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CHAPTER-IV

ORGANISATIONAL
STRUCTURE OF STATE
BANK OF INDIA
4.1 INTRODUCTION

Organisation is a group of people working together to


achieve common goals. Top management determines the
direction of the organization by defining its purpose,
establishing the goals to meet that purpose and formulating
strategies to achieve the goals. ^

Organisation structure is the system of task, reporting and


authority relationship within which the work of the organisation
is done. Thus structure defines the form and function of the
organisations activities. Structure also defines how the parts of
an organisation fit together, as is evident from an organisations
chart. The purpose of an organisations structure is to order and
coordinate the actions of employees to achieve organisational
goals. The premise of organised effort is that people can
accomplish more by working together than they can separately.
The work must be coordinated properly, however if the potential
gains of collective effort are to be realized. Consider what might
happen if the thousands of employees at Compaq computer
worked without any kind of structure. Each person might try to
build a computer that he or she thought would sell. Now two
computers would be alike and each would take months or years
to build. The costs of making the computers would be so high
that no one would be able to afford them. To produce computers
that are both competitive in the market place and profitable for
the company, Compaq must have a structure in which its
employees and managers work together in a coordinated
manner. The task of coordinating the activities of thousands of
workers to produce computers that do the work expected of
them but are guaranteed and easy to maintain may seem
monumental. Yet whether the goal is to mass produce
computers or to make soap, the requirements of organisation
structure requirements of organisation structure are similar.

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First the structure must identify the various tasks or processes
necessary for the organisation to reach its goals. This dividing
of tasks into smaller parts is often called "division of labour".
Even small organisations (those with fewer than. ^ One hundred
employees) use division of labour. The organisation structure is
concerned with the establishment of positions and the
relationship between positions. It provides an appropriate frame
work for authority relationships. Organisational structure
involves arrangement of activities and assignment of personnel
to these activities in order to achieve the organisational goals.
It is away by which various parts of an organisation are tied
together in a coordinated manner and it illustrates the various
relationships among various levels of the hierarchy within the
organisation as well as horizontal relationships among various
aspects of organisational operations. A well planed organisation
structure results in the better use of resources.

An organisational structure defines how job tasks are


formally divided, grouped and coordinated. These are six key
elements that managers need to address when they design their
organisation's structure. These are; work specialisation,
departmentalization, chain of command, span of control,
centralisation, decentralisations, and formalisation. A good
organisational structure is needed so that:

Each individual in the organisation is assigned a role,


responsibility and necessary authority. Each person who
is assigned to an activity must know his position, his role
and his relationship with others.

The activities of ail individuals are coordinated and


integrated into a common pattern in order to achieve the
organisational objectives.

The optimum use of human skill and efforts is achieved. A


good organisation requires the right person for the right

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job and this avoids misapplications of human resources
thus resulting in optimal utilisation of employee efforts.
This would ensure efficiency in the functioning of the
enterprise.^

4.2 ORGANISATION STRUCTURE OF INDIAN BANKING

Chart No. 4.1

Structure of Indian Banking

i
Commercial Banks Co-operative Credit Institutions

1
Scheduled Commercial Non-Scheduled Urban Co-operatives Rural Co-operative
Banks Commercial Banks Banks Credit Institutions
Local Area Banks

Scheduled Non-Scheduled Short Long


Public Sector Banks Private Sector Banks Urban Urban Term Term
Co-operative Co-operative
Banks Banks

Multi State
State Bank of India Nationalized Indian Private Foreign Operating in
and its Associates Bdnks Banks Banks Single State

Multi State Operating in


Single State

State Co-operative District Central Primary Agricultural


Banks Co-operative Banks Credit Societies

State Co-operative Primary Co-operative


Agriculture and Agnculture and
Rural Development Rural Development
Banks Banks

Source: RBI monthly bulletin October, 2007

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The structure of Indian banking is organised under two
ternns first is commercial banl<s and second is co-operative
credit institutions. Commercial banks are also divided into two
heads one is scheduled commercial banks and second is non-
scheduled commercial banks. Scheduled commercial banks
have also two branches (i) Public sector banks (ii) Private
sector banks.

