towards issuing SBI FASTag; working on Radio Your Bank continues to be the top acquirer digitising payment transactions, not only Frequency Identification technology in the country in terms of number of reduce cost of transactions but also help (RFID) and enables the Customers to terminals with a market share of 20.20% in reducing carbon footprint through pay the toll electronically across all (as per the latest available RBI data as on lesser use of paper. As a result of these the National Highway Toll plazas. 28th February, 2018). During the year, your initiatives, your Bank has improved its Through SBI FASTag, customers can Bank introduced two new digital payment market share in Debit Card spends from pay their toll electronically and can top acceptance products - Bharat QR and 29.33% as on 31st March, 2017 to 30.40% up/recharge their SBI FASTag wallet BHIM-Aadhhar-SBI; and on-boarded as on 31st March, 2018. online through a dedicated portal 2.02 lakh and 4.97 lakh merchants by using various modes like Debit respectively on these platforms. PoS State Bank Foreign Travel Cards: State Cards, Credit Cards, Internet Banking deployed by your Bank has grown from Bank Foreign Travel Cards (SBFTC) are of any Bank. The customer can also 5.09 lakh as on 31st March, 2017 to 6.10 available on the VISA platform, in eight view the history of transactions of lakh as on 31st March, 2018. In total, the Foreign currencies namely Japanese Yen, their vehicle. number of merchant payment acceptance Canadian Dollar, Australian Dollar, Saudi touch points crossed 1.96 million as on Riyal, Singapore Dollar, US Dollar, Euro and Your Bank has issued more than 31st March, 2018. British Pound, providing safety, security 2.7 lakh tags to customers. Toll and convenience to overseas travellers. transactions through the SBI FASTag The value of acquiring transactions SBFTC is also issued as Multicurrency has crossed a mark of 68 lakh and has reached almost ` 1 trillion with card on MasterCard platform. Initially, total transaction amount has crossed 68% increase on Y-o-Y basis. Your it was launched in four currencies viz. ` 140 crore level in FY2018. Bank has been successful in digitising US$, GBP, Euro and SGD. During the sale transactions of retail outlets of year, three new currencies viz. AUD, CAD (b) With the aim of digitising micro- oil marketing companies by installing and AED have been added. Your Bank is payments rapidly, your Bank has 34,000+ PoS terminals at more than also aggressively promoting tie-ups with participated in various metro and 20,000 retail outlets. FFMCs (Full Fledged Money Changers). transit projects. Your Bank has been awarded the Nagpur and Noida In order to increase penetration of Rupee Prepaid Cards: Prepaid card metro project for implementation of digital merchant payment acceptance usage has been growing for purchase of open loop Automatic Fare Collection infrastructure in semi-urban and rural areas, goods and services as well as for funds System based on the qSPARC your Bank has focused on tier V and tier VI transfer in India. Your Bank has issued technology on the RuPay platform. centers. As on 31st March, 2018, about 31% PPIs for ` 950.31 crore during FY2018 of total PoS terminals deployed are in rural registering a growth of 122.90% over the Your Bank has designed SARVATRA and semi urban areas. previous year. Card in line with the National Common Mobility Card (NCMC) In addition to offering basic acquiring Enterprise Wide Loyalty Program - guidelines as envisioned by Ministry services, your Bank is also providing Value State Bank Rewardz: To encourage of Urban Development (MoUD). This Added Services such as: and maximise digital adoption amongst card offers features of a metro travel card on RuPay Prepaid Card, wherein SBI customers and also to attract more zz DCC-Dynamic Currency Conversion customers on SBI platform, your Bank transactions can be conducted launched Loyalty Rewardz program offline. Apart from payment of fares zz EMI facility in the multi modal transit, this card across seven channels during 2015, which zz Cash@POS facility for cash offers extended usage for retail is being extended to 4 more channels dispensation to debit card holders including YONO. This will encourage payments as well as e-commerce. repetitive usage of digital transactions State Bank of India has collaborated thereby creating digital habit amongst with major Corporates and also with customers. State Bank Rewardz has also government departments in digitising been implemented through mobile app, their operations from cash to digital mode. which can be downloaded from the Google Your Bank has created a robust payment Play Store and from App Store in iOS infrastructure for facilitating digital acceptance, which involved customisation and integration of its systems with those of corporates and Government departments to ensure seamless flow of 46 Directors’ Report

digital transactions. Some of the notable integrations have been with the systems of 6. Bharat ke Veer Portal (BKV): Indian Railways, India Posts and e-GRAS for the Government of Haryana. Your Bank has proudly associated with the BKV portal of Ministry of Home Affairs by enabling payment gateway to collect donations for NoK (Next of Kin) of Martyrs of 8 Para Military Forces. 7. Migration of Salary/Vendor payments to e-Mode: Migrated salary/vendor payments of Lok Sabha, 80 CDDOs (Cheque Drawing & Disbursing Officers) of MoUD (Ministry of Urban Development); and made salary payments of 1.84 lakh Indian Air Force personnel.

8. PoS (Point of Sale) terminals: Your Bank has provided PoS terminals to the Indian Railways, Post Offices, Passport Seva Kendras and Ministry of External Affairs.

9. BHIM UPI: Solution implemented F. GOVERNMENT 3. Indian Railways: Your Bank was for Passenger Reservation System BUSINESS awarded the contract to open Inland (PRS) of Indian Railways (Railway LCs against indigenous contracts reservation counters across India). Your Bank has traditionally been the of supplies and works of Indian preferred and accredited Banker to Railways for an estimated amount of 10. e-MRO (Military Receivables Order): major Central Government Ministries/ ` 50, 000 crore per annum. All 31 CDAs/PCDAs (Controller/ Departments. Commanding the market Principal Controller of Defence in Government Business, your Bank has 4. Direct Benefit Transfer (DBT/L): Accounts) have been on-boarded. a share of more than 80% in Government During FY2018, over 28.26 crore Commission. Your Bank is at the forefront transactions were successfully 11. e-BG (Bank Guarantee): Your in developing e-Solutions for both Central processed through DBT amounting Bank is the first to integrate with and State Government undertakings. This to ` 1,24,881 crore. Your Bank is the Government e-Marketplace (GeM) for has facilitated transition of Government sole banker for processing Direct online confirmation of BGs/PBGs for Business to the online mode, resulting Benefit Transfer of LPG (DBTL). Over procurement. in greater efficiency and transparency. 114.39 crore transactions amounting Your Bank is an active stakeholder in to ` 23,076 crore were processed 12. e-Tendering: MoU (Memorandum the Government’s latest initiatives such through DBTL. of Understanding) has been signed as the Government e-Marketplace and with Uttar Pradesh Government is continuously engaged in developing 5. GCCS: Your Bank sponsored GCCS for e-Tendering solution of State customised technology solutions such 2017 (5th Annual Global Conference Government Departments and as e-Tendering, e-BG and e-Trade on Cyber Space) as a Platinum Autonomous Bodies. to keep pace with the Government’s Sponsor which attracted delegates digital initiatives. from over 100 countries. (` in crore) FY2017 FY2018 Turnover 49,77,798 55,61,295 Commission 2,879 3,050

With a view to facilitate e-Governance, digitalisation and bringing in more efficiency and transparency, the following initiatives were implemented during the year:

1. GSTN: Your Bank has been designated as the sole banker for refunds of GST with a 30% market share in GST collections.

2. GeM (Govt. e-Marketplace): A MoU has been signed with GeM for financial integration of payments to suppliers Shri. Rajnish Kumar, Chairman, along with Shri. Rajnath Singh, Union Minister of Home Affairs to facilitate procurement of goods and and Shri. Akshay Kumar (Film Star) at the launch of ‘Bharat ke Veer’ Portal services through GeM portal. 47

13. RFID FASTag: MoU signed with lodging of complaints etc., and will offer products and services offered by other Odisha State Transport Corporation delightful interactive experience to your groups in the Bank, including personal to provide SBI FASTag facility for their Bank’s customers/ public. banking services, co-branded credit cards 470+ buses. A MoU was also signed and supply chain finance. with South Bengal State Transport Outsourcing Model of Stationery Corporation to provide SBI FASTag Management Project is currently rolled out Corporate Accounts facility to their 750+ buses. in 9 Circles. The Project was implemented to reduce costs incurred on premises, The Corporate Accounts unit focuses on 14. e-Trade: PCDA New Delhi has been storage, obsolescence of stationery items, your Bank’s prime corporate clients across on-boarded for online opening of manpower, overheads and transportation India. Each client is assigned a dedicated LCs. More than 90% of LCs are being costs etc. Your Bank is in the process of accounts management team led by routed through the portal of SBI. rolling out the Project in all Circles in the a relationship manager to coordinate near future. the client’s banking requirements. The 15. Pension Payments: Your Bank has Corporate Accounts unit aims to leverage been administering pension payment Under Scanning and Digitalisation of post its corporate relationships to grow its to over 53.23 lakh pensioners LCPC AOFs, out of total stock of 15.89 fund-based, non-fund-based and fee- through the 16 CPPCs (Centralised crore AOFs held in LCPCs as on 31.03.18, based products. Pension Processing Centres). The your Bank has scanned 15.74 crore AOFs total pension amount disbursed has (99.05% completion), images of such Your Bank ensures focused marketing exceeded ` 1,33,475 crore during 14.73 crore AOFs have been migrated to and customer service for its corporate FY2018. Your Bank has added 2.81 Bank’s centralised (EDMS) server. This will clients. In addition to corporate internet lakh new pension accounts during help facilitate digital storage and retrieval banking facility with multi-level access the year. A number of Pensioner of AOFs data for operational purpose. and authorisation controls, other delivery Connect Programmes were held channels include the Bank’s extensive across the country. As a result of these initiatives, Branch branch network, credit card offerings premises will be decongested and have and electronic payments platforms. The 16. Small Savings Schemes: Your Bank more space and better look to offer to the Corporate Account units’ services are services more than 71.58 lakh PPF customers for their convenience and more delivered through the Bank’s specialised and 11.64 lakh Sukanya Samriddhi fulfilling experience. branches in Mumbai, New Delhi, Chennai, Accounts, which is the highest Kolkata, Ahmedabad and Hyderabad. among all authorised banks. Over 5.31 lakh new PPF accounts and 3.66 2. CORPORATE The Corporate Accounts unit’s corporate lakh new SSA Accounts were opened BANKING GROUP loan portfolio primarily consists of fund during FY2018. based products (including cash credit, The Wholesale Banking business working capital demand loans, bills ecosystem at your Bank focuses on discounting, export finance, corporate G. EFFICIENCY AND COST servicing corporate customers, through loans and term loans for project and CONTROL customised financial solutions, and is corporate finance) and non-fund based comprised of several teams focused on Your Bank has set up Insurance Cell for products (including letters of credit, specific areas to facilitate specialisation Insurance of Bank’s assets and other risks bank guarantees, deferred payment and customised product offerings to your in order to reduce requirement of Capital guarantees). Varied investment products Bank’s clients. under Advanced Measurement Approach like bonds, commercial paper and non- (AMA) of Basel-II framework. It has convertible debentures, among others are enabled your Bank in procuring Insurance A. CORPORATE BANKING arranged by the Global Market Group of your Bank to corporate customers. Cover with better wordings/cover in The Corporate Accounts Group (CAG), Insurance Policy at competitive pricing. provides corporate banking services to This has also facilitated timely lodgment The total outstanding loans to clients in large corporates and institutions, including the Corporate Accounts unit stood at of claims and improved claim settlement. state-owned enterprises and caters to Request for Quotes/Bids are issued only ` 3,385.78 billion and ` 4,118.97 billion customers with total credit exposure in in respect of fund-based products, and to those Insurance Companies which have excess of ` 5 billion. a record of settlement of at least 50% of ` 1,895.99 billion and ` 2,172.88 billion in respect of non-fund-based products as claims in the last three years. It offers fund-based and non-fund- of 31st March, 2017 and 31st March, 2018 based products, fee and commission- respectively. Your Bank has also introduced an based products and services, deposits, foreign exchange services as well as a innovative, dedicated customer care The CAG has been instrumental and a range of foreign currency and treasury centre ‘SBI CARE’, a customer facing co-participant in various development services, including RBI permitted outfit to cater to customer queries and their schemes of the Government aimed derivative arrangements provided by non-financial banking requirements with towards transforming India through the International Banking Group and the opening centres in Mumbai, Hyderabad, sustainable development within the 15- Global Markets Group. It also facilitates Delhi and Chandigarh. SBI CARE centre year road map. Towards achieving this cash management initiatives, centralised will handle Account related enquiry, vision, CAG has been actively supporting payment solutions, derivatives products, enquiry on all products, updation of KYC, many Infrastructure projects like Roads wealth management services, remittance Aadhaar, Mobile, PAN numbers, Cheque and Ports (improving connectivity all and collection services, online tax Book requests, Account Statement, over India and also contributing to ease payment, end to end payment solutions, ATM Card request, ATM Pin generation, of business); Power (in line with the Account opening through Digital platform, cross-selling of a variety of financial 48 Directors’ Report

Government’s Saubhagya Scheme of providing power to all households by March, 2019); Renewable Energy (including wind power, solar roof top and hydro projects, TBU Turnover (` in crore) among others for sustainability) and various EPC Projects (to support Government priority projects).

21,37,369

12,77,580 10,23,287

FY2016 FY2017 FY2018

C. PROJECT FINANCE AND LEASING The project finance environment presented contrasting pictures of sector- specific challenges where on the one hand sectors like Roads exhibited some Partners to L&T: Shipbuilding Floating Dock in Chennai signs of revival while on the other hand Power, in particular non-renewable and telecom sectors continued to grapple B. TRANSACTION penetration among existing as well as with the macro-economic issues. The start-up business. overall sentiments of the promoters and BANKING UNIT lenders remained subdued owing to Transaction Banking Unit (TBU), a TBU fee Income increased by 33.62% the continuously rising number of bad technology driven platform offers from ` 616.96 crore in FY2017 to loans and stalled infrastructure projects. comprehensive transaction related ` 824.39 crore in FY2018. A 30% growth There are several new initiatives taken by products and solutions to clients. The in fee Income has remained consistent in Government as well as RBI, and if these objectives of TBU are to adopt new the last three years. Turnover registered steps deliver successfully, FY2019 may technology initiatives catering to bulk a Y-o-Y increase of 67.30% with offer some hope to all the stakeholders. transaction requirements of clients along transactions amounting to ` 21,37,369 with other value additions like customised crore in FY2018 over `12,77,580 crore Your Bank’s special business unit Project MIS, integration with ERP and dedicated in FY2017. Your Bank was awarded with Finance and Leasing (PFSBU) deals single point Client Support Cell, among “Best Transaction Bank in India” by The with the appraisal and arrangement of others. Study and analysis of transaction Asian Banker for FY2017. funds for large projects in infrastructure patterns enables your Bank to develop sectors such as power, telecom, roads, non-traditional techniques for assessing ports and airports. It also covers other other Banking requirements like Credit, TBU Fee Income (` in crore) non-infrastructure projects in sectors Fund Management, Cross Selling and like metals, cements, oil & gas, among other for clients. others, with certain threshold on minimum project cost. PFSBU also provides Your Bank offers a wide range of TBU support to other verticals for vetting their products to Corporates, Mid-Corporates, large ticket term loan proposals. In order Government Departments, Financial 824.39 to strengthen the policy and regulatory Institutions viz. NBFCs, Insurance framework for financing infrastructure, Companies, Banks, Mutual Funds and 616.96 inputs are also provided to various SME Clients which facilitates their fund Ministries of Government of India and the RBI with respect to lenders’ views management requirements. 369.21 on new policies, Model Concession By keeping a track on market development, Agreements and broader issues being your Bank provides technology based faced in infrastructure financing. The futuristic solutions to clients to keep FY2016 FY2017 FY2018 role of PFSBU has further expanded in TBU products updated and ahead of its stressed asset management in view of competitors. the substantial increase in the number of stressed assets. While, Corporate Customers and Government clients (both Central and During the year, PFSBU in all earned `176 State Government) continue to be the crore as fee income, which was a growth key focus segment, your Bank has of 25% over previous year. grown thrust to SME sector to increase 49

Project Finance and Leasing Business Performance

(` in crore) FY2016 FY2017 FY2018 Project Cost 77,227 83,434 81,701 Project Debt 59,094 51,227 58,754 Sanctioned Amount 18,125 26,557 19,835 Syndication Amount 18,082 5,809 11,937

