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Directors Report of State Bank of India

Mar 31, 2015

Dear Members,

As part of focus on NPAs, Stressed Assets Management Group (SAMG) continues to work as a dedicated and specialised vertical, headed by a Deputy Managing Director, created specially to efficiently resolve high value NPAs. With five Regional Offices, each headed by a General Manager and two Chief General Managers overseeing the entire effort, SAMG has turned into a centre of excellence in the NPA resolution effort of the Bank. Effective 1st April, 2014, SAMG as a logical extension took over 42 Stressed Assets Resolution branches from National Banking Group, to extend its expertise for the resolution of high value retail NPAs, taking total number to 17 SAM and 42 SAR branches across the country. Currently, SAMG covers 23.4% and 62.60% of the Bank''s Non Performing Assets (NPAs) and Advances under Collection Account (AUCA) respectively. The recovery efforts of SAMG are supplemented by efforts put in by front-line operating staff across all verticals and branches of the Bank across the country. The CSPs are also being trained for acting as Banks recovery agents for extended coverage.

Exhibit 28: NPA Management Performance

(Rs in crores) FY 11-12 FY 12-13

Gross NPAs 39,676 51,189

Gross NPA% 4.44 4.75

Net NPA% 1.82 2.10

Fresh Slippages 24,712 31,993

Cash Recoveries/ 9,618 14,885 Up-gradations

Write Offs 744 5,594

Recoveries in Written 962 1,066 Off Accounts

(Rs in crores) FY 13-14 FY 14-15 Gross NPAs 61605 56,725

Gross NPA% 4.95 4.25%

Net NPA% 2.57 2.12%

Fresh Slippages 41,516 29,444

Cash Recoveries/ 17,924 13,011 Up-gradations

Write Offs 13,176 21,313

Recoveries in 1,543 2,318 Written Off Accounts

However, while making all out efforts for reducing the NPAs, the bank often faces certain impediments in the legal process, which delay recovery. The Bank has approached the concerned authorities at appropriate level for ironing out those impediments. Despite these constraints, all actions initiated for resolution are constantly followed up and strategies are periodically reviewed for expeditious resolution of NPAs and the Bank is fully geared to meet the asset quality challenges of FY2016 when near-term pressure is expected to ease.

RESTRUCTURING OF ASSETS

Corporate Debt Restructuring of assets is being done only in cases that are technically feasible and economically viable and where the promoter''s commitment to the project is ensured. Such cases are restructured only after conducting techno-economic viability (TEV) study. Further, restructuring is done also as per the guidelines put in place by RBI. Restructuring has attained prominence in recent years due to global slowdown, sluggish growth in the domestic market and the down-turn in industry. Moreover, restructuring of viable units enables the Bank to recover funds locked with the borrower, aids continued functioning of the industry and helps in keeping manpower gainfully employed.

CONTROLLING NPAs

The Bank has endeavoured to contain the increase in NPAs, the strategies for resolution are being constantly reviewed and revisited. Suitable measures for prevention of NPAs by timely identification and diagnosis of problems of irregular accounts, tracking and reviewing Special Mention Accounts, account wise monitoring etc have been put in place. The Bank has adopted a two fold strategy for controlling fresh accretion and resolution of existing NPAs.

CONTROLLING FRESH ACCRETION TO NPAS

- Early diagnosis of the problems and analysis of the reasons for irregularity, with appropriate strategies for time bound action to prevent slippage as NPA. - Industry wise exposure limits have been set to minimize risk.

- Loan portfolio is monitored on an ongoing basis.

- Account tracking Centres have been set up to prevent accounts slipping into NPA category.

- A system of Tele-calling/ personal contact/ SMS alert/ sending notices etc is being followed on default of overdue installments / irregularity in accounts.

IMPROVING RESOLUTION OF NPAS

- In cases where soft recovery measures do not fructify, legal action is being initiated.

- Filing suits in Debt Recovery Tribunals and other Courts for recovery of dues.

- Nodal officers monitor DRT Cases and liaise closely with DRT officials. Lawyers'' meets are conducted and the performance of advocates is constantly monitored to expedite DRT process.

- Action under SARFAESI Act is taken promptly to recover the dues by sale of secured assets.

- Identifying Companies and promoters as Wilful Defaulters and arranging for display of their names on the websites of Credit Information Companies such as CIBIL. These names are also reported to RBI.

- Credit cum Recovery camps are being organised.

- Involving Business Correspondents, Business Facilitators and Self Help Groups in recovery of Agricultural NPAs., Lok Adalat / Bank Adalat are arranged.

- Review of NPAs at various levels is done at regular intervals.

- BIFR cases are closely followed up.

- E-auction has been introduced for better price realisation.

- Sale to ARCs is also explored in select cases

- Identifying and engaging with strategic investors for takeover of stressed assets.

- Entering into One-Time Settlements with borrowers.

- Using Resolution Agents to take possession of properties mortgaged to the Bank and arranging for their auction.

- Considering Debt Asset swaps in some cases.

- Engaging investigation agencies to trace out unencumbered assets of promoters and guarantors and obtaining attachment before judgement over these properties.

- Publishing photographs of defaulters in newspapers

where warranted.

- Persuading Large Corporate borrowers under stress

to sell non-core assets, dilute their shareholding and bring in strategic investors thus reducing debt and improving viability.

- The Bank organised a "Mega Auction" in Q4 of FY2015, where over 250 properties were put to auction under SARFAESI Act on the same day. The properties put up for auction are located across the length and breadth of the country.

- SAMG is also setting up a centralised repository of all fixed assets / properties charged to the Bank, wherein, pictures with description and walk through videos of all securities are available. Going forward, we plan to make the portal available in the public domain for preview of securities by ARCs and other interested buyers.

- Properties available for auctions are also showcased in "Property Mall", wherein, space is taken in shopping malls in the prominent locations, to display pictures/videos of properties being put up for auction.

INITIATIVES TAKEN TO CLAMP DOWN ON NPAs

Early Warning Signal (EWS): As part of its proactive management of stressed assets to contain and control NPAs, we are in the process of introducing a system which would generate Early Warning Signals in the form of actionable alerts that would help the Bank to identify assets at the incipient stage of stress and facilitate their early resolution. The objective is to tackle problem loans well before they turn SMAs.

AT@M: The web based Assets Tracking and Monitoring (AT@M) software enables all stake holders to have a single point of view along with granular drill down up to account level. It covers monitoring of SMAs as well as Sub Standard accounts.

The Bank also tied up with GE Capital for proactively making calls to stressed accounts (SMAs) in Retail segment and Real Estate sector, to prevent slippages.

SBI has Assets Tracking Centres at Circle level to track and monitor probable NPA accounts (SMAs) in SME and Agriculture segments, for making calls on the customers and follow up for recovery.

Tele-calling to borrowers/guarantors has been introduced at Stressed Assets Resolution Branches to help in their recovery efforts. In order to simplify and add technology in the work flow of the call centres, a web based portal has been put in place, to efficiently monitor the call centre process.

The Bank has formed various committees to periodically review stressed assets and suggest resolution and turn around strategies.

2. Asset Quality improvement Measures for P-Segment

PBBU Assets quality has improved during FY2015. To strengthen the assets quality, following strategies have been adopted:

- SMS sent to borrowers before and after EMI due date

- Soft recovery entrusted to specialised teams - A campaign for Auto Loan recovery "Aar Ya Par Paisa Ya Car" launched

- Updation of defaulters'' details in Credit Information Companies'' database being followed up - Auctioning of defaulters'' assets hypothecated/ pledged with the Bank

- Portfolio Health Check and Skip Tracing for Auto Loan, Education Loan and -press Credit carried out

3. asset Quality improvement measures for agriculture Loans

- Several initiatives and innovative campaigns rolled out for arresting slippages and quick resolution of NPAs resulted in reducing the Agri NPA level to below 31st March, 2014. The initiatives adopted are: - ''R1U2 Campaign'' (Recover One & Upgrade Two) - launched to target NPA accounts, which pulled standard accounts to NPA under Single CIF Multiple accounts norm. The Campaign resulted in reduction of NPAs to the tune of Rs.214 crores.

- "Project Zero Campaign" launched to drive renewal of NPA KCC/ACC accounts. The campaign is driven by SMS based daily monitoring of renewal / closure. Under the campaign, 2.81 lakhs KCC/ACC accounts renewed / closed upto 31st March, 2015.

- SBI has renewed the National level tie-up with Shriram Automal India Limited to support branches in auction of seized tractors to reduce agri NPAs.

- Gold loan auctions carried out on fixed dates each month to drive NIL NPA position in Agri Gold Loan.

4. asset Quality improvement measures for corporate accounts

The asset quality of CAG remained well under control, with the gross NPAs at 0.44 % of total advances.

Every effort is made to improve the asset quality through regular engagement with promoters of weak and stressed accounts. All high value stressed accounts and D rated borrowers are kept under special watch of General Manager for reduction in exposure. The sale to Asset Reconstruction Companies (ARCs) is examined in all eligible stressed accounts. These efforts have led to decline in retained NPA of Mid Corporates from 17,250 crores as on March 2014 to 14,775 crores as on March, 2015.

2. INTERNATIONAL OPERATIONS International Banking Group (IBG)

International Operations of the Bank is guided by the overarching principle of supporting global Indian corporatesandIndian diasporaspreadacrossgeographies. In addition, the Bank also targets the local populace in line with its vision to become a truly International Bank. To this end, the Bank has a separate Business Unit - International Banking Group (IBG) headed by Managing Director & Group Executive (CB) and supported by Deputy Managing Director & Group Executive (IB).

global presence

The number of foreign offices of the Bank at 191 is spread across 36 countries. Diversity in operating structures is a cornerstone of the Bank''s expansion activity in different markets. During FY2015, the Bank has opened a new Representative Office in Myanmar and Indian Visa Application Receiving Centre at Dhanmondi, Bangladesh.

Exhibit 29: Break-up of Foreign Offices (No.)

FY2014 New Offices FY2015 opened during the year

Branches /Sub-Offices / Other 68 1 69 Offices

Subsidiaries / JV (7) 0 (7)

Offices of Subsidiaries/JV 110 0 110

Representative Offices 8 1(1) 8

Associates / Managed exchange 4 0 4 Cos /Investments

Total 190 2(1) 191

* Luanda Rep Office in Angola was closed and Yangon Rep Office in

Myanmar was opened.

The Group has dedicated verticals in Credit and NPA management, Compliance, Risk, Treasury, Human Resources, Operations, General Banking, and Strategy to support the extensive international operations of the Bank. IBG supports its major stakeholders through its business functions as detailed below:

CORPORATES Merchant Banking

The Bank facilitates raising debt in Foreign Currency by Indian corporates by way of External Commercial Borrowings through syndicated deals in conjunction with other Indian and Foreign Banks, and also through bilateral arrangements.

Highlights

- Premier Mandated Lead Arranger and Book Runner during the FY2015.

- 10 Syndications aggregating US$7.057 billion.

- 15 Bilateral Loans aggregating US$2.563 billion to Indian corporates on a bilateral basis.

treasury management

In addition to supporting the global liquidity, liability management framework and investment portfolio of the Bank, Treasury Management Group also undertakes foreign exchange and hedge transactions for corporates. In April, 2014, the Bank successfully priced a Rule 144A/ Reg S US$1.25 billion multi-tranche Bond issue. Apart from bonds, some of the other sources of liquidity at Foreign Offices were:

a. Long Term bilateral loans from multilateral agencies like Korea Exim Bank, EIB, KfW IPEX Bank

b. Medium Term bilateral loans from Correspondent Banks.

c. Medium term Syndicated Loans

d. Reciprocal Lines.

e. Repo arrangement

f. Lines against Bankers'' Acceptance

Highlights

- Investment Portfolio at US$4487 Million - Interest Income from Investment - US$160 Million - Divestment Income - US$36 Million

- Investment provisions written-back - US$94 Million

Back Office Centralisation Project

During FY2015, the Back Office Centralisation Project was initiated to enable migration of the Back Office (BO) functions across foreign offices to Global Markets Unit Kolkata. Till 31st March, 2015, 10 foreign offices had shifted their BO functions.

INDIVIDUAL CUSTOMERS

Through specialized remittance products the Bank enables a ''window to India'' for NRIs residing in different corners of the world. In some countries with considerable Indian diaspora, the Bank also engages in retail lending activities for both Indian as well as local customers.

Global Link Services (GLS)

Global Link Services (GLS), a specialised outfit, caters to centralised processing of Export Bills collection, Cheque collection and online inward remittance transaction. Tie- ups with 30 exchange companies and seven banks in the Middle-East Countries for routing remittances through the Bank have substantially contributed to the inward remittances business. During FY2015, your Bank launched a new online instant remittance product ''Russia to India Flash'' for remittances from Russia to India.

Highlights

- Export Bills Handled (on behalf of Domestic Branches) - 70,012

- Foreign Currency Cheques Collected - 47,116 - Online Inward Remittance - 89,02,307

FINANCIAL INSTITUTIONS

The Group also facilitates linkages of the Whole Bank with international stakeholders such as Correspondent Banks, Foreign Regulators, International Chambers of Commerce, etc. As such, there is considerable synergy between IBG and other Business Verticals such as Mid Corporate Group, Corporate Banking Group and Global Markets etc.

Highlights

- Correspondent banking relationships with 346 reputed International Banks across 88 countries - 1,617 Relationship Management Application (RMA) arrangements with Society for Worldwide Interbank Financial Telecommunication (SWIFT)

- Master Risk Participation Agreements (MRPAs) entered into with 32 banks with aggregate funded and non-funded exposure of over US$4 billion.

REGULATORS

The Bank is committed to the policy of zero tolerance of non-compliance with regulatory guidelines. Regulatory concerns identified by regulators/auditors are addressed on priority basis. Status of remediation is placed before the Audit Committee of the Board.

The Bank has adopted an Independent Risk Governance Structure covering domestic and international operations. A country Risk Management Policy in tune with RBI guidelines is in place. Country-wise and Bank-wise exposure limits are monitored and reviewed on regular basis. Trends of credit risk, operational risk and market risk in respect of overseas operations are monitored, analysed and reported periodically to top management and central risk management departments of the Bank.

EMPLOYEES

The Bank ensures employee satisfaction through continuous engagements with senior management, improving productivity and retention. Further, the Bank encourages communication and awareness in its multi-cultural and multi-ethnic workplaces abroad.

SOcIAL SEcTOR

The Bank engages in several corporate social responsibility projects in many countries of its presence. The Bank also sponsors local and Indian festivals as also cultural programme to increase its visibility and enhance soft power of India as well its Indian brand.

Nepal SBI Bank Limited, a subsidiary of State Bank of India was the only Bank to restore total banking services at its branches within only 5 days after the disastrous earthquake in Nepal. Mobile Currency Exchange counters were opened at Kathmandu airport to assist travellers evacuated from the disaster zone. In addition to swift response in mobilizing services to normalize the financial system, the Bank also extensively engaged in humanitarian efforts.

SBI &JBiC Sign Export Credit Line Agreement

In September, 2014, SBI and Japan Bank for International Cooperation (JBIC) signed a loan agreement to set up an export credit line. The loan is co-financed with the Bank of Tokyo-Mitsubishi UFJ Ltd (BTMU) which brings the total co-financing amount to JPY 13.5 billion and US$21 million approximately. This credit line will be utilised by Meja Urja Nigam Private Limited (MUNPL) to finance the procurement of steam turbine generator equipments from Japanese Company and its subsidiary in India to construct a super critical pressure coal-fired power plant (660MWx2 units) in Meja, Uttar Pradesh. MUNPL is a joint venture equally invested by NTPC Ltd and UP Rajya Vidyut Utpadan Nigam Limited.

3. TREASURY OPERATIONS

Global Markets Group, which manages the Bank''s treasury, has given a stellar performance this year with a 21% increase in net interest income, 85% jump in profit on sale of investments and a 33 bps improvement in yield on a portfolio of close to ''4.9 Lakhs crores. The Group has maintained the pre-eminent position of the Bank in providing foreign exchange / hedging products to customers, portfolio management services to retirement funds and in maintenance of CRR.

FY2015 has been a favourable year for the Indian debt and equity markets as fall in CPI inflation (adjusted for new series) from 8.24% in March 2014 to 5.17% in March 2015 and formation of a stable government helped improve sentiment, boosting FII inflows. RBI reduced its benchmark repo rate by 50 basis points to 7.5% and cut SLR from 23% to 21.5%.

Bond yields fell by more than 100 basis points during the year, while equity markets rallied by more than 25%. Your Bank has seized this opportunity to book record profits of Rs.3,428 crores through sale of investments, exceeding our FY2014 profit by 85%. Interest income has also gone up by 15%, while interest expenses are down 36% through better fund management, resulting in an almost 21% increase in Net Interest Income of Global Markets. In CRR management, your Bank again outperformed its peers by 195 basis points, resulting in interest-cost saving of around Rs.85 crores.

In the equity markets, profits increased 132% YOY as we expanded the universe of securities, and increased the size of trading portfolio to benefit from the favourable market conditions.

Global Markets provides foreign exchange solutions to the customers for managing their currency flows and hedging risks through options, swaps, forwards and bullion services. Our treasury marketing outfits complement this through frequent interactions with customers to provide them with inputs about market developments and suggesting products to suit their requirements. The Group also manages FCNR(B) corpus of the Bank and provides funds for FCNR(B) loans and Export Finance in foreign currency like PCFC/EBR for customers in India.

Profits from forex and derivatives increased by around 9% to Rs.1,600 crores (unaudited) this year, despite reduced volumes due to declining oil prices.

To streamline our global forex operations, including 191 overseas offices in 36 countries and 675 domestic branches, an integrated Global Back-Office has been set up in Kolkata. In addition, we have significantly improved reconciliation of transactions in our Nostro accounts with foreign branches/correspondents through implementation of Transaction Life-Cycle Management (TLM) reconciliation software.

We have also rolled out an internally designed and developed web based outward remittance product called "FX-Out" which will be accessible at all branches to facilitate transfer of funds upto Rs.10 lakhs to overseas centres.

We continue to explore opportunities in the area of Private Equity (PE) and Venture Capital Fund (VCF) Investments. During FY2015, five new VCF investments amounting to Rs.495 crores were committed to.

The JV set up with Macquarie and IFC in 2008, to manage a US$ 1.2 billion India-focused PE fund, has invested approximately 96% of its total capital commitments. The Oman India Joint Investment Fund (OIJIF), set up in 2010, has completed its investments for Fund 1 worth US$ 100 million. The partners have decided to launch Fund 2 with a corpus of US$ 300 million. Further, the social infrastructure focused VCF, the Neev Fund, with a target fund size of Rs.660 crores was operationalised jointly with DFID (UK) and SBICAP Ventures Limited.

Portfolio Management Services increased its AUM by 13.65% YOY to over Rs.3,15,000 crores in FY2015. It has consistently outperformed private sector peers in generating returns for the Employees Provident Fund Organisation (EPFO) funds, and was ranked by CRISIL as the best fund manager for EPFO for the third year in a row.

To retain its pre-eminent position in the specialized domain, Global Markets continuously invests in skill development of dealers through training sessions conducted by industry experts and short courses in prestigious institutions like IIMs and NIBM.

1. HUMAN RESOURCES

The Bank believes that Human Resources Management is an important facet of organization''s effectiveness. Aligned with the best practices of a caring and responsible employer, and befitting its status of ''first among the equals'' in the banking industry, our Bank has been making constant endeavour to improve the functioning of HR as a strategic business partner by nurturing its loyal and dedicated employees who have made significant and lasting contributions towards achieving the Bank''s goals on an upward scale, on year to year basis.

Towards this end, the Bank has taken important measures to meet the business challenges, which include, recruiting young and qualified candidates in large numbers; improving the working /service conditions of the employees representing a wide diversity of group / interests; re-skilling them through training interventions, workshops, seminars, video-conferencing; assisting in the career development of the employees by providing for a scientific and objective approach to measure their performance; incentivising the top performers ; putting in place an organised structure for skill / capability building in critical positions and by implementing various measures for talent retention. All these have contributed in a big way to generate a highly satisfying working environment wherein the employees feel happy, engaged and enthusiastic about their work and take positive action to further the Bank''s business interests and reputation.

In keeping with the Management tradition of being proactive in employee engagement which is critical for the Bank to sustain growth with profit, the current leadership has taken it to greater heights by taking important initiatives as detailed below during FY2015.

INITIATIVES :

Project ''Saksham''- Career Development System (CDS) and Manpower Planning -- The rapidly changing business environment, competition from the Public / Private Sector Banks and ever increasing expectations from the young and demanding customers have put high onus and responsibility on the Bank for higher productivity and customer service. To meet these challenges, your Bank is recruiting young and qualified candidates in large numbers, changing the products and processes. In order to keep the employees empowered and motivated at all levels, a Career Development System (CDS ), known as ''Saksham'' has been launched with the objective of scientific and objective approach for performance measurement and resource planning at all levels in the Bank. The new Career Development System provides for very high levels of transparency and is designed to provide an opportunity for a systematic, dynamic and progressive career planning to the individual. The revised CDS is intended to be an effective tool for promotion, incentives and rewards.

Scientific resource / manpower planning would ensure that each of our units is adequately staffed to match the workload and business potential, result in improvement in staff productivity and to rationalize and merge roles and redistribution of staff to meet branch expansion requirements.

Talent Management and Career Option - As a part of talent management and to support the talent retention process, necessary course of action was initiated in areas covering, grooming of young officers in basic banking during the initial phase of their career, capability building /re- skilling through training intervention, seminar, workshop, completion of mandatory assignments during the early stages, identification of officers for job specialization, posting in critical positions/specialized areas, viz., Credit, Forex operations, Marketing for a certain period. Movement across verticals in the specialized area is also contemplated.

Campus Recruitment - In order to further strengthen the human resource pipeline and to meet the skill gap requirements of the Bank in specialized areas, 190 young ''B'' school graduates of 2015 batch belonging to top ''B'' schools were recruited as Management Trainees.

EMPLOYEE ENGAGEMENT :

Performance Linked incentive Scheme - In order to keep the employees focused and motivated for a higher level of productivity and profitability, an IT enabled ''One Umbrella'' Performance Linked Incentive Scheme has been implemented by the Bank in modification of the earlier incentive scheme, covering both core and non-core business. The incentive amount payable is linked to the category of the positions vis-a-vis level of performance.

SBi Aspirations - "SBI Aspirations" a social media forum, has been put in place for a two- way interaction whereby employees of the Bank can share their ideas, enhance their knowledge, find the solutions of the critical problems and express their views freely. With a view to facilitating employees endeavour in enhancing brand value and image of the Bank among the public, a code of conduct has been drawn up for the employees to follow while communicating in social media in a more responsible and ethical way within the framework of their Service Rules / Service Conditions.

Sabbatical Leave - Taking a holistic view of employee requirements, provision of sabbatical leave with enlarged facilities has been introduced for women and Single Men (with children and / or Aged parents) employees of the Bank.

SBi Pinkathon - It turned out to be the biggest Bank sponsored all-women run event in six cities across India, with the specific purpose of getting more and more women to adopt a fitter lifestyle for themselves and their families and to spread awareness about breast cancer and other issues that put women''s lives at risk. The employee interest in the events stood a testimonial of their awareness and contribution to the socially relevant issues.

improvement in employee productivity - The large- scale recruitment of Gen-next employees in the Officers as well as in the Assistant grade over the last 4 / 5 years has not only brought about a far- reaching attitudinal change among staff in their customer interface and services across the branches, it has also become a catalyst in enhancing / improving the productivity and efficiency of the employees, thereby resulting in increased growth in business and profitability for the Bank. The business per employee (BPE) has increased from Rs.704 lakhs to Rs.1,234 lakhs during the period from FY2011 to FY2015. The profit per employee (PPE) also increased from Rs.3.85 lakhs in FY2011 to Rs.6.02 lakhs in FY2015, which is indicative of the improved performance trend of the Bank.

Women Employees in the Total Workforce:

At present, the number of women employees in the total workforce of the Bank is 44,790 which constitutes 21% of the total staff strength. The composition of women employees in different cadres during the last 3 years is as under:

Exhibit 35: Sc / St / PWD Representation in employment: Category Total SC ST PWD

Officers 78,540 14,833 5,566 664 (18.88% ) (7.08%) (0.84%)

Assistants 94,455 15,800 8,370 1,794 (16.72%) (8.86%) (1.89%)

Sub-staff 40,243 10,810 2,804 234 (26.86%) (6.96%) (0.58%)

Total 2,13,238 41,443 16,740 2,692 (19.43%) (7.85%) (1.26%)

Bank provides reservation to Scheduled Castes, Scheduled Tribes & Persons with Disabilities (PWDs) as per GOI directives. In order to deal with issues relating to reservation policy and effectively redress the grievances of the SC / ST employees, Liaison Officers have been designated at all Local Head Offices of the Bank as also at the Corporate Centre at Mumbai.

STATUS ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE :

The Bank has a zero tolerance towards sexual harassment at workplaces and has put in place appropriate mechanism for prevention and redressal of complaints of sexual harassment at workplaces so as to ensure that women work with dignity and without fear. Complaints of Sexual Harassment of Women filed & disposed off during FY2015

Total No. of cases filed Total No. cases disposed off

14 10

AWARDS AND ACCOLADES:

- Bank was honoured with the ''Randstad Award'' for encouraging best practices in building the ''Employer Brand''.

- ''Brand of the year'' in banking in India was awarded to the Bank at the World Branding Awards that took place in Paris, France on March 25th, 2015.

2. STRATEGIC TRAINING UNIT (STU)

In a quest for becoming an organization which is a great place to work, your Bank has been quietly revolutionizing its training system. While the Bank continues a planned, proactive process for individual growth and organizational effectiveness, new techniques, trainers and methodologies are being imported from all corners of the globe to establish a virtuous circle of teach/learn/ teach/learn to enhance quality, transform employees into knowledge workers so that they can carry these towards creating customer delight. A strong, robust infrastructure of Learning Centres encompassing the latest developments in technology, benchmarked with the best learning practices worldwide, including e-learnings, is being developed to meet the challenges of tomorrow.

Our training system functions under the overall supervision and guidance of the STU of the bank and the training apparatus at present consists of five Apex Training Institutes (ATIs) and 47 Learning Centres. The sixth ATI, styled ''State Bank Institute of Management'', is being set up at Rajarhat, New Town, Kolkata.

INCLUSION OF VISUALLY IMPAIRED (VI) AND HEARING Impaired (HI) employees

Inclusion is a National goal. Including differently abled citizens is a great part of it. Our Bank has 611 VI and 253 HI Employees and we are constantly innovating ways to train and equip them with skills to ensure that they become better contributors.

We partner with NGOs as part of this process, and welcome ideas and suggestions. Let''s take an example of Mr. Chellam, one of our employees.

Mr. Chellam is working as Grahak Mitra in our Sivakasi Main Branch. After undergoing an extensive training programme at State Bank Learning Centre his proficiency has gone up and he now prints more than 300 passbooks a day and answers customer queries. He also serves customers by linking their UID (Aadhar) number to their Bank accounts and updating their phone in their customer profile. There are many other such colleagues, who have been empowered to serve our customers better.

financial literacy centres (FLcs)

Financial Literacy Centre at Rashtrapati Bhawan, New Delhi has been inaugurated on 11th December 2014 the birthday of our First Citizen. The target group for Financial Literacy is Domestic Help, labourers and school going children between 10-18 years of age, etc. They are explained basic essentials like managing income, savings and investments, main features of Prime Minister''s Jana Dhan Yojana, Jeevan Jyoti Bima Yojana and Suraksha Bima Yojana and basic banking like Savings Bank Accounts, Recurring Deposits, Fixed Deposits as such. What is tried is to empower the ordinary citizen, who feels a little intimidated when he steps into a public office, like a bank, through experience and learning in a congenial atmosphere, at our bank dummy banking branches. This initiative will be rolled out countrywide.

PRINCIPLES THAT DRIVE LEARNING ACTIVITIES:

- During FY2015, training made mandatory for all employees.

- A culture of self-learning in the organisation, which be more cost effective and convenient in the long run, being promoted.

- A convenient e-learning platform to drive efficient e-learning.

- Training programmes aligned with current corporate priorities of the Business Units.

- A Mass Communication Programme for sharing and communicating corporate concerns conducted across the Bank.

- Constant upgrades of our training content and delivery learning to be at par with global best practices being tried.

NEW INITIATIVES TAKEN:

- Mandatory Learning and Weightage in AARF:

The Bank has made a system of mandatory learning, consisting of role based e-Lessons, Study Courses, On-line courses, from reputed international Business schools among others, compulsory for assistants and officers.

- Approving certification courses for self-learning:

With a view to improving knowledge levels in the organisation, new external study courses are being promoted under Staff Reward and Recognition Scheme and staff encouraged to under take thes courses.

- SBI Aspirations: With the spirit of enhancing learning and sharing in the Bank, the Bank has started learning communities for selected roles. The role holders are encouraged to participate and share their experiences within these communities as and when they participate in training programmes. The Bank has introduced ideation blogs in the STU community.

- SMS Alerts: To keep our staff updated on all relevant matters on a real time basis, suitable text messages on current banking issues are being sent to employees on a daily basis.

- Training Needs Assessment: As a first step towards

Knowledge/Skill mapping, an exercise for bridging training gaps and honing skills was conducted across the Bank, covering 2,12,704 employees

- Aarohan: ''Aarohan - Aim.. Aspire.. Achieve..'': For enhancing quality and professionalism in all our endeavours, the "Aarohan" training was implemented covering 2,08,019 employees.

