Chapter 1

Research methodology
1.1 Scope of the study:
The study would try to throw some insights into the existing services provided by the bank and
the gap between the customer expectations, perceptions and the actual state of performance. The
results of the study would be able to recognize the lacunae in the system and thus provide key
areas where improvement is required for better performance and success ratio.

1.2 Research Objectives:

(1) To find out the level of expectation and the level of perception of the customers from the
services offered by the bank.

(3) To know which service quality dimension the bank is performing well and in which
dimension it needs improvement.

(4) To understand the preferences of the customers and help the bank to incorporate such
changes.

1.3 Sampling Design:

 Targeted banks: State bank of Hyderabad

 Sampling Unit: Any customer of the bank in Kesamudram.

 Sampling Area: Kesamudram

 Sampling Method: Non- Probability Convenience Sampling

 Sample Size: 100 Respondents

1.4 Data Sources:

 Primary Data:

It is collected through structured questionnaire by conducting survey.

 Secondary Data:

Secondary data was collected from Internet, journals, books, magazines, etc.

1.5 Research Design:

Our research is Descriptive in nature as the banking industry is well-developed in India

and lot of research has already been done in this area.

1.6 Research tool:

• SERVQUAL Analysis.

SERVQUAL is an instrument for measuring how customers perceive the quality of a service. In
the mid-1980s Berry and his colleagues Parasuraman and Zeithaml began to investigate what
determines service quality and how it is evaluated by customers. As a result of their study they
developed the SERVQUAL instrument for measuring service quality, which initially included 10
service quality dimensions, which were later reduced to the following five: tangibles, reliability,
responsiveness, assurance and empathy.

The instrument is based on the idea of the disconfirmation model, in other words on the
comparison of customers’ expectations with their experiences from the service. Usually, the five
dimensions of the instrument are described through the use of 22 attributes an “respondents are
asked to state (on a seven-point scale from “Strongly disagree” to “Strongly agree”) what they
expected from the service and how they perceived the service.”

This instrument has been widely used by researchers, but still, there are some controversies in its
applicability across different service industries. In some studies the five dimensions of the
instrument (determinants) have been found to be unstable across different types of services.
Therefore, the SERVQUAL tool should be applied very carefully and the set of determinants and
attributes used should be adapted to the specific situation.

1.8 Limitations of the Study:

 Respondents may give biased answers for the required data. Some of the
respondents did not like to respond.

 In our study we have included only 100 customers of the bank because of time
constraint.
 CHAPTER 3

INDIAN BANKING INDUSTRY

Banks are the most significant players in the Indian financial market. They are the biggest
purveyors of credit, and they also attract most of the savings from the population. Dominated by
public sector, the banking industry has so far acted as an efficient partner in the growth and the
development of the country. Driven by the socialist ideologies and the welfare state concept,
public sector banks have long been the supporters of agriculture and other priority sectors. They
act as crucial channels of the government in its efforts to ensure equitable economic
development.

The Indian banking can be broadly categorized into nationalized (government owned), private
banks and specialized banking institutions. The Reserve Bank of India acts a centralized body
monitoring any discrepancies and shortcoming in the system. Since the nationalization of banks
in 1969, the public sector banks or the nationalized banks have acquired a place of prominence.
And has since then seen tremendous progress. The need to become highly customer focused has
forced the slow-moving public sector banks to adopt a fast track approach. The unleashing of
products and services through the net has galvanized players at all levels of the banking and
financial institutions market grid to look anew at their existing portfolio offering. Conservative
banking practices allowed Indian banks to be insulated partially from the Asian currency crisis.
Indian banks are now quoting al higher valuation when compared to banks in other Asian
countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge
Non Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed in
approach and armed with efficient branch networks focus primarily on the ‘high revenue’ niche
retail segments.