Partners to Solar Energy Project

D. MID CORPORATE Offices across Ahmedabad, Bangalore, as on 31st March, 2018 with 21 branches BANKING Chandigarh, Chennai (2), Hyderabad, in metro centres and 34 branches in other Indore, Kolkata (2), Mumbai (2), New Delhi urban centres. Your Bank’s Mid Corporate Group (2) and Pune. The MCG has 55 branches (MCG) operates through its 14 Regional

MCG Loan Portfolio (Non-Food Domestic)

(` in crore) 31st March, 2018 MCG Loan Portfolio (Non-Food Domestic) 3,29,772

The overall growth of MCG Vertical improved by 6.22% from `3,41,837 crore has been useful in the Group’s planning during the FY2018 was ` 9,433 crore, as on 31st March, 2017 to ` 3,63,084 crore for business growth and asset quality with a Y-o-Y growth rate of 3.20%. During as on 31st March, 2018. management. the year, MCG has sanctioned 80 new connections, with aggregate Fund Based MCG follows the approach of having The Group continues to partner in growth exposure of ` 21,551 crore, most of which periodical structured interactions, of its customers in India to expand their are investment grade assets. essentially serving as brain-storming activities and provides them support for sessions, among the key functionaries acquiring assets/companies overseas, The Trade Finance (LC & BG) turnover in the Group, for better understanding of including by way of loans to overseas volume of the Group improved by 25.96% the portfolio handled by the Group. The subsidiaries/JVs (backed by Letters of from ` 76,589 crore as on 31st March, exchange of ideas and views in these Comfort or Stand-by Letters of Credit). 2017 to `96,469 crore as on 31st March, interactions, among the top executives 2018. The forex turnover of the group has and the operating officials on the ground, 50 Directors’ Report

E. INTERNATIONAL OPERATIONS INTERNATIONAL BANKING NETWORK OF 206 OFFICES ACROSS 35 COUNTRIES

18

Branches/Offices Belgium (1) Germany (1) France (1) UK (13)

Subsidiary Branches Russia (1) USA (3) Bahamas (1) Rep office Turkey (1) Subsidiaries California (7) 1 Canada (6)

Rep Office USA (1)

Rep Office Brazil (1) 51

18

131

14 Branches/Sub Offices Subsidiary Maldives (4) Indonesia (14) Sri Lanka (6) Nepal (77) Bagladesh (14) Myanmar (1) Joint Venture Singapore (6) Bhutan (1) Hong Kong (1) China (2) Rep Office S. Korea (1) Philippines (1) Japan (2) India (1) 23 Branches/Offices Bahrain (3) S. Arabia (1) UAE (2) Oman (1) Israel (1)

Rep Office 1 Iran (1) UAE (2)

Exchange Co. Branches/Offices Oman (2) S Africa (5) Dubai (1)

Subsidiary Mauritius (15) Botswana (1)

Investment Branch Nigeria (1) Australia (1)

Rep Office Egypt (1) 52 Directors’ Report

Your Bank has been an epitome of trust of Bank of Madras in Colombo, Sri Lanka Telecom: Your Bank is the only Indian across the length and breadth of the in July, 1864. A branch of Imperial Bank of Bank to have extended External country. It has extended its wings across India at London followed in 1921. SBI has Commercial Borrowings to one of the the globe with financial products for now become a pioneer of International leading telecom players. the NRI community, Indian corporates, Banking among the Indian Public Sector exporters and importers as well as the Banks with its presence across all time Energy - Oil & Natural Gas: Your Bank local populace and corporates. zones in 206 offices in 35 countries. has been active in funding overseas These offices are being managed by the acquisition by Oil Exploration and Your Bank was the first Indian bank to International Banking Group of the Bank. Marketing companies. These acquisitions transcend borders with opening of branch have significant strategic importance to India, both in terms of augmenting India’s energy security amid unstable crude The breakup of overseas offices of our Bank is as under: prices by tying up new sources of crude oil as well as enhancing India’s stature in Overseas Offices Offices Overseas the global political and economic arenas. Offices opened closed Offices as on during last during as on Power: Your Bank has always been 31.03.2017 12 months last 12 31.03.2018 leader in providing External Commercial months Borrowings to Power sector companies Branches /Sub-Offices / 74 2 4 72 and NBFCs engaged in on-lending to Other Offices power sector.

Offices of 8 Subsidiaries/JV 113 9 - 122 Ports: With the current emphasis on “Make Representative Offices 5 2 - 7 in India”, the proportion of merchandise Associates / Managed 3 2 - 5 trade in India’s GDP is expected to exchange Cos /Investments increase rapidly. Thus, ports would play a vital role in enhancing trade and commerce Total 195 15 4 206 potential of the country by enhancing their operational efficiency and capacity. With During FY2018, the Bank opened 1 new branch viz. Hulhumale in Maldives. Nepal SBI this backdrop and with the intent to have Bank Limited, a subsidiary of SBI has opened 7 new branches during the year. During the access to cheaper cost of funds, Ministry same period, Sylhet branch (Bangladesh) and Doha branch (Qatar) were closed. Further, of Shipping, Government of India has 2 Managed Exchange companies and 2 Representative Offices (Dubai & Abu Dhabi) directed all major ports to avail External came into the gamut of SBI on account of merger with Associate Banks. Commercial Borrowing (ECB) to fund their future capex program. Your Bank was the The International Banking Group of your Bank has a balance sheet size of US$ 59,819 first among major Banks to support the Mio and Net Profit of US$ 206 Mio as on 31st March, 2018. The International Banking initiative and meet the foreign currency arm of the Bank has consistently been a major contributor to the bank’s profits, as under: requirements of Integrated Ports, thus demonstrating its long-term commitment Financial Years 2015 2016 2017 to support country’s infrastructure needs.

Contribution of Foreign Offices to Net Profit 24% 42% 27% Fertiliser: The fertilizer industry has a of the Bank (Solo) major role to play in transforming the Indian farming sector and helping India achieve the goal of self-sufficiency in The International Banking Group has SBI has financed bilateral loans to the tune agricultural production. Your Bank has contributed immensely in transforming the of US$ 3.00 billion to Indian corporates extended External Commercial Borrowing industry landscape of the country. It has and syndicated loans worth US$ 1.60 facility to major fertilizer producers in India positioned itself in the growth trajectory of billion during the year. that is slated to play a very important the economy with its specialised verticals role in achieving the GoI’s stated target offering their expertise and services on Your Bank was awarded Syndicated Loan of doubling the income of the farmers in various fronts, thus playing its part in House of the Year - India by APLMA (Asia five years. building the momentum for a transforming Pacific Loan Market Association). India in tandem with other drivers which 2. Collaborative Partnership are mentioned as under: Infrastructure is a key driver of the overall development of Indian economy. The and Image Building 1. Credit: Stimulating International Banking Group of the Bank DIFC Dubai Branch of your Bank has Growth has played pivotal role in setting forth the partnered with Indian Companies in setting transforming India journey. Coordinated up green field projects in Dubai, thereby Your Bank has facilitated Indian corporates efforts have been made to ensure faster promoting Indian Entrepreneurship Skills in their growth strategy including development of the economy by providing and Technology, providing employment to Green Field ventures by arranging debt in Foreign Currency funds at competitive the local populace and Indian immigrants Foreign Currency. rates to key infrastructure sectors and contributing to the New Image of India like Telecom, Ports, Fertilizers and to be reckoned with in the global arena. Power sector. 53

Highlights: zz Tie-up with 62 Exchange Companies, and Six Banks for channelising inward rupee remittances from Middle-East Countries to India.

zz Compliance framework strengthened for enhanced post transaction monitoring through AMLOCK related to remittances.

zz During FY 2108, GP&S on behalf of domestic branches handled 65,765 Export bills (in US$ and Euro currencies) and 65,232 Foreign Currency cheque collection GIFT City Branch- Celebrating the milestone of US$ 1 billion business aggregating to US$ 13,601 Mio. zz During FY2018, GP&S handled 14.03 million online inward 3. Retail & Remittances zz Remittances through ATMs rolled remittance transactions amounting out in Mauritius. to US$ 9,746 Mio, received from Your Bank has been a “window to India various global centres. for NRIs residing in different parts of the zz Mobile banking launched in UK, world through its specialised retail and Mauritius, Maldives, Canada, Nepal 4. Trade Finance remittances products. As IT infrastructure and Sri Lanka. is the bedrock for improving customer SBI has been providing a wide portfolio zz Online Account opening launched offerings in Retail & remittances segment, of Trade Services through a varied range at SBI California. a detailed IT strategy was put in of products and services to exporters place for implementation of IT zz Call centre operations of SBIUK and importers through an extensive, well enablers. The highlights of the year are relocated to India, resulting in equipped branch network that operates mentioned hereunder: significant cost savings. in all time zones in India and abroad. Monitored through a focused Department, zz zz Remittance business strategy Launched remittance from USA to Global Trade Department (GTD) in was re-imagined by focusing on India through Transfast Remittance International Banking Group (IBG), the developing various area specific LLC, USA. Trade Finance forms a significant part of the International Asset portfolio. SBI being Payment and remittance corridors, zz Student GIC Scheme launched at like India to Nepal, Indonesia to SBI Canada, thereby offering ease one of the top global banks is in a position India, Korea to India, Bhutan to India of entry and banking to Indian to arrange low cost Trade finance to Indian remittance corridors. In addition to students interested in pursuing Corporates for their imports. this, tie ups were made with third higher studies in Canada. party platform for US-India leg Global Trade Department in IBG and also for launching of App based Global Payment & Services: contributes immensely in synergizing remittances. Forex business flows from Domestic Global Payments & Services (GP&S), a unit Offices to Foreign Offices by acting as a zz FEBA was launched at all under International Banking Group (IBG), robust link between them and addressing Subsidiaries & FOs on Finacle comprises three branches/offices viz., related gaps. It also endeavors to leverage platform. Finacle alert server Global Link Services (GLS), International the Correspondent / Partner Banks for SMS delivery rolled out in Services Branch Mumbai (ISBM), and relationships for prospective Trade related 21 territories. International Services Branch Ernakulam business. (ISBE). It facilitates online inward zz InTouch Branches opened at Male, remittances from overseas locations Recently in Nov’2017, your Bank hosted SBI Mauritius & SBI Nepal during to India, Foreign Currency Cheque the year. the 34th Asian Banker Association collection, Opening & Maintenance of Annual Conference to reiterate its zz Digital Village initiative rolled out in Vostro Accounts, Asian Clearing Union commitment to provide support to Nepal to acquire dominant position (ACU) Transactions and Bank for Foreign projects that will encourage Trade, in digital sphere in Nepalese Economic Affairs (BFEA) of USSR section. Industrial and Investment Co-operation financial sector. in the Asian region. 54 Directors’ Report

SBI is a prominent player in India- Asia The initiatives taken at Overseas Your Bank has always been an integral Trade corridor and has been recently Offices are: part of the growth strategy of the Indian awarded as “The Best Trade Finance zz Finacle E-Banking Application economy, and has once again been on Bank for the South Asia region” by (FEBA) i.e. Retail INB, Corporate the forefront in stimulating growth and Global Trade review, London. This is the INB and Mobile banking solution facilitating opportunities for building second consecutive year SBI is awarded at Implemented at all overseas offices. momentum towards a transforming India. a regional level. We are already “The Best zz UK Based Contact Centre has Trade Finance Bank – India” for seven been migrated to Bengaluru (India) consecutive years in Global Finance. 3. STRESSED ASSET thereby extending availability of services to 24x7x365 for UK MANAGEMENT 5. Foreign Direct Customers at much reduced cost. For the last few years, the entire banking Investment sector has been under stress due to a zz Trade Finance Solution-eTrade spurt in the growth of Non-Performing Your Bank has set up Japan Desk from Misys Plc. (UK) a back-end Assets (NPAs). Rising NPA levels and fresh which aims to act as a nodal point for Application for 22 Trade Finance slippages across sectors can be attributed channelising flow of investments between Products such as Bank Guarantee, to the following factors: Japan and India through State Bank of LCs, Buyers Credit, MRPA etc. since India. It provides necessary information implemented at all FOs to support i. Inadequate pickup in the global / market research / legal support all Trade Finance requirements at economy and negative spill overs to Japanese companies wanting to Foreign Offices. from global financial markets. incorporate in India. Japanese corporates looking for investment opportunities in zz Truly digital sbiINTOUCH facility has ii. Less than adequate pick up in domestic India are being facilitated in identifying been extended from Domestic to growth and declining exports. Foreign Offices as well. As on date sectors/industries of interest to them and iii. Cancellation of coal blocks. are provided credible market information. it has been rolled out at 3 countries- This has facilitated flow of FDI from Japan Male, Mauritius and Nepal. iv. Delay in realisation of receivables due to subdued demand and reduced to India. zz Standalone SWIFT Centers at London market confidence, among others. and New York have been migrated SBI has also set up Korea Desk in back to India to ensure better control, v. Stress in Steel sector due to volatility collaboration with The Korea Development oversight and protection against in prices of steel; low capacity Bank (KDB). Korea Desk in coordination possible cyber threats utilisation and cheap imports from with KDB connects the Korean companies other countries; imposition of trade zz Enterprise level CRM solution with the opportunities in Indian market. It barriers by countries; and inverted is being implemented across all facilitates Korean companies in setting up duty structure. new business entities in India. Korea Desk Foreign offices to improve deep has facilitated acquisition deals. understanding of customer needs vi. Stress in Power sector due to and behaviour, requiring very little delayed tariff revisions; issues in Under the aegis of Japan Desk and Korea remote support. environmental clearances and land Desk, corporates are provided tailor made acquisition; high Aggregate Technical zz Bank’s Digital Banking strategy credit products and services in a seamless & Commercial (AT&C) losses; and is continuously reworking to poor financial health of DISCOMS. manner for their ease of doing business. initiate various technologies such as Internet of Everything, Open vii. Delay in execution of infrastructure Japan Desk and Korea Desk are unique Banking to enhance the choice, projects and related escalation facilities created in India which have utility and experience, Mobility and of costs coupled with increase in facilitated High Tech companies from Wearable. Your Bank has initiated : receivable days and unbilled WIP Japan & Korea in the area of Automobile, impacting EBITDA margins, stalled Engineering Goods, Food Processing etc. Enterprise Project Management projects, highly leveraged business set up manufacturing facilities in India tool where every IT project is model and lower than expected equity which helped in creation of employment tracked. returns for promoters/ sponsors. and also in the mission of Make in India. a. Big data analytics to help deliver viii. Stress in other major sectors like products on customer preferences Textiles, Telecom, Sugar and Aviation, 6. IT Initiatives: and tracking customer stickiness for among others. Your Bank as a truly Digital Bank has successful customer retention. According to the Financial Stability Report taken a holistic approach to innovate b. Bank has begun using Private of RBI for December 2017, risks to the processes to make them customer centric Cloud selectively and has plan for Banking sector remained at an elevated thereby enabling it to capture and convert Document Management Solution to level weighed down by further asset data into actionable insights by creating a capture its records digitally. simple, virtual organisation that appears quality deterioration. Further, results ubiquitous to every customer, offering c. Generation of regulatory and other of macro stress tests for credit risk at tailored products to the likes, needs reports directly from core data system, bank group and sectoral levels and preferences. under ADF (Automatic Data Flow) (to test the resilience of the Indian banking for International Banking Statistics system against macroeconomic shocks) (IBS), Bank Exposure and Country predict a grim picture under which GNPA Exposure. ratio of all Scheduled Commercial Banks (SCB) may increase to 10.8% by March 2018, 11.1% by September 2018 and may 55

further deteriorate if macro-economic situation worsens. Moreover, sensitivity analysis introduced certain innovative methods conducted to study the resilience of SCBs with respect to credit, interest rate, equity and thus gave first mover advantage to prices and liquidity risks predicts that a severe credit shock is likely to impact the capital your Bank in areas like arranging Mega adequacy and profitability of a significant number of banks, mostly PSBs. e-Auction of large number of properties on Pan-India basis, identification of un- The movement of NPAs and recovery in written-off accounts during encumbered properties of the borrowers/ guarantors and arranging for attachment the last four years are furnished below: of properties before judgement. NCLT (` in crore) cell has also been created in SARG to FY2015 FY2016 FY2017 FY2018 monitor all the cases referred to NCLT for Gross NPA 56,725 98,173 177,866 223,427 resolution. A total of 232 cases have so far been referred to NCLT, out of which 215 Gross NPA (%) 4.25% 6.50% 9.11% 10.91% cases have been admitted. Many cases Net NPA (%) 2.12% 3.81% 5.19% 5.73% referred to NCLT from the first list of 12 Fresh Slippages + 29,444 64,198 115,932 100,287 accounts are expected to be resolved by Increase in O/s H1, FY2019. Cash Recoveries / 13,011 6,987 32,283 14,530 Up-gradations A major portion of the recovery in SARG Write-Offs 21,313 15,763 27,757 40,196 comes from OTS/Compromise. The Recoveries in AUCA 2,318 2,859 3,963 5,333 vertical also comes up with special OTS schemes (Non-discretionary and Non- PCR (%) 69.13% 60.69% 61.53% 66.17% discriminatory) from time to time, to give the borrowers one-time opportunity to The substantial rise in Gross NPAs is partly due to the merger of erstwhile Associate settle their dues. A dedicated team is Banks (e-ABs) and Bhartiya Mahila Bank Ltd. (BMBL) with your Bank, wherein a total of also set up to look after the sale of Assets ` 65,523 crore of NPAs were added to the portfolio. to Asset Reconstruction Companies (ARCs). Stressed assets are sold to these Industry wise distribution of the NPA portfolio is represented as under: ARCs on Cash and Security Receipts (SR) basis.