- Quizzing Culture in Bank: To encourage curiosity in our employees and also provide a platform to showcase their knowledge, STU conducted online quiz competitions across the Bank along with Mega Quiz Competition.

- Mentoring of Newly Appointed Officers: The

system of mentoring of newly appointed officials has always been in existence in the bank. In order to facilitate integration of Probationary Officers and Trainee Officers, the Bank introduced a formal system of mentoring by senior officials.

- research Advisory committee: A Research Advisory Committee was formed to improve the quality of Research Work carried out by our Faculty and Research Officers and to make it more useful to the Bank.

- cyber Security Workshop: This workshop was designed for all Banks to participate in and was conducted in association with Truth Labs and Microsoft. The discussion on how cyber criminals can compromise our systems including wi-fi routers and other equipment to defraud victims and underscored the importance of ethical hackers to help protect our technology environment.

HIGHLIGHTS:

- Revamped onboarding and induction training of new recruits, with mentoring programme.

- Supporting architecture for training in specialised skills, including risk, marketing etc., with external training partners and in-house e-lessons and 44 Harvard Manage Mentor e-modules.

- Leveraging of social media for knowledge updation among Staff members.

- Mass communication programme called ''Aarohan'' with a coverage of 2,08,019 employees with further engagement with 536 in-house e-lessons, 345 Mobile Nuggets and 350 e-capsules.

- Mandatory e-lessons for POs/TOs/Officials opting for CAG/MCG/SAMG assignments/Newly Recruited Assistants.

- ''Gyanodaya'' - the e-learning portal is now extended to all Associate Banks.

- Case Studies, Research Projects and e-publications are available on the portal under ''e-library''.

- Exciting business simulation games used for behavioural learning

3. RISK MANAGEMENT AND INTERNAL CONTROLS

(A) RISK MANAGEMENT

The Bank is exposed to various risks that are an inherent part of any banking business. The major risks are credit risk, market risk, liquidity risk and operational risk which includes IT risk. The Bank has policies and procedures in place to measure, assess, monitor and manage these risks systematically across all its portfolios. The Bank is amongst the leaders to undertake implementation of the Advanced Approaches under Credit, Market and Operational risk. The Bank has also undertaken the Enterprise and Group Risk Management Projects which aim to adopt global best practices. The projects are being implemented with support from external consultants.

RBI Guidelines on Basel III Capital Regulations have been implemented and the Bank is adequately capitalized as per the current requirements under Basel III. An independent Risk Governance Structure, in line with international best practices, has been put in place, in the context of separation of duties and ensuring independence of Risk Measurement, Monitoring and Control functions. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.

The various risks across Bank and the SBI Group are monitored and reviewed through the Executive level committees and the Risk Management Committee of the Board (RMCB) which meets regularly. Risk Management Committees at Operational unit and Business unit level are also in place.

NEW INITIATIVES IN RISK MANAGEMENT:

- Your Bank has started the Dynamic Credit rating review of borrowal accounts to capture deterioration in credit quality promptly and to initiate corrective action and facilitate correct pricing of risk.

- An Early Warning Control System (EWCS) is being put in place to put in place a system driven, parameterized, quantified, trigger based monitoring system of credit exposures.

- Your bank has developed behavior model for monitoring and scoring the retail borrower performance. The coverage of behavior model is gradually being expanded to cover entire retail related basket of products.

- Coverage of Loan Originating system/Loan Lifecycle Management system (LOS/LLMS) is being steadily augmented to cover the entire credit portfolio.

- In order to focus on capital conservation and maximisation of return on capital, your Bank has introduced Risk Based Budgeting (RBB) . As a measure to quantify the reduction in risk we will be introducing levers to assess improvement periodically, based on Credit Risk Weighted Assets (CRWAs). Achievement of the budgeted advances levels will be subject to achievements under the specified levers.

- The VaR and Stressed VaR for market risk are computed on a daily basis. Enterprise VaR is also back-tested daily.

- The Operational Risk Management project is in advanced stage with collation of internal loss data, external loss data, RCSA phase IV and Scenario analysis phase II under process.

- Group Risk is measured through Contagion Risk, Concentration Risk, Strategic Risk and Reputation Risk Indices.

- Risk culture is being embedded through training of staff at all levels through e-learning lessons.

- The Bank is implementing the Risk Adjusted Return on Capital (RAROC) framework in FY 2015-16.

- The Risk Appetite statements for the Enterprise and Group are being re-looked and formalised.

CREDIT RISK

Credit Risk is defined as the possibility of losses associated with the diminution in the credit quality of borrowers or counterparties from outright default or from reduction in portfolio value. Credit Risk emanates from a bank''s dealings with an individual, non-corporate, corporate, Bank, financial institution or sovereign.

MITIGATION MEASURES

- Your bank has strong credit appraisal and risk assessment practices in place for identification, measurement, monitoring and control of the credit risk exposures. The Bank uses internal Credit Risk Assessment Models and score cards for assessing credit risk under different exposure segments. Internal ratings of the Bank are subject to comprehensive rating validation framework.

- Credit Risk Management Department studies 37 industries covering sectors, such as Telecom, Power, Coal, Aviation, NBFC, Textile, Iron and Steel covering approximately 85% of the Banks'' credit exposures. The detailed study covers market factors, potential and Portfolio Quality Index (PQI) based on which Industry-wise limits are set for taking bank-wide exposures.

- RBI has allowed the Bank to participate in the parallel run process for Foundation Internal Ratings Based (FIRB) under the Advanced Approaches for Credit Risk. The data under parallel run of FIRB is being submitted to RBI.

- Models for estimation of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) have been developed internally. The Bank has procured Credit Risk Management System (CRMS) for computation of IRB capital.

- The monitoring of Prudential Exposure norms for Single and Group borrowers, Substantial Exposure Norms and unsecured Exposures is being done regularly.

- Bank regularly conducts Stress Test on its Credit portfolio. Stress Scenarios are regularly updated in line with RBI guidelines, Industry best practices and changes in macro economic variables.

MARKET RISK

Market Risk is the possibility of loss a Bank may suffer on account of changes in values of its trading portfolio, due to change in market variables, such as exchange rates, interest rates and equity price, among others.

MITIGATION MEASURES

- The Bank''s market risk management consists of identification and measurement of risks, control measures, monitoring and reporting systems.

- Board approved policies for Market Risk Management, Trading in Foreign Exchange, Derivatives, Interest Rate Securities, Equities, Mutual Fund and Limit Management Framework among others are in place.

- Market risks are controlled through various risk limits, such as Net Overnight Open Position, Modified Duration, Stop Loss, Management Action Trigger, Cut Loss Trigger, Concentration and Exposure Limits.

- The Bank has Asset class wise risk limits for its trading portfolio and monitors the same on an ongoing basis.

- Currently, market risk capital is computed under the Standardised Measurement Method (SMM). The Bank has submitted Letter of Intent to the Reserve Bank of India for migration to Internal Models Approach (IMA) under the Advanced Approaches for market risk.

- Value at Risk (VaR) is a tool for monitoring risk in the Bank''s trading portfolio. The VaR methodology is supplemented by conducting quarterly stress tests of the trading portfolio.

OPERATIONAL RISK

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

MITIGATION MEASURES

- The main objectives of the Bank''s Operational Risk Management are to continuously review systems and control mechanisms, create awareness of operational risk throughout the Bank, assign risk ownership, align risk management activities with business strategy and ensure compliance with regulatory requirements, which are the key elements of the Bank''s Operational Risk Management Policy.

- The Bank had submitted its application to RBI to migrate to the Advanced Measurement Approach (AMA) for Operational risk.

- Important policies, manuals and framework

documents in line with RBI guidelines on Operational Risk Management Framework (ORMF) for migration to AMA are in place.

- For FY2015, Bank had assigned capital for

Operational risk as per Basic Indicator Approach (BIA). Capital for AMA for FY2015 has also been arrived at as part of Bank''s project to migrate to AMA.

ENTERPRISE RISK

Enterprise Risk Management Project aims to put in place a comprehensive framework to manage various risks. It encompasses Global best practices like Risk Appetite, Risk Aggregation and Risk-based Performance Management System.

MITIGATION MEASURES

- As part of the Bank''s Risk Management Project to transform role of Risk into a Strategic function, aligned with Business Objectives, Bank has initiated the Enterprise Risk Management (ERM) module. Board approved ERM Policy delineates the roles and responsibilities of various Committees / Functionaries to manage risks.

- The Bank has a comprehensive Internal Capital Adequacy Assessment Process (ICAAP) Policy. The Pillar 2 risks, such as Liquidity Risk, Interest Rate Risk in Banking Book (IRRBB), Concentration Risk etc, and overall Risk Management practices as well as adequacy of Capital under both normal and stressed conditions are assessed as per the Policy.

GRouP RISK

Group Risk Management aims to put in place standardised risk management processes in Group entities.

MITIGATION MEASURES

- Policies relating to Group Risk Management, Arms Length and Intra Group Transactions & Exposures are in place.

- Exposure limits for Large Borrower Exposure and Capital Market Exposure as per RBI have been adopted for the Group. In addition, limits for Unsecured Exposures, Real Estate and Intra-Group Exposures have been set by the Bank.

- Monitoring of consolidated Prudential Exposures and Group Risk components is also being done regularly.

- A quarterly analysis of risk-based parameters for Credit Risk, Market Risk, Operational Risk and Liquidity Risk, among others, is presented to Group Risk Management Committee/Risk Management Committee of the Board.

- The Group Internal Capital Adequacy Assessment Process (Group ICAAP) document includes an assessment of identified risks by Group entities, internal controls and mitigation measures, and capital assessment, under normal and stressed conditions. All Group entities, including Non- banking entities, carry out the ICAAP exercise and a Group ICAAP Policy is in place to ensure uniformity.

INFORMATION SECURITY RISK

Information Security risk seeks to establish stringent information security structure to prevent data loss and threats.

MITIGATION MEASURES

- Bank has put in place robust and agile Information Security framework in line with Business Strategy as also ever emerging cyber threats.

- The Information Security Policy and Standards benchmarked against Global Standards and are reviewed annually.

- The application setups undergo security reviews before launching as also are reviewed periodically.

- Bank''s SOC is one of the largest in the Global Banking sector as it covers all 20,000 strong network of Bank''s offices (Domestic and Foreign) and Associate Banks. The SOC has the following attributes:

- Capability of handling 60,000 Events Per Second (EPS) which is scalable up to 5 Lakhs EPS

- Operates on 24x7x365 days basis for Real- time monitoring of security events across the enterprise and thus provides Secure Banking platform to the customers.

- Visibility over the security threats from within and outside the Bank and improves Incident Reporting and Management.

- Regular security drills and employee awareness programmes are conducted to ensure security and increase awareness. Disaster Recovery Drills are conducted regularly as part of the implementation of the Business Continuity Management System (BCMS). Bank has achieved following International Accreditations for various critical IT setup -

- ISO 27001 for Information Security Management System (ISMS)

- ISO 22301 for Business Continuity Management System (BCMS)

(B) INTERNAL CONTROLS

The Bank has in-built internal control systems with well-defined responsibilities at each level. It conducts internal audit through its Inspection & Management Audit Department. Audit Committee of the Board (ACB) exercises supervision and control over the functioning of the I & MA Department. The inspection system plays an important and critical role in identification, control and management of risks through the internal audit function, which is regarded as one of the most important components of Risk Management Process. The Bank carries out mainly two streams of audits - Risk Focused Internal Audit (RFIA) and Management Audit, covering different facets of Internal Audit requirement. The Bank''s accounting units are subjected to RFIA. The Bank''s Management Audit covers administrative offices and examines policies and procedures, besides quality of execution thereof.

Besides, the department conducts Credit Audit, Information Systems Audit (Centralised IT establishments & Branches), Home Office Audit (audit of foreign offices) and Expenditure Audit (at administrative offices) and oversees policy and implementation of Concurrent Audit (domestic and foreign offices) and Circle Audit. To verify the level of rectification of irregularities by branches, audit of compliance at select branches is also undertaken. During FY2015, 9,889 domestic branches/BPR entities were audited under the Risk Focused Internal Audit.

RISK FOCUSED INTERNAL CONTROL AUDIT

The I&MA Department undertakes a critical review of the entire operations of audited units through RFIA an adjunct to Risk Based Supervision as per RBI directives. The domestic branches have been broadly segregated into three groups (Group I, II & III) on the basis of business

profile and risk exposures. While audit of Group I branches is administrated by the Central Audit Unit (CAU) headed by a General Manager, audit of branches in Group II and III category and Business Process Re-engineering (BPR) entities are conducted by 13 Zonal Inspection Offices, each of which is headed by a General Manager.

MANAGEMENT AUDIT

Management Audit encompasses Audit of Corporate Centre establishments / Local Head Offices / Apex Training Institutions, Associate Banks and Regional Rural Banks (RRB) sponsored by the Bank. To enhance the effectiveness of Management Audit, periodicity has been reduced from the existing once in three years to two years. 46 establishments / administrative offices were audited under Management Audit during FY2015.

CREDIT AUDIT

Credit Audit aims at achieving continuous improvement in the quality of Commercial Credit portfolio of the Bank by critically examining individual large commercial loans with exposures of Rs.10 crores and above annually. The Credit Audit System also provides feedback to the business unit by way of warning signals about the quality of advance portfolio in the unit and suggests remedial measures. Credit Audit also carries out a off-Site review (Loan Review Mechanism) of all the pre-sanction and sanction process of all individual advances above Rs.5 crores within 6 months of sanction / enhancement / renewal. During FY2015, 9,129 accounts were subjected to on-site Credit Audit.

INFORMATION SYSTEM AUDIT

All Branches are being subjected to Information System (IS) Audit to assess the IT related risks as part of RFIA of the branch. IS Audit of centralised IT establishments is carried out by a team of qualified officials/ outside experts. During FY2015, IS audit of 38 centralised IT establishments were completed.

FOREIGN OFFICE AUDIT

During FY2015, Home Office Audit was carried out at 48 branches, Management Audit at one Representative office / Country Head Offices and two Subsidiaries / Joint Ventures.

CONCURRENT AUDIT SYSTEM

Concurrent Audit System is essentially a control process, integral to the establishment of sound internal accounting functions, effective controls and overseeing of operations on a continuous basis. Concurrent Audit System is reviewed on an on-going basis in accordance with RBI directives, so as to cover the Bank''s Advances

and other risk exposures as prescribed by the regulatory authority. I&MA department prescribes the processes, guidelines and formats for the conduct of concurrent audit at branches and BPR entities. During the year, Concurrent Audit System has been revamped, along with the introduction of a web-based solution, with external auditors appointed as Concurrent Auditors at a few centres.

CIRCLE AUDIT

Circle Audit, which is a delegated audit, covers low-risk areas, and is conducted between two RFIAs. This enables an auditee unit to be better prepared for the RFIA. In FY2015, 10,671 units were audited by the Circle Audit Department.

EARLY SANCTION REVIEW [ESR]

ESR mechanism introduced in audit system since September, 2014 to review sanctions of more than Rs.1 crore up to Rs.5 crores. The objectives of ESR are:

- To capture the critical risks in the proposals

sanctioned, at an early stage and apprise the Controllers of such risks for mitigation thereof at the earliest.

- Improve the quality of pre-sanction process / sanctions in respect of exposures falling in this category.

- Improve the quality of sourcing of loan proposals. - During FY2015, 4,339 accounts have been reviewed under ESR.

OFF-SITE TRANSACTION MONITORING SYSTEM (OTMs)

Exception data generated by Data Warehouse (DW) based on requirements submitted by Offsite Monitoring Centre (OMC) at I&MA Hyderabad. OTMS, a web based solution has been introduced to capture deviations and take corrective actions. Presently 11 types of deviations are being monitored and will be reviewed as per requirements.

LEGAL AuDIT

Legal Audit was rolled out in all the Business Verticals in June, 2014 to cover all loan and Mortgage related documents pertaining to accounts with aggregate exposure of Rs.5.00 crores and above. As on 31st March, 2015 Legal Audit has been commenced in 8,976 eligible accounts and already completed in 3,310 accounts.

4. INFORMATION TECHNOLOGY

A. CORE BANKING PROJECT

CBS environment has been benchmarked to support one billion accounts, over 250 million transactions in a day, and delivering a throughput of over 17,000 transactions per second. Biometric authentication as a second-factor authentication has been implemented in branches for all CBS users. The process for the systematic and proactive risk identification, assessment, measurement, monitoring and mitigation of various risks in the IT vertical has been initiated.

Exhibit 37: Alternate channels Growth

As on ATMs Kiosks Cash Deposit Total (MFK SSK) Machines (Numbers) (CDMs)

31.03.2013 25,247 2,196 698 28,141

31.03.2014 40,768 2,583 1,516 44,867

31st March,2015 42,454 2,595 1,849 46,898

ATMs

State Bank of India, along with its Associate Banks has one of the largest ATM networks in the world with more than 54 thousands ATMs including Kiosks and Cash Deposit Machines as on 31st March, 2015. The ATM Base 24 Switch has recently been upgraded to handle close to 50,000 ATMs, in addition of Electra Switch.

The objective is to strengthen ATM facilities across every nook and corner of this vast country and enhance customer convenience. During FY2015, SBI has installed 1,686 ATMs. The total number of ATMs (standalone) now stands at 46,898 as on 31st March, 2015 (Includes ATM Kiosks CDM). Population group wise, the Bank has 50:50 coverage of Metro/Urban and Semi-Urban/Rural population groups.

With a 29.84% market share, of India''s ATM population, SBI''s ATM network transacts 49.65% of the country''s total ATM transactions. On an average, over 99.96 lakhs transactions per day are routed through our ATM network. Our ATM network is one of the busiest in the country with average hit rate of more than 185 transactions per day per ATM. State Bank Group has a Debit Card base (standalone 16.07 crores) of 20.59 crores.

On an average, the volume of cash that our ATMs dispense is Rs.2731 crores a day and 8.33 million transactions a day. On any given day, each of our ATMs dispense Rs.5.88 lacs a day and serve 185 transactions.

More than 4,000 ATMs (during FY2015) have been enabled as Talking ATMs for Visually Impaired Customers during FY2015, which took the total Talking ATM strength to 8,600 as on 31st March, 2015. Every new machine added comes with this feature ab initio.

Care for the physically challenged is our priority too. 2,414 of our ATMs have ramps to facilitate easy access for the physically challenged. Wherever possible, ramps and/or side railings are provided.

Over 950 of our ATMs are on solar power and the count keeps growing. ATM user-safety is our concern too. Apart from physical care taker arrangements, 2,488 ATMs have been brought under electronic surveillance during the year. The total number of e-corners installed in the Bank has crossed the 500 mark with more than 200 being installed in FY2015.

CASH DEPOSIT MACHINES (CDMs)

SBI is aggressive in rolling out CDMs for cash deposit by customers at these machines. As 31st March, 2015, the number of CDMs installed was 1,849 These CDMs are available to the customer 24 x 7 for their convenience.

B. iNB & E-COMMERCE

INTERNET BANKING

The Bank''s online banking platform onlinesbi.com provides robust and customer friendly net banking services to its retail and corporate customers, including PSUs and Government Agencies. This cost-effective channel has enabled more than 86 crores transactions during FY2015, achieving 39% growth over the previous year. Our robust Retail Internet Banking (RINB) platform has also been optimised for visually impaired customers.

The Corporate Internet Banking (CINB) is well suited to Small, Medium and Large Corporates. It has also been immensely successful in establishing traction with Government Treasury & Accounts Departments as well. Online collection of fees/funds for Institutions, Corporates and Government Departments is being facilitated through Multi Option Payment System (MOPS), StateBankCollect and merchant-acquisition through independent aggregators. Internet based solutions also cater to the e-Tendering, e-Auction and bulk payments related requirements of the Government/PSUs/Large and Medium Corporates.

During FY2015, the Bank has continued to be a major player in the e-Commerce space in the country. Through over 20,000 merchant tie-ups, direct or through State Bank Collect or through e-Commerce aggregators, the Bank has facilitated more than 72 crores e-Commerce transactions during the year. Some of the new features in Net Banking launched in FY2015 are:

- Facility to register/inquire/cancel nomination

through internet banking.

- Linking of Aadhaar Number and LPG customer ID.

- IRCTC - Quick Pay for quick booking of IRCTC tickets.

- Online resetting of login password by using ATM card credentials.

-Generation of Form 15G/H.

- ATM Card holder can set daily transaction

limit,channel type (ATM or POS or CNP) & usage type (domestic or international) through INB.

- In State Bank Anywhere mobile app for smart phones, Quick Transfer of small amounts can be done without beneficiary registration, using QR Code or account details.

- To prevent frauds perpetrated through fake/altered cheques, CINB provides facility to Corporates to upload particulars of cheques issued by them. This will be used for data validation during cheque payment.

- Loan against shares/facility has been launched to leverage the customer''s investments in shares for loans to meet unforeseen expenses. Customers can apply online for loans up to 20 lakhs against their shares.

- Facility has been provided to view details of units held with SBI Mutual fund through Internet banking.

- NRI customers can raise a request for disposal of inward/outward funds in their account through Internet Banking, instead of sending letters/email to the branches.

MOBILE BANKING

The Bank is the market leader for mobile banking services in India. The Bank''s mobile banking service, State Bank Freedom, offers low cost, round-the-clock, real time banking services focused on convenience and security.

Depending on the mode of access, mobile banking facilities include account balance enquiries, mini-statements, check book requests, trading account enquiries, fund transfer within the Bank and to other banks in India, mobile credit top-ups, railways and air ticket reservations, payment of bills, payment of life insurance premiums as well as inter-bank mobile payment services. The Bank has also introduced a prepaid stored value account called Mobicash.

TAB BANKING

The Bank has launched Tab Banking services for opening Saving Bank A/C, giving in-principle sanction of housing loan & auto loan and for recording PSS (Pre-Sanction Survey) of SME Loans. Staff will complete all account opening formalities by using tab, including taking photograph, uploading of KYC documents. The account opening details will be loaded in CBS platform and account number will be advised to customer. On the same line, Housing Loan / Auto Loan sales team visit the customer''s place, staff capture the KYC details, particulars of income and deductions and details of proposed property on the tab. Based on data furnished and cost of project, applicant will be advised on approx. housing loan amount and the EMI amount.

IT - FOREIGN OFFICES

IT-FO provides round-the-clock round-the-year IT support to 153 Foreign Offices (FOs) of the Bank in 26 countries. These FOs use Finacle Core Banking application along with a host of add-on/surround applications like Finacle Treasury, ACE Pelican, SWIFT Connect, AMLOK, FNR etc. to meet all the regulatory requirements besides providing high class customer experience.

To provide a better and robust IT platform, currently all these FOs are being migrated to an upgraded improved version of Finacle Core Banking application. FOs in 17 countries have already migrated as on 31st March, 2015; the remaining FOs in 9 countries are to be migrated by August, 2015.

A number of major projects have been taken up for implementation viz. e-Trade, INB, Mobile Banking, Supply Chain Finance, Loan Origination/Management System, observance of Foreign Account Tax Compliance Act(FATCA) etc. which will go a long way towards further enhancing & reinforcing our foreign operations.

ENTERPRISE DATA WAREHOUSE

(1) integration of Domestic and Overseas Exposure

With a view to have MIS for single view of exposure (fund/non-fund based credit, Non-SLR investment and derivative exposure), EDWP has integrated domestic and overseas credit exposure on individual borrower as well as group for both domestic and overseas operations (both on and off balance sheet for credit risk management). This is to be updated at monthly intervals. Under the project, integration has been done for customers of all 18,200 domestic branches and 180 overseas branches. The exposure can be viewed across various dimensions like Borrower Constituent, Retail /Corporate, Asset Class, Facilities, etc. Written off and restructured accounts of individual customer as well as group customers has also been taken into account under the project.

(2) Customer One View (COV)

With large customer base and wide variety of products, Bank faced challenges in Customer Relation Management, Customer Service and came up with a solution named Customer One View (COV). The COV aims to provide 360 degree view of retail and corporate customers. It helps Bank to understand customer profile and serve accordingly. To meet this objective, DWP gathers data from various sources of Bank as well as from different subsidiaries and then process (massage/scrub) it to produce information nuggets on Customer portfolio/ profitability/Risk grade/Next Best Product etc.

(3) COV integration with CBS

COV is integrated with CBS to enable frontline staff to meet customer expectation by offering next best product and tap cross selling business opportunities by leveraging core strength of Data Warehouse Data repository & advanced analytics. Salient features are as under-

- Web services deployed at CBS & DWP end X New menu button "COV" has been introduced in CBS B@ncslink.

- Customer portfolio and Next Best Product available on a click to Teller.

- Acceptance/Rejection of the offer is recorded.

PAYMENT SYSTEM GROUP (PRE-PAID CARDS)

Prepaid cards are issued in both I NR and Foreign Currency. Different variants of INR Prepaid cards such as Ez Pay cards; Gift cards; Smart Payout cards; Quick Pay Cards; Imprest Cards; Achiever Cards; etc are issued to individual & corporate customers. State Bank Foreign Travel Cards are available in eight foreign currencies namely the Japanese yen, the Canadian dollar, the Australian dollar, the Saudi riyal, the Singapore dollar, the U.S. dollar, the Euro and the British pound, providing safety, security and convenience to overseas travellers. In FY2015, we have issued 24,555 Foreign Travel cards and approximately 231,000 INR prepaid cards.

NETWORKING

State Bank Connect is the Bank''s secure and robust principal connectivity platform and is the backbone of its overall technology infrastructure. The State Bank Connect primary point-to-point links have recently been migrated to Multi Protocol Level Switch (MPLS) architecture for ensuring higher uptime and dynamic upgrade of bandwidth. The Bank and its Associate Banks are dependent on State Bank Connect to support business- critical applications such as the Bank''s core banking application, trade finance software, ATMs, payment systems, cash management software, corporate email and internet portals

CORPORATE WEB AND MAIL SERVICES

Internal Social Media "SBI Aspirations" a collaboration platform designed to empower the Bank''s employees to be more innovative, productive, and knowledgeable and to generate new ideas was launched on 1st July, 2013. It is a platform that empowers employees to develop, nurture and remain in contact with network of other colleagues, sharing knowledge, ask queries using forum and discuss new creative ideas within communities.

With a view to popularise the SBI Aspirations platform, we have introduced a number of initiatives like The Best Blog contest, quizzes, creation of new communities, Photo- vote contest etc., Further the platform was integrated with Knowledge Helpline & HR portals. The Best Blog Contest generated a lot of buzz amongst employees and encouraged people to start participating on this platform. The photo-vote contest #InOneYear saw a total of 444 people joining this contest community and 450 people adding a profile photo to their profile. The photo- vote contest was also successful in getting 349 photos uploaded and 3446 likes in total.

The platform was made available to all the foreign office employees and also for the local based officials in Foreign office.

External Social Media

Bank has marked its presence on External Social Media sites like Facebook, Twitter and YouTube for listening to and engaging with the young generation customers. We have achieved great response to our pages on these social media portals.

(1) YouTube

Our YouTube channel which was launched on 23rd January, 2014, is the leading YouTube channel amongst all Indian banks in terms of subscriber base. We have uploaded more than 120 videos on our YouTube channel. Currently it has over 6,500 subscribers; way ahead of other bank channels which have had their presence on YouTube for over 4 to 5 years. Also our channel has garnered around 3.50 lakhs views implying the fact that the digital audience is liking our content.

(2) Facebook

Our Facebook Page was launched on 7th November. 2013. Our Facebook Page reached its 1 million fans milestone within 15 months of its launch and in just another 2.5 months we crossed the 2 million Fans mark. We are ahead of Kotak Mahindra Bank, Citibank, IDBI Bank and YES Bank, all of whom have been on this social networking site for at least 4 to 5 years.

During the course of this year we had taken a number of initiatives to engage with audiences on this social platform. We have conducted various quizzes and contest on the themes like FIFA World Cup, Savings Mantra, Photo-vote contests etc.

(3) Twitter

Our Twitter handle was launched on 4th April, 2014. Today we have more than 1.30 lakh followers of our handle. Our Twitter handle crossed the 1 Lakh followers mark in March, 2015; within 11 months of its launch and it is the second highest followed handle amongst all Indian Banks, who have been on Twitter for over 3 or 4 years, such as ICICI Bank, HDFC Bank, Axis Bank, IDBI Bank & Kotak Mahindra Bank. Our Handle was certified as a Verified Handle by Twitter within 10 months, while some other bank handles with more than 4 years of presence are yet to get Verified Status. We have conducted various quizzes and contests on Twitter promoting our products and services. We have also extended the use of hashtags (#) to gain more visibility

We also are in talks about launching our official pages on other networking sites like GooglePlus and LinkedIn. Also we are evaluating how Social Media can be leveraged for business productivity by targeted advertising of our products and services.

DIGITAL BANKING

With an objective of becoming the pioneer in "Next Generation Banking with a difference" and enhancing the value proposition for our Retail Customers, 7 Digital Banking Outlets (DBOs) under the sub-brand "sbiINTOUCH" have been opened during the year.

DEVELOPMENT CHANNEL

(1) ATM Card Limit/Channel/Usage Modifications Through INB

A facility has been provided to State Bank Group customers in Internet Banking for modifying the daily limits (ATM, POS/PG) of ATM Card, disabling/enabling of channel (ATM,POS, PG), disabling/enabling of usage (domestic, international).