The Indian banking has finally worked up to the competitive dynamics of the ‘new’ Indian
market and is addressing the relevant issues to take on the multifarious challenges of
globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and proactive
players capable of meeting the multifarious requirements of the large customer’s base. Private
Banks have been fast on the uptake and are reorienting their strategies using the internet as a
medium The Internet has emerged as the new and challenging frontier of marketing with the
conventional physical world tenets being just as applicable like in any other marketing medium.

The Indian banking has come from a long way from being a sleepy business institution to a
highly proactive and dynamic entity. This transformation has been largely brought about by the
large dose of liberalization and economic reforms that allowed banks to explore new business
opportunities rather than generating revenues from conventional streams (i.e. borrowing and
lending). The banking in India is highly fragmented with 30 banking units contributing to
almost 50% of deposits and 60% of advances. Indian nationalized banks (banks owned by the
government) continue to be the major lenders in the economy due to their sheer size and
penetrative networks which assures them high deposit mobilization. The Indian banking can be
broadly categorized into nationalized, private banks and specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring any discrepancies and
shortcoming in the system. It is the foremost monitoring body in the Indian financial sector.
The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking
arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223
banks are in the public sector and 51 are in the private sector. The private sector bank grid also
includes 24 foreign banks that have started their operations here.

The liberalize policy of Government of India permitted entry to private sector in the banking,
the industry has witnessed the entry of nine new generation private banks. The major
differentiating parameter that distinguishes these banks from all the other banks in the
Indian banking is the level of service that is offered to the customer. Their focus has always
centered on the customer – understanding his needs, preempting him and consequently
delighting him with various configurations of benefits and a wide portfolio of products and
services. These banks have generally been established by promoters of repute or by ‘high
value’ domestic financial institutions.

The popularity of these banks can be gauged by the fact that in a short span of time, these banks
have gained considerable customer confidence and consequently have shown impressive growth
rates. Today, the private banks corner almost four per cent share of the total share of deposits.
Most of the banks in this category are concentrated in the high-growth urban areas in metros
(that account for approximately 70% of the total banking business). With efficiency being the
major focus, these banks have leveraged on their strengths and competencies viz. Management,
operational efficiency and flexibility, superior product positioning and higher employee
productivity skills.
The private banks with their focused business and service portfolio have a reputation of being
niche players in the industry. The strategy that has allowed these banks to concentrate on few
reliable high net worth companies and individuals rather than cater to the mass market. These
well-chalked out integrates strategy plans have allowed most of these banks to deliver
superlative levels of personalized services. With the Reserve Bank of India allowing these
banks to operate 70% of their businesses in urban areas, this statutory requirement has translated
into lower deposit mobilization costs and higher margins relative to public sector banks.
 PEST ANALYSIS

POLITICAL/ LEGAL ENVIROMENT

Government and RBI policies affect the banking sector. Sometimes looking into the political
advantage of a particular party, the Government declares some measures to their benefits like
waiver of short-term agricultural loans, to attract the farmer’s votes. By doing so the profits of
the bank get affected. Various banks in the cooperative sector are open and run by the politicians.
They exploit these banks for their benefits. Sometimes the government appoints various
chairmen of the banks. Various policies are framed by the RBI looking at the present situation of
the country for better control over the banks.

ECONOMICAL ENVIROMENT

Banking is as old as authentic history and the modern commercial banking are traceable to
ancient times. In India, banking has existed in one form or the other from time to time. The
present era in banking may be taken to have commenced with establishment of bank of Bengal in
1809 under the government charter and with government participation in share capital.
Allahabad bank was started in the year 1865 and Punjab national bank in 1895, and thus, others
followed.