The recovery in NPA and AUCA

22% accounts in SARG through 35% various modes is represented Iron & Steel below: Power

Textiles

Engineering Others Total Recovery (` in crore)

Telecom

Roads

14% Food Processing Trading 3,391.26 3% Infra Others 4% 6% 4% 4% Others 4% 4% 1,734.63

1,194.40 434.12 249.65 124.01

Ots/comp Sarfaesi/E DRT ARC Sale ECGC Others The Government of India in its Reforms specialised vertical for efficient resolution Auction Agenda for Responsive and Responsible of high value NPAs. At present, it is PSBs has directed creation of a Stressed headed by a Deputy Managing Director Despite making concerted efforts to Assets Management Vertical (SAMV). Your with three Chief General Managers expedite recovery and reducing NPAs, Bank takes immense pride in the fact that overseeing the entire effort. SARG has your Bank often faces impediments in SBI has been a pioneer in establishing turned into a centre of excellence in the form of legal hurdles, unavailability such a dedicated vertical almost decade resolution of NPA and stressed assets. of strategic investors and lack of buyers st and a half ago by establishing Stressed As on 31 March 2018, SARG has 20 for properties put up for auction, among Assets Management Group (SAMG) Stressed Assets Management Branches others. For legal constraints, your Bank during FY2005. (SAMBs) and 57 Stressed Assets has approached the concerned authorities Recovery Branches (SARBs) across the at appropriate levels and relevant fora like In order to give dedicated focus towards country and covers 26.34% and 73.16% Gyan Sangam, IBA, etc. The Government resolution of stressed accounts, SAMG of your Bank’s Non-Performing Assets and RBI have also responded by enacting has been renamed as Stressed Assets (NPAs) and Advances under Collection new laws, issuing new instructions and Resolution Group (SARG). SARG Account (AUCA) respectively. Besides amending some of the existing ones, continues to work as a dedicated and initiating hard recovery measures, SARG wherever required. RBI has recently come 56 Directors’ Report out with a revised framework for resolution A. SLR AND NON SLR PORTFOLIO of stressed assets, scrapping various restructuring schemes like S4A, SDR, Your Bank’s Global Markets Group is also responsible for managing the Bank’s SLR CDR, 5:25 Flexi restructuring. The revised portfolio, as well as liquidity management which includes maintenance of CRR and framework sends out a strong message HQLAs for Liquidity Coverage Ratio (LCR). After an impressive performance in the last by ending regulatory forbearance and two years, this year has proven to be challenging for bond markets due to rising yields. places higher reliance on the NCLT During the year, RBI had cut repo rate by 25 bps to 6% in August, 2017 but has held rates constant since then. The benchmark 10 year (of 6.97% due 2026) paper which framework for resolution of stressed st assets. In fact, enforcement of Insolvency was trading at 6.69% on 31 March, 2017, ended the current fiscal year at 7.53% as on th and Bankruptcy Code (IBC) for resolution 28 March, 2018. The new benchmark (of 6.79% due 2027) paper introduced in May, of Stressed/NPA borrowers has provided 2017, fell to a low of 6.41% in July, 2017 (on closing basis), but increased for most of Banks with a time bound, transparent and the remaining period and reached a high of 7.95% in March, 2018 before easing off to th effective mechanism to tackle stressed 7.55% as on 28 March 2018. Due to this sharp rise in yields, your Bank had to increase assets. Some of the large accounts initially provisions on investments. The rise in yields was significantly sharper by historical referred to NCLT are moving towards parameters like repo-GSec spread and real interest rates. resolution. It is reckoned that most of the large value accounts referred to NCLT may undergo resolution, preventing banks 10Yr G-Sec Yield from taking up huge haircuts as the going 8 concern value of those accounts shall be realised. As the system evolves with IBC, it may even pave the way for development of a robust secondary market for stressed 7.5 assets, leading to efficient price discovery and transparent resolution of accounts resulting in unlocking maximum value for 7 your Bank.

4. TREASURY 6.5 OPERATIONS The Global Markets Group performs 6 the treasury functions of your Bank. It is 17-Jul 17-Oct 17-Apr 18-Jan 17-Jun 18-Feb 18-Mar 17-Sep 17-Dec 17-Nov 17-Aug responsible for ensuring safety, liquidity 17-May and yield, besides maintaining statutory reserve requirements. The corpus under management of Global Markets increased During the year, the net interest income B. EQUITY MARKETS by 13.6% Y-o-Y to ` 10,26,439 crore, from treasury investments grew 15% as of 31st March, 2018. Global Market Y-o-Y. Global Markets’ G-Sec portfolio Equity markets continued their rally Group also provides foreign exchange also increased 22% Y-o-Y, mainly on for most of FY2018. However, post services and hedging instruments for risk account of the merger with Associate budget, tracking global equity markets, management to customers and offers Banks and Bhartiya Mahila Bank Ltd. on a sharp correction in the markets was portfolio management services to many 1st April, 2017. seen but Nifty still ended FY2018 with retirement funds. The year started off 10.25% gains. Your Bank has managed with a challenge to complete the merger To improve the portfolio yield and to the equity portfolio using a strategy of of treasuries of the five Associate Banks optimally utilise the surplus liquidity, your actively rebalancing the portfolio based and Bhartiya Mahila Bank Ltd. with SBI’s Bank has increased its Commercial Paper on key events, global and domestic treasury. This was successfully completed and Corporate Bond portfolio by around market conditions, quarterly earnings of and the combined treasury started 9% on a Y-o-Y basis. the companies and their future outlook operations on 3rd April, 2017. backed by its research. In addition to the secondary markets, your Bank continues to profitably invest in IPOs to improve the return on the portfolio. A 112% Y-o-Y profit growth has been achieved from equity investments during the year. 57

Private Equity / Venture Nifty 50 Index Capital Fund In this space, the JV set up with Macquarie 11500 and IFC in 2008, to manage the US$ 1.2 11000 billion India-focused PE fund, has invested approximately 96% of its total capital 10500 commitments. The Fund has invested across eight infrastructure assets namely 10000 Telecom Towers, Airport, Thermal Power, Hydro power and NHAI road assets. It 9500 is currently in the exit phase and has 9000 successfully exited from two road assets.

8500 The Oman India Joint Investment Fund (OIJIF), a JV set up in 2010 in partnership 8000 with State General Reserve Fund of Oman, 17-Jul 17-Oct 17-Apr 18-Jan 18-Feb 18-Mar 17-Jun has completed its investments for Fund-I 17-Sep 17-Dec 17-Nov 17-Aug 17-May of US$ 100 million. Fund-I has made two full exits and one partial exit. Based on C. FOREX MARKETS Treasury Marketing Group is the customer the success of Fund-I, both the partners engagement arm of Global Markets and (SBI and SGRF) decided to launch Fund-II The Global Markets Group also handles plays a pivotal role in marketing of Treasury with a target corpus of US$ 300 million. Till the foreign exchange business of your Products to Institutional and Corporate date, Fund-II has received commitments Bank, providing solutions to customers clients of your Bank. Treasury Marketing of US$ 230 million from sponsors and for managing their currency flows and Units located across the country, are the various domestic financial institutions. hedging risks through options, swaps and face of Global Markets to the customers. Fund-II is currently assessing various forwards, in addition to providing liquidity They interact with the customers on opportunities for investing. to markets. The Group also manages the a daily basis, identify their needs, and FCNR(B) deposit corpus of your Bank coordinate with other business units for During FY2018, your Bank picked up a and provides FCNR(B) loans and Pre & pricing, product structuring and delivery. stake in National e-Repository Ltd. and Post shipment Export Finance in foreign made an additional equity investment in currency to its customers. In May, 2017, your Bank has set up a National e-Governance Services Ltd. separate FPI desk for focused attention In order to improve ease of doing on FPI/FDI business. Various processes Portfolio Management business for its customers and to keep have been put in place to mobilise Services pace with the transforming India, your business from these large investors and Bank continues to increase the use of IT the desk has successfully on-boarded Your Bank is the largest retirement benefit in its Forex offerings. A new platform for 33 counterparties for the fixed income fund manager in the country with an large volume customers, Forex Edge, has market along with catering to the forex impeccable track record. The total AUM st been launched during the year. This is in requirements of many large FPI clients. as on 31 March 2018 is `4,51,237 crore. addition to your Bank’s earlier platforms, Earlier, in order to improve engagement Your Bank is ranked No. 1 fund manager e-Forex and FX-Out, which completes with other financial sector players (out of 3 fund managers) by Coal Mines the bouquet of products for forex services. including banks and financial institutions, Provident Fund Organisation and No. 2 While the Forex Edge platform is for high an Interbank Marketing Desk was created fund manager (out of 5 fund managers) by volume customers, e-Forex is committed under Global Markets Group. This desk is Employees Provident Fund Organisation towards providing a world class forex actively building and maintaining mutually as per the latest data made available by solution to medium and small corporate beneficial relationships with these respective client. customers, and FX-Out caters to the clients. Global Markets Group has also forex remittances of retail clients without augmented its in-house market research having to route them through a forex team to enhance value added services authorised branch. to your Bank’s clients as well as its own investment decisions. Your Bank believes that increased resources dedicated towards building relationships with customers and counterparties, as well as augmenting the scope and quality of its research, will bear rich dividends and help your Bank in maintaining its leadership position well into the future. 58 Directors’ Report

IV SUPPORT AND CONTROL OPERATIONS 3. Manpower Planning Your Bank has adopted a scientific 1. HUMAN RESOURCES can be overcome only by a committed model for manpower planning to ensure and dedicated work force. Your Bank’s HR optimal utilisation of its human resources. AND TRAINING vision has been built around the principles To foster optimum expertise and deep of inclusiveness, empowerment and domain knowledge, your Bank introduced A. HUMAN RESOURCES development. Job Families concept which is being Human Capital is the most critical adopted to place right person in the right component for your Bank to achieve the The financial year began with the historic job. Your Bank has anticipated the need to Strategic Corporate Goals. Your Bank’s merger of SBI with its five Associate Banks prepare future leaders of the Bank. Project HR policy is being constantly reviewed to and Bhartiya Mahila Bank Ltd. (BMB). Saksham is designed to achieve all this in align with business goals. The merger also witnessed the addition a structured and holistic way. Leadership of around 71,000 new employees to the development will remain the key focus of Your Bank considers its employees existing work force of around 2,00,000 the HR function. as its core strength and is proud of its employees. Initiatives introduced by performance oriented and meritocratic your Bank such as ‘SANGAM’, helped in 4. Staff Welfare Measures culture. It cares for the aspirations of its smooth on-boarding of employees. The Your Bank believes its human resource staff members by constantly trying to summarised HR Profile of your Bank as on to be professionally trained with high enrich their lives and job experiences. Your 31st March, 2018 is as under: standards of proficient competence. At Bank believes that challenges of the future the same time your Bank also cares for the employee’s personal life. With this motive, Category 31st March, 2017 31st March, 2018 your Bank has taken a transformative Officers 81,041 1,07,077 initiative to promote healthy work-life balance. The Bank is also taking proactive Associates 92,979 1,10,348 measures to reduce the hardship of the Subordinate staff & Others 35,547 46,616 officers by reducing the transfer/posting to its minimum and curtailing it to need Total 2,09,567 2,64,041 based. This new approach will provide the employees a good and healthy work 1. Vision, Mission & Value environment encompassing mutual respect and empathy in the work place. The fact that the global job site ‘indeed.com’ recently named SBI among the Top 3 Best places to Your Bank is a pioneer, in the Indian public work in India validates this cultural transformation. sector in starting an independent ‘Ethics & Business Conduct’ Department to weave its ethos in the operational fabric. Your Bank’s entire work force is committed to adhere to its newly crafted Vision, Mission and Values.

The entire team at SBI is dedicated towards providing simple, responsive and innovative financial solutions to a transforming India by being the preferred choice for any banking transaction. Your Bank believes in providing world class banking facilities through living daily its values of Service, Transparency, Ethics, Politeness & Sustainability (STEPS) towards creating a differentiated experience of our esteemed customers.

2. Recruitment Shri Rajnish Kumar, Chairman inaugurating ‘Sanjeevani’ HR Helpline. Your Bank is focused on developing processes to attract the best talent within the country. It has revamped the recruitment process and developed a Your Bank believes in recognising and rewarding good work done by the employees. It stronger employee value proposition to has rolled out the scheme called ‘SBI Gems’. Senior officials may award Gems to the attract the right talent. During FY2018, junior colleagues across the Bank as a token of appreciation. It enhances the loyalty and 2,220 young tech savvy and customer motivation of employees for the organisation. friendly probationary officers, and 600 Specialist Officers were selected through In extension of the various HR best practices to increase employees engagement, your lateral and contractual recruitment process. Bank has launched ‘SANJEEVANI-SBI HR Helpline’. It is a two-way communication channel between the employees and HR Team through Interactive Voice Response System, to provide quick and meaningful resolution of HR matters. Employees can approach SANJEEVANI through phone, SMS and e-mail. 59

Your Bank always aims to set examples by adopting best HR practices to make SBI as a B. STRATEGIC model organisation to work for. Your Bank introduced the ‘Bereavement Leave’ of seven TRAINING UNIT days, to help the employee to cope with loss of a near and dear ones. This leave allows employees to spend time with their families in the hour of crisis and grief. Your Bank has always been a learning organisation. To achieve this objective, 5. Gender Diversity over the years, your Bank has developed a robust training system, which caters to all Gender sensitivity and inclusiveness have always been the corner stone of your Bank’s categories of the Bank employees. It gears HR policy. Women employees are spread across all levels of hierarchy, as well as them not only to meet the present needs, geographical spread. Close to 2,400 Branches are being headed by women officers. Out but also enables them to remain ahead of of total work force of 2,64,041, 24% comprises of women employees. the learning and competitive curve. SBI’s training infrastructure in terms of facilities Your Bank maintains a Zero Tolerance Policy against Sexual Harassment at Workplace (consisting of six Apex Training Institutes, and has put in place an appropriate mechanism for prevention as well as redressal of 54 State Bank Institutes of Learning and complaints of sexual harassment. Development), content, programmes and trainers is the largest and unparalled in the TEAM COMPOSITION Indian Banking space.