(2) cardless Deposit

This facility is available for walk-in depositors of the bank to deposit money in any account maintained with us. Deposit menu will be invoked by touching the CDM screen. The walk-in customers will simply enter his/ her own mobile number, beneficiary mobile number and key-in the beneficiary account number. Once accepted, cash will be scanned, counted and verified, Beneficiary will receive SMS on his registered mobile number on successful cash deposit.

Transactions are limited to Rs.49,900 or maximum of 200 pieces of notes. The facility is currently available across 1,763 CDMs.

(3) State Bank anywhere

The latest initiative from the Bank comes to users in the form of a mobile smart phone application. The application State Bank Anywhere is now available on Android, iOS, Windows, and Blackberry platforms. The behemoth internet banking offering of State Bank of India has been bundled to provide a complete suite of banking services to the users conveniently on the move through this innovation.

Features like mPassbook, on line issue of e-TDR, e-STDR, e-RD, Quick transfer using QR code through IMPS without beneficiary registration, RTGS funds transfer, credit card (VISA) transfers, Aadhar seeding to bank accounts have been provided.

In addition host of regular banking services such as balance enquiry, mini statement, cheque book requests, funds transfer in self and third party accounts, IMPS transfers, NEFT, transfers within SBI group, mobile top up and DTH recharge, Profile setting, refer a friend, feedback have been provided.

CINB module of the Banks Internet banking is being provided separate Application named as State Bank anywhere-Saral.

To reach a wider audience segment, Hindi version of State Bank Anywhere in the name "State Bank Kahin Bhi" has also been launched. The Hindi version will make the usage of mobile banking more easy and comfortable for a larger number of customers.

SBI FINDER:

To facilitate users to easily find SBI ATMs, CDMs, Branches and E-corners in an area within the specified radius, a customer convenience smart phone application "SBI Finder" has been developed and rolled out on Android and iOS platforms. It provides directions to reach the SBI ATMs, CDMs, Branches and E-corners located within a specified radius of customer''s current location using GPS.

SBI HOLIDAY CALENDAR:

With a view to display Bank''s holidays in different States / Circles of the Bank, SBI Holiday Calendar customer convenience application for smart phone on Android and iOS platforms is available.

CORE DEVELOPMENT

Key developments during FY2015 were:

Integration of e-KYC with account opening in CBS:

The Aadhar based attributes are verified from UIDAI database and certified for this purpose. This development will help the customers in opening their accounts with our Bank without having to produce physical copies of their identification documents to the Bank branch.

New screen provided to branches to enter the details for LPG-ID registration in CBS:

This has been done to facilitate the customers who do not have Aadhar numbers. They can still link their account to the LPG_ID for the purposes of availing the subsidy.

Automatic seeding of Aadhar number to newly opened accounts under Financial Inclusion:

In all those accounts which are opened on the basis of Aadhar card / details submitted by the customer, the Aadhar number will be automatically linked to the account thus opened.

RBI''s KYC Compliance:

Notices were generated and sent to all the KYC non- compliant customers in March, 2015, as specified by RBI.

Updation of correct Mobile Numbers:

Functionality developed to notify the teller about missing or invalid mobile number for a customer whenever his account is transacted in CBS application to enable him/her to capture / correct the same. This will help the branches to update the CBS data with the latest mobile number of the customer, as the mobile number is required for sending various types of SMS''s to the customers.

TECHNOLOGY AWARDS

Exhibit 41: List of Awards received during FY2015 Award Category Received in

SAP Ace Award Best Run Pay Roll August 2014

IDRBT Awards 2014 Best Bank Award for Use October, of Technology for Financial 2014 Inclusion Best Bank Award for Electronic October, Payment Systems 2014

Finnoviti 2015 Analytics at SBI January, Award 2015

Performance Planning & January, Budgeting at SBI 2015

Global Finance Best Trade Finance Bank 2015 January - India 2015

CSI Excellence in Banking Financial Services & February, IT Awards 2014. Insurance 2015 Special Mention Award)

IBA Banking Best Technology Bank of February, Technology Awards the Year 2015 2015

Best Use of Data Best use of technology to enhance customer experience- shared with Union Bank of India Best use of digital and channels technology Best use of technology for leveraging technology in Training & Human resources, e-learning initiatives

Best Payment initiatives - Runner up

CIBIL Award Data Quality March, 2014-15 2015

5. BuSiNESS PRocESS RE-ENGiNEERiNG

During FY2015, SBI has made several improvements to its Business Processes as an on-going exercise for meeting the highest principles of excellence. These include the following:

- Productivity benchmarks for various processing centres

- Rightsizing of Networks and Zones for creating a structure that is more enabling & efficient.

- Cost Control, under Project Stationery Management, is being implemented by reducing and rationalising registers/ forms & introduction outsourcing model for stationery management.

- PPOs have been digitised for easy access, efficiency & productivity of the operating staff.

- Centralisation of cheque book printing is being implemented to reduce printing cost.

6. vIGILANcE

The essential function of the Bank''s Vigilance Administration is not only to check the non-compliance of systems and procedures and initiating suitable disciplinary action against serious transgressions, but also to devise and implement various preventive measures by reviewing the systems and processes to ensure higher effectiveness and least vulnerability.

The concept of vigilance as an investigative process and an exercise for punitive action has over time evolved to that of ''Vigilance for Corporate Growth'', the emphasis getting shifted from punitive vigilance to ''Preventive and Proactive Vigilance'' through an active participation of all concerned. Some of the Bank''s important preventive measures comprise the following:

- Preventive Vigilance Committee (PVC) Meetings are being held at the branches and the BPR outfits at quarterly intervals.

- Under Whistle Blower Scheme, our staff members are expected to advise appropriate authorities about irregular and unethical practices, if any, being indulged in by colleagues and even seniors.

- Suomoto investigations are conducted at fraud and complaint prone branches. The primary aim of such investigations is to find out non-adherence to the systems and procedures by the branch, which may lead to perpetration of fraud in future. Suitable corrective measures are initiated to stop irregular practices, if any, brought out in the report.

During FY2015, 1,109 cases of officers were taken up for examination under the vigilance category, compared to 1,024 cases during the previous financial year, and closed 1,126 cases in FY2015 in comparison to 1,063 cases closed during FY2014

7. OFFiCiAL LANGUAGE

The Bank made unprecedented efforts in the area of implementation of Official Language Policy and launched Mobile banking application in Hindi named ''STATE BANK KAHIN BHI'' during the fiscal year for their customers. This has the facility for making all type of banking transactions in Hindi on mobile phone. Within 6 months of its introduction almost 15 lakhs users have downloaded this app and got a rating on an average of 4.4 out of 5.

All the ATMs of the bank have the option of all the major regional languages, official language Hindi and English. Thus the customers can make transactions in their language of choice.

During FY2015, SBI launched a new corporate website in Hindi and all other websites of the bank including Corporate and internet banking websites in Hindi are being updated at regular intervals. This is another initiative of SBI in widening and strengthening its relationship with customers.

Bank''s Security Manual and RTI Manual are brought out in Hindi also. A compilation of training material in Hindi named ''Hindi Prashikshanavali'' has been brought out during the fiscal year to help staff members use Hindi in their day to day operations.

Notable progress has been made in the work of bringing Bank''s HRMS portal on Hindi platform in a phased manner. Standard E-mails emanating from HRMS department for more than 2,00,000 employees of the Bank every month have been started in bilingual i.e. Hindi and English.

AWARDS:

- Indira Gandhi Rajbhasha Shield 2014 (Honorable President of India Shri Pranab Mukherjee has given the shield on 14th September, 2014 at Vigyan Bhavan, New Delhi),

- RBI Hindi Journal Shield (Received from Governor, RBI, Dr. Raghuram G. Rajan), and - Best Bank Town Level Official Language Implementation Committee award which was given to our Lucknow, Siliguri and Thiruvananthapuram town committees by Honourable Governors of respective states.

8. CORPORATE SOCiAL RESPONSiBiLiTY (CSR)

Responsiveness to the needs of the society and responsibility to meet those needs is ingrained in the ethos of our Bank. CSR is not an isolated practice or initiative for the Bank but runs through its entire business paradigm. Our CSR activity touches the lives of millions of poor and needy across the length and breadth of the country. CSR is embedded in many of our business initiatives and has been practised in State Bank of India since 1973, under Community Services Banking covering various social, environmental and welfare activities. The Bank has a comprehensive Corporate Social Responsibility (CSR) Policy, approved by the Executive Committee of the Central Board in August 2011 and earmarks 1% of the previous year''s net profit as CSR spend budget for the year. The CSR budget for the FY2015 was Rs.109 crores. Against this budget, the actual CSR spend was Rs.115.80 Crores during FY2015.

focus areas of our csr activities are:

- Supporting education.

- Supporting healthcare.

- Supporting sanitation

- Livelihood creation.

- Assistance during natural calamities like floods/

droughts etc.

CATEGORY WISE Classification:

Exhibit 42: Category wise Classification

Category Amount(Rs in crores)

Supporting Healthcare 28.56

Supporting Education 41.20

Sanitation 13.64

Vocational training/Livelihood 24.24

Others 4.16

Natural calamities 4.00

Total 115.80

SUPPORTING EDUCATION

Technology is a vital part of the modern education. To support school education especially in the schools for the under privileged children, Bank has provided large number of computers across the country during FY2015 at a spend Rs.7.21 crores.

Infrastructure support by way of furniture, scientific instruments and other educational accessories and donation of large number of school buses/vans for the benefit of physically/visually challenged children and children belonging to economically weaker section of society have been provided by all our Circles.

SUPPORTING HEALTHCARE

To help in delivering quality healthcare, particularly to those belonging to underprivileged and economically weaker sections of the society and also to respond to the need of quick shifting of critical patients to hospitals, Bank has donated 79 ambulances and medical vans in rural and semi urban centres of various States and Union Territories. Further, Bank has donated various medical equipment to Eye Hospitals, Blood Banks and Cancer Hospitals. Major spend under healthcare was assigned to cancer detection & prevention.

SUPPORTING SANITATION

Participating in the National endeavour of Swachh Bharat Mission, Bank has supported reputed NGOs for construction of toilets in needy schools especially girls schools under ''Swachh Vidyalaya Campaign''. During 2014-15, Bank has donated Rs.13.64 crores for construction of 435 toilets in 398 schools in nine districts.

LIVELIHOOD CREATION

For skill building of the rural youth, Bank has provided infrastructure support of Rs.21 crores to 24 Rural Self Employment Training Institutes (RSETIs). At present 117 RSETIs are being run by the Bank, which is the highest number of RSETIs established by any Bank in the country. RSETIs of the Bank are rendering yeoman service in skilling the rural youth under CSR.

SBI YOUTH FOR INDIA

SBI Youth for India is a unique Indian rural fellowship Programme initiated, funded and managed by State Bank of India (SBI) in partnership with reputed NGOs of the country. It provides a framework for India''s bright young minds to join hands with rural communities,

empathizes with their struggles and connects with their aspirations. The selected fellows, mostly from the urban areas and from some of the top institutes/corporates work with experienced NGOs on challenging grass root development projects

ASSISTANCE DURING NATURAL CALAMITIES

Your Bank has always been at the forefront to help the States affected by natural calamities. During the FY2015, the Bank has lent its helping hand to the States of Jammu & Kashmir and Andhra Pradesh with a donation to the Chief Minister''s Relief Fund of the respective States to provide succour to the people affected by flood/cyclone.

HONOURS AND AWARDS: SCALING NEW HEIGHTS Of ACCOLADE For CSR

CSR activities of the Bank during the year FY2015 have received wide attention and appreciation. This year witnessed the highest number of awards (25 awards) for the Bank which includes its CSR achievements.

THE COVETED AWARDS INCLUDE:

- Golden Peacock Award for Sustainability, London.

- Golden Peacock Award for Corporate Social Responsibility, Mumbai

- Indo- American Chamber of Commerce Best Bank Award, Mumbai

- Global Finance Magazine, New York '' Best Emerging Markets Bank in Asia Pacific 2015'' Award - World Branding Forum, London ''Brand of The Year Award''

- BFSI '' Environmental Award, Singapore - CMO Asia Award for Best CSR Practices, Mumbai - Business World Magazine ''Socially Responsible Bank'' Award, Mumbai.

- Golden Globe Tigers Awards for CSR best Practices & Innovations in CSR. - Kuala Lumpur.

GREEN INITIATIVE

State Bank of India, in its constant endeavour to enhance the sustainability of the environment and cutting down on consumption of paper, has encouraged our shareholders to receive the Bank''s Annual Report in electronic form (eAR). In order to incentivize the switch over to electronic mode by the shareholders, it was decided by the bank to contribute a nominal sum to a charitable cause for each annual report sent to shareholders.

In recognition of the support and acceptance of eAR by shareholders in FY2014, the Bank has contributed Rs.3.09 crores, representing Rs.100/- for each eAR, to the SBI Children''s Welfare Fund, which is dedicated towards improving the lives of underprivileged and downtrodden children.

The Bank has also taken proactive steps to reduce the direct impact of its operations on the environment. From recycling programs to energy conservation in offices and branches, the Bank is working to reduce its operational footprints on the environment. Some of the measures introduced are:

- Wind based power projects commissioned and the power generated from these projects power Bank''s branches/offices in the States of Maharashtra, Gujarat and Tamil Nadu.

- Installed Solar ATMs, introduced Green Channel Banking (Paperless Banking)

- Initiated a pilot project to determine the Carbon footprint levels, which will help in determining the Bank''s resource consumption pattern and enable the Bank to take effective steps to implement various measures for sustainable usage in a cost effective way.

- The Bank has put in place SMART i.e. Specific, Measurable, Achievable, Realistic and Time bound Green Banking Goals, some of which have obtained star rating at all Local Head Office premises from Bureau of Energy Efficiency. Construction of ''Green'' buildings, waste water treatment plants, programs to sensitize staff on energy savings are some of the other initiative taken.

- The recycling plant housed at the basement of the SBI Bhavan converts the waste generated to compost which is used at State Bank Bhavan and State Bank residential quarters.

- Over 54,000 SBI group ATMs and Cash Deposit machines (CDMs) ensure reduced consumption of paper at Branches.

- Committed to financing of renewal energy projects (solar) to the tune of 75,000 crores over the next 5 years in view of GOI target for generation of 10,000 MW from renewable energy by 2019 subject to viability/feasibility and other laid down criteria pertaining to financing such projects.

- Tree plantation drive undertaken during monsoons across all Circles and more than 450,000 trees planted during last three years.

- Rainwater Harvesting Projects have been implemented in a number of Bank''s Buildings across the country.

As a part of mission to provide the entire gamut of financial services across India, the State Bank Group, with a network of 22,887 branches (including 6,554 branches of five Associate Banks), in addition to banking services, the Group, through its various subsidiaries, provides a whole range of financial services, including Life Insurance, Merchant Banking, Trustee Business, Mutual Funds, Credit Card, Factoring, Security trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

Associate Banks

The five Associate Banks of SBI had a Market share of 5.22% in deposits and 5.66 % in advances approximately as on 31st March 2015. Associate Banks together have 8,561 number of ATMs, which are shared by entire State Bank Group.

Exhibit 43: The performance highlights of the Associate Banks as on 31st March, 2015 (Rs.In crores)

Name of the Bank SBI Share of Total Agg. ownership Assets Deposits %

Investment %

State Bank of Bikaner 676.12 75.07 102302 83237 & Jaipur

State Bank of Hyderabad 367.55 100.00 154503 131194

State Bank of Mysore 628.63 90.00 79469 65058

State Bank of Patiala 1659.10 100.00 116709 91987

State Bank of Travancore 505.85 78.91 105595 90328



Total Op. Net CD Adv. Profit Profit Ratio

State Bank of Bikaner 71153 2104 777 85.48 & Jaipur

State Bank of Hyderabad 108753 2914 1317 82.89

State Bank of Mysore 53296 1331 409 81.92 State Bank of Patiala 80648 1599 362 87.67

State Bank of Travancore 69907 1372 336 77.39

CAR Gross Net Return % NPA NPA on % % Equity %

State Bank of Bikaner 11.57 4.14 2.54 12.92 & jaipur State Bank of Hyderabad 11.26 4.58 2.24 13.73

State Bank of mysore 11.42 4.00 2.16 9.40

State Bank of Patiala 12.06 5.41 3.88 5.41

State Bank of travancore 10.89 3.37 2.04 6.65

Awards and Accolades

- State Bank of Bikaner & Jaipur was awarded the "Social Banking Excellence Award: 2014: Public Sector Banks Category" by ASSOCHAM.

- State Bank of Hyderabad Bank has received "Best Bank (Public Sector) Award instituted by ABP News.

- State Bank of Mysore was awarded Best Bank Award for Tech Savvy - by Chamber of Indian Micro, Small &

Medium Enterprises, New Delhi

- State Bank of Patiala has received " Best Bank Award For New Initiative- Runner Up" from Chamber of Indian Micro Small and Medium Enterprises (CIMSME) New Delhi.

Subsidiaries

Exhibit 44: Non Banking subsidiaries

Name of the (Rs in crores) Subsidiary Company Ownership (StateBank % of Net Profit (Losses) interest)/crores Ownership for the FY2015

SBI Capital Markets Limited (Consolidated) 58.03 100 334.10

SBI DFHI Limited 139.15 63.78 92.55

SBI Mutual Fund Trustee Company Private Limited 0.10 100 0.94

SBI Global Factors Limited 137.79 86.18 (46.23)

SBI Pension Funds Private Limited 18.00 60 1.99

Name of the Subsidiary Company Ownership(StateBank % of Net Profit (Losses) interest)/crores Ownership for the FY2015

SBI Funds Management Private Limited 31.50 63 163.43

SBI Cards & Payment Services Private Limited 471.00 60 266.70

SBI Life Insurance Company Limited 740.00 74 820.04

SBI-SG Global Securities Services Private Limited 52.00 65 5.69

SBI General Insurance Company Limited 150.22 74 (105.33)

GE Capital Business Process Mgt. Services Private Limited 10.80 40 31.03

A. SBI CAPITAL MARKETS LiMiTED (SBiCAP)

SBICAP is India''s leading investment bank, offering financial advisory services to varied client base across three product groups - Infrastructure, Non- Infrastructure and Capital Markets (equity and Debt). These services include Project Advisory, Loan Syndication, M&A, Private Equity and Restructuring Advisory.

On a standalone basis, SBICAP posted a PBT of Rs.507.90 crores during the FY2015 as against Rs.388.89 crores during the FY2014 and a PAT of Rs.338 crores in FY2015 against Rs.265.47 crores in FY2014.

SBICAP and its 5 subsidiaries together, posted a PBT of Rs.509.59 crores during the FY2015 as against Rs.389.65 crores during the FY2014 and PAT of Rs.334.10 crores during FY2015 as against Rs.262.37 crores in FY2014.

SBICAP declared 430% dividend in FY2015 against Rs.260% in FY2014.

As a leader in its space, SBICAP has attained recognition in the form of some of the most prestigious awards in the industry namely,

Awards:

- IFR Asia Regional Awards High Yield Bond - Tata Steel''s US$1.5 billion dual -tranche senior notes.

- Asiamoney - Regional Capital Markets Awards - Best High Yield Bond- Tata Steel $ 1.5 billion dual tranche senior bond.

Rankings:

- No.1 Mandated Lead Arranger in Asia-Pac Ex-Japan Loans League Tables 2014, with Market share of 8.4% as per Bloomberg.

- No.1 Book Runner Asia-Pac ex-Japan Loans - market share 12.5% as per Bloomberg.

- No.1 India Loans Mandated Arranger (INR)- Markets Share 75.5% as per Bloomberg.

- In the India Loans MLA Tables SBI tops the list with market share of 57.3% as per Bloomberg.

- No.1 Book Runner Asia Pacific & Japan with market share of 14.6% as per PFI Thomson Reuters League table.

- Ranked No.1 MLA with 7.2% market share in the Dealogic Global Project Finance League Laos rankings 2014.

- No.1 MLA Asia Pacific Project Finance Loans (19.6%) as per Dealogic.

- No.1 Asian Project Finance Loans with 28.9% market share as per Dealogic.

1. SBIcap Securities limited (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Limited, besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in sales and distribution of other financial products like Mutual Funds, Tax Free Bonds etc.

SSL has over 100 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 7.80 lakhs clients in March, 2015 . The Company has booked gross revenue of Rs.114.01 crores during FY2015 as against Rs.79.02 crores in FY2014.

SSL was awarded appreciation certificates from National Stock Exchange of India for being a Top Performing Member in "Gold ETF mobilization" and "New Client Enrollment".

2. SBICAPS Ventures Limited (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Limited DFID (Department for International Development) has joined hands with the SBI group to sponsor the "Neev Fund" to be managed by SBICAP Ventures Limited SVL will act as the Asset Management Company.

The Funds will be invested in Infrastructure sectors such as renewable energy, water and sanitation, agricultural supply chain in 8 identified states of India (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh and West Bengal).

3. SBICAP (UK) LIMITED (SUL)

SUL is a wholly owned subsidiary of SBI Capital Markets Limited SUL is positioning itself as a relationship outfit for SBI Capital Markets Limited in UK and Europe. Relationships are being built with FIIs, Financial Institutions, Law Firms, Accounting Firms, etc to market the business products of SBICAP.

4. sbicap (Singapore) limited (ssgl)

SSGL, a wholly owned subsidiary of SBI Capital Markets Limited, which commenced business with effect from December 2012. Company has posted Net Profit of Rs.7.51 crores during FY2015 as against Net loss of Rs. 2.81 crores during FY2014.

5. sbicap trustee co. LIMITED (STcL)

SBICAP Trustee Co Ltd (STCL), a wholly owned subsidiary of SBI Capital Markets Limited, which commenced security trustee business with effect from 1st August 2008, has posted Net Profit of Rs.11.16 crores during FY2015 as against Rs.8.81 crores during FY2014. It has made available a facility for online creation of will.

B. SBI DFHI LIMITED (SBI DFHI)

SBI DFHI Ltd is one of the largest standalone Primary Dealers (PD) with a pan India presence. As a Primary Dealer (PD) it is mandated to support the book building process in primary auctions and provide depth and liquidity to secondary markets in G-Sec. Besides Government securities, it also deals in money market instruments, non G-Sec debt instruments, etc. As a PD, its business activities are regulated by RBI.

SBI group holds 72.17 % share in the Company. The Company posted Net Profit of Rs.92.55 crores in FY2015 as against Rs.60.70 crores in FY2014.

The market share of SBI DFHI was 3.03% amongst all market participants and 16.18% amongst Standalone PDs as on March, 2015.

c. SBI cards & payments services private LIMITED (SBicPSL)

SBICPSL, the stand-alone credit card issuing company in India, is a joint venture between State Bank of India and GE Capital Corporation, wherein SBI holds 60% stake.

SBICPSL is 3rd largest in the industry in terms of Cards in force with 15% market share with a base of 31.58 lakhs as at March, 2015 as compared to 15% market share with a base of 28.58 lakhs as at March, 2014. Company has 11.2% market share in terms of spends in FY2015 against 11% in FY2014.

The company''s net profit during the year FY2015 is Rs.266.70 Crores. Company has wiped out its accumulated losses and declared dividend in FY2015. SBI Card launched SytleUP Card, a new Co-branded Card in partnership with Fashion at Big Bazaar (A Future Group Enterprise) in December, 2014 and Mumbai Metro Card in March, 2015. SBI Cards has been awarded Gold in the category "Credit Cards" in the Readers Digest Trusted Brand Survey 2015.

d. Sbi Life Insurance Company

LIMITED (SBILIFE)

SBI Life Insurance Company Limited is a Joint Venture between State Bank of India and BNP Paribas Cardif in which SBI holds 74% stake. SBI Life has a unique multi- distribution model comprising Bancassurance, Retail Agency, Alternate, Group Corporate and Online Channels for distribution of insurance products.

Market share in New Business Premium (NBP) among all private players as on March, 2015 is 15.9%. SBI Life recorded 10.81% YOY increase in PAT to Rs.820 crores in FY2015 against Rs.740 crores in FY2014. The ''Assets under Management'' of SBI Life recorded a YOY growth of 21.99% to reach Rs.71,339 crores as on 31st March 2015. The company has been ranked No. 1 in the industry in (NBP) during FY2015 among all Private Insurance players.

Leveraging wider reach achieved through its 750 branch network, SBI Life has systematically brought large rural areas under insurance. The company has sold 22% of total policies in this segment in FY2015. A total of 65,745 lives covered by the company are from the underprivileged social sector. The Company has been substantially exceeding the minimum social and rural regulatory norms.

In FY2015, SBI Life reinforced its outreach initiatives in the realm of child welfare, across different parts of the country, in line with its approved CSR goals. The company has extended its support to nurture not only the educational aspirations of the children but also providing for their physical well-being. Significant measures have been taken to aid the provision of better infrastructure and healthcare facilities to remote areas of the country to ensure that all sections of the society gets an equal opportunity to sustain them in a healthy environment.

Awards and recognitions

- Best Training Provider of the Year.

- Best Practice in Learning Transfer for Improving Business Bottom Line.

- Plaque for commended Annual Report from Institute of Chartered Accountants of India (ICAI) for Excellence in Financial Reporting, 2013 -2014.

- 3 Awards at World HRD Congress 2015.

- Award for Excellence in HR through Technology .

- Award for Best HR Strategy in line with business .

- Award for Managing Health at work .

- FINNOVITI - Digital Innovation Award for Connect Life.

- Inspiring Wok Place Award 2014 in BFSI.

- ''Platinum Award for Excellence in Life Insurance'' by Skoch Financial Inclusion and Deepening Awards 2014.

- Indian Insurance Awards 2014 for ''Non-Urban Coverage-Life Insurance''.

- Best Life Insurance Company Award by Asia Banking, Financial Services and Insurance Excellence 2014.

- The Most Admired Life Insurance Company and the Best Life Insurance Company in the Private Sector, in the BFSI 2014 Awards.

- Most Trusted Private Life Insurance Brand by The Economic Times, Brand Equity and Nielsen Survey for four consecutive years.

- Golden Peacock National Training Award, 2014.

- Innovation Awards by BNP Paribas Cardif for ''Online Recruitment Solutions'' and for ''Creating New Markets using existing products: QROPS''.

These awards are a testimony to SBI Life''s quality and commitment towards customer centricity and professional excellence

While the focus at SBI Life during FY2014 was to revamp entire product portfolio to comply to revised IRDAI regulations; in FY2015, it shifted back to designing specific products to cater to the changing market requirements. To fill these gaps and to provide products as per customer needs, SBI Life introduced various products such as: SBI Life - Guaranteed Savings Plan, a guaranteed income plan; SBI Life - Smart Income Protect, life insurance savings plan with regular cash inflows:; SBI Life - Smart Champ Insurance, a child insurance plan and SBI Life - Suraksha Plus, a group term insurance plan.

E. SBI FUNDS MANAGEMENT PRiVATE LiMiTED (SBIFMPL)

SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 6th largest Fund House in terms of Average "Assets Under Management" and a leading player in the market with over 4 million investors.

SBIFMPL posted a PAT of Rs.163.43 crores in FY2015 as against Rs.155.57 crores earned during FY2014.

The average "Assets Under Management" (AUM) of the company during the quarter ended March, 2015 stood at Rs.72,942 crores with market share of 6.30%.

The Company has a fully owned foreign subsidiary namely SBI Funds Management (International) Private Limited, which is based at Mauritius and manages Off-shore Fund. SBI Funds Management (International) Private Limited is a 100% subsidiary of SBIFMPL.

f. sbi global factors limited

(SBIGFL)

SBIGFL is a leading provider of factoring services for domestic and international trade. SBI group holds 86.18 % share in the Company. Company''s services are especially suitable for MSME clients for freeing up resources locked in book debts. By virtue of its membership of Factors Chain International (FCI), the Company is able to ameliorate credit risk from export receivables under the 2 factor model.

Notwithstanding challenges in growing top line and improving asset quality in the prevailing economic slowdown, the Company registered an operating profit of Rs.49.78 crores during FY2015.

The company is adequately capitalized with AAA/ A1 ratings from reputed rating agencies for its borrowing programmes.

G. SBI PENSION FUNDS PRIVATE LiMiTED (SBIPF)

SBIPF is one of the three Pension Fund Managers (PFM) appointed by Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the National Pension System (NPS) for Central Government (except Armed Forces) and State Government employees.

SBIPF, a wholly owned subsidiary of the State Bank Group, commenced its operations from April, 2008. The total "Assets Under Management" of the company as on 31st March, 2015 were Rs.31,407 crores (YOY growth of 69 %) against Rs.18,624 crores in FY2014.

The Company maintained lead position amongst Pension Fund Managers in terms of AUM in both Government and Private Sectors.

The overall AUM market share in Private sector was 73 %, while in the Government sector it was 35 %. The company maintained its number 1 rank in both Private Sector and Government Sector.

H. SBI GENERAL INSURANCE COMPANY LIMITED (SBIGIc)

SBIGIC is a joint venture between State Bank of India and IAG Australia in which SBI holds 74% stake. The company''s strong focus is on disciplined pricing, fair and transparent claims management practices.

The cornerstone of the company''s growth aspiration will be focussed on the banca channel whilst selectively developing alternate channels and products that meet our business objectives.

Gross Written Premium (GWP) stood at Rs.1580 crores for FY2015. Company recorded 33% growth in GWP YOY against an industry growth of 9%.

Overall market share among all insurance companies (including Govt companies) increased from 1.5% to 1.9% and in 3.5% to 4.1% among private players.