Every year RBI declares its 6 monthly policy and accordingly the various measures and rates are
implemented which has an impact on the banking sector. Also the Union budget affects the
banking sector to boost the economy by giving certain concessions or facilities. If in the Budget
savings are encouraged, then more deposits will be attracted towards the banks and in turn they
can lend more money to the agricultural sector and industrial sector, therefore, booming the
economy. If the FDI limits are relaxed, then more FDI are brought in India through banking
channels.
SOCIAL ENVIROMENT

Before nationalization of the banks, their control was in the hands of the private parties and only
big business houses and the effluent sections of the society were getting benefits of banking in
India. In 1969 government nationalized 14 banks. To adopt the social development in the
banking sector it was necessary for speedy economic progress, consistent with social justice, in
democratic political system, which is free from domination of law, and in which opportunities
are open to all. Accordingly, keeping in mind both the national and social objectives, bankers
were given direction to help economically weaker section of the society and also provide need-
based finance to all the sectors of the economy with flexible and liberal attitude. Now the banks
provide various types of loans to farmers, working women, professionals, and traders. They also
provide education loan to the students and housing loans, consumer loans, etc.

Banks having big clients or big companies have to provide services like personalized banking to
their clients because these customers do not believe in running about and waiting in queues for
getting their work done. The bankers also have to provide these customers with special
provisions and at times with benefits like food and parties. But the banks do not mind incurring
these costs because of the kind of business these clients bring for the bank.

Banks have changed the culture of human life in India and have made life much easier for the
people.

TECHNOLOGICAL ENVIROMENT

Technology plays a very important role in bank’s internal control mechanisms as well as services
offered by them. It has in fact given new dimensions to the banks as well as services that they
cater to and the banks are enthusiastically adopting new technological innovations for devising
new products and service.

The latest developments in terms of technology in computer and telecommunication have

encouraged the bankers to change the concept of branch banking to anywhere banking. The use
of ATM and Internet banking has allowed ‘anytime, anywhere banking’ facilities. Automatic
voice recorders now answer simple queries, currency accounting machines makes the job easier
and self-service counters are now encouraged. Credit card facility has encouraged an era of
cashless society. Today MasterCard and Visa card are the two most popular cards used world
over. The banks have now started issuing smartcards or debit cards to be used for making
payments. These are also called as electronic purse. Some of the banks have also started home
banking through telecommunication facilities and computer technology by using terminals
installed at customers home and they can make the balance inquiry, get the statement of
accounts, give instructions for fund transfers, etc. Through ECS we can receive the dividends
and interest directly to our account avoiding the delay or chance of loosing the post.

Today banks are also using SMS and Internet as major tool of promotions and giving great utility
to its customers. For example SMS functions through simple text messages sent from your
mobile. The messages are then recognized by the bank to provide you with the required
information. All these technological changes have forced the bankers to adopt customer-based
approach instead of product-based approach.

NATIONALIZATION OF BANKS IN INDIA

The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then prime
minister. It nationalized 14 banks then. These banks were mostly owned by businessmen and
even managed by them.

• Central Bank of India • Indian Overseas Bank

• Bank of Maharashtra • Bank of Baroda
• Dena Bank • Union Bank
• Punjab National Bank • Allahabad Bank
• Syndicate Bank • United Bank of India
• Canara Bank • UCO Bank
• Indian Bank • Bank of India
Before the steps of nationalization of Indian banks, only State Bank of India (SBI) was
nationalized. It took place in July 1955 under the SBI Act of 1955. Nationalization of Seven State
Banks of India (formed subsidiary) took place on 19th July, 1960.

The State Bank of India is India's largest commercial bank and is ranked one of the top five banks
worldwide. It serves 90 million customers through a network of 9,000 branches and it offers --
either directly or through subsidiaries -- a wide range of banking services.

The second phase of nationalisation of Indian banks took place in the year 1980. Seven more
banks were nationalised with deposits over 200 crores. Till this year, approximately 80% of the
banking segments in India were under government ownership.

After the nationalisation of banks in India, the branches of the public sector banks rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.

BANKING STRUCTURE

The Indian banking industry, which has Reserve Bank of India as its regulatory authority, is a
mix of the public sector, private sector, and foreign banks. The private sector banks are again split
into old banks and new banks.