Year Women Men Your Bank’s endeavour is always to ensure a continuous, planned and FY2017 23% 77% proactive training process for individual FY2018 24% 76% growth and organisational effectiveness. New techniques and methodologies are 6. Reservation Policy adopted and imparted on a regular basis to establish a virtuous cycle of teach and Your Bank meticulously follows the GOI directives on Reservation Policy for SC/ST/ learn to enhance quality and efficacy of OBCs. It has a representation of SC, ST, OBCs and differently-abled persons among training. This will also transform employees all the cadres of its work force. Your Bank believes in having an empathic and caring into knowledge workers and enable them approach towards all its employees. It has appointed Liaison Officers at Corporate to carry forward the Bank’s initiatives Centre and at all the Local Head Offices of the Bank to redress the grievances of the SC/ towards creating customer delight ST employees on real time basis. Your Bank also conduct the Pre-Recruitment and Pre- and enhanced customer experience. Promotion training programmes regularly for SC/ST candidates. Further, in the fast-changing Banking environment, in order to stay relevant, Representation of SCs,STs,OBCs and Differently Abled as on your Bank is continuously grooming all 31st March, 2018 new employees and reskilling the existing ones by adopting world class and prudent Cadre Total Representation techniques in training and development. SCs STs OBCs DAPs * REVAMPING THE ‘TRAINING Officers 1,07,077 18,767 8,340 17,953 1,707 SYSTEM’ AND MAKING SBI Clerks 1,10,348 18,089 9,322 26,269 2,322 FUTURE READY Sub-staff 46,616 11,909 2,946 10,598 290 As quality and competence of the Total 2,64,041 48,765 20,608 54,820 4,319 workforce is most critical to your Bank’s performance and future growth, there is *Differently Abled Persons a continuous need to inculcate a culture of self-learning and skill enhancement. 7. Industrial Relations funds from the Staff Welfare Fund to Moreover, to enhance the reach of provide assistance to the retirees in case training to more employees in a uniform Your Bank has a strong focus on industrial of critical illnesses. manner, use of digital technology relations. Apart from proactively taking to transform learning is increasingly measures towards employee welfare, 9. Inculcating Learning being adopted through e-learning, your Bank holds constructive dialogue e-Gyanshala and Knowledge Helpline. with Associations and Unions for Culture Mass communication programmes for understanding and addressing the needs Your Bank emphasises on the importance building employee ownership and internal of our employees. of skill in its work force and constantly branding have successfully helped your upgrades it through continuous learning Bank in the past to overcome challenges, 8. Care for Retired process. Your Bank has designed inhouse and will also continue to be a part of the Employees e-Learning courses for the entire team new dispensation. With the objective of according to the nature and role of the making the Bank future ready, several new Your Bank recognises the contribution employee’s function. The completion of initiatives have been taken, few of them of its employees who have retired from such courses has been made mandatory are as follows: active service and extends a helping by linking them with Annual Appraisal hand whenever required. During the year, System of the employees. your Bank has not only provided financial aid for partially meeting the premium for Medical Insurance but has also set aside 60 Directors’ Report

1. Resource Optimisation their duties. Your Bank is the first Bank to roll out this initiative as per RBI directives in all areas, in association with external accredited agencies including Forex zz Faculty Selection Process: The Operations (IIBF), Treasury Operations (IIBF), Risk Management (IIBF), Accounts & selection process for faculty / Audit (NIBM) and Credit Management (Moody’s). trainer has been modified with the objective of selecting officials with zz Launch of Moody’s Certification: With the objective of Capacity Building in the passion and flair for teaching, as area of Commercial credit, your Bank launched Credit Certification programme in well as requisite command over the association with Moody’s Analytics on 10th October, 2017. chosen field of subject. zz Role Based Grade Level Certifications for Employees: All roles in your Bank are zz Verticalisation of Apex Training being divided in over 40 major categories and role manuals for certifications have Institutes (ATIs) to provide been developed by the ATIs for each of these categories to ensure quality and specific domain knowledge: With uniformity. All employees up to Assistant General Manager grade will be required Banking becoming increasingly to do role specific certification. This will also ensure that all employees attend at specialised, a need was felt to least one training during FY2019. have institutes which would specialise in providing domain specific quality training in areas of Credit, International Banking, Risk, Marketing, Rural Banking, IT, Leadership and Human Resources, among others. In this backdrop, the Apex Training Institutes have been entrusted to focus on specialised domains. Each ATI will be guided by an Advisory Council comprising of senior officials of your Bank and an eminent external expert to steer the way forward. An Apex Advisory Council for the whole training system has also been formed. Shri Rajnish Kumar, Chairman releasing ‘Role Guide and Certification zz Centralised Control of Learning Manuals’ designed for all roles and each employee upto scale-V Centres: The Learning Centres have been renamed as “State zz Institutional Training for Skill Development: While the ATIs would be imparting Bank Institute of Learning & domain specific specialised training programmes related to job families, SBILDs Development” (SBILD). These ILDs will be providing role-based trainings in a uniform manner across locations. provide short duration role based capsule programs for certifications. zz Leadership Development: Your Bank has set up the new state-of-the-art ‘State Bank Institute of Leadership’ in Kolkata which has become operational on 23rd September, 2017. Originally named as State Bank Institute of Management, it has 2. Capacity Building been rechristened to focus on Leadership Development in the changing paradigm. zz Taking Classroom to Desktop - SBIL has been launched as a flagship institute for training senior executives in e-Gyanshala: To assist your Bank’s the BFSI sector and envisioned as a centre of global excellence with world class operational workforce in their daily infrastructure. The facility will be used for enhancing the Leadership Skills of senior functioning, a google like search executives of SBI/BFSI sector in collaboration with reputed institutions (in India engine - e-Gyanshala, has been and abroad). developed for providing real time on-line support through various help documents which can be emailed and printed. zz E-learning: To inculcate self- learning, your Bank continues to invest in its e-learning portal to develop e-learning courses on all relevant topics with in-built opportunity of self-assessment and certification through tests. zz Certification Programmes for Capacity Building: The banking Industry is witnessing change at an unprecedented and relentless pace. It therefore becomes imperative that your Bank’s workforce is abreast State Bank Institute of Leadership, Kolkata of the changes and equipped with latest knowledge and operational guidelines for effectively discharging 61

In addition, your Bank is engaging 4. Marketing of Training them to lead a happy and satisfying external faculty and subject matter second innings, after having served the experts apart from its senior executives zz Marketing of Training Capacity to Bank for long years. selected as Guest Faculty. Engaging such other Banks and Undertakings: external faculty from reputed universities Spare capacity at ATIs and and business schools will not only make SBILDs would get created once 2. INFORMATION participants aware of the best practices our proposed digital and TECHNOLOGY in leadership and management across structured training interventions Your Bank is a strong proponent of the world, but will also equip them with viz. e-Gyanshala, e-learning and leveraging information technology to deliver contemporary managerial and leadership Certification programmes are fully convenience to its customers. Your Bank knowledge and skills. implemented. This surplus capacity is proposed to be used for revenue has been offering innovative and cutting- generation from other Banks and edge products to its customers with the zz National Pool of Trainers: objective of enabling banking transactions Your Bank is associated with undertakings . at anytime and from anywhere. retired officers, who havez z Marketing of e-lessons: Your domain knowledge, requisite Bank’s generic e-lessons, which Digitalisation and excellence in operations communication skills for imparting have a huge demand due to its has been core to your Bank’s strategy in knowledge and a flair for teaching. rich content is also proposed to be providing convenience to customers. It marketed to other Banks in India zz Participants Trained through has resulted in a reduction in turnaround ATIs/SBILDs: During FY2018, and abroad. time and extended benefits to your Bank’s over 1,93,994 SBI employees customers. have received at least one training 5. Research (excluding multiple trainings). A dedicated research wing is being set A. INTERNET BANKING zz Agradoot: This mass communication up at SBIL, Kolkata for high end quality Internet Banking solutions cater to programme is conducted for all sub- research focused on banking and financial the various payments, fund-transfers, staff members. Under this programme services in the areas across management e-Tendering, e-Auction and bulk payments in FY2018, 43,275 subordinate staff, discipline and fintech. related requirements of the Government/ constituting 94% of total subordinate PSUs/ Large and Medium Corporates staff (including subordinate staff of 6. Transition To Retirement as well as for Retail Internet Banking e-ABs) were covered. Your Bank conducts this programme for (RINB) customers. This channel has the senior executives of the Bank on the enabled more than 159 crore transactions during FY2018. 3. Honing Skills Of eve of their retirement. This is to equip and orient them with the change and enable Leadership zz Comprehensive Development Internet Banking Users (No. in lakh) Plan for Probationary and Trainee Officers: To ensure FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 proper onboarding of new entrants 130 177 220 263 327 479 and imparting of comprehensive training, the training policy for Some of the new features from Electra ACS to Bill Desk ACS Probationary and Trainee Officers launched in Net Banking in for Maestro, Mastercard, and has been revised to facilitate Prepaid card continuous learning. FY2018 are as under: zz Integration with GSTN and reporting zz ABC E-procurement: White Label zz Competency Assessment of transactions to FRT-TAX Engine e-Tendering Portal integrated with and 360 degree Feedback for on daily basis: Leadership Development: A MOPS leadership competency framework - Beneficiary addition threshold zz CFMS Andhra Pradesh Integration helps in defining the knowledge count increased from 1 to 3 per (SBMOPS, GBSS and RBI for and skills required for effective day for retail customer. e-Kuber) leadership. Your Bank has a - Multicity cheque book issue for predefined leadership competency zz CPWD Integration, Settlement and CA in INB framework for its top executives Refunds detailing the desired competencies - Option of 20 leaves cheque and proficiency level for each grade. zz Payment Integration with GEM books through INB All TEG officials are being taken (Government e-Market Place) through the Assessment Process to zz PPF Account Nominee display B. ATM identify their developmental areas. through INB Your Bank is building momentum and zz e-Mail Alerts for INB transactions- embracing change for transforming India Retail through the following initiatives:

zz MySBIWorld (Integration with Credit Cards, Mutual Funds) for Migration zz Samsung Pay participation for Token Service - Tap and Go Payment 62 Directors’ Report

was introduced. It is secured as zz Complaint Management System zz Electoral Bond made available at Tokenised PAN is stored on mobile. went live for 13 FOs identified branches. zz INTOUCH Instant Card Issuance zz Data Loss Prevention (DLP) agents zz Merger activity of Associate Bank Services for SBI Nepal and Mauritius deployed in Domestic and Foreign with SBI completed successfully. Customers. Offices After merger your Bank has around 42.42 crore customer base in over zz Branches facilitated with Debit zz Work in progress towards CRM roll 24,000 branches. Card Management System (DCMS) out for contact centre and complaint support functions for addressing management as part of Service customer concerns with respect to Module G. OPERATIONS AND debit cards. TECHNOLOGY SUPPORT zz Automation of Service Request zz Bank issued over 39.50 crore debit processing envisaged with Post-merger, there was a necessity to cards with approximately 26 crore integration of CBS and CRM and rationalise operations and to merge actively used debit cards, till 31st handling of service requests by branches/offices located in close proximity March, 2018. CPCs in coming months to strategic locations within a reasonable time frame so that your Bank may start E. FINANCIAL INCLUSION reaping the benefit of merger. C. “YONO” (YOU ONLY & GOVERNMENT NEED ONE) With this objective, bulk merger of SCHEMES (FIGS) branches was scheduled on various YONO (You Only Need One) is one of the Some of the key developments of FY2018 dates, and 1805 branches and 244 admin most ambitious, path-breaking, secure are as under: offices were rationalised. This is expected digital offering of State Bank of India which to reduce operating cost to the tune of th was launched on 24 November, 2017. zz Development of SAP for Corporate ` 1,099 crore in a year. Customers to facilitate acceptance D. CUSTOMER of payment based on Aadhaar To facilitate geographical distribution RELATIONSHIP Number to Non - Individual / of pensioners, your Bank has set up 16 Corporate Merchants like Petroleum CPPCs at all Local Head Office Locations MANAGEMENT (CRM) Banks, Chain Stores, Malls and and one dedicated CPPC for Defence SOLUTION AND Indian Railways. pensioners at Allahabad.

PROJECT IMPACT zz Modification in RD, STDR in BC The entire project consists of seven Channel to enable the closure of Various facilities provided to releases for CRM (covering Sales, Service RD, STDR available at BC Channel. pensioners are as under: and marketing modules), development zz Functionality for Referral Code zz Submission of Life Certificate at any of IMPACT platform, CRM for FOs and (PF number of staff/ BC Code or branch or digitally as per pensioner’s implementation of other solutions (MDM, Aadhaar Number) Capture from convenience DLP, SAS Analytics, CRM e-Learning Aadhaar Pay App. Solution etc.) zz SMS to pensioners containing zz Customer Enrolment through details of pension after credit of The key activities completed during the eKYC for all States except Assam, pension every month year are as follows: Meghalaya and Jammu & Kashmir zz Pension slips can be generated and minor customers under from any branch, through Internet zz Lead modules for retail (PBU, liberalised KYC product. banking, e-mail, and Samadhaan REHBU, SME, Agri, MCS, NRI) and App corporate business segments (CAG zz Mini ATM, a new service for Mobile seeding introduced for both non-FI & MCG) rolled out zz Helpline facility is available at all and FI customer enabled. CPPCs zz e-CRM Learning tool deployed and zz Mini ATM, a new service for Aadhaar integrated with Gyanodaya zz Arrear calculation sheet provided to linking through Kiosk for both FI and pensioners after every revision zz Customer 360 for Retail, CAG and Non FI customers introduced by MCG rolled out using Mini ATM. zz For registering complaints, the following can be done: zz Informatica Master Data Management (MDM) went live F. CORE BANKING - Pensioner can send an SMS with Customer 360; MDM will DEVELOPMENT “UNHAPPY” to 8008202020 hold master data of Customer, During the year, your Bank’s key - Connect with the Bank’s Geography, Product and Service developments are as under: Contact Centre at Toll Free No. zz Non-Financial Service (NFS) 1800110009 which is available request module enabled in CRM; 24 zz Exim Enterprise Edition rolled out at 24x7 different types of service requests Branches for Trade Finance. - Contact Designated Nodal can be lodged and tracked through zz Changes for regulatory compliance Officer at all LHO Centre CRM like GST, FATCA/CRS, Aadhar zz Deceased claim settlement request Linking to accounts, CKYC can also be lodged and tracked introduced to reduce efforts and through CRM paperless banking. 63

Some of the key highlights for Emerging/ Niche technologies and zz Rationalisation of currency chests are useful for the Bank are procured. FY2018 were: zz Cost per transaction across various During the year, 6 startups have digital channels zz Successful revision of pension for been engaged. In some cases, use Defence pensioners under OROP case evaluation is being undertaken. zz Performance analysis of SBI POS scheme Machines zz Hackathons: During the year, your zz Payment of arrears to Defence Bank conducted three end-to-end zz Identification of Mini Currency pensioners after de-linking of Hackathons (Idea submission till Administration Cell (Mini-CACs) qualifying service Working prototype submissions) to secure solutions for YONO, Wealth zz 7th CPC revision completed for over 2. Business Opportunities 38.50 lakh pensioners of various Management and CMP across zz Churn Prediction Model for Current central, state and autonomous body themes such as Facial Recognition, Accounts categories Voice based authentication/ chatbot, Signature Recognition, zz Propensity Model for Loans to zz Successful merger of pension data Mandate Registration process (SSBL & Mudra) of Associate Banks comprising over automation, Automated real time 9.5 lakh pensioners customer identification using AI/ zz Churn Prediction Model for HNI ML/ Cognitive tech/ IOT/ Beacons Customers H. OPERATIONS AND and others. PAYMENT SYSTEM 3. Risk Management J. IT SPECIAL PROJECTS III GROUP zz Identification of Shell companies During the financial year, Quick Photo Prepaid Cards: Your Bank is leveraging debit Card facility was made available to its Prepaid cards solution to provide 4. Innovation all SBI customers for getting their debit Automated Fare Collection (AFC) facility Card printed at any of our sbiINTOUCH zz Downtime and reduction via ATM to upcoming Metro projects. branches. In addition, sbiINTOUCH Fault Prediction branches were launched at three Funds Transfer and Settlement: The zz Tweet Classification overseas centres of Nepal (Kathmandu), volume (number) of outward fund transfers Maldives (Male) and Mauritius, during the zz Employee Search Engine through NEFT increased by 37.74% to financial year. 316.39 million during FY2018 compared zz Collaborative Project with BU to to 229.70 million in FY2017. Your Bank increase Cross-selling Income During FY2018, onboarding facility and has established itself as a leader in NEFT, OTP through email for NRI customers; with a market share of 15.19% as of 31st and Secure OTP for all transactions have L. BUSINESS March, 2018 (as per latest data by RBI). been provided in Wealth Management INTELLIGENCE The volume (number) of outward fund Application. Further, for better monitoring transfers through RTGS increased by Business Intelligence is core of any of performance of SWAYAM Barcode 46.39% to 16.25 million during FY2018 business and Business Intelligence based Passbook printing kiosks at various compared to 11.10 million in FY2017. In Department at GITC also plays a pivotal levels, SWAYAM Transaction and Health RTGS, your Bank maintained a market role. Your Bank’s Business Intelligence Dashboard have been deployed. share on 13.36% as on 31st March, 2018 Department has made data available at (as per latest data by RBI). right time for business decisions through Branch Darpan, a web-based application various reports and dashboards. has been made operational in the FY2018, The volume (number) of messages sent which provides self-assessment for through SWIFT increased by 15.64% to For operational convenience and control, the Branches on various parameters/ 3.03 million during FY2018 compared to a number of new dashboards have been aspects of Customer Delight, including 2.62 million in FY2017. hosted by BID on mobile devices as well infrastructure, ambience, cleanliness, as on desktops. Latest BI tools are being display of notices and subsequent procured to improve visualisation and I. INNOVATION PROGRAM monitoring by Controllers at various levels. ease of use. Some of the important IT-Innovation projects and activities undertaken by your K. ANALYTICS M. OFFICE365 Bank are as follows: The future of Banking business is data Office365 provides a productivity suite driven and SBI with its mammoth database, zz Intrapreneurship Scheme: Your of applications for the employees of your has potential to reap the benefits. Bank is encouraging employees to Bank. All State Bank users were migrated undertake innovative projects in the on Office365 platform in the month of Some of the major works carried out same way as an Entrepreneur. Your September, 2017. This has enabled by Analytics Team during FY2018 are Banks developed ‘SBI Intelligent employees to access the Banks email listed below: Voice Assistant – SIVA’ which is and other services like one Drive, Skype based on Artificial Intelligence (AI), and others from anywhere, reducing the Machine learning (ML) and Natural 1. Cost Efficiency dependency on office desktop. Language Processing (NLP). To improve the CIR of the Bank, Analytics Team has completed few The Office365 suite of application has zz Start-up Engagement Program: projects which are: replaced the old email solution in your Products/solutions from Fin-Tech Bank (EMS) and also provided services start-ups which are based on like OneDrive for business which solves 64 Directors’ Report

the documents sharing problem among c. Coordination with contact centres of SBI, other bank’s complaint handling teams, employees for better collaboration. and NPCI to ensure effective handling of complaints. Microsoft Teams provides an integrated virtual workplace to the employees, P. IT SPECIAL PROJECT II which will increase communication and collaboration among the departments and Oracle Financial Services Analytical Application (OFSAA): The key metrics which defines teams on a single platform. the coverage of project consists of the following:

N. SOCIAL MEDIA zz Consistent and Integrated delivery across 22 modules zz With insights of more than 650 OBIEE reports Your Bank’s social media presence was established in November, 2013 and its zz Covering 10 departments in risk and finance social media strategy has come a long way in last few years. Your Bank has been zz Covering more than 250 internal stakeholders consistently ranked number one globally zz Covering 500 million accounts among Top 100 Banks using Social Media by The Financial Brand in their list of zz Across 23,500 branches ‘Power 100 Ranks’. zz Spread over 27 countries

Taking cue from various interactions on zz Through more than 15 sources of data social media, focus has been kept on creating contact of customer’s choice, be it tutorial videos on our various digital List of IT - Awards received during FY2018 products, important announcements, CII Award for Customer Obsession 2016 1. Order of Merit Award for Banking security tips for using digital products or Events. tax saving options. 2. Accelerator (BEDA_T+O)

Your Bank’s Twitter handle has featured on Skoch Award 1. Order of Merit Award for Banking Brand Equity’s Twitter Advertising Index Events Data seven times during this financial year. SBI 2. Accelerator(BEDA_T+O) was the first Indian bank to achieve 100 Million views on YouTube and 1.5 million ABF Retail Banking Awards 2017 Debit Card Initiative of the Year – India views on Quora. Your Bank has also focused on creating content for the new IDRBT Banking Technology Excellence 1. Best Bank Award for Use of age professionals present on LinkedIn Awards for the year FY2017 Technology for Financial Inclusion and is one of the most engaging Indian Among Large Banks banks on the platform. This year the 2. Best Bank Award for Electronic official pages on Instagram and Facebook Payment Systems among Large started making use of the ‘stories’ feature Banks to engage the audience. CIO 100 by IDG Best CIO O. COMPLAINT CSI 1. Best CIO of the year 2. Best CISO of the year 2017 MANAGEMENT 3. Best Bank in terms of DEPARTMENT (GITC) Implementations of Cognitive Complaint Management Department Technologies (CMD) at GITC handles customer ASSOCHAM Technology Award Emerging technology award complaints lodged in Complaint Management System (CMS) and also SKOCH AWARD Technologies for Growth 1. 5 Order of Merit complaints received through e mails Awards, 2017 2. 3 Gold relating to Anytime channels including 3. 2 Platinum Debit Card Transactions (ATM/POS/PG); 4. 1 Best Technology Bank Prepaid Card Transactions (ATM/POS/PG); INB (Corporate & Retail INB) Transactions; FINNOVITI 2018 Best Innovative Product Award Mobile Banking Transactions - SB Anywhere, State Bank Buddy and UPI; IBA Banking Technology Conference 1. Best Technology Bank of the Year AEPS (Debit Card Transactions) and SBI Awards FY2017 (Large Category Bank) E-pay Transactions. 2. Most Innovative Project using IT (Emotion Tracker) 3. Best Financial Inclusion Iinitiatives The objectives of the department 4. Runner up- Best use of Digital and are as follows: Channels Tech a. To handle and resolve the complaints ET NOW BFSI (Banking Financial Services 1. Banking within prescribed TAT. & Insurance) Awards, 2018 2. Best CIO (Individual Category) b. Analyse the reasons for complaints and suggest remedial measures. 65

3. RISK MANAGEMENT Mitigation Measures performance have been developed and hosted on Credit Risk Data Mart. Your A. RISK MANAGEMENT Your Bank has put in strong credit Bank has procured the ORACLE “OFSAA” appraisal and risk management OVERVIEW platform for the Credit Risk Management frameworks in place for identification, System and the implementation of the Risk Management at your Bank includes measurement, monitoring and control of system has been initiated with the shortlisted risk identification, risk assessment, risk the risks in credit exposures. Industrial System Integrator. measurement and risk mitigation and its environment is scanned, researched and main objective is to minimise negative analysed in a structured manner by a Your Bank has put improved mechanism dedicated team for deciding your Bank’s impact on profitability and capital. in place to manage Credit Concentration outlook and growth appetite for each of Risk, by way of risk sensitive Internal the identified 39 industries/sectors, which Your Bank is exposed to various risks Prudential Exposure Limits framework for constitute about 70% of the Bank’s total that are an inherent part of any banking single as well as group borrowers. These domestic exposure. Risks in these sectors business. The major risks are credit risk, limits are fixed on the basis of the internal are monitored continuously and wherever market risk, liquidity risk and operational risk rating of the borrower. This framework warranted, the industries concerned are risk which includes IT risk. is one step ahead of the regulatory reviewed immediately. Impact of events like rise in Crude oil prices, profitability prescription of Prudential Exposure Your Bank has policies and procedures of telecom majors, power sector reforms, norms, which is ‘one size fits all’ in nature. in place to measure, assess, monitor and RERA implementation, Gems & Jewellery, These exposure norms are monitored manage these risks systematically across the upheaval in commodity prices to name regularly at a defined periodicity. all its portfolios. Your Bank is amongst the a few, were analysed and appropriate leaders to undertake implementation of responses to these situations were Your Bank conducts Stress Tests the Advanced Approaches under Credit, strategised by your Bank to mitigate every half-year on its Credit portfolio. Market and Operational risk. Your Bank possible risks. Exposure to sensitive/ Stress Scenarios are regularly updated has also undertaken the Enterprise and stressed sectors like Real Estate/Telecom in line with RBI guidelines, industry Group Risk Management Projects, which are reviewed at regular intervals. Sectors best practices and changes in macro aim to adopt global best practices. The like Power, Telecom, Iron & Steel, Textiles, economic variables. projects are being implemented with which are going through a challenging support from external consultants. phase, are watched continuously and RBI has allowed your Bank to participate analysis of new developments are shared in the parallel run process for Foundation RBI Guidelines on Basel III Capital with the business groups to enable Internal Ratings Based (FIRB) under the Regulations have been implemented and them to make informed credit decisions. Advanced Approaches for Credit Risk. your Bank is adequately capitalised as per Knowledge sharing sessions are The data under parallel run of FIRB is the current requirements under Basel III. An conducted for the benefit of the operating being submitted to RBI. Models for independent Risk Governance Structure, staff at various levels. estimation of Probability of Default (PD), in line with international best practices, Loss Given Default (LGD) and Exposure has been put in place, in the context Credit rating thresholds for each industry at Default (EAD) are hosted in Credit Risk of separation of duties and ensuring are decided on the basis of the outlook. Data mart for computation of IRB capital. independence of Risk Measurement, Your Bank uses various internal Credit Independent Risk Advisory (IRA) launched Monitoring and Control functions. This Risk Assessment Models and scorecards last year to examine Medium and High framework visualises empowerment of for assessing borrower wise credit risk. value credit proposals, has been further Business Units at the operating level, Models for internal credit ratings of the strengthened to increase the coverage. with technology being the key driver, borrowers have been developed in- enabling identification and management house. They are reviewed through cycles 2. Market Risk of risk at the place of origination. The of comprehensive validation and back various risks across Bank and the SBI testing frameworks. Market Risk is the possibility of loss that Group are monitored and reviewed Bank may suffer on account of change in through the Executive Level Committees Your Bank has adopted an IT platform value of its trading portfolio, on account of and the Risk Management Committee for credit appraisal processes through a market variables such as exchange rate, of the Board (RMCB) which meets Loan Originating Software/Loan Lifecycle interest rate and equity price, among others. regularly. Risk Management Committees Management system (LOS/LLMS). at Operational unit and Business unit level Models developed by the Bank are hosted Mitigation Measures are also in place. on these platforms which are interfaced with CIBIL and RBI defaulter’s lists. Your Bank’s market risk management consists of identification and measurement 1. Credit Risk In order to focus on capital conservation and of risks, control measures, monitoring and Credit Risk is defined as the possibility of maximisation of return on capital, your Bank reporting systems. losses associated with the diminution in has introduced Risk Based Budgeting (RBB). the credit quality of borrowers or counter- Risk sensitive return on capital is measured Market risks are controlled through various parties from outright default or from based on Return on Credit Risk Capital risk limits, such as Net Overnight Open reduction in portfolio value. Credit Risk (RoCrC). Achievement of the budgeted Position, Modified Duration, PV01, Stop emanates from a bank’s dealings with advances level are subject to scrutiny under Loss, Upper Management Action Trigger, an individual, non-corporate, corporate, the specified levers. Risk Adjusted Return Lower Management Action Trigger, Bank, financial institution or sovereign. on Capital (RAROC) framework has been Concentration and Exposure Limits. implemented from July’2015. The Customer level RAROC calculation has also been Your Bank has Asset class wise risk limits digitised. Further, behavioural models for for its trading portfolio and monitors the monitoring and scoring the retail borrower same on an ongoing basis. 66 Directors’ Report

Currently, market risk capital is computed 4. Enterprise Risk Mitigation Measures under the Standardised Measurement Method (SMM). Your Bank has submitted Enterprise Risk Management aims to Policies relating to Group Risk Letter of Intent to the Reserve Bank of India put in place a comprehensive framework Management, Group Liquidity and for migration to Internal Models Approach to manage various risks and alignment Contingency Funding Plan (CFP), Arm’s (IMA) under the Advanced Approaches for of risk with strategy at the whole Bank Length and Intra Group Transactions and market risk. level. It encompasses global best Exposures are in place. practices such as Risk Appetite, Material Value at Risk (VaR) is a tool used for Risk Assessment and Risk Aggregation, Monitoring of consolidated Prudential monitoring risk in your Bank’s trading among others. Exposures and Group Risk components portfolio. Enterprise level VaR of the Bank is also being done regularly. A quarterly is calculated on a daily basis and also back Mitigation Measures analysis of risk-based parameters for tested daily. The Stressed VaR for market Credit Risk, Market Risk, Operational As part of your Bank’s vision to transform Risk and Liquidity Risk, among others, risk is also computed on a daily basis. the role of Risk into a Strategic function, The VaR methodology is supplemented is presented to the Enterprise & Group a Board approved Enterprise Risk Risk Management Committee (EGRMC)/ by conducting quarterly stress tests of the Management (ERM) Policy is in place. trading portfolio. Risk Management Committee of the Board (RMCB). With an objective of maintaining a sound 3. Operational Risk risk profile, your Bank has developed a The Group Internal Capital Adequacy Operational Risk is the risk of loss Risk Appetite Framework incorporating Assessment Process (Group ICAAP) resulting from inadequate or failed internal limits for major risk metrics. For document includes an assessment of processes, people and systems or from promotion of a strong risk culture in the identified risks by Group entities, internal external events. Bank, Risk Culture Framework is being controls and mitigation measures, and operationalised in a phased manner. capital assessment, under normal and Mitigation Measures stressed conditions. All Group entities Your Bank conducts a comprehensive where SBI has 20% or more stake and Key elements of your Bank’s Operational Internal Capital Adequacy Assessment management control, including Non- Risk Management Policy, among others, Process (ICAAP) exercise on a yearly banking entities, carry out the ICAAP include ongoing review of systems basis with respect to adequacy of Capital exercise and a Group ICAAP Policy is in and controls, creation of awareness of under normal and stressed conditions. place to ensure uniformity. operational risk throughout the Bank, The Pillar 2 risks, such as Liquidity Risk, timely incident reporting, enhancing Interest Rate Risk in Banking Book 6. Basel Implementation operational risk awareness through (IRRBB), Concentration Risk and others RAW (Risk Awareness Workshop), along with the Pillar 1 risks such as Credit, Your Bank has been identified as D-SIB by improving early warning information Market and Operational risks are covered the Regulator and has to keep additional through implementation of Key Indicators under ICAAP. Common Equity Tier 1 (CET1) 0.60% (comprising of Key Risk Indicators (KRIs), of RWAs applicable from 1st April, 2016 Key Control Indicators (KCIs) and Key 5. Group Risk in a phased manner and it will become Process Indicators (KPI)), the resolution fully effective from 1st April, 2019. Your of risk issues by effectively tracking and Group Risk Management aims to put in Bank has also started maintaining follow- up of outcomes of assessment, place standardised risk management Capital Conservation Buffer (CCB) in a assigning risk ownership, aligning risk processes in Group entities. phased manner and will reach 2.5% by management activities with business 31st March, 2019. strategy. All these components ensure better capital management and improve Your Bank has been declared as the quality of Bank’s services/ products/ Winner of ‘Golden Peacock Award for processes, besides ensuring compliance Risk Management’ for the year 2017. with regulatory requirements. Risk Management Structure RBI has granted In-Principle approval to your Bank (on a solo basis) to migrate to AMA (Advanced Measurement Approach) Board of Directors Risk Management Committees for computation of operational risk capital charge on Parallel Run basis. Credit Risk Management Committee (CRMC) For FY2018, your Bank on a stand-alone basis, had assigned capital for Operational Asset Liability Market Risk Management Management Risk Management Committee Committee (MRMC) Risk as per Basic Indicator Approach of the Board (RMCB) (BIA). Capital charge as per AMA has also Committee (ALCO) been calculated as part of Parallel Run. Operational Risk Management MD (R, IT & S) Committee (ORMC) Your Bank Celebrated Risk Awareness Enterprise and Group Risk Day on 1st September. Risk culture is GM (CISO) DMD & CRO Management Committee being embedded through training to staff (EGRMC) at all levels through e-learning lessons. CGM (RM) 67