Improved in market ranking - overall to 13th from 18th in FY 2014 and to 8th in FY2015 from 12th among the private players.

SBIGIC occupies 2nd position in "Personal Accident" at an overall industry level and 2nd position in Fire among Private Insurers.

awards and recognitions

- Winner - iCMG (inter Company Marketing Group) Excellence Award for Enterprise Architecture in 2014.

- Runner-up - IAIDQ Data Quality Asia Pacific Award 2014.

- iAAA rating from ICRA for claim paying ability.

I. sbi sg global securities

services private limited (SBISG)

SBISG, a joint venture between State Bank of India and Societe Generale, was set up to offer high quality custody and fund administration services to complete the bouquet of financial services on offer by a financial conglomerate.

SBISG commenced commercial operations in Custody in May 2010 and Fund Accounting Services in Sept 2010.

Company''s Net profits in Rs.5.69 crores in FY2015 as against Rs.0.21 crore in FY2014.

The Assets Under Custody as on 31st March, 2015 rose to Rs.169,587 crores as against Rs.1,15,701 crores on 31st March 2014, while the Assets Under Administration were at Rs.79,090 crores in FY2015 as against Rs.62,901 crores in FY2014.

Responsibility Statement

The Board of Directors hereby states:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2015, and of the profit and loss of the bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities;

iv. that they have prepared the annual accounts on a going concern basis;

v. that the internal financial controls had been laid down, to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

vi. that proper system had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Acknowledgement

During the year, Shri Hemant G. Contractor and Shri S. Vishvanathan, Managing Directors, retired on attaining superannuation on 30th April, 2014. Shri Deepak I. Amin nominated u/s 19(d) by the Government has resigned from the Board w.e.f. 8th May, 2014. Sarvashri S. Vankatachalam, D. Sundaram, Parthasarathy Iyengar and Thomas Mathew retired from the Board w.e.f. 24th June, 2014 consequent upon completion of their term. Shri G. S. Sandhu retired from the Board w.e.f. 10th November, 2014. Shri J. B. Mohapatra retired from the Board w.e.f. 21st November, 2014 consequent upon completion of his term. Shri A. Krishna Kumar, Managing Director, retired from the board w.e.f. 30th November, 2014 consequent upon superannuation.

Shri Sanjiv Malhotra, Shri M. D. Mallya, Shri Sunil Mehta and Shri Deepak I. Amin were elected as Shareholder Directors under section 19(c) w.e.f. 26th June, 2014. Shri B. Sriram and Shri V. G. Kannan were appointed as Managing Directors under section 19(b) w.e.f. 17th July, 2014 on the Board. Dr. Hasmukh Adhia was nominated as Director under section 19(e) on the Board w.e.f. 11th November, 2014.

The Directors place on record their appreciation of the contributions made by the respective outgoing Directors, namely, Shri Hemant G. Contractor, Shri S. Vishvanathan, Shri S. Venkatachalam, Shri D. Sundaram, Shri Parthasarathy Iyengar, Shri Thomas Mathew, Shri J. B. Mohapatra, Shri G. S. Sandhu and Shri A. Krishna Kumar, to the deliberations of the Board. The Directors welcome the new Directors Shri Sanjiv Malhotra, Shri M. D. Mallya, Shri Sunil Mehta, Shri Deepak I. Amin, Shri B. Sriram, Shri V. G. Kannan and Dr. Hasmukh Adhia on the Board.

The Directors also express their gratitude for the guidance and co-operation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank.

For and on behalf of the Central Board of Directors

Date: 22nd May 2015 Chairman


Mar 31, 2013

Financial Performance

Profit

The Operating Profit of the Bank for 2012-13 stood at Rs. 31,081.72 crores as compared to Rs. 31,573.54 crores in 2011-12 registering a marginal decline of 1.56%. The Bank has posted a Net Profit of Rs. 14,104.98 crores for 2012-13 as compared to Rs. 11,707.29 crores in 2011-12 registering a growth of 20.48%.

While Net Interest Income recorded a growth of 2.40%, the Other Income increased by 11.73%, Operating Expenses increased by 12.33% attributable to higher staff cost and other expenses.

Net Interest Income

The Net Interest Income of the Bank registered a growth of 2.40% from Rs. 43,291.08 crores in 2011-12 to Rs. 44,331.30 crores in 2012-13. This was due to higher growth in the advances and investment portfolios.

The gross interest income from global operations correspondingly rose from Rs. 1,06,521.45 crores to Rs. 1,19,657.10 crores during the year registering a growth of 12.33%.

Interest income on advances in India registered an increase from Rs. 77,309.15 crores in 2011-12 to Rs. 85,782.26 crores in 2012-13 due to higher volumes. The average yield on advances in India has declined from 11.05% in 2011-12 to 10.54% in 2012-13. Interest income on advances at foreign offices has grown by 26.17%.

Income from resources deployed in treasury operations in India increased by 13.82% mainly due to higher average resources deployed. The average yield, which was 7.51% in 2011-12, has increased to 7.54% in 2012-13.

Total interest expenses of global operations increased from Rs. 63,230.37 crores in 2011-12 to Rs. 75,325.80 crores in 2012-13. Interest expenses on deposits in India during 2012-13 recorded an increase of 20.88% compared to the previous year, whereas the average level of deposits in India grew by 14.3%. The average cost of deposits has consequently increased from 5.95% in 2011-12 to 6.29% in 2012-13.

Non-Interest Income

Non-interest income stood at Rs. 16,034.84 crores in 2012-13 as against Rs. 14,351.45 crores in 2011-12 registering an increase of 11.73%.

During the year, the Bank received an income of Rs. 715.51 crores (Rs. 767.35 crores in the previous year) by way of dividends from Associate Banks/ subsidiaries and joint ventures in India and abroad.

Operating Expenses

There was an increase of 8.29% in the Staff Cost from Rs. 16,974.04 crores in 2011-12 to Rs. 18,380.90 crores in 2012-13. Other Operating Expenses registered an increase of 19.89% mainly due to increase in expenses on rent, taxes and lighting, advertisement & publicity, law charges, postage, telegrams & telephones, insurance and miscellaneous expenditure.

Operating Expenses, comprising both staff cost and other operating expenses, have registered an increase of 12.33% over the previous year.

Provisions and Contingencies

Major amounts of provisions made in 2012-13 were as under:

- Rs. 961.29 crores write back from provisions for depreciation on investments, excluding amortization of premium on Held to Maturity category (as against Rs. 663.70 crores provided towards depreciation on investments in 2011-12).

- Rs. 5,953.88 crores towards Provision for Tax, excluding deferred tax creation of Rs. 107.97 crores (as against Rs. 6,320.09 crores in 2011-12 excluding deferred tax reversal of Rs. 455.93 crores).

- Rs. 11,367.79 crores (net of write-back) for non- performing assets (as against Rs. 11,545.85 crores in 2011-12).

- Rs. 749.61 crores towards Standard Assets (as against Rs. 978.81 crores in 2011-12). Including the current years provision, the total provision held on Standard Assets amounts to Rs. 5,289.58 crores.

Reserves and Surplus

- An amount of Rs. 4,417.86 crores (as against Rs. 3,516.98 crores in 2011-12) was transferred to Statutory Reserves.

- An amount of Rs. 19.17 crores (as against Rs. 14.38 crores in 2011-12) was transferred to Capital Reserve Fund.

- An amount of Rs. 6,453.26 crores (as against Rs. 5,536.50 crores in 2011-12) was transferred to other Reserve Funds.

Table 1: Key Performance Indicators

Indicators SBI SBI Group

2011-12 2012-13 2011-12 2012-13

Return on Average Assets (%) 0.88 0.91 0.89 0.89

Return on Equity (%) 16.05 15.94 16.49 15.97

Expenses to Income (%) (Operating Expenses to Total Net Income) 45.23 48.51 53.51 56.35

Book Value per share (Rs.) 1214.78 1394.79 1540.64 1769.19

Basic Earnings Per Share (Rs.) 184.31 210.06 241.55 266.82

Diluted Earnings Per Share (Rs.) 184.31 210.06 241.55 266.82

Capital Adequacy Ratio (%) (Basel-I) 12.05 11.22 11.84 11.07

Tier I 8.50 8.23 8.30 8.10

Tier II 3.55 2.99 3.54 2.97

Capital Adequacy Ratio (%) (Basel-II) 13.86 12.92 13.68 12.82

Tier I 9.79 9.49 9.65 9.46

Tier II 4.07 3.43 4.03 3.36

Net NPAs to Net Advances (%) 1.82 2.10 1.81 2.07

Assets

The total assets of the Bank increased by 17.28% from Rs. 13,35,519.23 crores at the end of March 2012 to Rs. 15,66,261.04 crores as at the end of March 2013. During the period, the loan portfolio increased by 20.52% from Rs. 8,67,578.89 crores to Rs. 10,45,616.55 crores. Investments increased by 12.41% from Rs. 3,12,197.61 crores to Rs. 3,50,927.27 crores as at the end of March 2013. A major portion of the investment was in the domestic market in government securities.

Liabilities

The Banks aggregate liabilities (excluding capital and reserves) rose by 17.24% from Rs. 12,51,568.03 crores on 31st March 2012 to Rs. 14,67,377.36 crores on 31st March 2013. The increase in liabilities was mainly contributed by increase in deposits and borrowings. The Global deposits stood at Rs. 12,02,739.57 crores as on 31st March 2013 against Rs. 10,43,647.36 crores as on 31st March 2012, representing an increase of 15.24% over the level on 31st March 2012. The borrowings increased by 33.21% from Rs. 1,27,005.57 crores at the end of March 2012 to Rs. 1,69,182.71 crores as at the end of March 2013 mainly attributable to borrowings from RBI in India and borrowings & refinance outside India.

I CORE OPERATIONS

I. 1. Customer Service

Our vision statement unambiguously spells out the centricity of the customer in the Banks business strategies and operations. A multi-tiered structure of committees constantly review existing services and suggest improvements. Important issues raised by these Committees and action taken thereon, as well as analysis of the consolidated data for customer grievances for all Circles are placed before the Customer Service Committee of the Board every quarter, to identify common systemic and policy issues that require rectification.

The Bank has a well defined and documented Grievance Redressal Policy which provides for:

- A dedicated Customer Care Cell

- Banks Web based Complaint Management System (CMS) has been redesigned and launched as a single online Grievance Lodging and Redressing System for the Bank. Customers can lodge their complaints through various channels including written complaint at branch, by calling at the toll free number of Banks Contact Centre 1800 425 3800 / 1800 11 22 11, online through Banks website www.sbi.co.in, sending SMS message UNHAPPY to number 8008 202020 etc. All complaints are lodged through CMS and are acknowledged with a unique ticket number immediately on lodging. Bank has mandated and has been able to redress a majority of the customer grievances within a maximum period of three weeks of receipt, as against the time limit of 30 days prescribed in the BCSBI Code. All ATM related complaints of Bank customers are redressed within the RBI-prescribed 7 days.

- While the Bank strives to achieve the highest standards in customer service, it has also put in place a Board approved Compensation Policy to compensate the customer financially in the unlikely event of any slippage in services extended. The Policy ensures that the aggrieved customer is compensated without having to ask for it.

- Over 70% of the recommendations of the Damodaran Committee have already been implemented.

- Suitable structure has been put in place at the Branches, Regional Business Offices, Local Head Offices, Administrative offices and at the Corporate Centre of the Bank for handling requests and appeals under the RTI Act 2005, Consumer Forums, etc.

Customer Friendly Initiatives

During 2012-2013, in the backdrop of slowing investment/consumption/net exports, constrained food production, high inflation, distress in several industry and infrastructure sectors-textile, chemicals, iron and steel, food processing, construction, telecom- major initiatives were taken by your Bank towards catalyzing investment & growth, to facilitate the flow of credit to critical sectors of the economy including agriculture, infrastructure, micro, small & medium enterprises, housing, exports, and with a view to reducing customer distress/pain points & raising levels of customer satisfaction. These initiatives include:

- Pricing concessions

- Interest rates Base rate was twice reduced during the year from 10% to 9.75% as on 20/9/2012, and then again to 9.70% as on 4/2/2013, the lowest amongst all banks and so pegged, to bring relief to all borrowers, particularly SME units, home loan borrowers, who continued to enjoy the lowest home loan interest rates, and commercial real estate accounts, which were aligned with the prevailing retail housing loans in terms of interest rates.

- Guarantee fees were absorbed by the Bank, both for exporters( ECGC fees) and fees payable by MSE units to CGTMSE for guarantee cover on collateral free loans upto Rs. 1 crore.

- Process innovations

- Relationship management platform was strengthened across business verticals-Accounts Management teams for corporates, premier banking services for high networth customers, relationship managers for SMEs (ME&SE)

- The number of processing cells(RACPCs/ SMECCs), supported by loan origination software, were increased and revamped, for quicker processing of loans

- Touch-points with customers were expanded, through opening of branches and increasing Customer Service Points, BC outlets in remote areas

- Cluster models were introduced at all currency chest branches for efficient cash management at semi-urban/rural areas

- A dedicated wing was created in all processing cells to monitor NPA accounts

- Product changes

- We have a great CASA franchise and savings bank accounts form the bulwark. The savings bank account is normally the first on-board facility availed by a customer and the referral point for all future services from the Bank. To preserve and enhance the value of our savings bank offering, your Bank introduced the following initiatives during the year :

- Minimum balance in savings account was done away with.

- The penalty on non-maintenance of Average Quarterly Balance stands withdrawn.

- The inter-core transfer transactions have been made free, and cash deposit minimum charges were reduced from Rs. 25 to Rs. 10.

- Introduction of Personal Accident Insurance Policy for all savings bank account holders at a nominal rate received tremendous response.

- Proactively, providing CTS-2010 compliant multi- city cheque- books benefited all our customers

- Unfixed Deposits scheme applicable to term deposits of 6 months was extended to term deposits upto one year.

- A new tractor loan scheme with relaxations in eligibility, margin, security, interest & upfront fee was launched. Also a revised KCC scheme was rolled out for the benefit of farmers. Relaxed collateral security norms for all agri loans upto Rs.1 lac was introduced.

- SBI loan scheme for Vocational Education & Training was launched while loan amount for studies abroad was raised to Rs. 30 lacs

- Technology upgrades

- SBI through CMP Centre was the first Bank to use NPCI Aadhar Payment Bridge System (APBS) for transferring LPG subsidy based on Aadhar Number.

- The Bank launched an Online Savings Bank Application facility and e-RD,TDR/STDR accounts which evoked enthusiastic response from the customers. Issuance of TDR/STDR through ATMs have been operationalised.

- Centralised printing and mailing of current account/oD/Cash credit statements, housing loan interest certificates, deposit accounts certificates to enhance customer convenience, were initiated during the year

- The Bank issued a series of new plastic cards for the convenience of their target groups, e.g State Bank Business debit card for corporate customers in two variants-Pride & Premium, Insta Deposit cards enabling traders & service providers to quickly deposit cash, State Bank Virtual Card for retail customers

- State Bank MobiCash Easy, a mobile wallet, was introduced during the year

- E-challan cum return for collection of Employees Provident fund, through branches and corporate internet, commenced during the year.

I.2. BUSINESS GROUPS

A. GLOBAL Markets OPERATIONS

Global Markets Unit manages the Banks rupee liquidity, compliance with reserve requirements and investment portfolio of the Bank besides offering a wide range of foreign exchange and hedging products to the customers. It also offers portfolio management services to large retirement funds. It constantly endeavors to keep liquidity at the optimum level while maximizing the returns.

During the year the Reserve Bank of India reduced Cash Reserve Ratio by 0.75% and Statutory Liquidity Ratio by 1%. The Bank therefore had ample liquidity during the year. This offered the Bank opportunities to invest in short term money market instruments like Commercial Papers (CPs) and Certificate of Deposits (CDs). Bank invested over Rs. 75,000 Crores in CDs and CPs at an average spread of 65 to 75 basis points (BPs) over applicable yield on Treasury Bills, thereby earning additional interest income.

The yield on Government securities declined during the year responding to the Repo rate cuts of 100 BPs by the RBI and moderation in inflation. Yield on the benchmark 10 year Central Government securities declined from 8.63% in April 2012 to 7.99% by 31st March 2013. This reduction in yield offered opportunities for churning the SLR portfolio of the Bank.

We booked more than Rs. 200 Crores from active management of the portfolio. Despite a fall of 64 BPs in yield on Government Securities, the return on SLR portfolio was only marginally lower by 5 basis points, because of dynamic rebalancing of the portfolio.

As the yields were in a declining trend, the Bank decided to increase duration of the portfolio. The Bank purchased long dated Securities of over Rs. 35,000 Crores of Central and State Governments. The Bank also invested in high yielding corporate bonds aggregating to more than Rs. 10,000 Crores during the year. The gross corpus of funds under the management of Global Markets was close to Rs. 4 lac Crores as on 31st March 2013.

Equities witnessed a turnaround this year led by improved economic situation in the USA, reduced stress in Eurozone, pro-reform measures of the Indian Government as well as rate cuts by the RBI. While the Bank remains invested in multiple strategic positions, Global Markets increased proprietary trading in Nifty stocks. The Bank also used Mutual fund schemes for liquidity management and higher returns. The Bank made a profit of about Rs. 600 Crores from Equity and Mutual Funds.

The Bank continued to explore opportunities in the area of private equity and venture capital fund investments. During the year, investments of Rs. 100 Crores were made in different venture capital funds. Bank also partially exited from one of the private equity investments during FY13 resulting in a profit in excess of Rs. 50 Crores at an IRR of more than 45.25%. Due to favorable valuations and market conditions, Bank also exited from another strategic investment resulting in a profit of Rs. 65 Crores. The Bank also participated in the primary market and disinvestment programme of the Government of India through Offer For Sale (OFS) route by investing about Rs. 1,300 Crores.

Global Markets provides foreign exchange solutions to the customers in all currencies for managing their currency flows and hedging risks through options, swaps, forwards and bullion services. Given the large presence across the country, the Bank provides a world class technology platform to seamlessly process currency flows between its customers through branches and the dealing room. This is part of our continuous endeavour to provide enhanced services to our customers. The Treasury Marketing outfits complement this by engaging with customers to provide them with inputs about markets and suggest products to suit their requirements. The Bank earned income of over Rs. 1600 Crores from covering the customer flows in foreign exchange, hedging, gold, and proprietary trading, registering an increase of 18%. Global Markets also manages FCNR(B) corpus of the Bank and provides funds for Export Finance in Foreign Currency and FCNR(B) loans.

The Bank was also ranked number one in the "Best for FX options" and "Best for FX Products and Services" categories and number two in the "Best for FX Research & Market Coverage" category in the same poll. These help us to consistently improve our service to our esteemed customers.

The Bank provides portfolio management services to an array of retirement funds in the country consistently giving better returns. The Portfolio Management Services section, with an AUM of over Rs. 2,38,000 Crores, has consistently outperformed private sector peers in generating returns for the EPFO funds. Last year, the bank was adjudged the best fund manager for EPFo.

B. CORPORATE BANKING GROUP (CBG)

The Banks Corporate Banking Group consists of three Strategic Business units viz. Corporate Accounts Group, Transaction Banking Unit and Project Finance & Leasing SBu.

B.1. Corporate Accounts Group (CAG)

CAG is the dedicated SBU for handling the large credit portfolio of the Bank. The SBU has Offices in 6 regional centers viz. Mumbai, Delhi, Chennai, Kolkata, Hyderabad and Ahmedabad headed by General Managers. The business model of CAG is centered around the Relationship Management concept and each client is mapped to a Relationship Manager who spear-heads a cross-functional Client Service Team. The Relationship strategy is anchored on delivering integrated and comprehensive solutions to the clients, including structured products, within a strict Turn- Around-Time. The principal objective of the strategy is to make SBI the first choice of the top corporates thereby deepening the wallet-share and improving the Return on Capital Employed. A sustained Account Planning exercise with rigorous review by senior management sets the pace for the Relationship Management in CAG.

Table 2: Business Performance of CAG (Rs. in cr)

Facility Mar-12 Mar-13 YoY Growth

Fund Based (O/s) 125286 175831 40%

Non Fund Based (Vol) 337486 409477 21%

While the Fund Based outstandings of CAG constitute 16% of total credit portfolio of the Bank, CAG also handles about 59% of the domestic forex business of the Bank. During the year, CAG handled several high value deals for clients such as Essar Oil, HDFC, Hindalco Industries, Essar Steel, Power Grid Corporation, DVC, JSW Energy etc.

In an environment of depreciating Rupee, several CAG clients prefer to borrow in foreign currency. Significant International business is thus originated from CAG clients like PSU Oil Majors and groups such as Tata, Reliance, Essar, Adani, JSW, etc. In the highly competitive area of Acquisition Funding also, CAG has registered a strong presence through deals such as Hindujas acquisition of Houton International Inc, USA and B C Jindal groups acquisition of Exxon Mobils global BOPP business.

The Asset quality of CAG remained well under control with the Gross NPAs at 0.57% of total advances. About 87% of CAGs portfolio is investment grade with 40% carrying the highest rating from the External Credit Rating Agencies.

In the backdrop of the robust growth of CAG, it is proposed to open additional Offices in major centres beginning with Mumbai and Delhi. All CAG Offices are now headed by General Managers in line with the rising business profile of the Group and to facilitate interaction at senior level with due regard to the high profile of the CAG clients. Keeping in view the critical importance of the delivery platform, the incumbency of the Chief Operating Officer has also been upgraded to the level of Dy. General Manager in all CAG units.

B.2. Transaction Banking Unit (TBU)

TBU oversees Cash Management Products, Trade Finance and Supply Chain (Dealer / Vendor) Finance and has expanded its activity during the last three years.

- Cash Management Product (CMP)

Collection services in the Bank are now offered through 1219 authorized branches located at 722 Centres. Besides usual cheque and cash collections, Doorstep Banking for cash / cheque pickup and collections for Public Issues (IPO/Bonds), are being handled by CMP. Payment services comprising Dividend Warrants, Multi City Cheques, IOIs and e-payment are extended through all branches. CMP Centre has integrated the State Government Payments Systems with the Core Banking Solution of the Bank providing Centralized Payment Solutions to the State Governments in their ambitious National e-Governance Project (NeGP). SBI was the first Bank to use NPCI Aadhar Payment Bridge System (APBS) for transferring LPG subsidy based on Aadhar Numbers.

- e-Trade SBI, a web-based portal, to enhance customer comfort and provide easy access to trade finance services, by enabling customers to lodge Letters of Credit, Bank Guarantees and Bills Collection/ negotiation requirements online from any corner of the world has been well received, with 1326 Corporates registered under e-Trade SBI as on 31.03.2013 and more than 11000 transactions per month through e-Trade platform.

- e-VFS ( Electronic Vendor Financing Scheme) & e-DFS ( Electronic Dealer Financing Scheme) are fully automated and secured products, designed to ensure efficient management of working capital cycle of the corporates and sustained growth and profitability of business partners.

- Financial Institutions Business Unit (FIBU), a dedicated vertical created for capturing potential business opportunities from financial institutions, has been able to bring on board 15 Insurance Companies, 26 Mutual Fund Companies, 45 NBFCs and 15 Banks.

B.3. Project Finance & Leasing SBU (PFSBU)

PFSBU deals with the approval and arrangement of funds for large projects in infrastructure sectors like power, telecom, roads, ports, airports, other urban infrastructure as also other non-infrastructure projects in sectors like metals, cement etc., with certain threshold on minmum project cost.

Table 3 : Business Performance of PFSBU (Rs. in cr.)

2011-12 2012-13

Project Cost 109293 166299

Project Debt 84858 88033

Sanctioned Amount 24976 24119

Syndication Amount 18160 33454

As on 31.03.2013, t he portfolio of infrastructure projects under implementation with PFSBU involves Power projects with aggregate capacity of 52,862 MW; Telecom Projects serving 303 million subscribers; Road projects covering 5,386 kms; new Ports to handle 40 MTPA multi-purpose cargo and 1.2 million TEU of container capacity; Metro project in Hyderabad besides a host of projects in steel, cement, Urban Infra, CRE etc. During the year, a total (FB + NFB) of Rs.12,884 crores (Rs.15,410 crores in FY 12) were disbursed to these projects.

Table 4: major deals during 2012-13:

Project Details

Tata Steel Odisha Integrated Steel Plant of 6 mio TPA capacity.

ONGC Greenfield Petro-Chemical Plant Petro-additions of 1100 KTPA of ethylene and 400 KTPA of propylene.

Jindal Power Setting up Thermal Power Plant of 1200 MW capacity.

Videocon Term loan refinance and SBLC Industries for Mozambique Oil operations. The deal won the Business World Magna best structured deal of the year award.

The Bank has constituted a panel of 21 eminent Consultants who are former CEOs/ Directors of leading PSUs with domain expertise in various important sectors. The expert panel has significantly enhanced the capability of PFSBU in evaluating the techno- economic feasibility of projects in critical sectors like Power, Oil Refining, Metals, Fertilizers, Telecom etc.

C. mid corporate group

Mid Corporate Group (MCG), through its 13 regional offices at Ahmedabad, Bangalore, Chandigarh, Chennai (2), Hyderabad, Indore, Kolkata, Mumbai (2), New Delhi (2) and Pune, has 60 branches as on 31.03.2013. During the year, the advances grew from Rs.1,70,442 crores to Rs.2,04,853 crores.

Looking to the expansion and growth in business, both in number and volumes, an additional Chief General Manager (CGM) was posted in October 2012 at the Mid Corporate Group, Corporate Centre. The distribution of work between the 2 CGMs is based on geographical lines, with one looking after Northern and Southern regions and the other Eastern and Western regions - assisting the DMD & Group Executive in handling the increased number of MCROs/MCG branches and the growing complexities of business. Similarly, an additional General Manager has been posted at Delhi, Mumbai and Chennai Regional Offices during 2012-13, with clear allocation of MCG branches and attendant responsibilities. The doubling of General Managers at these centres has provided customers with greater access to senior officials, and has also resulted in improved credit delivery - with greater thrust on attracting good quality new business. During the year, the incumbency of 16 Mid Corporate branches was upgraded from Assistant General Manager (AGM) to Deputy General Manger (DGM). With these branches now being headed by DGMs, instead of AGMs earlier, the customers would have more effective resolution of their credit and other related problems.

Account Management Team (AMT) Model, with manageable number of accounts in each team, has been implemented at all branches (214 AMTs), for better credit delivery and focused attention to individual accounts. In the AMT set-up, both pre and post-sanction formalities are handled by the same team - consisting of Relationship Manager, Credit Analyst and Service Officer, which helps in having a holistic view of the requirements of customers as also the underlying risks.

The MCG held several conclaves, essentially as brain- storming sessions with the key functionaries to understand and analyse the trends of business. The frank and detailed exchange of views between the top executives and the operating officials on the ground, in these conclaves, were extremely useful in planning business growth and asset management.

As a result of a concerted drive for selecting good quality assets by making pricing and other terms more attractive for top rated customers, the total percentage of assets above investment grade grew from 64.26% as on March 2012 to 68.31% as on March 2013.

The Group also assisted companies in India to acquire assets / companies overseas and provides support for such expansion plans, including by way of external loans to overseas subsidiaries/JVs (backed by LoCs) through the International Banking Group. Over the years, the Group has helped many such acquisitions by Indian companies in USA, Europe, Australia, Africa, etc. Simultaneously, a conscious attempt was made to improve the asset quality through intense engagement with promoters of weak/stressed accounts. Consequently, the Non Performing Assets (NPAs) of MCG declined from Rs.19,777 crores as on December 2012 to Rs.18,443 crores as on March 2013, and NPAs as a percentage of total advances were not only contained but also significantly brought down in the last quarter of 2012-13.

The Mid Corporates have been more severely affected by the down-turn in economy - leading to deterioration in asset quality. The processes of appraisal/sanction, follow-up and supervision were, therefore, significantly beefed up. An additional position of General Manager (Restructuring) has also been created in the Group at Corporate Centre, in view of the recent increase in restructuring cases - both CDR and non-CDR. With these additions, the DMD has greater support from senior officials to look after customer relationships.

D. NATIONAL BANKING GROUP

Table 5 : NBG Business Performance (Rs. In cr.)

As on 31.3.2011 31.03.2012 31.03.2013 YTD GROWTH Level Level Level Absolute (%)

Segmental 7,91,836 9,12,848* 10,48,136 1,35,288 14.82 Deposits

Segmental 3,75,037 4,29,509* 4,96,394 66,885 15.57 Advances (non-food)

(* This figure is excluding accounts transferred to MCG during FY 2012-13)

In terms of Business volumes, Branch Network, and Human Resources, the National Banking Group (NBG) is the largest Business Vertical of the Bank. The Group has five strategic Business Units, comprising of Rural Banking (RBU), Personal Banking (PBBU), Real Estate Habitat & Housing Development (RE, H & HD), Small & Medium Enterprises (SMEBU), and Government Business (GBU). National Banking Groups share in the total business of the Bank as on 31st March 2013 is 95.05% in total domestic Deposits, and 56.70% in total domestic Advances.

National Banking group, as on 31st March 2013, comprised of 14,733 branches out of 14,816 total domestic branches, which are controlled by 14 Local Head Offices.

With a view to enhance customer experiences at our branches, we have air-conditioned all our branches, and improved ambience of our branches. With the recruitment of a large number of Assistants, Branch expansion programme also got an impetus, and during the year we increased our Branch count by 719.