Public sector banks again divided into two heads, state


bank of India (8) Nationalized banks (20). On the same ground
private sector banks have two branches. Indian Private banks
(27) and foreign banks (29). Now, Co-operative credit
institutions have several stages. First stage is urban co-
operative banks and Rural co-operative credit institutions. Then
urban co-operative banks have schedule UCBs and Non-
scheduled UCBs. Scheduled UCBs have two parts (i) Multi-state
(ii) Operating in single state. Non- scheduled UCBs have also
single branch (1) Multi-state opening in single state. On the
hand rural co-operative credit institutions have short term and
long term institutions.

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4.3 ORGANISATIONAL STRUCTURE OF STATE BANK OF
INDIA

4.3.1 The Central Office

Chart No. 4.2

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85
The apex body of the bank, the central office is headed by
a chairnnan who is assisted by a managing directors. The
Chairman and the Managing Directors are appointed by the
govt, of India. Besides there are positions of Deputy Managing
directors, one each for commercial banking, HR and OD,
international banking associate banks and planning, industrial
rehabilitation, personal and services. Banking and computer
system and technology corporate operations, personnel,
development banking and treasury and investment management.
The activities of the deputy managing director (DMD) are co-
oridinated by the managing director (M.D.) A central
Management committee comprising of chairman, MD and DMD's
exists for the purpose of taking important policy decisions. The
central office is mainly concerned with corporate policy and
planning, development of critical resources, large advances,
investments and control of foreign offices. The organizational
structure of central office is shown in Chart No. 4.2

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4.3.2 Local Head Office

Chart No. 4.3

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The central office has circles working directly below it.
The apex body of a circle is the local head office (LHO). LHO is
headed by chief general manager (CGM). The CGM is the chief
executive of a circle stationed at local head office and he is
envisaged as an extended arm of the corporate management on
location. There are two general manager (GM) one for
operations and the other for planning in each circle. The CGM is
also the member secretary of the local Board and in addition,
discharge the responsibility of coordinating the activities of
operations and planning wing for achieving optimum results at a
circle level. GM (operations) primarily attends to all operational
matters emanating from regional offices and assume total
operation responsibility for the circle. GM (planning) is the chief
executive in the circle and is charged with the responsibility of
providing inputs to the central office for the evolution of the
banks policies as also to make on going assessment of its
policies and procedures keeping in view of requirements of the
operations wing. The detailed organisation structure of LHO is
shown as Chart No. 4.3.

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4.3.3 Zonal Office

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At the zonal level, the office Is headed by deputy general
manager (DGM) and a team of regional managers called
assistant general manager (Region) and is responsible for
operation control over branches in their region. They provide
necessary support to the branches by prompt attendance to the
financial needs of customers which fall outside the purview of
the branch manager. They also convey the bank expectations
and priorities in the area of business development and provide
necessary support to the branch staff in implementation of
policies and co-ordinate the functioning of branches. The
organisation structure of zonal offices is shown in chart No. 4.4.

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4.3.4 Branch office

Chart No. 4.5

Organisation structure of Branch

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91
The bank being a service sector organisation, its internal
setup sliould reflect and respond to the needs of its customers.
In 1971, State bank made a shift from the traditional tasks of
accepting deposits and granting loans and re-organised the
organisaiton structure according to market segments by
identifying various customer groups. At the branch level as
shown in chart 4.5 the banks domestic operations are grouped
into five categories to achieve a focused business thrust at the
branch level. There market segments are-

a) Commercial and institutional banking

b) Small industries and small business banking

c) Agriculture banking

d) Personal and services banking

e) Government banking

Each segment provides as complete a banking service to


their customer as possible understands their special needs and
come out with special scheme to satisfy there needs. The
regional managers or AGM (regions) officer are kept closer to
their operational area (contiguous Districts) comprising 35-40
branches.

Since its insception State Bank has been striving to blend


its business goals with social obligations by actively
participating in the country's development efforts to improve the
living conditions of the people. The bank has made significant
contribution to the geographical expansion of banking facilities
in embanked under banked region of the country. The bank is a
pioneer in the field of financing agriculture and small scale
industries with innovative and imaginative approach. The bank
is serving as change agent in the service of the community. It
has willing by accepted the challenge of developing the most
economically backward districts in the country under the lead

92
bank scheme. The banks mission has been spelt out as "A
premier commercial bank committed to serve the national
development" and to achieve the goal of "profit with growth" and
all these have become possible by creating a well designed
organisational structure for the branches regional offices, LHOs
and central office as described earlier.