B. INTERNAL CONTROL Risk Focused Internal Information System and Your Banks’ internal audit function Audit (RFIA) Cyber Security Audit evaluates effectiveness of controls and IA Department undertakes a critical review All Branches are subjected to Information the adherence to internal processes and of the entire operations of auditee units System (IS) Audit to assess the IT related procedures. The internal audit function through RFIA, an adjunct to Risk Based risks, as part of the periodic audit. IS Audit undertakes a comprehensive risk based Supervision, as per RBI directives. The of centralised IT establishments is carried audit of all operating units of your Bank domestic branches have been broadly out by a team of qualified officials/ outside in line with regulatory guidelines relating segregated into three groups (Group I, II experts. During the FY2018, IS Audits of to Risk Based Supervision. Internal audit & III) on the basis of business profile and 86 centralised IT establishments were in your Bank is independent, enjoys risk exposures. During FY2018, IAD has conducted. In line with the RBI guidelines sufficient standing in the Bank and is audited14,638 domestic branches/BPR on ensuring Cyber Security of the IT headed by a Deputy Managing Director. entities under the RFIA. System of the Bank, we have initiated The Internal Audit (IA) function works the process of conducting Cyber Security under the guidance and supervision of the audit from the yerar 2017-18. Audit Committee of the Board. FEMA Audit FEMA Audit of branches categorised Keeping pace with rapid digitalisation, as authorised dealers is conducted by Foreign Offices Audit – Home your Bank has initiated technology driven audit officials, who are well versed with Office Audit interventions, in conducting various Foreign Exchange Business and FEMA During the FY2018, Home Office Audit audits and moving towards automation in / RBI guidelines. During the FY2018, was carried out at 20 foreign offices. your Bank’s audit processes. Some key 430 auditee units were covered, under Management Audit was completed at one initiatives include the following: FEMA Audit. Representative office and one Subsidiary. a) System-based off-site transaction monitoring and Concurrent Audit of Credit Audit Concurrent Audit System business units to ensure continuous Credit Audit aims at achieving continuous monitoring of controls. Concurrent Audit system is essentially improvement in the quality of Commercial a control process, integral to the b) Early Review of sanctions, to assess Credit portfolio of the Bank, through establishment of sound internal accounting quality of loans of ` 50 lakh and above. critically examining individual large functions and effective controls. Concurrent commercial loans with exposures of c) Web based RFIA (Risk Focused Audit covers your Bank’s Advances and ` 10 crore and above annually. Critical Internal Audit) which is flexible, other risk exposures as prescribed by accounts with exposure of ` 100 crore scalable and expandable with the regulatory authority. Concurrent Audit and above, are reviewed at Half-Yearly enhanced level of automation. System has been revamped by introducing intervals. The Credit Audit System also a web-based solution. d) Online self audit by branches, for provides feedback to the Business Units, self-assessment by branches and by way of warning signals, about the vetting by controllers. quality of advance portfolio in the unit and Off-Site Transaction e) Audit findings are made available suggests remedial measures. Monitoring System (OTMS) on MIS dash board on T+1 basis, to As part of our initiative towards continuous facilitate identification of concerns Early Review of Sanction (ERS – Large monitoring of controls, Off-Site Transaction and monitoring of compliance by Loans) Monitoring System (OTMS), a web based Management. Audit in high value credit area has an solution, was introduced, to further off-site review machanism (Early Review strengthen the transaction audit, to capture ii. Your Bank has adopted the process of Sanction – Large Loans) of all the control gaps without much loss of time of Risk Focused Internal Audit pre-sanction and sanction process of and take corrective actions. At Present, 37 (RFIA), wherein audit prioritisation is individual advances of ` 5 crore and types of exceptions are being monitored decided based on assessment of risk above, within 3-6 months of sanction / and flagged to the branches for verification in various activities and businesses enhancement / renewal. ERS has been by them. The exceptions are periodically conducted by the Bank. integrated with Loan processing software reviewed and enlarged, depending upon for online review, submission of ATR and the need and certain triggers. iii. As part of RFIA, IA Department monitoring by controllers. conducts various audit, viz., Credit Legal Audit Audit, Information Systems Audit, Early Review of Sanction (ERS – Home Office Audit (audit of foreign Small Loans) was introduced to review Legal Audit was conducted, to cover all offices), Concurrent Audit, FEMA sanctions of more than ` 50 lakh up to loan and Mortgage related documents of Audit, Audit of Outsourced Activities ` 5 crore, to capture the critical risks in high value loans of ` 5 crore and above. of the Bank, Expenditure Audit and the proposals sanctioned at an early stage During the FY2018, Legal Audit has been compliance audit. It also undertakes and apprise the Controllers of such risks, completed in 11,100 accounts. Management Audit of business for mitigation thereof. verticals to assess their strategic effectiveness. 68 Directors’ Report

Audit of Outsourced Activities A Compliance Risk Management A number of initiatives have been Committee, comprising of Senior undertaken to bring greater awareness Audit of Outsourced activities is conducted Executives from Business Verticals and amongst Bank staff about KYC and AML/ to provide reasonable assurances that Support functions oversees all compliance CFT compliances. For creating awareness adequate systems and procedures are related issues. The committee meets of KYC Compliance e-lessons have been in place to mitigate legal, financial and regularly and extends necessary guidance mandatory for all staff members. AML-CFT reputational risks that may arise on account to the all concerned in the smooth Day is being observed on 2nd November of outsourcing of financial and IT related implementation of Risk Based Supervision every year. Pledge has been taken on that activities to third parties. During FY2018, (RBS) of RBI and other regulatory matters. day at all branches/processing centres 657 audits have been conducted covering and Administrative Offices. Similary 57 activities, which includes ATM services, Compliance Testing of RBI’s regulations 1st August is observed as KYC Compliance Corporate BCs, Recovery & Resolution and guidelines is regularly carried out and and Fraud Prevention Day. agents, Doorstep banking, Cheque printing the testing universe is being expanded to etc. Total No. of 537 vendors have been ensure that the control mechanisms are in Your Bank has procured a new Anti- covered during the year. place to comply with regulatory guidelines. Money Laundering solution (FICO) which is being rolled out in Domestic and Foreign The Bank has engaged the services of Compliance culture is crucial for the Bank branches and will enable online screening 58,000 individual BCs and CSP under to manage the compliance risk effectively of transactions/SWIFT messages, Risk financial inclusion plan, who are being and is being strengthened through various Scoring and Transaction Monitoring to fully audited and during FY2018, 29,038 such forms of communication and interactions comply with the regulatory requirements audits were conducted. across the organization. The Bank has in India and respective geographies of also created a pool of trainers capable of Foreign Offices. Management Audit handling sessions on compliance. Management Audit covers business 4. OFFICIAL LANGUAGE verticals, administrative Offices /All of the above will help your Bank in departments and examines the strategy, strengthening compliance function. Your Bank took innovative steps to processes and risk management practices. propagate use of official language in It encompasses Corporate Centre D. AML-CFT MEASURES: reaching out to its 42 crore customers. The key highlights are mentioned below: establishments / Circle Local Head Offices In order to mitigate risks arising out of / Apex Training Institutions and Regional non-compliance of KYC norms, AML/CFT Rural Banks (RRB) sponsored by the guidelines, your Bank has put in place a Introduction of Online Rajbhasha Bank. During FY2018, 38 establishments / Board approved and transparent Know Roster administrative offices were audited under Your Customer (KYC) Policy incorporating Management Audit. Your Bank has developed and introduced therein Bank’s framework for customer an online Rajbhasha Knowledge Roster acceptance, customer identification, for its staff members where they can C. COMPLIANCE RISK monitoring of transactions, Customer submit details of their knowledge of Hindi. MANAGEMENT Risk categorisation and reporting of transactions to FIU-IND. The Policy has Executives of the Bank pledged to Your Bank has been ascribing highest been updated and subsequent changes, level of importance to Compliance Risk as and when notified by RBI, are also do most of their Correspondence Management and has taken a number being circulated through e-Circular for and Internal work in Hindi on 14th of initiatives to strengthen compliance Branches /Offices for ensuring meticulous of every month function keeping in view the scale and compliance of the same by all operating All executives of your Bank pledged to do complexities of business operations. functionaries. A robust system is in place most of their correspondence and internal Some key initiatives are: containing a combination of manual as work in Hindi on 14th of every month well as system enabled methodology to which is being regularly followed by them. All products, process, policies are ensure KYC compliance in the Bank. vetted from the regulatory compliance One day Hindi Workshop at perspective before they are approved and Your Bank has allotted Uniform Customer operationalized or reviewed. Identification Code (UCIC) to all individual District Headquarters customers as per RBI guidelines. Your Bank’s different Administrative Periodical updation of KYC is undertaken Offices conducted one day Hindi by the bank as per RBI guidelines. E-KYC Workshop for staff of their offices and is made mandatory for account opening to branches starting December, 2017 in strengthen its AML and KYC procedures. the district headquarters spread all over the country. 69

Hindi House magazine ‘Prayas’ bagged GoI Rajbhasha Kirti Prize 2017 audiences. While the legendary SBI monogram has been retained, combining Your Bank’s Hindi House magazine PRAYAS was accredited with ‘1st Prize’ in ‘Rajbhasha it with the abbreviated SBI word is the key Kirti Awards, 2017’. Present Chairman Shri Rajnish Kumar received the prize from change in the refreshed brand identity. The Hon’ble President of India. PRAYAS got this prestigious award consecutively for the monogram has been refined for greater second time. clarity. The M&C department played a vital role in the implementation of the new brand identity across the country.

Apart from the re-branding campaign, the M&C department rolled another big campaign ’Home Loan Balance Transfer Campaign’. The department also rolled out integrated campaign merging products for six different festivals. Appropriate media vehicles were used for all these campaigns.

Your Bank launched YONO – India’s only comprehensive, omni channel digital platform in November, 2017. The M&C department played a key role in this launch, by way of developing the go-to-market strategy and executing a comprehensive communications plan across multiple media including digital media.

Shri Rajnish Kumar, Chairman receiving GOI Rajbhasha Kirti Award 2017 from The M&C department developed and rolled Shri Ramnath Kovind, Hon’ble President of India. out ‘The Green Marathon’ in collaboration with your Bank’s sustainability department. This initiative will raise consciousness “Prayas” awarded First prize among the Bank’s staff and public at large. 5. MARKETING AND This activity was conducted in six cities in by RBI COMMUNICATIONS two months. “Prayaas” the quarterly Hindi house The Marketing & Communications (M&C) As a transforming economy, India is magazine of your bank is honored with department is responsible for your Bank’s First prize in the Hindi-in-house magazine witnessing several changes across initiatives for all brand and product various aspects. To help build momentum competition organised by the RBI for the marketing and public relations. The year 2016-17. for the Bank’s growth, alongside routine primary objective of this department is to marketing activities, promotion of the optimise your Bank’s efforts in promoting Bank’s various digital initiatives will hold Aashirwad Rajbhasha Ratna its products and services, adopting the centre stage. The core responsibility Award 2017 contemporary marketing approach to get of the department will remain towards brand prominence among prospective maintaining favourable brand perception Renowned literary and cultural customers as well as to reinforce the of SBI among varied cross sections of organisation ‘Aashirwad’ recognised your brand’s image among existing customers. the country’s populace; while playing the Bank with special award for excellent The M&C department’s key responsibilities role of a catalyst in marketing its products implementation of Hindi; special award include developing and implementing and services by way of appropriate to PRAYAS for excellence in Hindi house integrated marketing strategies to marketing and communications strategy magazine category; and Rajbhasha Ratna address business challenges of different implementation. Award 2017 to your Bank’s DMD (H.R.) business units divisions of your Bank and CDO for valuable contribution in including Indian and overseas operations. It would be the department’s continued promoting official language policy. This department comprises of skilled endeavour to enable business units to professionals and domain specialists strategise and implement cost efficient drawn from various relevant fields of Different Administrative Offices marketing programs and to enhance your media, marketing communications, of your Bank bagged prizes Bank’s image among different stakeholders. advertising and public relations. from GoI Your Bank is committed towards enhancing its brand equity and affinity through Your Bank took a giant leap by merging Your Bank’s Administrative Offices at concerted marketing initiatives. Bengaluru, Sambalpur, Tirupati, Guntur, five subsidiaries and Bhartiya Mahila Bank Jammu, Delhi, Vadodara, Jabalpur and Ltd. with itself. With this mega merger, Bhubaneswar were also recognised your Bank also undertook a re-branding 6. VIGILANCE for excellence in implementing official exercise. The M&C department, under the MECHANISM language policy by the Government guidance of the Bank’s senior management of India. undertook the implementation of a brand At your Bank there are three aspects identity refresh to energise the brand to to the vigilance function – Preventive, stay relevant to the youth as well as global Punitive and Participative. During this year Vigilance Awareness Week was 70 Directors’ Report

observed from 30th October, 2017 to 4th terms of regulatory requirements. Your Your Bank has adopted the advanced November, 2017, with the theme “My Bank, a pioneer in introducing global best approach for assessing the impact on Vision - Corruption Free India”. Vigilance practices, has transformed the process of Earnings at Risk (EaR) and Market Value Department has taken initiatives for Asset & Liability Management and rolled of Equity (MVE) with pre-defined tolerance spreading this messages through various out updated Oracle Financial Services limits that determine the risks associated channels during the Vigilance Awareness Analytical Application (OFSAA) during with them and enables the Management to Week, 2017, through Alternate Channels, the year. initiate appropriate preventive steps in a likely IVR, Social Media, Gram Sabha by RRBs scenario of erosion in Net Interest Income. and Mass pledge at RRB’s. In order to encourage branches to garner stable funds and assess their profitability In line with the regulatory requirements, The concept of Whistleblower is another based on cost of funds, a new model your Bank has evolved Internal Capital effective tool for Preventive Vigilance. To for Funds Transfer Pricing based on Adequacy Assessment Process (ICAAP) highlight any malpractices under Whistle daily average balances and dynamic with robust methodology, responses and Blower Scheme, a portal has been bid/offer curves for pricing loans and an effective framework. launched by your Bank. Whistle Blower deposits raised by branches has been can lodge a complaint online and also implemented. monitor the progress made in this regard. 8. ETHICS AND There is already a well-defined Whistle The levels of High Quality Liquid Assets BUSINESS CONDUCT Blower policy in our Bank, which acts (HQLA) and cash outflows are effectively Banking deals with the trust of the people. as a deterrent for the employees to keep monitored in a highly dynamic environment. Trust calls for the highest level of ethical themselves away from malicious activities. As per regulatory requirement, your Bank conduct from the Banking sector. This We keep the secrecy of the whistleblower has started computing LCR on daily basis. is the reason for creation of Ethics & and give protection to them so that they Monitoring LCR in significant currency (US$) Business Control Department at SBI. continue to be an effective tool against is also undertaken and reviewed by ALCO. wrongdoings without fear. This department came into operation last year under Chief Ethics Officer, who Studies are conducted at regular intervals plays a major role. Ethical conditioning Branches, where certain lapses of grave to assess the behavioural pattern of empowers its human resources and helps nature are observed, are identified and non-contractual assets and liabilities, in distinguishing right from wrong, in a suo-motu investigations are conducted embedded options available to customers, particular situation. so that possible fraudulent activities could off-balance sheet exposures, impact of be checked, and remedial measures are probable loan losses and others. The Your Bank firmly believes that ethical undertaken. inputs derived therefrom are used for character is shaped, reinforced and effective management of on-balance influenced by the decisions we make During FY2018, a total of 1,266 cases (908 sheet and off-balance sheet items. new cases) were taken up for examination, every day. In this context, sustained promotion of ethical awareness will give out of which 786 cases have since been As part of best Risk Management impetus to the overall operating culture concluded. practices, updated Internal Policies and take the Bank to the next level by are put in place on ‘Deposits’, ‘Whole strengthening its moral muscles. Towards Bank Asset and Liability Management’, this purpose, best international practices 7. ASSET AND ‘Whole Bank Stress Testing of Liquidity are being learnt, technology being and Interest Rate Risks’ by introducing LIABILITY leveraged and ethics being encouraged as the concepts such as ‘reverse stress a part of regular conversations at different MANAGEMENT testing’. As part of contingency planning, organisational layers; and a normative Effective Asset and Liability Management Contingency Funding Plan (CFP) is in sense of congruence is being developed (ALM) is vital for sustainable and qualitative place and reviewed regularly. across various functions in the Bank. growth of banks. It aims to strengthen Balance Sheet Management by constantly reviewing the market conditions, capturing the signals emanating, scanning the regulatory environment and initiating proactive measures for value creation.