Table 6: Branch Expansion

As on Rural Semi- Urban Metro Total Urban

31.03.12 5382 3995 2502 2218 14097

Branches added during 304 170 122 123 719 FY 2012-13

31.03.13 5686 4165 2624 2341 14816

New branches were opened with very good ambience, air-conditioning, digital display facilities and with adequate staffing.

To improve operational efficiencies , we have added 2 more Networks, 7 more Administrative Offices and 81 Regional Business Offices during the FY 2012-13.

ATM Network: State Bank of India has the largest ATM network in the country, which we have expanded further during the year, to provide better ATM facilities to the customers. We have also improved upon uptime of ATMs.

Table 7: ATM Network

As on No. of ATMs ATM No. of Availability transactions at uptime ATMs (in lacs)

31.03.12 22141 95.15% 23811

31.03.13 27175 96.42% 29324

To further improve upon customer satisfaction and to minimize their hardship during bunched holidays, we have been suo-moto offering increased working hours/ additional working days.

D.1 RURAL BUSINESS UNIT

- FINANCIAL INCLUSION:

- Bank has set up 38,480 BC Customer Service Points, through alliances both at national and regional level.

- SBI is offering various technological-enabled products, through Business Correspondents (BC) channel, such as, Savings Bank, RD, STDR, remittances & OD facilities.

- Opened 2.03 crores small accounts with simplified KYC.

- Bank has covered 12,931 FI villages (population >2000) and 7,600 FIP villages (population <2000).

- Transactions volume through BC Channel has grown 2.4 times during FY12-13 at Rs.13,033 crores over FY 11-12.

- Direct Benefit Transfer (DBT) Scheme successfully rolled out. SBI has Lead responsibility in 28 out of 121 DBT pilot districts. SBI has successfully completed 1.31 lac transactions amounting to Rs. 8.77 crores as Sponsoring Bank, in addition to handling 0.41 lac transactions amounting to Rs. 7.08 crores as Receiving Bank.

- Around 99% households covered & 9.85 lac accounts linked with Aadhaar in 43 pilot districts.

- Under Urban Financial Inclusion, 5,629 BC outlets have been set up in Urban/Metro centres to cater to the requirements of migrant labourers, vendors, etc. 157 lac remittance transactions for Rs. 6,962 crores were registered during FY 13.

- 5.45 lac SHGs were credit linked with credit deployment of Rs. 5,600 crores. Our market share in SHGs is 23%.

Multiple IT enabled channels for Financial Inclusion include:

- Kiosk Banking - The Banks own technology initiative, operated at internet enabled PC (Kiosk) with bio-metric validation at 20,178 CSPs, covering 83 lac customer enrolments, has been rolled out in 31 states and 479 districts.

- SBI Tiny Card - About 14 lac customers have been enrolled during FY13 (cumulative more than 76 lac customers).

- Mobile Rural Banking - Banks own technology on mobile platform introduced. This technology works on even very inexpensive mobile handsets.

- Cell Phone Messaging Channel-This cost effective model, working on low-cost simple mobile phones and well secured through PIN / signature based security has been rolled out in 12 states across 50 districts and covered 2,025 CSP outlets.

Table 8: Business Performance of Agri-Advances

Rs. in cr.

Particulars Level

31.03.2012 31.03.2013

Number of farmers covered 99,80,156 1,11,69,524

Agri Priority Advances 1,07,256 1,24,834

Direct Agri Advances 86,281 1,08,584

Direct Agriculture Advances 12.99% 14.24% (%of ANBC) Benchmark 13.5%

Direct Agri Advances crossed Rs. 1,00,000 crores, the only Bank to have crossed this landmark, covering more than 1,11,00,000 farmers and surpassed the Benchmark of 13.5% of ANBC. The Bank has also achieved an all time high growth of Rs. 21,408 cr under Agri segmental advances during FY13. YOY growth works out to 25%.

- Bank has opened the largest number- 111 RSETIs for empowering rural youth to take up self- employment.

- Credit Flow to Agriculture

The Bank has disbursed loans aggregating Rs.63,936 crores in FY13 surpassing the annual GOI target of Rs.60,000 crores and 11.89 lakh new famers were brought into the banks fold during the year.

* New Products launched:

- The revised Kisan Credit Card scheme provides for comprehensive short term credit limit, assessed for 5 years with 10% step up every year, with inbuilt post harvest/household/consumption requirement, maintenance expenses of farm assets, Crop Insurance, Personal Accidental Insurance Scheme (PAIS), asset insurance and investment credit. In addition, loan account is operated through multi-delivery channels (PoS and ATMs)using the State Bank Kisan Cards.

- The new Tractor Loan Scheme was rolled out to cater to emerging needs with relaxations in eligibility norms, margin, security, coupled with competitive interest rates and EMI mode of repayment.

- Special campaigns were launched to accelerate agri-business growth:

Swarna Dhara Campaigns for agri-gold loans was continued, with quarterly competitions and garnered Rs. 14,345 crores business.

Tractor Carnival launched from 1st Sep 12 to regain the market share, resulted in a business growth of Rs. 328 crores (8083 tractor loans).

- Growth enablers:

- Corporate and Partnership Tie-ups: Bank has entered into 14 new corporate tie-ups for driving growth , major being PepsiCo (KCC), Rallis India (KCC), ITC Ltd (KCC) and National Bulk Handling Corporation (Warehousing receipt financing).

- Special interest concessions: Special interest concessions ranging from 1.5% to 3.5% were extended to promote loan growth in high value agriculture activities like horticulture, minor irrigation, seed processing, warehousing, rural godowns, fishery, dairy, poultry, dealers in agri inputs, farm machinery etc.

- Relaxed collateral security norms upto Rs.1.00 lac for all agri loans and Rs.3.00 lac for loans with recovery tie up arrangements have been leveraged to improve quality Agri-Business.

- Bonding with Farmers:

During the year 209 new villages were adopted under "SBI Ka Apna Gaon Scheme" for overall development taking the total to 1,272. 373 new Farmer Clubs were formed for fostering continued relationship with the farming community taking the total to 10,648.

- Regional Rural Banks:

Table 9: Overview of Regional Rural Banks

Particulars Level as on

31.03.2012 31.03.2013

No. of RRBs 18 15

States covered 16 15

Districts covered 129 138

Branches 3180 3380

Deposits (Rs.in crores) 29491 33379

Advances (Rs. in crores) 17833 20681

CD Ratio 60.47 61.95

Profit after tax (Rs. in crores) 320 386

As on 31.03.2013, SBI has 15 sponsored RRBs, which operate in 138 districts of 15 states and have a network of 3380 branches. During FY2012-13, four RRBs viz.,Sharda Gramin Bank, Rewa Sidhi Gramin Bank, Nainital Almora Kshetriya Gramin Bank &Rushikulya Gramin Bank, sponsored by other Commercial Banks, have amalgamated with SBI sponsored RRBs and three RRBs sponsored by the Bank viz; Parvatiya Gramin Bank, Samastipur Kshetriya Gramin Bank &Vidisha Bhopal Kshetriya Gramin Bank have amalgamated with RRBs, sponsored by other Banks. All the RRBs are operating on Core Banking platform and are leveraging technology in electronic banking services such as NEFT, RTGS, ATM linked KCC and ATM, to provide better customer service. The RRBs are endeavouring to increase the size and business volumes by implementing financial inclusion.

- Rural Self Employment Training Institutes (RSETIs) Table 10:

Performance of RSETIs Rs. in cr.

Particulars 31.03.2012 31.03.2013

Number of RSETIs 106 111

States/ UT covered 19 24

Persons trained 1,11,049 1,43,190

Persons settled 45,285 56,630

RSETIs offer free, unique and intensive short term residential self employment training programmes with free food and accommodation, designed specially to empower rural youth. Bank has set up 111 RSETIs as on 31.03.2013 across the country. The SBI- RSETIs in aggregate conducted 5371 training programmes, trained 1,43,190 candidates and 56,630 trainees are settled under self employment/wage employment.

- Other Highlights

- Under Prime Ministers Programme for the welfare of Minorities and implementation of Sachar Committee recommendations, against GOI stipulated target of 15% of the total priority sector lending (PSL) to Minority Communities, the Bank has achieved a level of 16.77% of the total PSL as on 31.03.2013.

- 169 Financial Literacy Centres (FLCs) were set up with the main objective of creating financial awareness, importance of savings, and advantage of savings with banks, other facilities provided by banks and benefits of borrowing from Banks

- The Bank has extended advances to the tune of Rs. 77,019 crores as on 31.03.2013 to the weaker sections, which is 10.14% of ANBC against the Benchmark of 10% set by Reserve Bank of India.

- The Bank has opened 172 new branches in under-banked/unbanked areas in Minority Community Districts ( MCDs) taking the total number of such branches to 3,438 as on 31.03.2013.

D. 2 Personal Banking Business Unit Table 11: Domestic Business performance of PBBU

(Rs. in cr)

Particulars 31.03.2012 31.03.2013 YTD Growth (%)

Deposits 5,99,313 6,94,033 15.80

Advances (Retail 79,688 90,227 13.23 excluding Housing Loans)

CASA 2,82,047 3,29,699 16.89

Domestic Deposits have grown by Rs. 94,720 crores with a growth of 15.8% and Advances by Rs. 10,539 crores with a growth rate of 13.23% as on 31 March 2013. CASA Deposit has grown by 16.89% and CASA Ratio as on 31.03.2013 is 47.5%.

Table 12: Growth in Savings Bank Accounts

31.03.2012 31.03.2013

No. of New Savings 227 lacs 286.60 lacs Bank Accounts opened

Other highlights include:

- Western Union transactions are being offered at all the branches and have contributed Rs. 8.11 crores to other income up to 31st March, 2013. During the year the Bank also commenced Money Gram transactions.

- Our Bank has been designated as the point of Presence (POP) for conducting business under the New Pension System (NPS), an initiative of the Government of India, and 3879 branches across all Circles have been registered for conducting business under the New Pension System. Our Bank has also developed a Corporate Model and has registered 08 Corporates including State Bank of India. Bank is also registered as an Aggregator for promotion of registrations under NPS Lite which is a variant of NPS.

- Our Bank is Self-Certified Syndicate Member for ASBA (Application Supported by Blocked Amount), as per SEBI guidelines, which is being offered through all our branches in India.

- SBI has enabled 3000 ATMs across the country for Visually Challenged Persons to carry out ATM transaction through voice guidance. These ATMs can be accessed by visually challenged custmomers of all banks.

- NRI Services:

- During the year 2012-13, NRI Deposits have grown by Rs. 13,922 crores (22%) and reached a level of Rs. 77,185 crores as on 31.03.2013. Advances to NRIs recorded a growth of Rs. 442 crores (25%) during the financial year 2012-13, the level reached being Rs. 2,240 crores as on 31.03.2013. NRIs have invested in the schemes of SBIMF and SBI Life to the tune of Rs. 696 crores during the year.

- SBI was the principal sponsor of Pravasi Bharatiya Divas, a flagship event for NRI Diaspora from all over the world, organized by the Ministry of Overseas Indian Affairs, which was held in Kochi (Kerala) from 7th- 9thJanuary 2013.

- To achieve the status of the preferred NRI Bank, we have opened 16 new NRI Branches in India during the current financial year, taking the number of NRI branches to 69. These branches have an excellent ambience along with dedicated team of officials to serve NRI customers.

- SBI has started offering FCNR (B) deposits in 4 additional currencies viz. Swiss Franc (CHF), New Zealand Dollar (NZD), Swedish Krona (SEK) and Danish Krone (DKK) since September 2012.

Table 13: Corporate & Institutional Tie-Ups:

Particulars 31.03.2012 31.03.2013 Growth during FY 2012-13 Absolute %

Defence Salary Package and 19,21,107 22,27,930 3,06,823 15.97 Para Military Salary Package accounts

Other Salary Package 42,54,397 48,51,168 5,96,771 14.03 Accounts

Total No of Salary Package 61,75,504 70,79,098 9,03,594 14.63 Accounts

CASA (in Rs. crores) 16,221 21,262 5,041 31.08

The various Salary packages together have resulted in taking the total salary account Customer base to 70.79 lacs, i.e. a growth of 9.03 lac new accounts during the period 01.04.2012 to 31.03.2013. CASA in these accounts has gone up from Rs. 16,221 crores to Rs. 21,262 crores during this period. The incremental CASA of Rs. 5,041 crores represents 11.58 % of the incremental Personal Banking CASA of the Bank.

* Auto Loans

SBI Auto Loans maintains its retail market leadership in car loan financing. The Auto Loan portfolio has grown by 35.48% during FY 2012- 13 in spite of near flat growth of passenger car market. The Bank has emerged as a clear market leader in Auto Loans with a market share of 22.25% amongst ASCB as on Mar2013.

The Bank is currently offering car finance on "On Road Price" of the car, with the longest repayment period of 7 years, no pre-payment penalty, no advance EMI and at competitive interest rates. A new product "SBI Combo Loan Scheme" has been launched during the year for financing a car and a two-wheeler together (combined limit).

SBI has taken up various joint promotional activities with major car manufacturers like Maruti, Hyundai, Tata Motors, Ford, Mahindra & Mahindra, Toyota, and Mercedes during the financial year 2012-13.

* Education Loans

SBI Education Loans has grown by 9.43% during FY 2012-13. SBI has a total exposure of Rs. 13,751 crores as on Mar 2013.

SBI Loan Scheme for Vocational Education and Training was launched in July 2012 and loans upto Rs. 1 lac are given under this scheme.

Maximum Loan Amount for Studies Abroad has also been increased to Rs. 30 lac from the previous limit of Rs. 20 lac.

In order to provide financial assistance to more students opting for higher education, the SBI Scholar Loan scheme has been extended to 114 institutes . The maximum loan amount under this scheme has also been enhanced to Rs. 30 lac.

* Personal Loans

The Personal Loans Portfolio, which is the second largest in the Personal Banking Segment, has grown by Rs. 2,860 crores during FY 2012-13. It includes Loan against Securities, Loans against Properties, Gold Loan, etc. Of these, Xpress Credit and Loan against Time Deposits are two major products and have grown by Rs. 1,002 crores and Rs. 1,217 crores during FY 2012-13 respectively. The most notable growth has been in Gold Loan portfolio of Rs. 480 crores (96.94%) during FY 2012- 13.In order to further increase our market share in the Loan against Deposit Scheme, we have reduced our rate of interest from 0.75% above the TD rate to 0.50% above the TD Rate, which is one of the lowest in the industry.

The Delivery Systems for loan products have been under constant focus. Retail Assets Centralized Processing Centres (RACPCs) have been opened up across the country, based on the volume, geographical spread and product focus to ensure uniformity in processing of all Retail loan proposals. This ensures smooth delivery to the customer and with the support of Loan Originating Software (LOS) that currently takes care of Credit- related risks, will enable customers, in future, the facility to track their application online. As on 31.03.2013, there were 60 RACPCs and 70 Retail Assets and Small & Medium Enterprises City Credit Centres (RASMECCs).

Some of the steps taken to reduce NPAs are:

- Risk Scoring Models have been developed for all P-Segment Loans on the basis of statistical models for objective assessment. Recently, the Auto Loan scoring model has been made tighter and more emphasis is now being given to Net Income of an individual. (For eg: The minimum income criterion for Auto Loans has been raised from Rs. 1 lac to Rs. 2.5 lac p.a.).

- Loan Origination Software (LOS) usage (100% usage at RACPCs), and its integration with the Risk Scoring Model (RSM) and CIBIL check to take care of many process related risks.

- In view of the rising NPAs in Education Loans, PAN card of the student and co-borrower/ guarantor has been made mandatory for all Education Loans. For existing Education Loans, a one-time exercise is planned to obtain the PAN card numbers. Instructions have been issued to all operating units to send Notices to borrower, co-borrowers and guarantors in case of default in Education Loans.

- Immediate action under SARFAESI, including seizure of cars for eligible cases.

- Instructions are in place for granting no further Retail Loans (except Education Loans) to the employees of those companies whose accounts are classified as NPAs.

D.3 Real Estate, Habitat & Housing Development (RE, H&HD)

State Bank of India, the Most Preferred Home Loan Provider with the largest Home Loan portfolio in the Banking Sector and market share of over 26% amongst All Scheduled Commercial Banks (ASCBs) :

Table 14: Performance in Home Loans

(Rs. in cr.)

Particulars March, 2012 March, 2013

Levels 1,02,739 1,19,467

YTD Growth 12,826 16,728

YTD Growth (%) 14.41 16.30

During FY 2012-13, several initiatives were taken by the Bank to give an additional thrust to its Home Loan portfolio. Some of the important initiatives in this regard are as under:-

- The Maximum Repayment Period permissible under NRI Home Loans Scheme has been increased from 25 years to 30 Years to align the same with the Maximum Repayment Period under domestic Home Loans Scheme, imparting it with greater flexibility.

- The ceiling on financing Home Interiors/ Furnishings, as part of the project cost, has been revised upwards from Rs.3 lac to Rs.6 lac subject to the amount expended towards Home Interiors/ Furnishings being restricted to 10% of the Project Cost and the Maximum Loan Amount adhering to the stipulated Loan to Value (LTV) Ratio.

- Home Loan Interest Rates were reduced substantially w.e.f. 7thAugust, 2012 by reducing the spread over the Base Rate. With subsequent downward revisions in the Base Rate itself, the effective Interest Rate on Home Loans ultimately stood reduced to 9.95% p.a. for loans upto Rs.30 lac and 10.10% p.a. for Home Loans above Rs.30 lac as on 4thFebruary, 2013 rendering them very competitive and the lowest in the market.

- The premium of 0.25% p.a. applicable on Interest Rates under Commercial Real Estate (CRE) Home Loans has been waived to align the same with the prevailing Interest Rates on normal Home Loans.

- With a view to extend the benefit of lower rates of interest (both Fixed and Floating Interest) to our existing Home Loan customers paying relatively higher interest rates, an option to switch-over their loans to the current lower interest rates was made available on payment of a fee of 0.56% of the outstanding w.e.f. 21stSeptember, 2012.

- A Special Takeover Campaign was launched from 1stSeptember, 2012, assuring prospective customers, of a fixed Processing Fee of Rs. 1000/- on Home Loan Takeovers, irrespective of the loan amount. The Campaign was extended till 31stMarch, 2013 and provided our Bank with a competitive edge in the overall pricing of our Home Loan products.

- Term Assurance (Loan Protection) Cover (optional) is available to our Home Loan customers from SBI Life Insurance Company Ltd through RiNnRaksha /Smart Shield/Saral Shield. The Bank provides additional loan for payment of the premium of the above policies on the same terms as those applicable to the underlying Home Loans.

D.4 SME BUSINESS UNIT (SMEBU)

During the financial year 2012-13, the advances under SME Business Unit has registered year on year growth of 12.45%. The advances figures of SME Business Unit as on 31..03.2013 are as under.

Table 15: Business Performance in SME

(Rs. in Cr.)

Particulars 31.03.2012 31.03.2013 Growth (% increase)

Advances 1,63,745 1,84,128 20,383

(12.45)

No of 12.84 12.97 0.13 accounts (in lakhs)

- Relationship Banking :

Under single window approach, the Bank is offering Relationship Banking to SME Entrepreneurs. The strength of Relationship Managers (Medium Enterprises) was augmented to 566 as on 31.03.2013 and mapped to ME units with credit limits Rs.1.00 crores and above across the country. The advances portfolio under Relationship banking as on 31.03.2013 is Rs. 1,03,619 crores. For units having credit limits between Rs. 10.00 lacs to Rs. 1.00 crores, Relationship Managers (SE) have been posted to improve credit flow to Micro and Small Enterprises.

- SME Credit City Centres (SMECCC):

SMECCCs, rolled out during 2004-05 as a part of BPR initiative, are centralized loan processing centres for sanction of SME loans upto credit limit of Rs. 1 crore. At present 78 SMECCCs and 58 RASMECCs across the country are functional. To further revamp the structure and process of SMECCCs to enable consolidation of the Banks position in the SME universe in the country a major exercise has been initiated in association with renowned consulting group. The revamped process will be in place by September 2013.

- Specialized SME Branches :

To provide specialized services to SME Entrepreneurs, 400 branches having predominant share of SME advances in their portfolio are being branded as "SME BRANCH" to define the identity of these branches with a common nomenclature and to develop these branches as centres of excellence for SME loan delivery.

- Credit Flow to Micro and Small Enterprises under CGTMSE:

Bank is extending collateral free lending up to Rs. 1.00 crores to MSE sector under guarantee of CGTMSE. Additionally, to provide relief to these units Bank has decided to absorb the guarantee charges payable to CGTMSE. The outstanding under the guarantee scheme of CGTMSE is as under:

Table 16: Performance in CGTMSE (Rs. in cr.)

Particulars As on As on Growth 31.03.2012 31.03.2013 (% Increase)

Outstandings 3,716 7,236 3,520 (% to (2.27) (3.92) (94.7) total SME advances)

No of 1.13 1.72 0.59 customers (52.2) (in lakhs)

- Project Uptech:

Bank is providing consultancy support to SMEs for catalyzing Technology Upgradation in SME clusters with the objective of making the clusters more competitive through increase in productivity and quality and reduction in costs. Since inception of the initiative 1600 units have benefitted in 28 clusters. Presently, three projects, Steel Structural Fabrication & Boiler Component (Trichy), Fabrication Engineering (Jamshedpur and Nagpur) are going on.

- Entrepreneurship Development programme :

Bank has formulated a scheme for conduct of EDPs on an ongoing basis, in association with reputed national level EDP training institutes. To begin with, 4 centres were identified for conduct of EDPs on pilot basis during the year, viz. Ahmedabad (in association with EDI), Hyderabad (in association with NI-MSME), New Delhi (in association with NIESBUD) and Bhubaneswar (in association with SBI-RSETI, Jharsuguda). The target groups for the EDPs were mainly final year students of engineering / management colleges and educated youth. The total number of participants was 120. It is proposed to have EDP programmes on regular basis in all the Circles across the country during FY 2013-14.

- Supply Chain Finance:

Leveraging its state-of-art technology, SBI is focusing on further strengthening its relationship with the Corporate World by financing their Supply Chain partners. Towards this SBI introduced Channel Financing Products with the following features:

- Web based platform, fully integrated worth Corporate Enterprise Resource Planning Software

- Real time online transfer of funds 4 Automated settlement of funds

- Customized MIS

- Centralized hassle free processing All the product offerings under Channel finance are designed to ensure efficient management of working capital cycle and sustained growth and profitability of business partners and the entire Supply chain is taken care under the scheme, which is fully automated, secured and robust. The products offered under channel financing are Electronic Dealer Financing Scheme (e-DFS) and Electronic Vendor Finance scheme (e-VFS). Under Supply Chain Finance bank has tied up with 65 Industry majors with across all Industry Verticals like Auto, Oil, steel, Power, fertilizer, FMCG and Textile.

Table 17: Performance in Supply Chain Finance

(Rs. in cr.)

Particulars As on As on Growth 31.03.2012 31.03.2013 (% Increase)

Outstandings 2,190 4,781 2,591

(118.3)

No of 813 1766 953 customers (117.2)

- Cash Management

The Bank has introduced cash deposit machines to facilitate deposit of cash into their account by customers themselves by swiping their SBI ATM cum Debit card. To enable SME customers also to deposit cash into their CA/CC account through CDMs, State Bank SME Insta Deposit Card was launched during the year. With Insta Deposit Card, SME customers like traders & service providers are able to quickly deposit their cash into their accounts without waiting in the queue. As on March 31, 2013, the Bank had issued 1,66,477 insta deposit cards to SME customers, showing the growing popularity of the facility. The number of CDMs installed was 665.Similarly,the cash pickup facility of collecting cash at customers doorsteps was introduced for SME customers in August 2011 Marketing campaigns were launched during the year to popularize the scheme among SME customers. The growth in usage of this facility has been as under:

Table18: Cash Pick up Facility (Rs. in cr.)

Particulars As on As on Growth 31.03.2012 31.03.2013 (% Increase)

No of 88 484 396 customers (450) availing the facility

Amount of 153.20 2,246.75 2,093.55 cash pick-up (1348)

Table 19: Performance in Government Business

Year Turnover Commission Market (in cr.) (in cr.) Share (%)

2011-12 2536900 2008.23 58.50

2012-13 2862053 1778.20 58.12

- While the Bank retained its leadership in Government Business ,there was a minor dip in Agency Commission due to downward revision in rates by RBI with effect from 1st July, 2012. The adverse impact on Agency Commission was contained by marketing of various products, customized to suit the requirements of the Government.

- The Bank brought more State Governments and taxes under the ambit of Cyber Treasury and paid special attention to opening Public Provident Fund Accounts and Pension Accounts.

- E- Governance Projects of Central and State Governments which are bringing a paradigm shift in the way Government business is conducted are being leveraged for customers convenience bringing about more efficiencies of processes.

- 2.83 Lakhs new Pension Accounts were opened, bringing the tally to 34.74 Lakhs Pension Accounts being serviced efficiently through 14 Centralized Pension Processing Cells set up in various parts of the country. Pension details are being sent to the pensioners on their mobile numbers. Besides this, pensioners can lodge their complaints online, on our website, or seek clarifications at our contact Centre.

- The Bank is ushering in the era of hassle free fee collection on behalf of various Departments, Union Ministries and state Governments. An income of Rs. 41 crores was generated from this product during the current financial year.

- The Bank is actively participating in the "SAAKSHAR BHARAT" Mission of the Union Government and has opened 1, 23,343 accounts for dispensation of funds upto Gram Panchayat level in 22 states across the country. The Bank has also sponsored the SAAKSHAR BHARAT celebrations at Red Fort, Delhi and Lucknow, the Capital city of Uttar Pradesh.

- State Bank of India is the exclusive Banker to the Ministry of External Affairs (MEA) and is collecting the Passport Fees from Passport Sewa Kendra (PSK) in the country.

- Bank is proud to be associated with Central Government Projects like Government e-Payment Gateway (GePG). By integrating with GePG portal, the Bank is now enabled to make electronic payments to employees/ vendors of Central Government across the country.

- Products like "Rail Shakti", "E-Auction" and "Imprest Cards" have been very well received by Railway Authorities and are expected to gain momentum during FY 13-14.

- The Bank has since been authorized to collect RTI fee online which will be helpful in generating substantial revenue as Agency Commission.

E INTERNATIONAL BANKING

Operation of Foreign Offices

The asset level of foreign branches rose by 18%, from USD 35.826 bn in March 2012 to USD 42.146 bn in March 2013. During FY13, net customer credit grew by 17% from USD 26.681 bn to USD 31.148 bn, customer deposits grew by 11%, from USD 12.075 bn to USD 13.374 bn. Net profit rose by 10% to USD 435.64 mn.

Table 20: Business Performance of Foreign Offices

(IN USD MIO)

Mar-12 Mar-13 YOY YOY Growth Increase in %

Net Assets 35826.46 42146.10 6319.65 17.64

Net Customer Credit 26681.23 31148.53 4467.31 16.74

Net profit 395.63 435.62 39.99 10.11

The number of foreign offices increased from 173 as on 31st March 2012 to 186 as on 31st March 2013 spread across 34 countries. The offices comprised of 51 branches, 7 Representative Offices, 107 offices of the six foreign banking subsidiaries and 21 other offices.

Table 21: Break -Up of Foreign Offices

FY-12 New Offices FY-13 opened during the year

Branches/SO/Other Offices 58 10 68

Subsidiaries/JV (6)

Offices 103 4 107

Rep Offices* 8 -1 7

Associates/ Managed 4 0 4 Exchange Cos/Investments

Total 1731 131 186

*Tianjin Representative office was Upgraded to full fledged Branch

Resource Management

Banks Foreign Offices maintained comfortable liquidity position during the fiscal, despite volatile market conditions. In July 2012, Bank successfully priced a USD 1.25 Bn Bond issue, 144A/ Reg S transaction maturing in August 2017. Bank received overwhelming response across investor classes for the Bond, despite very difficult market conditions. Bilateral loans of different maturities worth USD 540 Mn were also raised during the fiscal. At Singapore, where the Bank has 7 branches and 24 ATMS, including ATMs at Changi Airport terminals 1, 2 & 3, retail deposits saw a 21% growth year-on-year. Our UK operations also scaled up its retail presence to achieve a retail deposit growth of 41% in the fiscal.

Remittance

Inward remittances grew from Rs. 61,457 crores in FY12 to Rs. 69,812 crores in FY13, clocking a growth of 14%. The Bank had a tie-up with 27 exchange companies and five banks in Middle-East countries for routing remittances through SBI. During the year, new remittance product SBI Express Remit-Canada was launched exclusively for Canadian Dollar remittances. An Outward remittance product RemXout was launched for SBI Internet Banking customers.

E-2. Domestic Operations Merchant Banking

The Bank retained its premier position as Mandated Lead Arranger and Book Runner for syndicated loans in Asia Pacific (excluding Japan but including Australia) for the sixth consecutive calendar year, in FY13.

During FY-13, Bank acted as the Mandated Lead Arranger in 17 deals aggregating USD 6.442 Bn for several leading Indian corporates like IOCL, REC, NPCL, MRPL, Reliance Industries and Vedanta Resources Plc.

Table 22: Syndicated Loan Deals

No of Deals Amount (in USD bn)

FY-12 14 4.76

FY-13 17 6.29

Apart from this, foreign currency term loans aggregating USD 3.68 bn were extended to Indian corporates on a bilateral basis. Further, 10 loans amounting to USD 229.04 mn were acquired through secondary market.