4.4 MANAGEMENT OF STATE BANK OF INDIA

The management of the bank vest in a central board of


directors which consists of appointees of government of India,
nominees from the government of India and reserve bank and
elected representatives of private share holder. The constitution
of central board of directors is shown in table 4.1 as follow.

Table No. 4.1


Constitution of central board of directors

Sr. Appointed by Number


No.

1. Chairman and Deputy Central government in 1


Chairman consultation with RBI

2. Managing Director Central Board of director 2


with approval of central
government

3. Ex-officio Directors Under section 19 (bb) of 7


SBI act 1955

4. Elected Director Under section 19 (c) of 2


SBI Act, 1955

5. Appointed Directors Central government 2


under 19 (a) and (cb) of
SBI Act 1955

6. Nominded Director Central government 2


under section 19 (d) and
19 (c) of SBI Act 1955

7. Nominated Director Reserve Bank of India 1


sec. 19 (f) of SBI Act
1955

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The Chairman, Deputy Chairman and managing directors
hold office for such term not exceeding 5 year as the central
govt, may fix at the time of appointed them. They are eligible for
reappointment. The ex-officio director and those nominated by
the central government hold office for 4 years and are eligible
for re-election and re-nomination. Other nominated director hold
office during the presence of nominated authority.

4.4.1 Hierarchy of management

The term level involves person's arranged in series. Thus


levels of management suggest the arranged managerial position
in an organisation. In State bank of India there are four
management level or grades except board of directors.
Directors are nominees of government, Reserve bank of India,
Shareholders and workers or employees. These management
levels are constituted from seven scales of managers. Scale of
managers and their name is hierarchy of management is given
below.

Table No. 4.2

Hierarchy of management

Scale Name in management as per scale

Scale 1 Officers or Deputy manager

Scale II Manager or branch manager

Scale III Senior manager or branch manager

Scale IV Chief manager or regional manager or branch


manager

Scale V Assistant general manager or branch manager

Scale VI Deputy general manager or zonal manager

Scale VII General manager or zonal manager

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Table No. 4.3

Payscale of staff of State Bank of India

Officers

Scales of pay (as on 01/11/2002)

Scale I = Rs. 1 0 0 0 0 - 4 7 0 - 1 2 8 2 0 - 5 0 0 - 1 4 3 2 0 - 5 6 0 - 1 8 2 4 0

Scale II = Rs. 1 3 8 2 0 - 5 0 0 - 1 4 3 2 0 - 5 6 0 - 1 9 9 2 0

Scale III = Rs. 1 8 2 4 0 - 5 6 0 - 2 1 0 4 0 - 6 2 0 - 2 2 2 8 0

Scale IV = Rs. 2 0 4 8 0 - 5 6 0 - 2 1 0 4 0 - 6 2 0 - 2 4 1 4 0

Scale V = 24140-620-26620

Sc^le VI = 26620-680-29340

Scale VII 29340-680-30700-900-31600-1000-32600


/

Clerical Staff

4410-215-5055-335-6060-470-7940-500

9440-560-11680-970-12650-560-13210

Subordinate Staff

4060-105-4270-115-4500-135-4770-165

5265-195-6045-235-6750-270-7560

Source: http://en.wikpedia.org/wiki/banking in India

95
4.2.2 Organisational Control Centres

Table No. 4.4

Organisational control centres

Sr. Control Responsibilities Headed by


No. centre

1. Top Corporate and Chairman and


Management strategic control managing directors

2. Circle Management control Chief general


management manager and
general manager

3. Zonal Operational control Deputy general


management manager and
Assett. General
manager

4.4.2 Organisational control centres

From the table 4.4 it is clear that top management is


headed by chairman and managing director. They are
responsible for corporate and strategic control. Second level of
management is circle management is circle management
headed by chief general manager and general manager with the
responsibilities of management control. After that zonal
management is headed by deputy general manager and
assistant general manager with the responsibilities of
operational control.