The Asset Liability Management Committee (ALCO) of your Bank oversees the Interest Rate and Liquidity Risks, reviews the components of balance sheet and sets up benchmarks for efficient management of these risks and constantly monitors them. ALCO inter alia, reviews the Interest Rate scenarios, pattern of growth of liability products, credit growth, market behaviour, liquidity management and adherence to the regulatory prescriptions. ALCO sets the pricing of the liabilities and reviews at Synergise & Energise Top Management Summit monthly intervals, the Marginal Cost of Funds based Lending Rates (MCLR) in 71

Your Bank has already unveiled its New SUPPORTING HEALTHCARE: zz Reproductive healthcare check-up Vision, Mission and Values Statements zz Basic health check-up (Blood after a gap of almost 10 years to reflect National Health Policy, 2017 was approved Pressure, HB and others) its contemporary persona as an agile and by the Government in March, 2017 with an objective to achieve highest possible level tech savvy bank. zz Diabetes check up of good health and well-being. It seeks to achieve universal access to quality health zz Mammography for women 9. CORPORATE SOCIAL care. However, since long healthcare sector has remained a thrust area for your zz Cataract operations RESPONSIBILITY Bank’s CSR activity. Your Bank provides Your Bank believes that it has a solemn basic infrastructure to improve the SUPPORTING EDUCATION duty to make sustainable social change conditions of the common man. To deliver Your Bank always strives to support in the lives of the less fortunate and quality healthcare to those belonging to underprivileged members of the society. education of weaker social group in underprivileged and economically weaker Your Bank always places the interest of remote, unreachable and underdeveloped the common man, especially the most sections of the society. Your Bank has area. The areas covered are given below: marginalised, at its core. Your Bank supported large number of hospitals. The major initiatives of your Bank in health earmarked 1% of the previous year’s net zz Donated computers and printers to profit as the budget for CSR spend for care sector are as under: various schools the year. Its CSR activities are widespread and deep-rooted and have made true Ambulances and Medical Vans: Your zz Provided water filters for access to difference in the lives of thousands Bank has donated ` 2.88 crore to over clean drinking water from the underserved and downtrodden 23 charitable organisations for acquiring communities. CSR is a continuing zz Provided toilets to the schools Ambulances and Medical Vans commitment of your Bank for developing the quality of life of the community and zz Persons with Disabilities (PwDs) society as a whole. Health Equipment and Surgeries: Your were given vocational training Bank has donated ` 5.33 crore to over 35 charitable organisations/hospitals zz Donated ` 82 lakh for providing FOCUS AREAS for acquiring various medical/surgical school buses/vehicles for zz Healthcare equipment like Stress Test Machine, transportation facilities to underprivileged children zz Education Dialysis Machine, BIPAP Ventilators, Digital X-Ray Machines, Artificial limbs, zz Sanitation Automated Bio-chemistry Analysers, DRINKING WATER AND zz Skill Development and Livelihood Surgical Microscopes and Retinal SANITATION Creation Equipment. This has improved the Your Bank is committed to the zz Environment Protection capacity and potential of the hospitals to serve large number of deprived patients. Government’s mission of “Swachh Bharat” zz Culture, Sports and others and has undertaken several initiatives Community Outreach Programmes: across the country including building toilet CSR SPEND DURING FY2018 Your Bank organised camps to focus on blocks; providing sanitary napkin vending machines and incinerators, dumper The CSR spend of the Bank for the curative and preventive healthcare for bins and dust bins, among others. Also, FY2018 stood at ` 112.96 crore. This is the under privileged rural population. The provision of drinking water (R.O.) and the sixth successive year, where your areas covered are mentioned below: toilets in schools is being made. Bank’s CSR spend has crossed the mile zz Eye check-up stone of ` 100.00 crore. The sector wise spend is as under: zz Cancer detection ENVIRONMENT AND SUSTAINABILITY Your Bank is committed to environment Focus Area Spend (%) protection and contributes positively to reduce the carbon footprint. Responsible interaction with environment to avoid 3.98% depletion and degeneration of natural 9.63% Skill Development 5.84% resources and maintain long term Sanitation 2.21% quality of the environment is a priority for 11.63% PWD your Bank. Health Your Bank has contributed ` 2.05 crore Education 1.28% towards the following: National Donations 4.60% Culture, Sports, zz Acquiring solar power plant, solar R&D and Others water heater and solar street lamps Environment zz Tree plantations

zz Maintenance of parks and gardens

zz Donating battery operated vehicles 60.83% 72 Directors’ Report

SBI CHILDREN’S WELFARE SKILL DEVELOPMENT Your Bank has set up 151 Rural Self FUND INITIATIVES AND LIVELIHOOD Employment Training Institutes (RSETIs) across the country as institution to Your Bank constituted SBI Children’s CREATION help mitigate the unemployment and welfare Fund as a Trust in 1983, which Rural Self Employment Training underemployment problem among youth extends grants to Educational Institutions Institutes (RSETIs): India is one of in the country. engaged in the welfare of underprivileged the youngest nation in the world with children like orphans, destitute, and more than 54% of its population below Your Bank has contributed ` 9.03 crore physically challenged. The corpus of the 25 years of age. Employability of the for construction of 9 RSETI buildings. fund is made by the staff members and growing young demography is one of The recurring expenditure for skill matching contribution is provided by your the important factors in the economic development programs for youth was Bank. During FY2018, your Bank has development of the country. The skill ` 47.52 crore at 151 RSETIs of your Bank donated ` 98 lakh to various educational development initiatives support the supply across the country. institutes all across the country. of trained manpower.

Shri Rajnish Kumar, Chairman handing over replica of key to Donation of Stiching & Sewing Machines to Sewa Samarpan Sansthan,Varanasi Mehar Baba Charitable Trust, Chandigarh 73

V. SUBSIDIARIES 1. SBI CAPITAL As a part of mission to provide the entire gamut of financial services across India, the MARKETS LIMITED State Bank Group, through its various subsidiaries, provides a whole range of financial (SBICAP) services, including Life Insurance, Merchant Banking, Trustee Business, Mutual Funds, SBICAPs is India’s leading investment Credit Card, Factoring, Security Trading, Pension Fund Management, Custodial Services, banker, offering entire bouquet of investment General Insurance (Non Life Insurance) and Primary Dealership in the Money Market. banking and corporate advisory services to varied client base across three product Non- Banking Subsidiaries: groups – Infrastructure, Equity Capital (` crore) Markets and Debt Capital Markets. These services include Project Advisory, Loan Sr. Name of the Subsidiary Ownership % of Net Profit Syndication, Structured Debt Placement, No Company (SBI interest) Ownership (Losses) Mergers & Acquisitions, Private Equity, for FY2018 Restructuring Advisory, Stressed Assets 1 SBI Capital Markets Ltd. 58.03 100.00 327.32 Resolution, IPO, FPO, Rights Issues, Debt (Consolidated) and Hybrid Capital raising.

2 SBI DFHI Ltd. 131.52 *69.04 32.07 On a standalone basis, SBICAPs posted a PBT of ` 349.35 crore during FY2018 as 3 SBI Mutual Fund Trustee 0.10 100.00 3.83 against ` 312.57 crore during the FY2017 Company Pvt Ltd. and a PAT of ` 244.64 crore for FY2018 4 SBI Global Factors Ltd. 137.79 86.18 (3.24) against ` 217.95 crore in FY2017. On a consolidated basis it has posted a profit of 5 SBI Pension Funds Pvt. Ltd. 18.00 *60.00 1.39 ` 327.32 crore as against ` 251.80 crore in the previous year. *Group holding of SBI is 100% in SBI Pension Funds Pvt. Ltd. (SBI 60%, SBI MF and SBI Capital Markets 20% each) and in SBI DFHI State Bank holding is 72.17% (SBI 69.04%, SBICAPS declared dividend at 225% during FY2018 as against 200% in FY2017. after merger of Associate Banks and SBI Capital Markets 3.13%). A. SBICAP SECURITIES Non- Banking Subsidiaries: Joint Ventures LIMITED (SSL) (` crore) SSL, a wholly owned subsidiary of SBI Sr. Name of the Subsidiary Ownership (SBI % of Net Profit Capital Markets Limited, besides offering No Company interest) Ownership (Losses) equity broking services to retail and for FY2018 institutional clients both in cash as well as in Futures and Options segments, is also 1 SBI Funds Management 31.50 63 331 engaged in sales and distribution of other Pvt. Ltd. financial products like Mutual Funds, Tax Free Bonds, Home Loan, Auto Loan, 2 SBI Cards & Payment 581 74 363 Tractor Loan, among others. Services Pvt. Ltd.

3 SBI Life Insurance 621.00 62.10 1150 SSL has over 100 branches and offers Company Ltd. Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL 4 SBI-SG Global Securities 52.00 65 26 currently has more than 15 lakh clients. The Services Pvt. Ltd. Company has booked gross revenue of ` 357.56 crore during FY2018 as against 5 SBI General Insurance 159.47 74 396 ` 250.35 crore in FY2017. Company Ltd.

6 SBI Business Process 17.46 74 66 B. SBICAP VENTURES Mgt. Services Pvt. Ltd.* LIMITED (SVL) * Name of “GE Capital Business Process Mgt. Services Pvt. Ltd.” has been changed to SVL is a wholly owned subsidiary of SBI “SBI Business Process Mgt. Services Pvt. Ltd.” Capital Markets Limited. DFID (Department for International Development) has joined hands with the SBI group to set up the “Neev Fund” which is being managed by SBICAP Ventures Limited. SVL is acting as the Asset Management Company. 74 Directors’ Report

The Neev Fund had its Initial close on 10th 2. SBI DFHI LIMITED During the period the Company received April, 2015 and current corpus of the Fund many awards which includes: is 469.39 crore. Fund will be invested in (SBI DFHI) ` • SBI Unnati Card wins of SKOCH Infrastructure sectors such as renewable SBI DFHI Limited is one of the largest Financial Inclusion Award at the 48th energy, water and sanitation, agricultural standalone Primary Dealers (PD) with a SKOCH Summit supply chain in 8 identified states of pan India presence. As a Primary Dealer • Corporate Card Team has been India (Bihar, Chhattisgarh, Jharkhand, (PD) it is mandated to support the book awarded by VISA for becoming “No. Madhya Pradesh, Odisha, Rajasthan, building process in primary auctions and 1 Commercial Card Issuer” for VISA Uttar Pradesh and West Bengal). SVL has provide depth and liquidity to secondary India started earning Management Fees. markets in G-Sec. Besides Government securities, it also deals in money market • SBI Card awarded with ‘Best Data C. SBICAP (UK) LIMITED instruments, non G-Sec debt instruments, Quality Award’ in NBFC category (SUL) etc. As a PD, its business activities are by CIBIL regulated by RBI. SUL is a wholly owned subsidiary of 4. SBI BUSINESS SBI Capital Markets Limited. SUL is SBI group holds 72.17% share in the positioning itself as a relationship outfit Company. The Company posted Net PROCESS AND for SBI Capital Markets Limited in UK and Profit of` 32.07 crore in the FY2018 as MANAGEMENT Europe. Relationships are the business against ` 176.44 crore in the FY2017. Total products of SBICAP. balance sheet size was ` 5,659.46 crore as SERVICES PRIVATE on 31st March 2018 as against ` 3,187.70 LIMITED (SBIBPMSL) D. SBICAP (SINGAPORE) crore as on 31st March 2017. (Formerly GE Capital Business LIMITED (SSGL) Process and Management Services Pvt Ltd) SSGL, is a wholly owned subsidiary 3. SBI CARDS of SBI Capital Markets Limited. SSGL & PAYMENTS commenced business from December SBIBPMSL is a joint venture between 2012. Relationships are being built with SERVICES PRIVATE State Bank of India and the Carlyle Group, FIIs, Financial Institutions, Law Firms, wherein SBI holds 74% stake and CA Accounting Firms, etc. to market the LIMITED (SBICPSL) Rover Holdings (An affiliate of Carlyle) business products of SBICAP. It has SBI Cards and Payment Services Private holds 26% stake. SBIBPMSL provides been specialising in marketing of Foreign Limited is a joint venture between State back end services and solutions to Currency Bonds and securing clients for Bank of India and the Carlyle Group SBICPSL. During the year, SBI increased SBICAP SEC. wherein SBI holds 74% stake and CA its stake in the company from 40% to Rover Holdings (An affiliate of Carlyle) 74% by buying out shares from exiting E. SBICAP TRUSTEE CO. holds 26% stake. SBICPSL is a NBFC and partner GE Capital. is in the business of issuing credit cards LIMITED (STCL) in India. During the year, SBI increased its During the FY2018, the Company SBICAP Trustee Co Limited (STCL), is a stake in the company from 60% to 74% generated PAT of ` 66 crore at a YoY wholly owned subsidiary of SBI Capital by buying out shares from exiting partner growth rate of 41%. Markets Limited. STCL commenced GE Capital. security trustee business with effect During FY2018, the Company undertook from 1st August, 2008. STCL posted Net During the FY2018, the Company’s Card following key initiatives: Profit of` 11.90 crore during FY2018 as base has grown by 37% YoY with total • Bharat QR launched on Mobile against `11.68 crore during FY2017. number of credit cards reaching to a level Application to enable transactions st STCL successfully launched an Online of 62.58 lakh as at 31 March 2018. The through mobile application Will Creation service for the individuals Spends on card witnessed a YoY growth in the name of ‘My Will Service Online’. of 73% to reach a level of ` 79,808 crore • Instant Payment Credit functionalities It also launched its ‘Trustee Enterprise for the same period. The company is made available when online payment Management System’ – an integrated positioned at Rank #2 with 16.75% Spends done through 3rd party system to address all the trustee related Share and 16.42% Cards base as per RBI • New features like Card full statement operations and thus has become the report for Mar’18 (Previous Year 13.06% in and one click Loan, Flexi-pay booking first and only Trustee Company in India terms of Spends and 15.34% in terms of are now available on MOBILE to have full automation across all trustee Cards base as per RBI report for March’17) Application related operations. The company delivered Profit after Tax of `363 crore for the FY17-18 (PBT of • Digital for Customers – SBI mobile ` 776 crore). This includes one off adverse app “#1 rated Mobile App impact of ` 219.9 crore due to change in accounting policy. Excluding the one off PBT has grown by ~30% YoY. 75

5. SBI LIFE INSURANCE Awards and recognitions received during manages Off- shore Fund. SBIFMPL also the year include: provides Portfolio management services COMPANY LIMITED 1. Brand of the Year 2016-17 Award in (PMS) and Alternative Investment Funds (SBI LIFE) the Insurance Category by WCRC. (AIF). During the year the Company’s gross sales through digital platforms SBI Life Insurance is a joint venture 2. Ranked #1 (in a jointly held spot) in crossed ` 10,000 crore. between State Bank of India (SBI) and Customer loyalty in the Life Insurance BNP Paribas Cardif S. A. During the year Category in a survey conducted ended 31st March, 2018, Initial Public across more than 15 key cities in 7. SBI GLOBAL Offer of 120,000,000 equity shares of India, according to Kantar – IMRB FACTORS LIMITED face value of ` 10 each of the Company Survey 2017. at Offer Price of ` 700 per equity shares (SBIGFL) 3. Won the “DSCI Excellence Awards aggregating to ` 8,388.73 crore (net of 2017” under category “Best SBIPFPL has been appointed as the employee discount) through an Offer Practices for Insurance Sector” for SBIGFL is a leading provider of factoring for Sale by State Bank of India and BNP the year 2017, by the Jury under the services for domestic and international Paribas Cardif S.A. of 80,000,000 equity Chairmanship of Mr. Pramod Bhasin, trade. SBI holds 86.18% share in the shares and 40,000,000 equity shares, Founder & Non Executive, Vice Company. The Company’s services are respectively was completed. The equity Chairman of Genpact. especially suitable for MSME clients for shares of the Company were listed on freeing up resources locked in book debts. 4. Awarded ‘India’s Leading insurance National Stock Exchange Limited (‘NSE’) By virtue of its membership of Factors Company – Life’ (Private sector) at the and Bombay Stock Exchange Limited Chain International (FCI), the Company is rd Dun & Bradstreet BFSI Summit 2018’. (‘BSE’) on 3 October, 2017. able to ameliorate credit risk from export 5. Adjudged as one of the ‘Most receivables under the 2 factor model. SBI owns 62.1% of the total capital Trusted Brand, 2017’ for the Seventh and BNP Paribas Cardif S. A. holds consecutive year by The Economic The Company reported a PBT of ` 2.08 22%, while remaining 15.9% share is Times Brand Equity - Nielsen survey. crore during the year ended FY2018 (PY held by public. SBI Life has a unique – PBT ` 3.25 crore) & PAT (Loss) of ` 3.24 multi–distribution model encompassing crore (PY – PAT ` 1.01 crore). Turnover vibrant Bancassurance, Retail Agency, for 12 months ended FY2018 is ` 3,555 Institutional Alliances and Corporate 6. SBI FUNDS crore as compared to turnover of ` 3,047 Solutions distribution channels. crore in previous year (i.e. an increase of MANAGEMENT 17%). FIU as on 31st March 2018 is ` 1,276 The Company has proven its market PRIVATE LIMITED crore as compared to ` 1,059 crore as on leadership in FY2018 with number 1 31st March 2017. Turnover in EF under position in Individual New Business (SBIFMPL) 2 Factor Model for 12 months ended Premium among private insurers. SBIFMPL, the Asset Management FY2018 is equivalent to EUR 59 Mio (PY Company of SBI Mutual Fund, is the 5th EUR 42 mio). In INR terms, the EF turnover The company witnessed a 30% growth largest Fund House in terms of Average touched ` 452 crore for 12 months ended in Retail New Business Premium (NBP) “Assets Under Management” and a FY2018, as against ` 321 crore in previous vis-à-vis the private industry growth of leading player in the market with over 7.8 year, i.e. an increase of 41%. 26%. The market share of SBI Life Retail million investors. SBIFMPL is the largest New Business Premium (NBP) among all ETF manager in India with over 50% st private players as on 31 March, 2018 is market share in fast growing ETF market. 8. SBI PENSION FUNDS 21.8% vis-a-vis 20.7% for last year. SBIFMPL posted a PAT of ` 331.03 PRIVATE LIMITED crore during the year ended Mar 2018 SBI Life witnessed a PAT of ` 1,150 as against ` 224.32 crore earned during (SBIPFPL) crore in FY2018 against ` 955 crore in the year ended March 2017. During the SBIPFPL has been appointed as the FY2017. AUM of the Company recorded current year, SBI MF crossed the historic Pension Fund Managers (PFM) along a growth of 19% at ` 116,261 crore as on milestone of INR 2 Trillion AUM mark. The with 8 others to manage the pension 31st March, 2018 as compared to ` 97,737 average “Assets Under Management” corpus under National Pension System crore as on 31st March, 2017. (AUM) of the Company during the quarter (NPS). SBIPFPL is one of the three

ended March 2018 were ` 2,17,649 crore PFM appointed by the Pension Fund Leveraging wider reach achieved through with a market share of 9.44% as against Regulatory & Development Authority its network of 825 offices, SBI Life has the average assets under management (PFRDA) for management of Pension systematically brought large rural areas of ` 1,57,025 crore with a market share Funds under the NPS for Central under insurance. The Company has sold of 8.58% during the quarter ended Government (except Armed Forces) and 24% of total policies in this segment in March, 2017. The Company has a fully State Government employees and one of FY2018. A total of 649,599 lives covered by owned foreign subsidiary viz. SBI Funds eight PFM appointed for management of the company are from the underprivileged Management (International) Private Pension Funds under the Private Sector. social sector. Limited, which is based at Mauritius and The total Assets Under Management 76 Directors’ Report