SCHEDULED BANKS

Scheduled commercial banks are those that come under the purview of the Second Schedule of
Reserve Bank of India (RBI) Act, 1934. The banks that are included under this schedule are those
that satisfy the criteria laid down vide section 42 (60 of the Act). Some co-operative banks come
under the category of scheduled commercial banks though not all co-operative banks.

PUBLIC SECTOR BANKS

Public sector banks are those in which the Government of India or the RBI is a majority
shareholder. These banks include the State Bank of India (SBI) and its subsidiaries, other
nationalized banks, and Regional Rural Banks (RRBs). Over 70% of the aggregate branches in
India are those of the public sector banks. Some of the leading banks in this segment include
Allahabad Bank, Canara Bank, Bank of Maharashtra, Central Bank of India, Indian Overseas
Bank, State Bank of India, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of
Travancore, Bank of Baroda, Bank of India, Oriental Bank of Commerce, UCO Bank, Union
Bank of India, Dena Bank and Corporation Bank.

PRIVATE SECTOR BANKS

Private Banks are essentially comprised of two types: the old and the new. The old private sector
banks comprise those, which were operating before Banking Nationalization Act was passed in
1969. On account of their small size, and regional operations, these banks were not nationalized.
These banks face intense rivalry from the new private banks and the foreign banks. The banks
that are included in this segment include: Bank of Madura Ltd. (now a part of ICICI Bank),
Bharat Overseas Bank Ltd., Bank of Rajasthan, Karnataka Bank Ltd., Lord Krishna Bank Ltd.,
The Catholic Syrian Bank Ltd., The Dhanalakshmi Bank Ltd., The Federal Bank Ltd., The
13
Jammu & Kashmir Bank Ltd., The Karur Vysya Bank Ltd., The Lakshmi Vilas Bank Ltd., The
Nedungadi Bank Ltd. and Vysya Bank. The new private sector banks were established when the
Banking Regulation Act was amended in 1993. Financial institutions promoted several of these
banks. After the initial licenses, the RBI has granted no more licenses. These banks are gearing
up to face the foreign banks by focusing on service and technology. Currently, these banks are on
an expansion spree, spreading into semi-urban areas and satellite towns. The leading banks that
are included in this segment include Bank of Punjab Ltd., Centurion Bank Ltd., Global Trust
Bank Ltd., HDFC Bank Ltd., ICICI Banking Corporation Ltd., IDBI Bank Ltd., IndusInd Bank
Ltd. and UTI Bank Ltd.

FOREIGN BANKS

The operations of foreign banks, though similar to that of other commercial Indian banks, are
mainly confined to metropolitan areas. Foray of foreign banks depends on reciprocity, economic
and political bilateral relations. An inter-departmental committee has been set up to endorse
applications for entry and expansion. Foreign banks, in the wake of the liberalization era, are
looking to expand and diversify. Some of the leading foreign banks that operate in India are
Citibank, Standard Chartered Grindlays Bank, Hong Kong Shanghai Banking Corporation, Bank
of America, Deutsche Bank, Development Bank of Singapore and Banque National De Paris.

14
15
 TRANSFORMATION INITIATIVES NEEDED FOR BANKS

Strategy

 Sales & Marketing strategy for both retail & wholesale banking
 Expanding geographies

Brand

 Understanding the values of the brand

 Repositioning the brand to communicate the values

Organization restructuring

 Re organization of the bank in line with the strategic thrust

16
Re engineering of the key business processes

 Redesign of Sales processes to increase conversion ratio

 Six Sigma process improvements for branch channel, Call Centre & back office
 processes
 Centralization of branch operations and deferred processes to free up resources

Cost efficiency

 Reduction in Total cost of acquisition

 Reduction in transaction costs
 Reduction in fixed and overheads cost

Right sizing and matching of skills

 Manpower modelling for branch & back office at various volume scenarios
 Productivity improvement for sales & service functions
 Competency Assessments & profiling

Creating a high performing organization

 Define new roles & responsibilities, KRA

 Assessing competencies of people across levels and match the position with the skill-set
 Designing and implementing a new PMS for restructured organization

Change management & creating a new mind set

 Developing critical mass of champions and drive ‘Change’ across the organisation to
move from conventional banking to new age banking.