Fee income of USD 89.88 mn was earned from foreign currency term loans concluded during the year through syndication / bilateral deals.

Global Link Services (GLS)

Global Link Services (GLS), a specialized outfit, caters to centralized processing of Export Bills collection, Cheque collection and online inward remittance transactions.

During the financial year 2012-13, GLS (on behalf of domestic branches) handled 104,262 export bills and 74,566 foreign currency cheque collections aggregating USD 15.27 bn. In addition, it handled 7,047,064 online inward remittance transactions amounting to USD 6.45 bn received from all over the world in 39 currencies

Correspondent Relations

The Bank maintains correspondent banking arrangement with 429 reputed International Banks to extend seamless services to varied clients. These correspondent Banks are located in 118 countries. The Bank also has 1,765 Relationship Management Application (RMA) arrangements with SWIFT, facilitating speedier flow of financial messages.

Country Risk and Bank Exposures

The Bank has in place a Country Risk Management Policy in tune with RBI guidelines. The policy outlines robust risk management model with prescriptions for Country, Bank, Product and Counter party exposure limits. Both Country-wise and Bank-wise exposure limits are monitored and reviewed on a regular basis. The exposure ceilings and classifications are moderated in line with the dynamics of their risk profiles. Periodical corrective steps are initiated to safeguard the Banks interests.

I.3. CORPORATE STRATEGY AND NEW BUSINESSES

Emerging business areas, including tech-based products, are developed and launched by a dedicated department headed by a Dy. Managing Director. Progress on some of their key initiatives is detailed hereunder:

- Debit Cards:

Debit Card spends of State Bank Group crossed Rs. 15,000 crores for FY 2012-13 which constitutes over 20% of total Debit Card spends in the industry. The Bank has been actively promoting Debit Card usage at Point of Sale/for e-Commerce. For the festive season from 16- Oct-2012 to 15-Nov-2012, the Bank ran a promotional Campaign called "Cracker of an Offer" where the Bank along with its subsidiary, SBI Card, tied up with a number of merchant partners to offer attractive discounts for State Bank Debit and Credit Card usage at their outlets/websites. With a view to increasing Debit Card activation, the Bank also ran special promotional offers for its Debit Cardholders with leading merchants of different merchant categories in the industry in co-ordination with SBI

Card.

The Bank launched "State Bank Business Debit Card" for its corporate customers in two variants "Pride" and "Premium" on the occasion of Banks Day 2012. Till 31-March-2013, more than 86,000 Business Debit Cards have been issued. This product is being launched in Associate Banks shortly.

- Prepaid Cards:

Banks range of products include popular Rupee Prepaid Cards like Gift Card, General Purpose Prepaid Card like eZ-Pay Card and Foreign Travel Card catering to various payment needs of the customers.

- Foreign Travel Card:

Foreign Travel Card, now a CHIP based EMV Compliant Card, is available in eight currencies, US Dollar (USD), Great Britain Pound (GBP), Euro, Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yan (JPY), Saudi Riyal (SAR) and Singapore Dollar (SGD), providing safety, security and convenience to overseas travellers. Corporate variants of SBFTC have been introduced to cater to the needs of Corporates. Sales for FY 2012-13 were to the tune of to USD 66.92 million.

- eZ-Pay Cards

eZ-Pay Cards are aligned with most of the social schemes of State and Central Governments in addition to salary payments by Corporate entities, thus reaching millions of households. Sales for FY 2012-13 were to the tune of to INR 931.92 crores. Co-branded Prepaid Cards for various Zones of Indian Railways and Federation of Freight Forwarders Association in Indian (FFFAI) were rolled out during FY 2012-13.

- Gift Cards

Gift Cards remain the preferred option to customers to gift the freedom of choice to their loved ones. Customers can create Gift Cards online. Sales registered during FY 2012-13 was INR 77.44 crores. State Bank Achiever Card, a re-loadable corporate incentive Card with a validity of 10 years for disbursement of incentives/awards was rolled out during March-2013.

- Green Channel Counter (GCC)

The Green Channel Counter facility is made available in 7052 branches. On an average, the daily transactions routed through GCC are more than 1,00,000.

- Self Service Kiosk (SSK)

As on 31.03.2013, SSKs have been installed in 965 branches. On an average, SSKs are recording more than 30,000 transactions on a daily basis.

- Green Remit Card (GRC)

GRC, a remittance card, was introduced on 02.01.2012 mainly to take care of the large number of non- home cash deposit transactions at our branches. A cardholder can swipe the card at Green Channel Counter or in Cash Deposit Machines and remit money to the beneficiary whose account number is mapped to the card. Once the transaction is complete, both the remitter and beneficiary get confirmation through SMS on their mobile phone. The Bank has issued 6,23,623 cards resulting into 8,08,830 cash deposit transactions as on 31.03.2013.

- Mobile Banking & Wallet

Presently, the Bank has a market share of around 65% in the transaction volume and over 36% in the transaction value . During the FY, financial transactions to the tune of Rs.1933 Crores were done through the service resulting in a total income of Rs.4.67 crores. As on February 2013 SBI is the market leader in terms of registered user base and number of transactions. Efforts are in place to maintain the leadership position in this space.

The Bank has launched a full KYC mobile wallet under the brand name "State Bank MobiCash". A variant of the same "State Bank MobiCash Easy", a wallet which does not require completion of KYC formalities was launched in Mumbai, Delhi and Chandigarh on the 31st December, 2012. So far, around 14,500 wallets have been issued.

- Merchant Acquiring Business (MAB)

In order to create a comprehensive electronic infrastructure in the country, activate our more than 136 million debit cards on POS terminals, increase visibility and to tap the huge potential available in the market, Merchant Acquiring business is being conducted by the bank. With around 70000 terminals in the market, Bank is already the largest player amongst the Public Sector Banks and 4th largest Acquirer in India. Bank has already entered into Corporate tie-ups with many prominent players including top educational institutions and hospitals.

- Private Equity

The Banks foray into the Private Equity space began in 2009 with a Joint Venture with the Macquarie Group of Australia. The Fund raised US $ 1.2 billion, making it one of the largest India focussed Private Equity Funds. The Fund has made 8 investments in sectors such as Airports, Telecom, Roads, Renewable and Thermal Energy. The Fund made investments to the extent of 90% of the Capital Committed.

The Joint Venture with State General Reserve Fund of the Sultanate of Oman, named the Oman India Joint Investment Fund, a US $ 100 million Fund has made three investments of Rs.202 crores, in sectors such as defense electronics and industrial explosives. With this, the Fund has made investments to the extent of 40% of the Capital Committed.

The Bank signed a preliminary non-binding MoU with Russian Sovereign Wealth Fund- Russian Direct Investment Fund (RDIF) for setting up US $ 2 billion Private Equity Fund to invest / facilitate investments into bilateral co-operation projects, bilateral trade related projects or companies, privatization or globalization opportunities, projects particularly with India-Russia context.

I.4. NPA MANAGEMENT

Credit Policy and Procedures

This year was characterized by sharp increase in non- performing assets in the first three quarters of the year, which abated only in the fourth quarter. While a major reason for such high NPA generation could be the overall slowdown in economic growth and other macro economic factors, it has also brought to attention the need for arranging our credit policy and practices to achieve the following objectives:

a. To analyse and address the reasons for relatively higher NPAs in comparison to the other banks,

b. Reasons for our relatively low share in better performing business segments.

The Credit Policy and Procedure Committee of the Bank, headed by Chairman, comprises of all heads of business groups/verticals like CFO, IBG, NBG, MCG, CAG and also Treasury. The forum of CPPC was activated and 17 meetings were held during the year and 72 policy changes were approved.

Details of the Credit Committees Structure are as below: At Corporate Centre:

a) Executive Committee of Central Board (ECCB)

b) Corporate Centre Credit Committee (CCCC)

c) Whole Banking Credit Committee (WBCC-I) International Division Credit Committee (IDCC)

d) Whole Banking Credit Committee (WBCC-II) International Division Credit Committee (IDCC-II)

At Local Head Office/Mid Corporate Group

a) Circle Credit Committee (CCC-I)/

Mid Corporate Credit Committee(MCCC)

b) Circle Credit Committee (CCC-II)

c) Zonal Credit Committee (ZCC)/

SME Credit Committee (Branch level Credit Committee in MCG)

d) Regional Credit Committee (RCC)

In order to downstream the credit sanction process, a Regional Credit Committee (RCC) at each Regional Office was created with discretionary powers of Rs.5 crores fund based and Rs.2.5 crores non-fund based for Corporates.

SAMG has also put in place a new Credit Committee.

The above structure has the benefit of being able to respond to the business opportunities in a quick manner and at the same time having adequate control and oversight. All the above Committees have periodic and regular meetings whenever there were enough proposals to be considered. The collective decision making process has been found to be effective in better risk assessment and quality decision making.

The analysis revealed the spreads in non-fund business in the Bank are much lower compared to the fund based even after adjusting for cost of capital. Accordingly, the Bank has decided to link the pricing for all non-fund based business to External Credit Ratings and also improve the security cover for these exposures. Simultaneously, the pricing for top rated companies viz. AAA, AA, A was made more aggressive in order to get higher share. The first half of the financial year was slack. The results of these strategies were noticeable in the second half and there was a robust growth of Rs.46,491 crores in advances from the last quarter and more than 80% of this came from companies rated investment grade.

The Bank has also fine tuned its policy for Corporates, which allows the Bank to refinance their high cost loans with other Banks. Corporate loan has twin advantage as it is extended for long term working capital requirements of the corporate and requires only a minimum Fixed Assets Coverage Ratio (FACR) of 1.25. It has proved to be quite popular with our constituents. Similarly, from time to time, the pricing and terms of various other loans like Home Loans, etc. have been adjusted to generate high growth with good quality.

The product of electronic platform for financing to dealers of reputed companies e-DFS was made strong and pricing was also made very attractive, which has led to phenomenal growth in the portfolio of e-DFS.

The Bank also continued with its policy of 100% ECGC cover for all export oriented units and premium thereof was borne by the Bank. During the year ECGC based on their understanding of global slowdown and default by several overseas buyers, made the rules stricter for packing and post shipment credit. Accordingly, Banks credit policy also envisages that packing credit can be sanctioned only when there are satisfactory credit reports available on the overseas buyers on a recent date and verification of Buyers Specific Approval list maintained by ECGC.

Similarly, credit scoring model for car loans was modified to make it more effective without significantly diluting credit standards. Further, the minimum threshold credit rating for takeover of advance has also been enhanced to SB6 and with External Rating of minimum BBB.

External rating: The Bank has to allocate capital on assets depending on the basis of credit rating. As per current regulations, credit rating is necessary / mandatory for all accounts of advances of Rs.5 crores and above. Out of 55,130 eligible accounts, 31,702 have already been rated. We are continuing our endeavours to encourage the remaining eligible accounts to obtain the required external credit rating.

In order to impart transparency and impartiality to the pricing process for all working capital advances, the pricing has been linked to external rating and the current matrix is:

Table 23: Pricing of Loans

External Rating WCDL Cash Credit

AAA / AA Base Rate Base Rate + 25 bps

A Base Rate + 25 bps Base Rate + 50 bps

BBB Base Rate + 0.65 bps Base Rate + 0.90 bps

With the pricing for loans being non-discriminatory, executive time is not required to be given for deciding on pricing for individual companies. Similarly, in other business areas like Home Loans, Education Loans, Car Loans, etc. the pricing was made non-discriminatory and uniform for similar categories.

STRESSED ASSETS MANAGEMENT GROUP

In the wake of the Global crisis of 2008 and the headwinds before the Indian economy today, asset quality of Indian Banks, including SBI, has been under pressure. Slippages have continued unabated and resolution of NPAs today poses a major challenge to Banks.

With a view to address this issue, we have, during 2004, set up the Stressed Assets Management Group (SAMG). SAMG is headed by a Deputy Managing Director supported by a team of 2 Chief General Managers and other senior officials. SAMG has been set up as a dedicated and specialised vertical to efficiently resolve high value NPAs which are transferred to the Group by other Strategic Business Units.

Today, SAMG has 15 branches across the country of which 2, one at Ernakulam and another at Mumbai (second branch) were opened during the year. The Bank also holds licenses for opening branches in three other Centres. Arrangements are on hand to open one of these in Coimbatore. The branches are staffed with officials with expertise in resolution of stressed assets, duly supported by Law officers.

As on date, 24.35% and 58.14% of the Banks NPAs and AUCA reside within SAMG. While SAMG is primarily responsible for resolution of NPAs in the Corporate segment, Stressed Assets Recovery Branches (SARBs) and Stressed Assets Recovery Cells (SARCs) have been set up within the National Banking Group to tackle retail NPAs. The recovery efforts of SARBs/SARCs are supplemented by efforts put in by ground level operating staff at our 14,816 branches across the country. Besides, Account Tracking & Monitoring (AT@M) Centres have been operationalised in all Circles to contact SMAs and NPAs in the retail segment. Business Correspondents, Business Facilitators and Self Help Group are also involved in recovery of Agricultural NPAs.

SAMG employs multi-pronged strategies to resolve stressed assets including, inter alia,

- Restructuring of both Standard assets and NPAs, either though the CDR mechanism or through a bilateral arrangement

- Recovery through auction of assets using the SARFAESI route

- Filing suits in Debt Recovery Tribunals and other Courts for recovery of our dues

- Identifying strategic investors and engaging with them for takeover of stressed assets

- Sale of NPAs to Asset Reconstruction Companies

- Entering into One Time Settlements with borrowers

- Using Resolution Agents to take possession of properties mortgaged to the Bank and arranging for their auction

- Using the e-auction platform to reach out to as many prospective bidders as possible

- Debt Asset swaps have been considered in some cases

- Engaging investigation agencies to trace out unencumbered assets of promoters and guarantors and obtaining Attachment Before Judgements over these properties

- Identifying Companies and promoters as Wilful Defaulters and arranging for display of their names on the websites of Credit Information Companies such as CIBIL. These names are also reported to the Reserve Bank of India.

- Publishing photographs of defaulters in newspapers where warranted.

The focussed and specialised attention that SAMG has been able to bring to the task has resulted in substantial recoveries in high value NPAs during the year. Besides, the concerted efforts of SAMG have resulted in recoveries of dues to the Bank this year, some of which are decades old.

The skills of officials posted in SAMG and other recovery units are constantly upgraded and honed by:

- Regular training programmes tailor made to the requirements of SAMG organized by the Banks Apex Training Institutes

- Arranging for Guest Lectures by acknowledged experts in the field (For e.g. Shri R. C. Kohli, an experienced banker and author of "Practical Approach to Recovery Management in Banks and Financial Institutions and Securitisation Act" has addressed our officials on several occasions)

- Regular conclaves are held where matters of topical relevance are discussed. Individual accounts are also reviewed and strategies decided to expedite recoveries in these accounts. Feedback from operating functionaries is regularly elicited on how the Group can further optimize operations.

- Top Management of the Bank, including the Chairman, regularly review all high value accounts and suggest ways and means to resolve these NPAs.

The Bank took an important initiative during the year to facilitate expeditious credit decisions, such as approving OTSs, fixing reserve prices for auction of seized properties, etc., within SAMG. Till recently, all matters requiring sanctions/approvals were routed through Credit Committees of other Business Groups. A Stressed Assets Management Credit Committee (SAMCC) has now been set up with the sole objective of considering proposals of SAMG for sanction or approval. This dedicated Credit Committee is a valuable resource for SAMG as credit decisions are taken immediately and communicated at once to operating functionaries resulting in swifter recoveries. During the year, the Bank had also announced a scheme where nominal incentives were paid to officials instrumental in recovering amounts written off over 5 years ago, which yielded significant results and the Bank was able to recover more than Rs. 1000 crores during this year from written off accounts.

Notwithstanding the harsh and challenging environment we have seen in the year gone by, the determined and focussed efforts of the SAMG and SAMBs/SARBs/SARCs has contributed to a deceleration in NPA accretion. This was particularly evident during Q4 of 2012-13 when Gross and Net NPA percentages were brought down to 4.75% and 2.10% respectively from the peak levels of 5.30% and 2.59% witnessed during the year. In fact, Q4 also saw a reduction in gross NPAs by Rs.2, 269 crores in absolute terms. More details are furnished below:

Table 24: Break -up of NPA (Rs. In cr.)

NPA FY 11-12 Q3 FY13 FY 12-131

Gross NPAs 39,676 53,458 51,189

Gross NPA% 4.44 5.30 4.75

Net NPA% 1.82 2.59 2.10

Fresh Slippages 24,712 26,126 31,993

Cash Recoveries/ Upgradations 9,618 9,167 14,885

Write Offs 744 3,176 5,594

Recoveries in Written Off Accounts 962 673 1,066

While asset quality is expected to be under pressure during FY 13-14 also, the SAMG and other recovery outfits of the Bank are fully geared up to meet the challenges of the future.

II SUPPORT & CONTROL OPERATIONS

II.1. INFORMATION TECHNOLOGY

- CORE BANKING PROJECT

The CBS environment is benchmarked to establish the capability to support one billion accounts, over 250 million transactions in a day, and delivering a throughput of over 17,000 transactions per second.

Several new features were rolled out in CBS during the year for making the system more user-friendly. Two new ATM cards on RUPAY platform. Password protected statements in PDF format of Savings Bank, Current Account, Cash Credit accounts are now being sent to the e-mail addresses of customers. Functionalities for issuance of TDR/ STDR through ATM, online capture of 16-digit Census Code have been developed in CBS. Biometric authentication as a second-factor authentication method is being implemented in branches for all CBS users.

The process for the systematic and proactive risk identification, assessment, measurement, monitoring and mitigation of various risks in the IT vertical has been initiated. Disaster Recovery Drills are conducted regularly as part of the implementation of the Business Continuity Management System (BCMS). The first comprehensive Integrated Business Continuity Exercise (IBCE) during the current financial year was tested on 8th & 9th December 2012 and the second on 17th & 18th February 2013.

- ATM

SBI has issued more than 11.00 crores Cards out of which around 8.54 crores Cards are transacting regularly on the ATMs. The State Bank Groups ATM operations run from two Switches. The BASE24 Switch has recently been upgraded and it can now handle close to 50,000 ATMs. The ATM footprint is being enlarged substantially through Brown Label ATMs which are being rolled out as totally outsourced initiative under the guidance of Ministry of Finance. A wide variety of ATMs and various types of cards have been deployed. 581 new Cash Deposit Machines have been installed to facilitate customers to deposit the cash.

- INTERNET BANKING

Internet Banking service is available through the Banks website "https://www.onlinesbi.com".

The Banks internet banking solution is a comprehensive product for both retail and corporate users. The following major new features have been added during current financial year 2012-13:

Personal Internet Banking:

IPO(Debt) AS BA facility, Multi- lingual image based keyboard for profile password, Voice OTP for J&K customers for doing Internet Banking transactions etc.

Corporate Internet Banking:

Rakhsha IRCTC - Ticket Booking by Paramilitary Forces, Central Plan Scheme Monitoring System (CPSMS) facility , EPF payments by Corporate customers, Second Factor authentication through Hardware token for login by corporate customers, Merchant pre-approved transactions for corporate, Foreign Currency Loan Application

- IT - FOREIGN OFFICES

145 Foreign Offices of the Bank in 25 countries use the Finacle suite of applications that include Finacle Core, Finacle Treasury and Finacle Internet Banking Applications. 134 ATMs and 2 Kiosks have been installed at Foreign Centres and 7.63 lakh Debit Cards have been issued. Around 1.43 lakh users have been registered for Internet Banking.

- ENTERPRISE DATA WAREHOUSE DEPARTMENT

Data Marts relating to the various areas like Risk Management, Customer Analytics, Assets and Liability Management etc. have been designed. Dashboards have been developed and deployed for use by the executives for decision making. Campaign Management Tool has been implemented and campaigns through emails/ SMS have been launched by the various Business Units targeting customers under various segments. "Customer One view" (COV) has been developed for Corporate Account Group, Mid Corporate Group and Small and Medium Enterprise Accounts for better monitoring. Data Mining and Analytics are being performed in the areas of business development, Control, Performance and Profitability.

- NETWORKING

The Bank has implemented a secured, robust WAN architecture network connecting branches/ offices and ATMs of State Bank Group through leased lines, VSATs and CDMA technology. While leased lines and VSATs have been procured for primary links for connectivity, ISDN lines or VSATs have been provided as backup. The bandwidth of primary VSATs has been upgraded from 32 Kbps to 64 Kbps at all locations. The Bank is in the process of upgrading leased lines at all locations with bandwidth of 64 Kbps to 128 Kbps.

II.2. RISK MANAGEMENT & INTERNAL CONTROLS

- Risk Management Structure in SBI: The Risk Governance structure in place in the Bank is as under: Table 25: Risk Governance structure in the Bank

An independent Risk Governance Structure, in line with international best practices, has been put in place, in the context of separation of duties and ensuring independence of Risk Measurement, Monitoring and Control functions. This framework visualizes empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.

As envisaged in the Risk Governance Structure, Credit Risk , Market Risk, Operational Risk, Group Risk and Enterprise Risk Management Departments alongwith Basel Implementation and Information Security Departments are placed under Chief General Manager (Risk Management) under the control of Deputy Managing Director and Chief Credit & Risk Officer to ensure Integrated Risk Management for various Risks

- Credit Risk Management:

- The Bank has strong credit appraisal and risk assessment practices in place. The Bank uses various internal Credit Risk Assessment Models for assessing credit risk under different exposure segments. Internal ratings of the bank are subject to comprehensive rating validation framework.

- The department tracked 36 industries during FY 2012-13 including sectors such as Telecom, Power, Coal, Aviation, NBFC, Textile Sector, Iron and Steel and disseminated the same to operating staff for informed decision making. Specific studies on Companies/Groups as directed by the Banks Board were also conducted.

- The Bank has filed Letter of Intent with RBI for migration to Internal Ratings Based (IRB) Approach for Credit Risk. For this purpose, new policies and governance structure related to credit risk management have been approved by the Risk Management Committee of the Board (RMCB). The governance structure has also been made more robust for effective implementation of the IRB.

- Models for estimation of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) have been developed.

- Bank regularly conducts stress test on its Credit portfolio and Stress Scenarios are regularly updated in line with Industry best practices and changes in Macro economic variables.

- Five meetings of Credit Risk management Committee (CRMC) and six meetings ofRisk Management committee of Board (RMCB) were conducted during the year to review various risk policies, industry guidance and exposure norms.

- Market Risk Management:

- Market Risk is the possibility of loss a Bank may suffer on account of changes in values of its trading portfolio due to change in market variables such as exchange rates, interest rates, equity price, etc. The Market Risk management process at the Bank consists of identification, and measurement of risks, control measures, monitoring and reporting systems.

- The Bank has Board approved policies pertaining to the said risks for Trading in Foreign Exchange, Derivatives, Interest Rate Securities, Equities and Mutual Fund. Market risks are controlled through various risk limits such as Net Overnight Open Position, Modified Duration, Stop Loss, Management Action Trigger, Cut Loss Trigger, Concentration & Exposure Limits etc mentioned in the respective policies.

- Presently, market risk capital is computed under Standardized Measurement Method (SMM). The Bank has decided to migrate to advanced approaches under Basel-II for market risk i.e. Internal Models Approach (IMA) and submitted its Letter of Intent to the Reserve Bank of India. The IMA is a Value at Risk (VaR) based tool for monitoring of Banks trading portfolio. The VaR methodology is supplemented by conducting stress testing of the trading portfolio at quarterly intervals. The Bank is currently conducting parallel run of SMM and IMA methodologies.

- The Market Risk at the Bank is monitored and reviewed by the Market Risk Management Committee (MRMC) and the Risk Management Committee of the Board (RMCB) which meet at least once at quarterly intervals.

- Operational Risk Management:

- Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

- The main objectives of the Banks Operational Risk Management are to continuously review systems and control mechanisms, create awareness of operational risk throughout the Bank, assign risk ownership, align risk management activities with business strategy and ensure compliance with regulatory requirements, which are the key elements of the Operational Risk Management Policy of the Bank.

- Important policies, manuals and framework documents in line with RBI guidelines on Operational Risk Management Framework (ORMF) and Operational Risk Measurement System (ORMS) for migration to Advanced Measurement Approach (AMA) are in place.

- The Bank has already submitted its Letter of Intent (LOI) to RBI for migration to Advanced Measurement Approach (AMA).

- The Bank-level Operational Risk Management Committee (ORMC), an executive committee, reviews the operational risk profile of the Bank at quarterly intervals and recommends suitable controls/mitigations for managing operational risk in the Bank. The Risk Management Committees at all the 14 Circles, Business and Support Groups (NBG, IBG, CBG, MCG, GMU & IT) are also in place.

- Committee of Executives on High Value Frauds (CEHVF), headed by the Chairman, has been set up during the current year to periodically monitor and control high value frauds (Rs.1 crores & above) and alsofor mitigation of the same.

- Other executive level Committees viz. Overall Product Committee (OPC) and Outsourcing Vetting Committee (OVC) are also in place.

- Group Risk Management:

- Group Risk Management aims to put in place standardised risk management processes in Group entities

- The Group Internal Capital Adequacy Assessment Process (Group ICAAP) assesses relevant risks and mitigation measures for capital assessment, including under stressed conditions. A Group ICAAP Policy to ensure uniformity in ICAAP exercises of Group entities is in place.

- A quarterly analysis of risk-based parameters for Credit Risk, Market Risk, Operational Risk, Concentration Risk, Liquidity Risk and Contagion Risk is presented to Group Risk Management Committee/Risk Management Committee of the Board.

- Exposure limits for Large Borrower Exposure and Capital Market Exposure as per RBI have been adopted for the Group. Also, limits for Unsecured Exposures, Real Estate and Intra-Group Exposures have been set by the Bank.

- In order to overhaul the Group Risk Management and adopt global best practices, the Bank has embarked upon a Group Risk Management Project recently.

- Basel Implementation:

- RBI Guidelines on Basel III Capital Regulations have been implemented from April 1, 2013. Bank has put in place appropriate mechanism to comply with these guidelines.

- India is one of the first few countries to implement the Basel-III guidelines while USA and EU Block, are not yet on board.

- Enterprise Risk Management:

- For assessment of Pillar I risks and Pillar 2 risks such as Liquidity Risk, Interest Rate Risk, Credit Concentration Risk, as well as adequacy of Capital and overall Risk Management practices under normal and stressed conditions, the Bank has comprehensive Internal Capital Adequacy Assessment Process (ICAAP) in place.

- As part of the Risk Management Project being undertaken by the Bank to transform its role into a Strategic function aligned with Business Objectives, Bank has initiated Enterprise Risk Management (ERM) framework.

- Global best practices like Risk Appetite, Risk Aggregation and Risk based Performance Management System including Economic Capital and Risk Adjusted Return on Capital (RAROC) will also be covered within the ERM project recently taken up.

- Information Security:

- Bank has implemented a robust IT policy and Information System Securitypolicy which are in line with the international best practices. These policies are reviewed periodically and suitably strengthened in order to address emerging threats.

- Regular security drills and employee awareness programs are conducted to ensure security and increase awareness among staff. Business Continuity Management Systems (BCMS) has been implemented at Global IT centre, Belapur. Bank is also among the forerunners in the process of implementing the new RBI guidelines for the Banking Sector in this area.

- Internal Controls

The Bank has in-built internal control systems with well-defined responsibilities at each level. It conducts internal audit through its Inspection & Management Audit Department. Audit Committee of the Board (ACB) exercises supervision and control over the functioning of the I&MA department. The inspection system plays an important and critical role in identification, control and management of risks through the internal audit function which is regarded as one of the most important components of Corporate Governance. The Bank carries out mainly two streams of audits - Risk Focused Internal Audit (RFIA) and Management Audit covering different facets of Internal Audit requirement. All accounting units of the Bank* are subjected to RFIA. Management Audit covers administrative offices and examines policies and procedures besides quality of execution thereof.

*Besides the above, the department conducts Credit Audit, Information Systems Audit (Centralised IT Establishments & Branches), Home Office Audit (audit of foreign offices) and Expenditure Audit (at administrative offices) and oversee policy and implementation of Concurrent Audit (domestic & foreign offices) and Circle Audit. To verify the level of rectification of irregularities by branches, audit of compliance at select branches is also undertaken. During the period 01.04.2012 to 31.03.2013 - 8895 domestic branches / BPR entities were audited under Risk Focussed Internal Audit.

- Risk Focussed Internal Audit:

I&MA Dept undertakes a critical review of the entire working of auditee units through RFIA an adjunct to risk based supervision as per RBI directives. All domestic branches have been segregated into three groups (Group I, II & III) on the basis of business profile and risk exposures. While audit of Group I branches is administrated by Central Audit Unit (CAU), audit of branches in Group II & III category and Business Process Re-engineering (BPR) entities are conducted by thirteen Zonal Inspection Offices, each of which is headed by a General Manager. During the period 01.04.2012 to 31.03.2013 - 8895 domestic branches / BPR entities were audited under Risk Focused Internal Audit.

- Management Audit:

With the introduction of RFIA, Management Audit has been reoriented to focus on the effectiveness of risk management in the processes and the procedures followed in the Bank. Management Audit universe comprises of Corporate Centre establishments / Circle Local Head Offices / Apex Training Institutions, Associate Banks and Regional Rural Banks sponsored by the Bank (RRB).