(AUM) of the company as on 31st March, among the private players in FY2017- 11. SBI INFRA 2018 was ` 89,283 crore (YoY growth 18. SBIGIC occupies 2nd position in of 34%) against ` 66,723 crore on “Personal Accident” among private MANAGEMENT 31st March, 2017. insurers & 4th position in the industry SOLUTIONS PVT. LTD. in FY2018. The company ranks 3rd in The Company maintained lead position “Fire” among private insurers and 7th SBI Infra Management Solutions Private amongst Pension Fund Managers in terms position in the industry in FY2018. Share Limited, incorporated on 17th June, of AUM in both Government and Private of health business decreased marginally 2016, is engaged in providing real estate Sectors. The overall AUM market share from 14.3% to 13.4%. However, there is management services to State Bank in Private Sector was 58%, while in the a growth to the tune of 27.1% for FY2018 of India. Government Sector it was 35%. against Industry growth of 22.4%. The Company commenced its pilot The Company was adjudged winner in SBI General wins the ET Best BFSI operations w.e.f. 8th March, 2017 at six the “Pension Fund House Category” by Brands Award 2018. The ISO 27001:2013 centres in India i.e. Greater Mumbai and Outlook Money for the year 2017. Awards certification awarded to SBI General for Navi Mumbai, Twin City Ahmadabad and by Outlook money have been adjudged to its Information Security practices. SBI Gandhinagar, Greater Chennai, Kolkata the Company for 3rd consecutive year in General Insurance was awarded the Metropolitan area, Greater Hyderabad and a row. Bancassurance Leader award in the 7th Delhi NCR for some benchmark value. The edition of Insurance awards organised Company is at present efficiently handling by Fintelekt. more than 60 projects of construction/ 9. SBI GENERAL interior/retrofitting/ purchasing/leasing etc. INSURANCE 10. SBI SG GLOBAL After successful run of pilot projects, the COMPANY LIMITED SECURITIES Company has extended all the activities (SBIGIC) related to premises and estate irrespective SERVICES PRIVATE of value of all the six circles (situated at SBIGIC is a joint venture between State LIMITED (SBI-SG) aforesaid six centres) and corporate Bank of India and IAG Australia in which centre establishment from January 2018. SBI holds 74% stake. The cornerstone SBI-SG, a joint venture between State The Company is also likely to expand its of the Company’s growth aspiration is Bank of India and Societe Generale with operations further on pan India basis by focussed on the Banca channel whilst 65% holding by SBI. The Company was the mid of financial year 2018-19. developing other channels and products set up to offer high quality custody and that meet business objectives and drive fund administration services to complete profitable growth. The Company has the bouquet of financial services offered 12. SBI FOUNDATION entered in to strategic tie-ups with three by the SBI Group. SBI-SG commenced SBI Foundation was established by State large car manufactures to drive growth in commercial operations in 2010. The Bank of India in 2015 as a Section VIII the Motor portfolio. Company’s Net Profit was` 26.03 crore company under Companies Act (2013) to in FY2018 as against ` 11.74 crore in undertake the CSR activities of SBI and Gross Written Premium (GWP) stood at FY2017. Accumulated profit is` 45 crore. its subsidiaries in a planned and focused ` 3,553 crore for FY2017-18. In the seven manner. years of operation, for the first time in Average Assets Under Custody in March FY2017 SBIG had achieved profit, to 2018 rose to ` 4,82,435 crore from SBI Foundation aims to give back to the the tune of ` 396 crore. The Company ` 3,27,158 crore as in March 2017, while society by working towards the socio- recorded 36.1% growth in GWP YoY the Average Assets Under Administration economic well-being of the marginalised against an industry growth of 17.5% were at ` 2,54,089 crore in March 2018 as and vulnerable communities. Your Bank including crop whereas excluding Crop against ` 1,83,779 crore in March 2017. is actively working towards impacting SBIGIC recorded growth of 24.0% against people on a grassroots level across PAN Industry growth of 17.1% for FY2017-18. SBI-SG has been rated as one of the India with a vision to provide ‘Service SBIGIC has grown by 124.8% in Crop leading custodians in India in the Global Beyond Banking’. Insurance in FY2017-18 by participating Custodian magazine’s Agent Banks and in the PMFBY schemes and extending our Emerging Markets Survey 2017. SBI Foundation is presently working on geographies. The Overall market share various projects and many initiatives has among all general insurance companies SBI-SG has been rated #1 custodian been taken to build a momentum for a stands at 2.35% and 5.42% among in India in the Global Investor/ISF Sub- transforming India by creating an inclusive private insurers. The Company’s market Custody survey for 2017. development paradigm, that serves all ranking is 14th in the industry and 9th Indians without any discrimination on the basis of regional, linguistic, caste, creed, religious or other barriers. 77

The CSR budget for FY2018 was B. EDUCATION D. ARTS, CULTURE, ` 20 crore, the grant received was Education is one of the most powerful and HERITAGE AND OTHERS ` 25.71 crore (including grant received from subsidiaries). SBI Foundation proven vehicle to bring transformational To achieve the dual goal of preservation of sanctioned 28 proposals amounting to change in the development landscape. culture & heritage and contribute to ‘The Education plays a vital role in improving ` 49.53 crore. The total disbursement Swachh Iconic Places’, SBI Foundation the standard of life of an individual and during the year stood at ` 27.18 crore. has started two projects under this is viewed as an effective tool for bringing category as mentioned below: The CSR activities are undertaken in the social economic changes. Scarcity of following focus areas: resources and lack of infrastructure are the a) Swachh Iconic CSMT: This initiative major hindrances in the education sector aims for conservation and restoration in India. SBI Foundation is committed to A. HEALTHCARE of south and east façade of the contribute positively to United Nation’s heritage building at Chhatrapati The vast majority of rural population is Sustainable Development Goals (SDGs) Shivaji Maharaj Terminus Mumbai (A deprived of basic medical facilities due to Goal#4: Quality Education. Through SBI UNESCO World Heritage Site). lack of healthcare infrastructure in various Foundation, your Banks has initiated parts of the country. SBI Foundation is various projects as mentioned below: b) SBI Eklavya: SBI Foundation is committed to contribute positively to providing basic sports facility to the United Nation’s Sustainable Development a. Gyanshala: This is a middle school children under ashram schools of Goals (SDGs)-Goal#3: Good Health and education project for urban slum Marathwada region of Maharashtra. Well Being by bringing about positive children (Grade IV to Grade VIII) to changes in the lives of underprivileged provide them quality education as E. DISABILITY other privileged children receive in sections of society by providing free The vision is to enable the Persons their schools. access to quality healthcare. with Disabilities (PwDs) to avail better b. Beti Padhao Kendras: Under this livelihood opportunities by market linked To contribute towards improve the health initiative, Beti Padhao centres were training and jobs in the organised sector. scenario, your Bank has undertaken started with an aim to provide basic Therefore, to support the PwDs your Bank the following CSR projects through SBI education (up to Grade V) to girl has started the following projects: Foundation. children in remote rural areas.

a. Sishu Rakhsha: A project to curtail c. SBI Udaan: This project works a. Project Parivarthan: The initiative infant mortality rate by providing towards quality education along with aims to make inclusive employment complete screening facilities and Arts, Crafts and Sports development of the underprivileged and PwDs immediate treatment to the infants. for children in slums and remote the norm in companies by providing areas. them market-oriented trainings. b. SBI Life: An initiative to prevent and control of Thalassemia diseases by d. Shiksha Sahay: This project b. Project SBI Shravan Shakti: Under facilitating Thalassemia tests to the supports tribal school for maintaining this initiative, your Bank has facilitated public. the quality education and other basic fitment of Cochlear Implants to needs. hearing impaired children. c. Cancer Care: A project which aims to prevent and control of Breast and c. Project Swabhiman: This project Cervical Cancer among women. C. ENVIRONMENT AND aims to provide job linked training SUSTAINABILITY to PwDs by establishing and running d. SBI Darpan: This project works on skill centres. mitigating damages of Sickle Cell Your Bank is committed to environment Anaemia diseases. protection and contribution to reduce the carbon footprint. Flagship Programs e. SBI Umeed: The objective of the program is to curtail maternal, infant SBI Youth for India Fellowship program: a. Waste to gold: A project that aims mortality and morbidity in expecting SBI Youth for India (YFI) is a Fellowship to motivate and develop the skills of mothers and their infants by providing program initiated, funded and managed vulnerable youth to address waste the preventive care information by the SBI Foundation in partnership with management in the city; and develop through mobile call facilities. reputed NGOs. It provides a framework small sustainable businesses for their for India's best young minds to join hands f. SBI Eye care: This initiative aims to livelihood as well. with rural communities, empathise with provide free cataract surgeries in the b. SBI Corbett: Under this project, their struggles and connect with their underprivileged rural areas of India. SBI Foundation is providing villages aspirations a sustainable waste management system and conducting trainings of Under the initiative, SBI Foundation SHG Workers to provide awareness has partnered with the reputed NGOs, in nearby schools and hotels. engaged in development work in rural 78 Directors’ Report

areas, to deploy the youth enrolling for optimising their cognitive, physical, social The objectives of the flagship the fellowship, for conceiving and working and vocational functioning. program are: on innovative projects. YFI has an alumni base of 184 passionate change makers, CoE has conducted five inclusive training a. To link and leverage the specific 60% of Alumni are associated with the programs for employees with disabilities government schemes/services to development sector after the fellowship. and their trainers. Seven public sector villages (families) Banks participated in the training b. To lay emphasis on digitalisation Centre of Excellence for PwDs (CoE): program. CoE has also signed MoUs and create awareness about online Majority of persons with disabilities can with Bank of Baroda and Union Bank of service (including online banking) lead a better quality of life if they have India for institutionalisation of inclusion c. Improve the basic infrastructure equal opportunities and effective access and empowerment of employees with of villages (set up computer labs, to rehabilitation measures. There has been disabilities. CoE has set up skilling centres community rooms and others) an increasing recognition of abilities of in various cities for placement linked skill persons with disabilities and emphasis on development of PwDs. d. Encourage Panchayat/Village mainstreaming them in the society based self-governance and create on their capabilities. It was conceptualised SBI Gram Seva: India resides in its environment for participatory with a goal to be a centralised support villages, and for the holistic development efforts by the people for rural centre for persons with disabilities. of the villages, SBI Foundation has asset creation and community adopted 10 Gram panchayats covering 50 development. CoE primarily works on empowering of villages in 6 states of India. e. Integrated village development is PwDs through skill enhancement to make aimed to promote education for all, significant and measurable improvement environment protection, livelihood that enables individuals to enjoy a development, digitalisation in Gram more productive and satisfying life by Panchayat, skill development and improvement of preventive and primary health care in villages.

Awards and Accolades SBI Foundation has won seven national level awards during the year for its CSR initiatives.

Name of the Award Category Golden Globe Tiger Award for Excellence & Leadership in CSR Best CSR Practices Golden Globe Tiger Award for Excellence & Leadership in CSR Innovation in CSR Golden Globe Tiger Award for Excellence & Leadership in CSR CSR Leadership Award ET Now presents CSR Leadership Awards Best CSR Practices ET Now presents CSR Leadership Awards Innovation in CSR ET Now presents CSR Leadership Awards Promoting Employment for the Disabled Bureaucracy Today CSR Excellence Awards Care of Senior Citizens FICCI CSR Awards Appreciation Plaque in the Health Category 79

VI. RESPONSIBILITY VII. ACKNOWLEDGEMENT During the year, Shri M. D. Mallya and Shri Bhaskar Pramanik, Shri Basant Seth, STATEMENT Shri Deepak I. Amin retired from the Shri Rajiv Kumar and Dr. Purnima Gupta Board w.e.f. 25th June 2017, consequent on the Board. The Board of Directors upon completion of their term. Shri Sanjiv hereby states: Malhotra was reappointed as Independent The Directors also express their gratitude Director u/s 19(c) of the SBI Act w.e.f. 26th for the guidance and co-operation i. that in the preparation of the annual June 2017 on the Board. Shri Bhaskar received from the Government of India, accounts, the applicable accounting Pramanik, Shri Basant Seth and Shri Pravin RBI, SEBI, IRDA and other government standards have been followed along Kutumbe were elected by the Shareholders and regulatory agencies. with proper explanation relating to as Directors on the Board u/s 19(c) of the material departures; SBI Act w.e.f. 26th June 2017. Smt. Anjuly The Directors also thank all the valued ii. that they have selected such Chib Duggal retired from the Board w.e.f. clients, shareholders, banks and financial accounting policies and applied them 31st August 2017 consequent upon her institutions, stock exchanges, rating consistently and made judgements retirement as Secretary, Department of agencies and other stakeholders for their and estimates as are reasonable and Financial Services and Shri Rajiv Kumar patronage and support, and take this prudent, so as to give a true and fair was nominated as GOI Nominee Director opportunity to express their appreciation view of the state of affairs of your in her place w.e.f. 12th September 2017. for the dedicated and committed team of Bank as on the 31st March 2018, and employees of the Bank. of the profit and loss of Your Bank for Smt. Arundhati Bhattacharya, Chairman the year ended on that date; retired on completion of her tenure on 6th iii. that they have taken proper and October 2017 and Shri Rajnish Kumar was sufficient care for the maintenance appointed as Chairman in her place w.e.f. For and on behalf of the th of adequate accounting records in 7 October 2017. Central Board of Directors accordance with the provisions of the Banking Regulation Act, 1949 Dr. Purnima Gupta has been nominated and State Bank of India Act, 1955 for by GOI as Director u/s 19(d) of the SBI Chairman st nd safeguarding the assets of your Bank Act w.e.f. 1 February 2018. Shri Pravin Date: 22 May, 2018 and preventing and detecting frauds Kutumbe resigned from the Board w.e.f. th and other irregularities; 8 March 2018 consequent upon his appointment as Whole-Time Member iv. that they have prepared the annual in IRDA. accounts on a going concern basis; v. that the internal financial controls The Directors place on record their had been laid down, to be followed appreciation for the contributions made by your Bank and that such internal by the outgoing Chairman, Smt. Arundhati financial controls are adequate and Bhattacharya and Directors, namely, were operating effectively; and Shri M. D. Mallya, Shri Deepak I. Amin, Smt. Anjuly Chib Duggal and Shri Pravin vi. that proper system had been devised Kutumbe, to the deliberations of the Board. to ensure compliance with the The Directors welcome the new Chairman, provisions of all applicable laws and Shri Rajnish Kumar and Directors, that such systems were adequate and operating effectively.