17
 SBH profile

BANK AND MANAGEMENT

HISTORY & BACKGROUND OF THE BANK

State Bank of Hyderabad was constituted as ‘Hyderabad State Bank’ on August 8th 1941 under
the Hyderabad State Bank Act, 1941. The Bank started as the central bank to the erstwhile
princely State of Hyderabad for managing its currency - Osmania Sikka - and public debt, besides
functioning as a commercial bank. The first branch of the Bank was opened at Gunfoundry,
Hyderabad on 5th April 1942.

In 1953 the Bank took over the assets and liabilities of the Hyderabad Mercantile Bank Ltd., and
in the same year, the Bank started conducting Government and Treasury business as an agent of
Reserve Bank of India. In 1956, the Bank was taken over by Reserve Bank of India as its first

18
subsidiary and its name was changed from Hyderabad State Bank to ‘State Bank of Hyderabad’
The Bank became a subsidiary of the State Bank of India on 1st October, 1959 and is now the
largest Associate Bank of State Bank of India.

The Bank’s core geographical area of operation continues to be the erstwhile State of the Nizam
of Hyderabad comprising of Telangana region in Andhra Pradesh, Hyderabad-Karnataka region
of Karnataka and Marathwada region in Maharashtra. With 70.82% of its branches located in
these areas, the Bank has been playing a catalytic role in the economic development of these
regions through financing of commerce, industry and agriculture.

The Bank has, over the years, also broad-based its operations in other parts of the country and
now has a network of 1344 outlets (929 branches and 80 Extension Counters, 5 satellite offices
and 330 ATMs) spread over 12 States and 2 Union Territories. 289 branches conduct government
business (State/Central) and 215 branches maintain currency chests.

The Bank has established 70 specialized branches that focus on identified specific segments of
business like Personal & Services Banking, Agricultural Development Banking, and Small Scale
Industries. Treasury Branches for Government business, etc.

All branches of the Bank are computerized and have extended working hours.

All ATMs of the Bank are linked to the network of more than 5000 ATMs of the State Bank
Group enabling customers to draw cash anywhere in the country at any time.

The Single Window Services facility at branches provides convenience to customers to conduct all
their banking transactions at a single point in the branch.

Organizational Set-up:

The organizational set-up is represented by the Managing Director at the top assisted by the Chief
General Manager and 6 General Managers looking after the functions of operations, Commercial
and International Banking, Planning & Development, Treasury, Inspection & vigilance; and
Information & Technology. The Bank has 6 decentralized units i.e., Zonal Offices at Hyderabad,
Secunderabad, Warangal, Vizag, Gulbarga and Aurangabad – and two independent Regional
Offices at New Delhi and

19
 Mumbai headed by Deputy General Managers. The Bank also has a Commercial
Module comprising of branches dealing with high-value corporate business.

Business Profile

The total deposits of the Bank as at the end of March, 2005 was Rs.28929.52 crores and the total
advances stood at Rs15599.74 crores. The Bank’s advances to priority sector stood at Rs. 6388.72
crores and constituted 40.65 % of its net bank credit. Advances to agriculture stood at Rs. 2113.42
crores and export credit stood at Rs. 1119.10 crores.

The gross NPA ratio has come down sharply from 5.56% as on 31.03.2004 to 3.46% as on
31.03.2005. The Bank’s provision on NPAs is more than the amount prescribed under IRAC
norms. The net NPA ratio of the Bank stood at 0.61% as on 31.03.2005. The Bank has recorded
Net profits of Rs. 250.90 crores for the year ended 31st March 2005.