4.5 RECRUITMENT OF STAFF IN STATE BANK OF INDIA


In the matter of recruitment of clerical and subordinate
staff, subsidiaries follow a more or less uniform policy based on

96
the guide-lines issued by the state bank of India on matters like
notification of vacancies through employment exchanges
minimum qualifications relaxations to certain categories of
candidates etc. subsidiaries are encouraged to adopt modern
techniques in selecting proper candidates for these jobs. As
regards recruitment of officers taken directly a selection board
has been constituted by the State bank of India which makes
selection of candidates on an all India basis both for the State
bank of India and subsidiaries. Besides saving costs for the
subsidiaries, it is stated that the board ensures that officers of
right type with good academic qualification are taken in the
service of the subsidiaries.

4.6 TRAINING OF STAFF IN STATE BANK OF INDIA

The state bank of India's experience in training span more


than four decades and is based on an in-depth understanding of
the business and banking environment, domestic as well as
international. The State bank of India also provides training to
officers of the subsidiaries in their various specialized
departments at their central office and local head offices.
Training in the State bank of India is a proactive, planned and
continuous process as an integral part of organisation
development. It seeks to impart knowledge improve skills and
re-orient attitudes for individual growth and organizational
effectiveness. Some of the officers of the subsidiaries are also
taken on deputation by the state bank of India. So that these
officers may in due course be equipped to take up responsible
assignments in the respective subsidiaries. Periodical
conferences of the Central office of State bank for discussion of
business strategies, personnel, policies, new techniques in
development of business etc.'' In view of the rapid expansion
programme of the subsidiaries, due attention is given to the
aspect of training of personnel in the subsidiaries. All the

97
subsidiaries have been encouraged to open residential and non
residential training centres in the lines of the State bank.

4.6.1 Training System Goals

Training updating, maintenance, and renewal

Proactive, progressive, preparative and educative

Reorienting attitudes for better management marketing

A change agent

Feed back to corporate office to assist in policy


formulation and product development

To act as a think tank

An internal consultant

Organizational development interventions

To conduct customised on site programmes at our


branches

Interventions at branch level for organisational


development

Research and development

Programmes conducted

Credit management

Credit appraisal and management

Project appraisal and project finance

Risk management

NPA management and industrial rehabilitation.

International banking

Foreign exchange and Euromarkets

Trade finance- trade settlements, financing techniques

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Derivatives

Management development programme

Branch management programme

Executive development programmes

Leadership and motivation

Professional effectiveness

Stress management

Role efficacy

Personnel management and industrial relations

4.7 CONCLUSION

An ideal organisation supposed to be a place where


highly motivated people can work together to achieve both their
individual goals as also the goals of the organisation. It is well
known fact that optimum results can be achieved unless the
organisation structure is consistant with objectives. A good
organisation structure also facilities the progress of decision
making. From the above discussion it is very clear that the
organisation structure which has been shown in different tables
has adopted from recommendation of consultancy group (USA)

Highest body in the zone is general manager and under


him there is long layer of officers, those who are responsible
for their decisions and facts directly to general manager. So it
is not possible for the officer to handle this type of big
organisation. Although, proper delegation of power and
authority has been implemented in the bank, but it is suggested
that more power should be given to different level officers,
more over they should be held responsible for their authority.
Further, any decision taken by the government has to effect the
functioning of banking industries. It is suggested that any

99
decision taken by the government related to the bank should be
adopted after consulting the banking experts. Although highly
competitive have been appointed as managers in the bank but
it could be better some consultancy services may be taken at
different level.

Although bank has with its routes of excellence in human


resources, values and tradition excelled and realised a
loudable performance of business and has subsequently
contributed to the realisation of corporate and national goals
during past years. It has improved its deposits, advances, and
profit subsequently.

Customer satisfaction has always remained primary


concern. Suggestions and complaints boxes are available at all
the branches and offices. Action is immediately taken to the
complaint lodged by customer.

100
REFERENCES

John R. Montanari, Cyril P. Morgan, and Jeffrey S.


Bracker. "STRATEGIC MANAGEMENT" (Hinsdale, 1 1 1 ,
Dryden Press, 1990) PP. 1-2.

Bryman, A.D. Beardworth, E.T. Keil, and J. Ford,


"ORGANIZATIONAL SIZE AND SPECIALISATION,"
organization studies, September 1983, pp. 271-278.

Jain, N.K., "ORGANISATIONAL BEHAVIOUR", Atlantic


publishers and distributions. 2005 P. 383-384.

Sinha, S.L.N. "FUTURE OF SBI'S SUBSIDIARIES"


Madras (1973) P. 189 to 194.

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