- Credit Audit:

Credit Audit aims at achieving continuous improvement in the quality of Commercial Credit portfolio of the Bank through critically examining individual large commercial loans with exposures of Rs. 10 Crs and above annually. Credit Audit System also provides feedback to the business unit by way of warning signals about the quality of advance portfolio in the unit and suggests remedial measures. Credit Audit also carries out a review (Loan Review Mechanism) of all the pre- sanction and sanction process of all individual advances above Rs. 5 Crs within 6 months of sanction / enhancement / renewal. During the period 01.04.2012 to 31.03.2013 - 7329 accounts have been subjected to Credit Audit on-site.

- Information System Audit:

All the Branches are being subjected to Information System (IS) Audit to assess the IT related risks as part of RFIA of the branch. Is Audit of centralized IT establishments is carried out by a team qualified officials. During the period from 01.04.2012 to 31.03.2013, IS audits of 13 centralised IT establishments were completed.

- Foreign Offices Audit:

During the period from 01.04.2012 to 31.03.2013, Home Office Audit was carried at 49 branches, Management Audit at 11 Representative offices / Country Head Offices & 4 Subsidiaries / Joint Ventures.

- Concurrent Audit System :

Concurrent Audit System is essentially a control process integral to the establishment of sound internal accounting functions effective controls and overseeing of operations on continuous basis. Concurrent Audit System is reviewed on an on-going basis as per the RBI directives so as to cover Banks Advances and other risk exposures as prescribed by RBI. I&MA department prescribes the processes, guidelines and formats for the conduct of concurrent audit at branches and BPR entities.

- Circle Audit:

Circle Audit which is a delegated audit covers low risk areas and is conducted between two RFIAs. This enables auditee unit to be better prepared better for the RFIA.

11.3. VIGILANCE

The essential function of Vigilance Administration in the Bank is not only to check against non- compliance of rules & regulations by initiating suitable disciplinary action for serious transgressions, but also to devise and implement various measures of preventive vigilance by reviewing the systems & processes to ensure a higher effectiveness and the least vulnerability. The concept of Vigilance as an investigative process and an exercise for punitive action has over time evolved to that of "Vigilance for Corporate Growth", the emphasis getting shifted from punitive vigilance to "Preventive and Proactive Vigilance" through an active participation of all concerned.

(i) Preventive Vigilance Committee (PVC) Meetings being held at the branches and the BPR outfits and (ii) Under Whistle Blower Scheme*, our staff members are expected to advise appropriate authorities about irregular and unethical practices, if any, being indulged in by colleagues and even seniors.

The number of vigilance cases brought to conclusion during the year 2012-13 is 1508, as compared to 1117 during 2011-12.

Fraud Prevention & Monitoring

- Monitoring of transactions is done with a view to submit critical reports to Financial Intelligence Unit - India, as mandated vide Prevention of Money laundering Act, 2002.

- Bank is observing 1st August every year as "KYC Compliance and Fraud Prevention Day" to maintain appropriate awareness across the Bank as also to create proper understanding of KYC issues among the members of Public.

- Bank has taken several measures with a view to strengthening internal control mechanism to prevent frauds.

11.4.HUMAN RESOURCES

Human Resources are a very important part because of the people intensive nature of the banking industry.

Table 26: Staff Strength

Officers Assistants Subordinate Total staff

As on 31.3.2012 80,404 95,715 39,362 2,15,481

Less: Retirements / Attrition 3,059 4,107 2,412 9,578

Add / Less (-) due to promotion of clerical staff to officers grade 2,604 (+) 2,604 (-) - -

Add: New Addition 847 20,682 864 22,393

As on 31.3.2013 80,7961 1,09,6861 37,814 2,28,296

In order to take full advantage of the expansion of the branch network and also to mitigate staff shortage, particularly at our rural and semi-urban branches, the Bank added 20,682 new Assistants. More than 30 lakhs candidates appeared for the test and the Bank chose the best and the brightest candidates. Many of the new assistants are holding good academic qualification including professional qualifications of computer engineering, MBA, etc. Apart from lowering the average age, the young recruits have brought a fresh attitude to the work. We welcome the new entrants and believe that they will ensure a strong future for the Bank.

The Bank also advertised for recruitment of 1500 Probationary Officers and an unprecedented 17 lakhs candidates applied for the same. This only shows that the Bank is now the employer of choice of the young and educated population of the country.

Improvement in employee productivity:

The large-scale recruitment of Gen-next employees in the officers as well as in the assistant grade have not only brought a far reaching attitudinal change among staff in their customer interface and services across the branches, it has also become a catalyst in enhancing / improving the productivity and efficiency of the employees, thereby resulting in increasing growth in business and profitability for the Bank. Consequently, both business per employee and also profit per employee went up significantly during the year.

The addition of new manpower in the Assistant category during the year happened only in January- March 2013 quarter and these employees are now inducted for full scale work in the bank after initial training and are ready to contribute towards further growth in business.

Improvement in work culture: The Management initiated administrative action against frivolous agitations by certain categories of officers. State Bank officers are on the best terms and conditions among all the banks in the public sector. It is ironic that still some categories of officers chose to conduct agitation only in SBI to the exclusion of other banks. The Bank is a caring and considerate employer. Therefore, in our view, there is no case for disruptive agitation exclusively in SBI, when issues are to be decided at the industry level. Consequent upon the above administrative action, the demonstrations within the Bank premises have stopped.

Periodic consultative meetings were held with the Officers Associations / Staff Unions and the SC-ST Staff Welfare Association as part of the constructive dialogue for understanding and addressing grievances of various categories of employees. These consultations are done both at Corporate Centre as also at Circles.

Table 28: Reservation in employment

Category Total SC ST PWD

Officers 80,796 13,824 5,215 485

(17.11%) (6.45%) (0.60%)

Assistants 1,09,686 18,226 8,745 1,724

(16.62%) (7.97%) (1.57%)

Sub-staff 37,814 11,500 2,804 193

(30.41%) (7.42%) (0.51%)

Total 2,28,296 43,550 16,764 2,402

(19.08%) (7.34%) (1.05%)

Bank provides reservation to SC, ST, & Persons with disabilities (PWDs) as per GOI directives. In order to deal with issues relating to reservation policy and effectively redress the grievances of the SC/ST employees, Liaison Officers have been designated at all Local Head Offices of the Bank as also at the Corporate Centre at Mumbai.

Other Initiatives

Several perquisites like leased accommodation, provision of mobile phones, Group Insurance etc. were significantly improved for all categories of staff during the year, which besides, being a great motivational factor in improving the employee productivity, were indicative of a healthy employer-employee relationship.

During the year, Inter-Circle Tournaments were also successfully arranged in the field of Hockey, Volleyball and Basketball at Bhopal, Chennai and Hyderabad respectively with the active participation by the employees representing all the 14 Circles.

II.5. Strategic Training Unit (STU)

The Banks training apparatus comprises of the following:

Apex Training Institutions (ATI): State Bank Staff College - Hyderabad, State Bank Academy - Gurgaon, State Bank Foundation Institute (Chetana) - Indore, State Bank Institute of Rural Development - Hyderabad, State Bank Institute of Information and Communication Management - Hyderabad State Bank Learning Centres: 47 Learning Centres spread across 19 states of the country.

Further, the Bank has acquired 10 acres of land in the prime institutional area at Rajarhat New Town, Kolkata from WBHIDCO (West Bengal Housing Infrastructure Development Corporation Limited) at a cost of Rs. 58 crores. The land is located close to the Kolkata Airport. Efforts are under way to construct a state of the art full scale residential apex training institute. This would help correct regional imbalances as participants from eastern and north eastern region would not have to travel long distance for undergoing training.

In order to raise the standards of training and also to familiarize the Bank officials in the new and sophisticated techniques of financial management like mergers, acquisitions overseas and also in-depth analysis of financial statements, the Bank has taken the help of outside experts, who along with our senior retired officials, are conducting advanced training courses for officials handling credit and faculty members, for imparting sophisticated learning. The aspiration is that our faculty at the training institute should progressively be able to customize these programs and conduct the in-house training.

Training Overseas:

Recognising the need for more advanced training and particularly in areas of strategic management, which may not be completely provided by the Banks in- house training apparatus, the Bank deputed its senior executives for training in short duration Executive Development Programmes to reputed institutes both in India and overseas.

Table 29: Senior Excutives Trained Overseas

Overseas Training Institutes training in India

MDs / DMDs 18 --

CGMs 37 --

GMs 29 62

DGMs 9 228

Total 93 290

In fact, the senior officials were given an opportunity of selecting both the training as also the university / institute they wanted to attend. The Institutions/ universities where officials were deputed include reputed names like Harvard, Stanford, Wharpon School of Management Studies, Indian Institute of Management etc. The Policy of the Bank is that every single employee in every grade must attend at least one training programme every year. 1.76 lakhs employees have been given institutional training during the year, covering 90% of the Officers and 60% of the Assistants.

Several articles have been published by our Research officers/faculty members in internal and reputed external journals such as Bancon compendium, Indian Banker, Financial Planning Journal etc.

Our efforts to inculcate a self learning culture in the Bank through an e-Learning portal which has over 280 lessons currently, has yielded good results and more than 70000 employees are using the portal while 94% have registered. State Bank Training Management System (SBTMS), a comprehensive database system in place, enables viewing of training calendars of any ATI/SBLC, programme timetable, individual training history, trainee feedback and self nomination on line. Knowledge Helpline, has been established to answer, knowledge related queries.

II.6. OFFICIAL LANGUAGE

Various efforts were made during the year for improving and increasing Official Language implementation at various levels in the Bank. After providing for the facility to work in Hindi on the Core Banking Solution (CBS), Standard Encoding Unicode facility was uploaded on all the computers of branches and offices of the Bank. Training on the usage of Hindi in Unicode has been given to majority of staff members during the year and thus the usage of Hindi on computers has now become much easier for staff members in the Bank. For encouraging the staff members to use Hindi in their day to day work, various Functional Hindi Training Programmes were also conducted for officers and employees during the period under review.

The work of bilingualisation of the Banks corporate and internet banking websites is in progress. Different information and procedural manuals in HRMS related to staff members have been provided in bilingual, i.e. in Hindi and English and thus the use of HRMS has become much easier for all the employees especially for the subordinate staff members. The service desk queries asked in Hindi are being replied in Hindi only. Similarly, now information at the Call Centers of the Bank is being provided in Hindi. This year the total number of ATM hits in Hindi was 66674049 as compared to 52063356 hits last year, thus recording an impressive increase of 28.04% which shows the rising interest of our customers in the usage of Hindi in alternative channels

II.7. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility:

1. The Bank keeps aside 1% of its net profit for corporate social responsibility and the endeavour is to have full achievement of the same.

2. The Bank CSR policy involves donation under the following major categories:

i) National donations to Prime Ministers and Chief Ministers Relief Funds for natural and other calamities,

ii) Contribution to organizations having exemption under 80G of the Income Tax Act largely for equipment and vehicles,

iii) Distribution of fans and water purifiers to neighbourhood schools.

During the year we are happy that the target of donating 1% of the net profits to CSR, which has eluded the Bank earlier, was not only fully achieved but was surpassed.

Table30: CSR spend (Rs. in cr.)

2012 2013

1% of net profit 82 117

CSR Spent 71 123

3. Other Flagship programmes:

Looking to the deep inconvenience and discomfort students faced in hot summer in classrooms without the fans, the Bank donated 1,40,000 fans to 14,000 schools. The methodology was that every branch of the Bank adopted a school in its neighbourhood attended by students from modest background and installed 10 fans and one water purifier. This strategy gave wide reach to the activity and every single region of the country having SBI branch had schools in the vicinity benefitting from donation of fans and a water purifier.

Table31: Donation of fans and water purifiers

No. of Water No. of Fans Purifiers

2012-13 1,40,000 43,161

The Bank prefers to support largely with community assets as the benefits of those are shared by all. These steps have created tremendous goodwill in the community and many of our branch managers have been invited to preside over the annual functions of neighbourhood schools. We consider this to be a constructive bond between the Bank and the community. We are happy to make the lives of our young citizens comfortable and healthier.

To help in delivering quality healthcare and transportation of patients and doctors which is a challenge especially in non metro areas, Bank has donated 313 ambulances and medical vans. To help children especially the physically handicapped children, Bank has distributed 51 school buses/vans.

Some of the notable beneficiaries of Banks support have been the following institutions like Aravind Eye Hospital, Chennai, Tata Medical Centre, Kolkata, N. Swain Memorial Trust, Hyderabad, Sankara Nethralaya, Chennai, St. Xaviers College, Mumbai etc.

Environment friendly initiatives:

The Bank has also supported several initiatives in installing solar lamps in many places largely in the rural areas not having dependable electricity supply.

III ASSOCIATES AND SUBSIDIARIES

State Bank Group, with a network of 20325 branches, including 5509 branches of its five Associate Banks, dominates the banking industry in India. In addition to banking, the Group, through its various subsidiaries, provides a whole range of financial services, which include Life Insurance, Merchant Banking, Mutual Funds, Credit Card, Factoring, Security trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

1 Associate Banks

The five Associate Banks of SBI had a market share of 6.16% in deposits and 6.32% in advances as on last Friday of March 2013.

Table32: Performance Highlights of Associate Banks (Overall):

(Rs. in cr.)

As on As on Change 31.03.2013 31.03.2012 (%)

Total Assets 5,04,556 4,34,947 16.00

Agg. Deposits 4,17,657 3,61,589 15.51

Total Advances 3,40,321 2,89,148 17.70

Operating Profit 8,803 8,214 7.17

Net Profit 3,678 3,626 1.43

Credit Deposit 81.48% 79.97% 151 bps Ratio

Capital Adequacy Ratio 11.85% 13.16%- 131 bps

Gross NPA 11,589 8,538 35.73

Net NPA 6,143 4,418 39.04

Return on Equity* 14.33% 15.64% -131 bps

*Annualised

Important Developments during the year in Associates, Subsidiaries and Joint Ventures:

- SBI Capital Markets Ltd has decided to invest in equity of its subsidiary, viz, SBICAP Securities Ltd, to the tune of Rs. 50 crores in in two tranches of Rs. 25 crores each. The amount of 1st tranche has been invested on 4th May 2012.

- Our JV Company, GE Capital Business Process Management Services (P) Ltd. has bought back a total of 33,98,996 shares of Rs.10/- each @ Rs.141/- per share, aggregating Rs.47.92 crores in January 2013. The share of SBI in the buy back is 13,59,598 shares worth Rs. 19.17 crores.

- An additional capital of Rs.5 crores each has been infused by SBI Funds Management (P) Ltd and SBI Capital Markets Ltd. (Total Rs.10 crores) in SBI Pension Fund Pvt Ltd (SBIPF) during Oct12. Consequently, the stake of SBI in SBI PF has come down from 90% to 60%.

2 SBI Capital Markets Limited (SBICAP)

SBICAP is Indias leading investment bank, offering financial advisory services to varied client base across three product groups - Infrastructure, Non- Infrastructure and Capital Markets (Equity and Debt). These services include Project Advisory, Loan Syndication, M&A, Private Equity and Restructuring Advisory.

SBICAP, on a standalone basis, posted a PBT of Rs.418.39 crores during the FY 13 as against Rs.364.84 crores earned in FY 12 and a PAT of Rs.296.00 crores in FY 13 as against a PAT of Rs.250.96 crores during FY 12.

SBICAP and its 4 subsidiaries together, posted a PBT of Rs. 444.37 crores during the FY 13 as against Rs. 385.87 crores earned in FY 12 and PAT of Rs. 313.96 crores in FY 13 as against Rs. 265.31 crores in FY 12.

As a leader in its space, SBICAP has attained recognition in the form of some of the most prestigious awards in the industry namely, IFR Asias India Loan House of the Year 2012 and Business World Award for the Deal of the Year 2012 for Videocon. SBICAP continues to attain the premier spot in industry rankings, the highlights being:

- Ranked No. 1 Global Mandated Lead Arranger in Project Finance Loans by Dealogic.

- Ranked No. 1 Global Project Finance Bookrunner by Thomson- Reuters.

- Ranked No. 1 in the number of issues handled for the public issue of debt in FY 2013 by PRIME

2.1 SBICAP Securities Limited (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Ltd., besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in Sales & Distribution of other financial products like Mutual Funds, etc. SSL has 100 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 3.18 lacs customers in their books. The Company has posted a PAT of Rs.2.42 crores during the FY 13 as against a PAT of Rs.4.03 crores during the FY 12. The profits are lower on account of subdued capital markets.

2.2 SBICAPS Ventures Limited (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Ltd. SVL earned a Net Profit of Rs.0.35 crores during FY 13 as against Rs. 0.23 crores earned during FY 12.

2.3 SBICAP (UK) Ltd. (SUL)

SUL is a wholly owned subsidiary of SBI Capital Markets Ltd. SUL has booked Total Revenue of Rs. 17.26 crores and has posted a Net Profit of Rs. 10.76 crores during FY 13 as against Total Revenue of Rs. 9.18 crores and Net Profit of Rs. 4.82 crores during FY 12 despite the global recessionary scenario.

SUL is positioning itself as a relationship outfit for SBI Capital Markets in UK and Europe. Relationships are being built with FIIs, Financial Institutions, Law Firms, Accounting Firms, etc to market the business products of SBICAP.

2.4 SBICAP TRUSTEE Co. Ltd. (STCL)

SBICAP Trustee Co Ltd (STCL), a wholly owned subsidiary of SBI Capital Markets Ltd., which commenced security trustee business with effect from 1st August 2008 has earned a gross income of Rs.14.93 crores and a Net Profit of Rs.7.51 crores during FY 13 as against Gross Income of Rs.11.63 crores and Net Profit of Rs. 5.86 crores during FY 12.

3 SBI DFHI Ltd. (SBI DFHI)

SBI DFHI Ltd is one of the largest standalone Primary Dealers (PD) with a pan India presence. Besides Government securities, it also deals in money market instruments, non G-Sec debt instruments etc. As a PD, its business activities are stipulated/ regulated by RBI.

SBI group holds 72.17 % share in the Company, which is a primary dealer to support the book building process in Primary Auctions and provide depth and liquidity to secondary markets in Gsecs. For the period ended 31st March 2013, the Companys PAT was Rs.80.28 crores as against Rs.43.50 crores earned during FY 12.

The market share of SBIDFHI amongst all market participants was 3.64% as on March 2013.

SBI DFHIs market share amongst Standalone PDs has increased from 16.45 % in March 2012 to 22.48 % in March 2013.

4 SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

- SBICPSL, the only stand-alone credit card issuing company in India, is a joint venture between State Bank of India and GE Capital Corporation, wherein SBI holds 60% stake.

- SBICPSL is 3rd largest in the industry in terms of Cards in Force.

- The "Cards in Force" (CIF) of the Company stood at 25.70 lacs as at 31st March 2013 The Average receivables stood at Rs.3,294 crores as at the end of March 2013 as against Rs.2,178 crores at the end of March 2012.

- The Company has posted a net profit of Rs.136.30 crores as on March 2013 as against Rs.37.90 crores earned during the year ended March 2012. This performance was primarily driven by asset based revenue growth, substantial reduction in credit losses and better collection performance.

- SBICPSL won "Gold Award" in the Readers Digest most trusted brand 2012 survey under the finance category.

- SBICPSL has crossed Rs. 1000 crores mark on monthly retail spends in current financial year, which is the highest since inception.

5 SBI Life Insurance Company Limited (SBILIFE)

- SBI Life is Joint Venture Company between SBI and BNP Paribas Cardiff in which SBI holds 74% stake.

- SBI Life has a unique multi-distribution model comprising Bancassurance, Retail Agency & Institutional Alliances and Group Corporate Channels for distribution of insurance products.

- SBI Life emerged as the private market leader in New Business Premium for FY 13.

- SBI Life has a market share of 16.85 % in respect of New Business Premium (NBP) amongst Private Life Insurers. Overall market share (including Life Insurance Corporation of India) of SBI Life in terms of NBP stood at 4.84 % as on 31st March, 2013.

- SBI Life launched Dynamic Insurance products catering to different customer segments, initiated online term plans with - "E-Shield" the first significant foray into online distribution and "Grameen Bima" catering to the micro insurance sector aimed at financial inclusion.

- SBI Life recorded a PAT of Rs.622.20 crores during FY 13 as against Rs.555.80 crores during FY 12, recording a YOY growth of 12 %.

- The Assets under Management of SBI Life recorded a growth of 11.50% YoY to reach Rs.51912 crores as on 31st March 2013.

- SBI Life expanded its branch network by adding 44 branches during the year bringing the total number of branches to 758.

- SBI Life has undertaken various CSR projects during the year. Tree plantation drive witnessed a plantation of 6,309 trees till date. "Gift a Smile" and "Project Scholar" are initiatives to contribute towards economically disadvantaged students. SBI Life took an initiative of enabling mentally challenged children of "Swayam Siddh". Donations have been made to Leprosy eradication centres.

The following are some of the awards / recognitions received by the Company during 2012-13:

- Best Employer Brand Award at IPE BFSI Awards

- Best Presented Annual Report Award by South Asian Federation of Accountants (SAFA).

- Dun & Bradstreet

- PSU Award

2012-Insurance Sector

- The Indian Insurance Awards 2012 for the categories -Under- served Market Penetration Award and Claims Service of the Year Award 2012.

- SBI Life has won Indian Merchant Chambers Ramakrishna Bajaj National Quality Award 2012 in Services category indicating its commitment towards quality and organizational excellence.

6. SBI Funds Management (P) Ltd. (SBIFMPL)

- SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 6th largest Fund House in terms of Average "Assets Under Management" and a leading player in the market with over 5 million investors.

- SBI Mutual Funds celebrated 25 Years of Investment Management in FY 13.

- SBIFMPL recorded a complete turnaround in investment performance with over 92% of equity scheme AUM in top 2 quartiles, and 41% were in top quartile.

- SBIFMPL posted a PAT of Rs.85.68 crores during FY 13 as against Rs.60.52 crores earned during FY 12.

- The average "Assets Under Management" (AUM) of the company during the quarter ended March 2013 quarter stood at Rs.54,905 crores as against Rs.42,042 crores during Mar 2012 quarter registering an YoY growth of 30.60%.

- SBIFMPL launched first Exchange Traded Fund- SBI Sensex Fund, this Fund also qualifies for availing benefits under Rajiv Gandhi Equity Savings Scheme during the FY 13.

- SBIFMPL launched SBI Edge Fund, a fund that gives benefit of 3 asset classes viz. Equity, Gold and Debt in one fund.

7 SBI Global Factors Ltd. (SBIGFL)

- SBIGFL is one of the leading factoring companies in India in both domestic as well as export & import factoring.

- The company registered a Profit of Rs. 3.63 crores during the FY 13 as against a loss of Rs.65.73 crores incurred during FY 12.

8 SBI Pension Funds Pvt. Ltd. (SBIPF)

- SBIPF is one of the three Pension Fund Managers (PFM) appointed by Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the National Pension System (NPS) for Central Government (except Armed Forces) and State Government Employees.

- SBIPF, a wholly owned subsidiary of the State Bank Group, commenced its operations from April 2008. The total "Assets Under Management" of the company as on 31st March 2013 were Rs. 11,788 crores (YoY growth of 96 %).

- The Company maintained lead position amongst Pension Fund Managers (6) in terms of AUM in both Government and Private sectors.

- The overall AUM market share in Private sector was 73 %, while in the Government sector it was 37 %.

- SBIPF has maintained lead in 7 asset categories in terms of returns since inception.

- SBIPF received the following awards during the FY 13:

- Pension Fund of the Year for excellence in performance and customer service to subscribers at the Indian Pension Fund Awards- 2012.

- Award for Financial Inclusion (Pension Category) in Skoch Financial Inclusion Awards, 2013.

9. SBI GENERAL INSURANCE COMPANY LTD (SBIGIC)

- SBIGIC is a joint venture between State Bank of India and IAG Australia in which SBI holds 74% stake.

- SBIGIC has completed its Third year of full operations during FY 13.

- Gross Direct Written Premium stood at Rs. 770.85 crores as at 31st March 2013.

- The Company recorded a net loss of Rs. 145.16 crores as against the estimated loss of Rs. 164.90 crores during FY 13 and a loss of Rs. 95.34 crores incurred during the FY 12. The Company is expected to turn around during 2014-15.

- SBIGIC has a multi-distribution model comprising Bancassurance, Agents, Broker and Direct Channels for distribution of insurance products.

10. SBI SG GLOBAL SECURITIES SERVICES PVT LTD (SBISG)

- SBISG, a joint venture between State Bank of India and Societe Generale, was set up to offer high quality custody and fund administration services to complete the bouquet of financial services on offer by a financial conglomerate.

- SBISG commenced commercial operations in Custody in May 2010 and Fund Accounting Services in Sept 2010.

- The Company recorded a net profit of Rs.38.43 lacs during the FY 13 as against Rs.24.71 lacs during the FY 12.

- The Assets Under Custody as on 31st March 2013 stood at Rs.51,629 crores, while the Assets Under Administration were at Rs.52,639 crores.

INFORMATION WITH REGARD TO SUBSIDIARIES & JOINT VENTURES AS ON 31.03.2013

Table 33:Performance Highlights of Domestic Banking Subsidiaries

(Rs. in cr.)

S. Name of SBI Share of Total Agg. Total No the Bank ownership Assets Deposits Advances Amt. %

State Bank 676.12 75.07 86023 71215 58474 1 of Bikaner & Jaipur State 367.55 100 139664 117270 92020 2 Bank of Hyderabad

3 State Bank 628.63 92.33 68739 56712 45980 of Mysore

State Bank 445.10 100 108551 88416 75460 4 of Patiala

State 120.85 75.01 101579 84046 68389 5 Bank of Travancore

Name of Op. Net CD CAR Gross Net Return the Bank Profit Profit Ratio % NPAs % NPA on Equity % %

State Bank of Bikaner & Jaipur 1713 730 82.11 12.16 3.62 2.27 15.33

State Bank of Hyderabad 2788 1250 78.77 12.36 3.46 1.61 17.70

State Bank of Mysore 1331 416 81.08 11.79 4.53 2.69 11.05

State Bank of Patiala 1619 667 85.35 11.12 3.25 1.62 12.48

State Bank of Travancore 1351 615 81.37 11.70 2.56 1.46 14.76

Table 34 : Performance of Non Banking Subsidiaries

S. Name of the Subsidiary Company Ownership (State % of Ownership Net Profit (Losses) No Bank interest) /Crs for the FY 2012-131

1 SBI Capital Markets Ltd. (Consolidated) 58.03 100 313.96

2 SBI DFHI Ltd. 139.15 63.78 80.28

3 SBI Payment Services Pvt. Ltd. 2.00 100 0.0381

4 SBI Mutual Fund Trustee Company Pvt Ltd. 0.10 100 4.20

5 SBI Global Factors Ltd. 137.79 86.18 3.63

6 SBI Pension Funds Pvt. Ltd. 18.001 60. (0.74)

Table 35: Performance of Joint Ventures

S. Name of the Subsidiary Company Ownership % of Net Profit No. (State Bank Ownership (Losses) interest) for the Rs. crores FY 2012-13

1 SBI Funds Management Pvt. Ltd. 31.50 63 85.68

2 SBI Funds Management (International) Pvt. Ltd.(USD) $ 50000 63 Loss USD 29854

3 SBI Cards & Payment Services Pvt. Ltd. 471.00 60 136.30

4 SBI Life Insurance Company Ltd. 740.00 74 622.20

5 SBI-SG Global Securities Services Pvt. Ltd. 52.00 65 0.38

6 SBI General Insurance Company Ltd. 111.00 74 (145.16)

7 C-Edge Technologies Ltd 4.90 49% 1.22

8 GE Capital Business Process Mgt. Services Pvt. Ltd. 9.44 40 21.65

9 Macquarie SBI Infrastructure Mgt. Pte. Ltd. 2.25 45 USD 5.41

10 Macquarie SBI Infrastructure Trustee Ltd. # USD 56,425

11 SBI Macquarie SBI Infrastructure Mgt. Pvt. Ltd. 18.57 45 8.03

12 SBI Macquarie SBI Infrastructure Trustee Pvt. Ltd. 0.025 45 0.007

13 Oman India Joint 50Investment Fund-Mgt. Co Pvt. Ltd. 2.30 50 2.53

14 Oman India Joint Investment Fund-Trustee Co Pvt. Ltd. 0.01 50 0.004

# 100 % subsidiary of Macquarie SBI Infrastructure Mgt. Pte. Ltd.

Responsibility Statement

The Board of Directors hereby states:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2013, and of the profit and loss of the bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and

iv. that they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

During the year, Shri G. D. Nadaf, Officer Employee Director, retired on attaining superannuation on 31st May 2012. Shri Rashpal Malhotra, Director nominated under section 19(d) by Govt. of India retired on 9th August 2012. Dr. Subir V. Gokarn, Dy. Governor, RBI Nominee, retired on completing his term on 31st December 2012. Shri Dileep C. Choksi, Director, elected by Shareholders under Section 19(c) resigned from the Board effective from the close of business on 31st December 2012. Shri D. K. Mittal, GOI Nominee Director retired on 31st January 2013 attaining superannuation.

Dr. Rajiv Kumar was re-nominated as Director under section 19(d) by GOI w.e.f. 6th August 2012. Shri Harichandra Bahadur Singh was nominated as Director under section 19(d) by GOI w.e.f. 24th September 2012. Shri S. K. Mukherjee, was nominated under section 19(cb) as Officer Employee Director w.e.f. 4th October 2012. Shri S. Vishvananthan was appointed as Managing Director under section 19(b) w.e.f. 9th October 2012. Shri Thomas Mathew, elected for the first time from 13th January 2013 to 24th June 2014 in place of Shri Dileep C. Choksi. Shri Rajiv Takru was nominated as Govt. Nominee Director vice Shri D. K. Mittal, under section 19(e) vide Notification dated 4th February 2013. Dr. Urjit R. Patel was nominated as RBI Nominee Director vice Dr. Subir V. Gokarn, under section 19(f), vide Notification dated 6th February 2013.