New Products launched by the Bank

The following new products were launched by the bank to cater to the needs of the present day
demands in the market:

• Personal Segment
o SBH Varun Mitra
o SBH Vanita Gold
o SBH Paryatan Scheme
o Rakshak Suvidha Scheme O Kanya
Vivah Suvidha Scheme
o Valmiki Ambedkar Awas Yojana
o Adhyapak Suvidha Scheme
o Credit to credit card holders
o Personnel Rupee loans to NRI’s
o SBH Fast Credit
o SBH Rail Plus
o SBH Sanchar Plus
o SBH Siri Sampada
o SBH Journalist Plus
o Tax Suvidha Scheme

• Small Industries and Business Segment

o SME Credit Plus
o SME Smart Score
o Udyogabandhu Scheme
o Laghu Udyami Credit Card Scheme
o Fin Bowl Scheme
o Doctor Plus
o Software Professional Plus
o Tourism Finance
o Rajiv Yuva Shakti
o Technological Upgradation of Rice Mills

20
 o Shramajeevi Yojana

• Commercial & Institutional Segment

o Rent Plus Scheme
o Mortgage Loan Scheme

• Agriculture Segment

o Medicinal and Aromatic Plants

o Gram Nivas Scheme
o Sahayog Nivas Scheme
o Kisan Credit Card Scheme
o Agro-clinic Schemes
O Star Kisan Credit Card Scheme

Cross-Selling

All branches are authorized to conduct the business of selling SBI Life products and General
Insurance business (non-life). Accredition is obtained from IRDA to impart bancassurance (life)
training. Corporate agency of United India Insurance Company Ltd. Has been obtained for non-
life insurance activities. For sale of mutual fund units, the bank has a tie-up with SBI Mutual
Fund.

Future plans:

A few important corporate goals of the bank for FY 2005-06 are as follows:

• Operating profits of Rs.950 crores.

• Increase of 2 basis points in the market share of the Bank in deposits of SCBs with
growth of Rs. 4800 crores.
• Increase of 8 basis points in the market share of the Bank’s in advances of SCBs with
growth of Rs.4000 crores.
• Increase in non-interest income of branches by at least 17%
• All branches to be networked with core banking solutions.
• Extension of transaction based internet banking facility.

Main Objects of the Bank

The SBI (SB) Act was enacted, providing for formation of seven subsidiaries to SBI including
SET and for the constitution, management and control of the subsidiary banks so formed and for
matters connected there with or incidental thereto. Chapter II Section 4(3) of the SBI (SB) Act
provides that the Bank shall carry on the business of banking and other business in accordance
with the provisions of the ACT and shall have the power to acquire and hold property whether
moveable or immoveable for the purpose of its business and to dispose off the same.

BRANCH NETWORK OF THE BANK

The Bank has 6 Zonal Offices, a Commercial module and 27 Regional Offices. The 929 branches
and 80 extension counters as on March 31, 2005, (including 70 specialized branches (excluding

21
currency chest branches)) are under the control of these modules. The Zonal offices, the
Commercial Module, two of the Regional Offices (Mumbai & New Delhi) and six of the branches
are headed by Deputy General Managers.

Distribution of Branch Network

The population group-wise break up of branches as on March 31, 2005 in India is as follows:

Population Group Number of branches % Share to Total

Rural 286 30.79
Semi-Urban 290 31.22
Urban 197 21.20
Metropolitan /Port Town 156 16.79
Total 929 100

Geographical Distribution of Branches is as under:

State / Union Territory No. of branches % Share to

ANDHRA PRADESH 579 62.33
DELHI 10 1.08
GUJARAT 6 0.65
HARYANA 5 0.54
KARNATAKA 115 12.38
KERALA 6 0.65
MADHYA PRADESH 3 0.32
MAHARASHTRA 164 17.65
ORISSA 5 0.54
PONDICHERRY 1 0.11
PUNJAB 2 0.22
RAJASTHAN 2 0.22
TAMIL NADU 19 2.05
U T (CHANDIGARH) 1 0.11
UTTAR PRADESH 5 0.54
WEST BENGAL 6 0.65
TOTAL 929 100.00

22
BUSINESS OF THE BANK & ITS PRODUCTS AND SERVICES

DEPOSITS

Rs. In crores

As on 31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05

Deposits (Global) 14841.86 17402.75 20598.94 24257.85 28929.51
Annual Growth – Amount 2314.84 2560.89 3196.19 3658.91 4671.66
Annual Growth – Percent 18.48 17.25 18.37 17.76 19.25
Cost of Deposits (Global) 7.86 7.83 7.01 5.97 5.20

Total global deposits of the Bank as on March 31, 2005, touched a level of Rs. 28929.51 crores.
The same was Rs. 24257.85 crores on 31st March 2004 and in 2004-05 the growth was thus
Rs.4671 .66 crores.

The category-wise break-up of total deposits during last 5 years is presented below: Rs. In
crores

As on March March March March March

31, 2001 31, 2002 31, 2003 31, 2004 31, 2005
Current Deposits 2321.30 2484.14 2551.88 3062.42 3490.99
2784.27 3194.22 3939.69 4756.82 5435.22
Savings Bank
Term Deposits 9055.76 10981.03 13418.32 15677.35 19242.13
Bank Deposits 680.53 743.36 689.05 761.26 761.17
Total 14841.86 17402.75 20598.94 24257.85 28929.51

Distribution of Deposits

The population group-wise break-up of total domestic deposits for the last five years is as given in
the table below:

As on March March March March March

31, 2001 31, 2002 31, 2003 31, 2004 31, 2005
Rural 1301.63 1435.73 1590.24 1831.47 2178.39
Semi-Urban 3609.54 4117.49 4665.66 5222.72 6072.30
Urban 2738.32 3252.57 3742.83 4342.15 5103.17
Metropolitan 7192.37 8596.96 10600.21 12861.51 15575.65
Total 14841.86 17402.75 20598.94 24257.85 28929.51

Other Projects

Core Banking Solution (CBS)

Connectivity to State Bank network has been established at 537 branches/offices of the bank to
enable implementation of Core banking Solutions and Internet Banking. Further 305 branches
have been connected by leased lines awaiting connection of ISDN lines.

23
The Core Banking Solution has been implemented at 279 branches. All the branches of the Bank
are scheduled to be migrated to CBS in the calendar year.

Extension counter connectivity

15 extension counters of the fully computerized branches have been connected to the Wide Area
Network.

Realtime Gross Settlement System (RTGS): The Bank has gone live on RTGS in July 2004 for
Inter-Bank Transactions. This will shortly be extended for customer transactions, across the Bank.

Key financial Ratios

Ratios 31.3.2001 31.3.2002 31.3.2003 31.3.2004 31.3.2005

Interest Income as a percentage to 10.09 9.65 8.75 7.77 7.33

Non-Interest Income as a 1.72 1.84 1.95 2.48 1.33

percentage
Operating profit as a percentage to 2.67 3.02 3.21 3.56 2.25

Return on Assets 0.9 1.02 1.15 1.24 0.72

Business per employee (Rs. In 166.44 192.23 227.23 274.1 342.3
Profit
lacs) per employee (Rs.in lacs) 1.13 1.68 2.25 2.87 1.91
Credit/Deposits Ratio (%) 52.82 52.49 50.17 51.93 55.43
Interest Spread / Average 3.65 3.27 3.16 2.95 3.04
Working
Net profit / Average Working 0.90 1.14 1.28 1.34 0.79
Funds
Operating Expenses / Average 3.09 2.46 2.34 2.3 2.27

Return on Average Net Worth (%) 21.77 25.74 26.80 26.99 15.03
Yield on Advances 11.04 10.93 9.96 9.11 8.32
Yield on Investments (%) 11.71 11.06 10.08 8.50 8.00
Cost of Deposit’s (%) 7.82 7.83 7.00 5.97 5.20
Gross Profit per Employee (Rs in 3.38 4.45 5.67 7.64 5.44
Business per Branch (Rs in lakhs) 2517 2927 3400 4035 4829

Tier I Capital

Tier II Capital

24
25