The Directors place on record their appreciation of the contributions made by the respective outgoing Directors, namely, Shri G. D. Nadaf, Shri Rashpal Malhotra, Dr. Subir V. Gokarn, Shri Dileep C. Choksi and Shri D. K. Mittal to the deliberations of the Board. The Directors welcome the new Directors Dr. Rajiv Kumar, Shri Harichandra Bahadur Singh, Shri S. K. Mukherjee, Shri S. Vishvananthan, Shri Thomas Mathew, Shri Rajiv Takru and Dr. Urjit R. Patel on the Board.

The Directors also express their gratitude for the guidance and co-operation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank.

For and on behalf of the

Central Board of Directors

Date : 23rd May 2013 Chairman


Mar 31, 2012

FINANCIAL PERFORMANCE

Profit

The Operating Profit of the Bank for 2011-12 stood at Rs31,573.54 crores as compared to Rs25,335.57 crores in 2010-11 registering a growth of 24.62%. The Bank has posted a Net Profit of Rs11,707.29 crores for 2011-12 as compared to Rs8,264.52 crores in 2010-11 registering a growth of 41.66%.

While Net Interest Income recorded a growth of 33.10%, the Other Income declined by 9.31%, Operating Expenses increased by 13.27% attributable to higher staff cost and other expenses.

Dividend

The Bank has declared dividend @ Rs35.00 per share (350%) as against @ Rs30.00 per share (300%) in the previous year.

Net Interest Income

The Net Interest Income of the Bank registered a growth of 33.10% from Rs32,526.41 crores in 2010-11 to Rs43,291.08 crores in 2011-12. This was due to higher growth in the advances and investment portfolios.

The gross interest income from global operations correspondingly rose from Rs81,394.36 crores to Rs1,06,521.45 crores during the year registering a growth of 30.87%.

Interest income on advances in India registered an increase from Rs56,960.97 crores in 2010-11 to Rs77,309.15 crores in 2011-12 due to higher volumes. The average yield on advances in India increased from 9.56% in 2010-11 to 11.05% in 2011-12. Interest income on advances at foreign offices has also grown by 24.99%.

Income from resources deployed in treasury operations in India increased by 22.05% mainly due to higher average resources deployed and increase in average yield. The average yield, which was 7.02% in 2010-11, has increased to 7.51% in 2011-12.

Total interest expenses of global operations increased from Rs48,867.96 crores in 2010-11 to Rs63,230.37 crores in 2011-12. Interest expenses on deposits in India during 2011-12 recorded an increase of 29.19% compared to the previous year, whereas the average level of deposits in India grew by 14.31%. The average cost of deposits has consequently increased from 5.26% in 2010-11 to 5.95% in 2011-12.

Non-Interest Income

Non-interest income stood at Rs14,351.45 crores in 2011-12 as against Rs15,824.59 crores in 2010-11 registering a decline of 9.31%.

During the year, the Bank received an income of Rs767.35 crores (Rs827.73 crores in the previous year) by way of dividends from Associate Banks/ subsidiaries and joint ventures in India and abroad.

Operating Expenses

There was an increase of 11.59% in the Staff Cost from Rs15,211.62 crores in 2010-11 to Rs16,974.04 crores in 2011-12. Other Operating expenses have also registered an increase of 16.54% mainly due to increase in expenses on rent, taxes and lighting, postage, telegrams & telephones, insurance and miscellaneous expenditure.

Operating Expenses, comprising both staff cost and other operating expenses, have registered an increase of 13.27% over the previous year.

Provisions and Contingencies

Major amounts of provisions made in 2011-12 were as under:

- Rs663.70 crores towards provision for depreciation on investments, excluding amortization of premium on Held to Maturity category (as against Rs646.75 crores towards depreciation on investments in 2010-11).

- Rs6,320.09 crores towards Provision for Tax, excluding deferred tax reversal of Rs455.93 crores (as against Rs5,712.89 crores in 2010-11 excluding deferred tax reversal of Rs976.82 crores).

- Rs11,545.85 crores (net of write-back) for non- performing assets (as against Rs8,792.09 crores in 2010-11).

- Rs978.81 crores towards Standard Assets (as against Rs976.60 crores in 2010-11). Including the current years provision, the total provision held on Standard Assets amounts to Rs4,296.03 crores.

Reserves and Surplus

- An amount of Rs3,516.98 crores (as against Rs2,479.36 crores in 2010-11) was transferred to Statutory Reserves.

- An amount of Rs14.38 crores (as against Rs9.61 crores in 2010-11) was transferred to Capital Reserve Fund.

- An amount of Rs5,536.50 crores (as against Rs2,729.86 crores in 2010-11) was transferred to Other Reserve Funds.

Table : Key Performance Indicators

Indicators SBI SBI Group 2010-11 2011-12 2010-11 2011-12

Return on Average Assets (%) 0.71 0.88 0.70 0.89

Return on Equity (%) 12.84 14.36 12.92 14.84

Expenses to Income (%) (Operating Expenses to Total Net Income) 47.60 45.23 58.32 53.42

Book Value per share (Rs) 1013.82 1214.78 1302.70 1540.64

Basic Earnings Per Share (Rs) 130.16 184.31 168.28 241.55

Diluted Earnings Per Share (Rs) 130.16 184.31 168.28 241.55

Capital Adequacy Ratio (%) (Basel-I) 10.69 12.05 11.02 11.84

Tier I 6.93 8.50 7.20 8.30

Tier II 3.76 3.55 3.82 3.54

Capital Adequacy Ratio (%) (Basel-II) 11.98 13.86 12.26 13.68

Tier I 7.77 9.79 8.02 9.65

Tier II 4.21 4.07 4.24 4.03

Net NPAs to Net Advances (%) 1.63 1.82 1.56 1.81

Assets

The total assets of the Bank increased by 9.13% from Rs12,23,736.20 crores at the end of March 2011 to Rs13,35,519.23 crores as at the end of March 2012. During the period, the loan portfolio increased by 14.65% from Rs7,56,719.45 crores to Rs8,67,578.89 crores. Investments increased by 5.61% from Rs2, 95,600.57 crores to Rs3,12,197.61 crores as at the end of March 2012. A major portion of the investment was in the domestic market in government securities and investment in Subsidiaries & Associates.

Liabilities

The Banks aggregate liabilities (excluding capital and reserves) rose by 8.01% from Rs11,58,750.16 crores on 31st March 2011 to Rs 12,51,568.03 crores on 31st March 2012. The increase in liabilities was mainly contributed by increase in deposits and borrowings. The Global deposits stood at Rs10, 43,647.36 crores as on 31st March 2012 against Rs9,33,932.81 crores as on 31st March 2011, representing an increase of 11.75 % over the level on 31st March 2011.

CORE OPERATIONS

1. BUSINESS GROUPS

A. GLOBAL MARKETS OPERATIONS

Global Markets department mainly handles the banks liquidity and provides foreign exchange services to customers. In addition, it also handles compliance with reserve requirements of RBI, provides products like derivatives, gold forwards and portfolio management services, and handles the banks proprietary trading and investment portfolio.

The liquidity management function and debt portfolios performance depend significantly on interest rate movements and system wide liquidity conditions. In fiscal year 2012, interest rates were volatile due to inflation and liquidity concerns. The second half of the fiscal saw liquidity in the banking system tighten significantly. Within this environment Global Markets continued to actively manage the liquidity and optimized returns on investment.

The equity markets continued to fall for the major part of the year prompting a strategic decision to reduce our exposure to equities for proprietary trading and rebalance the portfolio. We still continue to hold multiple strategic positions and remain on the lookout for good investment opportunities to enhance returns while maintaining a reduced risk appetite given the uncertain environment.

Being the biggest bank of the country and its role as a market maker, the bank endeavours to provide the best prices to corporates, ranging from the behemoths to emerging SMEs both in the Public and Private Sector. In addition, forex treasury facilitates liquidity in the inter-bank market.

In addition to these, the bank also provides Indian Rupee and Foreign Exchange Derivatives to corporates for hedging their interest rate and currency exposures, within the regulatory stipulations.

Treasury Marketing Group markets various treasury products offered by the Bank, to its customers to mitigate Exchange Rate Risk / Interest Rate Risk in their exposures. Dedicated Treasury Marketing Officers continuously engage with the customers bringing them various inputs about markets as part of advisory services offered by the Bank. The Banks forex volumes grew by 14% YoY for FY 2011-12.

Portfolio Management Services Section of Global Markets, one of the largest fund managers, is managing terminal benefit funds of various provident fund trusts since 1995. It also manages investments of funds of RRBs sponsored by SBI. As on 31st March 2012, Assets under management of Portfolio Management Section exceeded Rs2,00,000 crores.

B. CORPORATE BANKING GROUP

The Banks Corporate Banking Group consists of four Strategic Business Units viz., Corporate Accounts Group, Transaction Banking Unit, Project Finance & Leasing SBU and Financial Institutions Business Unit.

B.1. Corporate Accounts Group (CAG)

CAG was set up in 1995 as the first Strategic Business Unit to be created under Corporate Banking Group of the Bank. Over the years CAG has effectively met its strategic objectives of delivering best in class Corporate Banking services to the top most corporates in the country. Nearly five hundred such corporates deal with CAG and the client list includes industry leaders in every segment.

A highly skilled Relationship team and a strong delivery platform with enabling technology support lie at the core of each CAG unit. CAG has offices in all four metros, Hyderabad and Ahmedabad. The incumbency of Regional Head at each of the above centres has been upgraded to the level of General Manager in line with the rising business profile of the group and to facilitate interaction at senior level having regard to the high profile of the CAG clients.

The total Fund and Non-Fund limits of CAG accounts stand at Rs5,26,078 crores. The Fund based outstandings grew by 15% during FY12 from

High Value Deals

Rs10,000 crores to NTPC Ltd., Rs5,000 crores to Power Grid Corp. & Rs2,000 crores to Tata Steel Ltd.

Rs1,08,774 crores to Rs1,25,286 crores. It constitutes 16% of total domestic credit portfolio and 31% of the C & I (Non-Food) advances of the Bank.

The Non-Fund based outstandings at Rs1,87,062 crores also grew by 17% during the year. CAGs FOREX business at Rs8,73,416 crores constitutes 48% of the domestic FOREX business of the Bank. Trade Finance (LC and BG) volumes also registered a growth of 30% with the volumes standing at Rs3,37,486 crores for FY12. Despite slow pick up of credit and a tepid financial market that did not offer significant scope for structured products, CAGs operating profit grew by 31% from Rs9,808 crores to Rs12,875 crores during FY12.

About 36% of CAGs Fund based & Non-fund based outstandings carries the highest rating grades from the external rating agencies. The NPA level of CAG is well contained at 0.20% of total advances as on 31st March 2012.

During the year CAG handled several high value deals, a few of which are listed below excluding Term loans sanctioned through PFSBU:

- NTPC Ltd.-Term Loan of Rs10,000 crores with tenor of 12 years.

- Power Grid Corporation of India Ltd.- Term Loan of Rs5,000 crores with tenor of 15 years.

- Tata Steel Ltd - Corporate loan of Rs2,000 crores with tenor of 5 years.

- Bharti Airtel Ltd - Term loan of Rs2,000 crores with tenor of 6 years.

- Adani Power Ltd - Term loan of Rs1,200 crores with tenor of 8.5 years.

The Bank played a strategic role in global acquisition by major Indian Groups like, Adani, JSW, Tata etc.

B.2. Transaction Banking Unit (TBU)

TBU, with special focus on Cash Management Product, Trade Finance and Supply Chain (Dealer / Vendor) Finance has expanded its activity during the last two years.

(1) Cash Management Product (CMP)

CMP Cheque and cash collection services in the Bank are now offered through 1133 authorized branches located at 701 Centres, while payment services comprising Dividend Warrants, Multi City Cheques, lOIs and e-payment are extended through all branches. CMP Centre executed several prestigious dividend deals like Reliance Industries Ltd., TCS, Tata Motors Ltd., L&T, Coal India Ltd. ONGC etc., in 2011-12. It is the Sole Refund Banker for Income Tax Department and handled over 111 lakh refund records (Rs36,613 crores) in FY 2011-12. CMP has been selected as the authorized banker for handling all UMEA payments for 253 PAOs relating to 43 accredited Ministries & Departments and also did the pilot.

(2) Trade Finance

SBI has been awarded the "Best Trade Finance Bank in India" Award for 2012 by The Asian Banker.

e-Trade SBI, a web-based online portal, has been launched by our Bank in March 2011 to provide the means to customers access trade finance services with speed and efficiency by enabling them to lodge Letters of Credit, Bank Guarantees and Bills Collection/negotiation requirements online from any corner of the world. Presently, the e-trade platform has been introduced in all 6 CAG Branches and 63 MCG Branches and has been well received with 393 Corporates registered under e-Trade SBI as on 31.03.2012.

(3) Supply Chain Finance

e-VFS ( Electronic Vendor Financing Scheme) & e-DFS ( Electronic Dealer Financing Scheme)

The above products, which are fully on electronic platform, provide automated payment and settlement of supply chain transactions as also real time MIS to both Industrial Majors(IM) and their vendors and dealers. A total number of 64 IMs and 289 vendors and 1041 dealers across the country have been migrated to the electronic facility under the e-VFS/e-DFS platform as on 31.03.2012.

B.3. Project Finance & Leasing SBU (PFSBU)

Project Finance & Leasing SBU (PFSBU) focuses on funding large projects in infrastructure sectors like power, telecom, roads, ports, airports, other urban infrastructure as also other non-infrastructure projects in sectors like metals, cement etc., with certain threshold on minimum project cost.

In order to further strengthen this specialised outfit, Bank has engaged 19 former CEOs/ Directors of leading PSUs with domain expertise in Energy, Transport, Mining, Telecom, Metals and Fertilizer sectors to provide consultancy support in technical areas.

During 2011-12, PFSBU appraised and enabled funding of projects with outlay of Rs1,08,468 crores (Rs3,33,054 crores) involving debt of Rs84,408 crores (Rs2,36,607 crores). Sanctions accorded aggregated Rs24,976 crores (Rs59,209 crores), while PFSBU took up syndication of debt of Rs18,610 crores (Rs73,082 crores) with other banks.

Major sanctions with Project Finance during 2011-12 included Neyveli Lignite Corporation Limited (Rs2,500 crores) for setting up Power plant for 1000 MW, Meja Urja Nigam Limited (Rs2,000 crores) for 1320 MW and Tata Teleservices Ltd (Rs2500 crores) for expansion of their services.

As on 31st March 2012, the portfolio of infrastructure projects under implementation with Project Finance SBU involves Power projects to produce 57,788 MW including 399 MW from renewable sources; Telecom Projects serving 303 million subscribers; Road projects to lay 5185 kms. of 2-lane, 4-lane & 6-lane Roads; new Ports to handle 40 MTPA multi-purpose cargo and 1.2 million TEU of container capacity ; Metro projects in the cities of Bangalore and Hyderabad besides a host of projects in steel, cement, Urban Infra, CRE etc. During the year, a total (FB + NFB) of Rs15,410 crores (Rs9,670 crores in FY11) were disbursed to these projects.

Financial Year 2011-12, saw a general decline in new investments more particularly in the Infrastructure sector owing to higher interest rates and systemic issues. PFSBU plays an active role in various efforts being made by Government and other agencies to iron out the issues facing infrastructure finance.

Notwithstanding the slowdown, 43 proposals were in pipeline with aggregate Project Cost of Rs69,535 crores and debt component of Rs49,465 crores with SBIs Share likely to be Rs11,643 crores as on 31.03.2012. When completed, these projects will further add to the Infra story of our country. (Figures in brackets represent previous year figures)

B.4. Financial Institutions Business Unit (FIBU)

FIBU focuses on capturing potential business opportunities from financial institutions viz. Banks, Mutual Funds, Insurance companies, Brokerage Firms and NBFCs. Capital Market Branch, Mumbai (CMB), a specialized branch under FIBU, is a settlement bank for all major exchanges and CCIL. CMB has handled the settlement banking and transaction banking needs of brokers and mutual funds and has also acted as the Banker to the Issue and Escrow Collecting and Refund Banker to all major IPO/FPO/NFO/Bonds Issues including NHAI, HUDCO, REC, NBCC.

Some of the major initiatives undertaken and products launched for this segment include special current account product for brokers, special current account product for targeting housing societies / associations for mobilizing CASA, site to site integration facility for large stock brokers,

ATM sharing arrangement for RRBs and Co-operative Banks.

Products being developed by FIBU include collection of premium of Life Insurance Companies, new deposit and loan products for stock brokers, etc. FIBU is focusing on leveraging our vast network and technology to increase our market share of CASA by offering collection, payment and remittance solutions to FI clients pan India.

C. MID-CORPORATE

1. MCG exclusively caters to the banking needs of the units falling under the Mid-Corporate sector. The main purpose of creation of MCG was to improve the service levels to the Mid-Corporate customers through improvement of the Turnaround Time (TAT) for credit delivery and ensuring quality in credit appraisal, as well as extension of banks various products to the Mid- Corporate customers through Relationship Management model. As at the end of 31.03.2012, the Group has expanded to 62 branches under 10 MCROs at Ahmedabad, Bangalore, Chandigarh, Chennai, Hyderabad, Indore, Kolkata, Mumbai, New Delhi and Pune, with an asset base of Rs1,72,651 crores. All Companies / firms whose annual sales / Income exceed Rs50 crores or whose Fund Based and Non Fund Based requirements exceed Rs10 crores are covered by MCG. Facilities are extended to the customers in the form of Cash Credit, Term Loans, FCNRB Loans, ECBs (through our International Banking Group), Letters of credit, Bank Guarantees, Letters of Comfort, Buyers Credit, Vendor Finance, Supply Chain Finance, Cash Management Product etc., MCG encompasses the entire span of industrial activities in all sectors like textiles, iron, steel, food, sugar, engineering, pharmaceuticals gems & jewellery, infrastructure sector including construction, telecom, roads, ports, power etc. as well as trade and services sector. The aggregate business (Fund Based Assets and deposits) of the Group is Rs1,97,162 crores as on 31.03.2012.

2. During 2011-12 the Group sanctioned 397 loans by way of new connections aggregating an asset growth of Rs14,466 crores, thus increasing the level of Fund-based advances from Rs1,61,208 crores as on 31.03.2011 to Rs 1,72,651 crores as on 31.03.2012. The Group recorded y-o-y growth of 39.86% by way of Interest Income and 33.89% in operating profit. The average yield on advances of the group stood at 11.87% as at the end of March 2012 vis-a-vis 9.88% as on 31.3.2011.

3. The Group also extends export credit to the exporters through EPC, PCFC and EBR. The aggregate outstanding export credit as on 31.3.2012 of the Group was Rs19,324 crores. The aggregate Forex business (Sales & Purchases) of the Group as on 31.03.2012 stood at Rs4,52,816 crores vis-a-vis Rs4,07,901 crores as on 31.03.2011. The Group also assists its customers in imports through facilities like issue of LC / BG / LOC as well as extension of Buyers Credit facility. Apart from this, the Group also assists Companies in India to acquire assets / companies abroad and also funds the expansion plans of its customers abroad through issuance of LOCs through the Banks International Banking Group. Over the years, the Group has helped many such acquisitions by the companies in USA, Europe, Australia, Africa etc.

4. In addition, MCG has also extended Vendor Financing and Supply Chain Financing to the industrial units to facilitate smooth achievement of their Sales targets.

5. The Staff strength of MCG has increased marginally from 3,470 as on March 2005 to 3,806 as on 31.03.2012. The business per employee has increased over 4 times during the same period from Rs11.98 crores to Rs48.24 crores.

6. To enable the units to overcome the stress in their business, the Group has restructured 65 accounts aggregating Rs3,139 crores during the year.

7. The Group has also actively participated in 19 activities under Corporate Social Responsibility programmes encompassing donations of school buses, ambulances, cycles for orthopaedically challenged, vocational training equipments, etc., aggregating Rs42.28 lacs.

HIGHLIGHTS

(Rs in Crores) 31.03.2011 31.03.2012

Advances 1,61,208 1,72,651

Aggregate Business 1,87,236 1,97,162

Forex Remittances 3,97,587 4,42,957

Export Credit 19,452 19,324

Intt. Income 14,288 19,983

Other Income 2,345 2,482

Operating Profit 15,419 20,646

D. NATIONAL BANKING GROUP (NBG)

National Banking Group, as on 31st March 2012, comprised of 14,013 out of 14,097 domestic branches, controlled by 14 Local Head Offices. NBG has five strategic Business Units comprising of Small & Medium Enterprises (SMEBU), Personal Banking (PBBU), Real Estate Habitat & Housing Development (RE-H & HD), Rural Banking (RBU) and Government Business (GBU). NBGs share in the total business of the Bank as on 31.03.2012 is 94.71% in total domestic deposits(excluding Inter-Bank) and 58.08% in total domestic advances (excluding Food & Inter-Bank).

NBG Highlights

(Rs in Crores)

As on 31.03.2011 31.03.2012 YoY Growth Level Level Absolute (%)

Deposits (excl.Inter- bank) 7,94,836* 9,15,670 1,20,834 15.20

Advances (excl. Food & Inter-Bank) 3,72,797* 4,29,843 57,046 15.30

(*This figure is inclusive of RBU for the year 2011)

- During the year, PBBU deposits have grown by Rs93,056 crores with a growth of 18.38%.

- The CASA Ratio as on 31.03.2012 is 47.06%.

- 227 lac new Savings Bank Accounts were opened during the year ended 31st March 2012.

- During the year, the Bank launched a Personal Accident Insurance Policy on a pilot basis for our Savings Bank customers at a very competitive cost.

- The Bank entered into a tie-up with M/s Thomas Cook to provide Money Transfer Services Scheme (MTSS) of M/s Moneygram.

- The Bank has been designated as the Point of Presence (PoP) for conducting business under the New Pension Scheme (an initiative of the Government of India).

- The Bank is Self Certified Syndicate Member for ASBA (Application Supported by Blocked Amount) as per SEBI guidelines, which is being offered through 1,061 branches in India.

- The charges on non-maintenance of Average Quarterly Balance in Savings Bank Accounts have been waived.

- Only Multi-city Cheques are now being issued to all P-Segment customers with a uniform limit of Rs5 lacs.

NRI Services

- NRI Deposits grew by Rs11,486 crores (22%) during the year and reached a level of Rs 63,263 crores in March 2012. NRIs have invested in the schemes of SBIMF and SBILIFE to the tune of Rs2,058 crores during the year. FCNB Premium Account which was launched last year booked business to the tune of USD 42 mn, GBP 12 mn, Euro 8 mn against USD 15 mn, GBP 2 mn and Euro 3 mn.

Corporate & Institutional Tie-Ups

The Bank now has customized Special Salary Packages for employees of Corporates, Defence, Para Military, Railways, Central Government, State Governments as well as Police, which enable a focused marketing approach. The growth in Salary Package Accounts has generated a high level of CASA accounts.

Corporate & Institutional Tie-Ups Salary Package Particulars 31.03.2011 31.03.2012

YoY Growth % in account growth

Defence and Para Military accounts 14,82,336 20,18,470 5,36,134 36.17

Other Accounts 31,25,129 41,57,034 10,31,905 33.02

Total 46,07,465 61,75,504 15,68,039 34.03

CASA (Rs in Crores) 12,655 16,221 3,566 28.17

Education Loans

SBI Education Loans have grown at 13.2% YoY (as on March 2012). SBI has a total exposure of Rs12,566 crores as on March 2012 and is the market leader with a market share of approximately 25% amongst ASCB.

Personal Loans

The Personal Loans Portfolio, grew by Rs3,691 crores in FY 12. The most notable growth was seen in Gold Loan which grew by 51.06% in FY 12. Auto Loans

SBI Auto Loans maintains its market leadership in retail car loan financing and enjoys a market share of 17.51% as on March 2012.

D2. Real Estate Habitat and Housing Development (RE, H&HD)

Home Loan portfolio of the Bank grew by Rs12,826 Crores during FY 2011-12 to Rs1,02,739 Crores.

About 2 lacs new Home Loan customers were added to the portfolio during the same period. Total Home Loan limits sanctioned during FY 2011-12 were Rs28,036 Crores. State Bank of India continues to be the No.1 Home Loan player in terms of size of the Individual Home Loan portfolio - amongst all players in the Home Loan market. State Bank of India had a market share of over 26% in Home Loan levels achieved by Scheduled Commercial Banks as of 31st March 2012.

FY 2011-12 saw an uptrend in the interest rate cycle, keeping this in view the following steps were taken to minimise the possibility of stress arising from rise in Home Loan rates -

- Maximum repayment tenure for new Home Loan borrowers increased from 25 to 30 years.

- Extension of repayment tenure up to 5 years keeping EMI unchanged, subject to maximum tenure of 35 years.

- Existing borrowers on floating rate loans have been given a one time option to switchover to current interest rates by paying a 1% switchover fee.

A new Home Equity product has been launched to provide existing home loan customers an option to leverage their equity in the house to raise additional loans at low interest rates for meeting their liquidity requirements. Furthermore, modifications have been carried out in the Yuva Home Loan and Maxgain products to extend their coverage, so that more customers are able to get benefitted by the schemes.

Optional Life Insurance cover is available to Home Loan customers under SBI Suraksha. The customer has option for selecting a suitable product from SBI Life namely, RiNn Raksha or Smart Shield policy at payment of nominal premium. Bank provides additional loan for payment of premium at similar terms as applicable to the underlying Home Loan. Technology initiatives like dashboards for monitoring of slippages, account tracking centres etc. have been undertaken towards management of collections and prevention of fresh slippages. In order to strengthen Banks affordable housing initiatives, consultations are underway with consultants for arriving at a suitable methodology for delivering finance for affordable housing.

D3. SME Business Unit (SMEBU)

During the financial year 2011-12, the advances under SME Business Unit has registered YoY growth of 17.40%. The business figures of SME Business Unit as on 31.03.2012 have remained as under:

(Rs in Crores)

Particulars As on As on Growth 31.03.2011 31.03.2012

Advances 139470 163745 24274

(17.40%)

Highlights and Initiatives:

- Relationship Banking :

Under single window approach, the Bank is offering relationship banking to SME entrepreneurs. The strength of Relationship Managers (Medium Enterprises) was augmented to 510 as on 31.03.2012 and mapped to ME units with credit limits Rs1.00 crore and above across the country. Further, to improve credit flow to Micro and Small Enterprises a new channel of Relationship Managers (SE), was introduced for MSE units having Credit limits between Rs10.00 lacs to Rs1.00 crore.

- Specialized SME Branches :

To provide specialized services to SME Entrepreneurs, 400 branches having predominant share of SME advances in their portfolio were identified for rebranding as "SME BRANCH".

- Credit Flow to Micro and Small Enterprises

i. Bank is extending collateral free lending upto Rs1.00 crore to MSE sector under guarantee of CGTMSE. Additionally, to provide relief to these units, the Bank decided to absorb the guarantee charges payable to CGTMSE. To ramp up collateral free lending to Micro and Small Enterprises, a special campaign "SME BONANZA" was launched for a period of three months from January-March 2012.

ii. A new product Weavers Credit Card launched for weavers.

- Project Uptech and Cluster Financing :

The Bank is providing consultancy services to SMEs to enable them to increase productivity and reduce costs. Since inception of the initiative, 1600 units have benefitted in 28 clusters. During the year, a project for engineering and fabrication was launched in Nagpur along with two ongoing projects at Jamshedpur and Trichy. Under cluster approach 13 clusters were taken up for financing by the Circles.

- Supply Chain Finance:

Under e-DFS and e-VFS, the Bank has tied up with 60 Industry Majors(IMs) with aggregate business of over Rs3,325 crores across all Industry Verticals like Auto, Oil, Steel, Power, Fertilizer, FMCG & Textiles.

- Liability & Transaction Products:

- unFIXED Deposit: The Bank launched a new scheme for short term deposits for 7 days to less than 1 year with an attractive feature of waiver of prepayment penalty. It met with success and we plan to take it forward next year.

- New process for deposit of contributions to Employees Provident Fund Organisation (EPFO) was implemented across the country in our 7000 plus branches. Deposit of such contributions through CINB was also put in place.

- Service charge on payment of Multi City Cheques was waived for SME customers.

- Cash Pick up facility was launched across the country for cash collection of SME customers at their door steps.

- An Internet banking transaction product- CINB SARAL with single user interface was launched for micro & small entrepreneurs.

- The process of implementation of Loan Origination Software was started for better monitoring of SME advances.

- During the year our Bank has been conferred with the Second Award under National Awards for Excellence in MSE Lending by Government of India for the financial year 2010-11.

D.4 Government Business Unit (GBU)

- With 58.50% market share in Government Business, the Bank has not only retained its leadership but also increased its market share by 70 basis points over previous year.

- Bank earned a commission income of Rs2,008 crores as against Rs1,939 crores during the previous year.

- E-Governance Project of Central & State Governments have brought a paradigm shift in the way Government Business will be conducted in the days to come. Integration of these projects with the Banks robust Core Banking Solutions/Internet Banking platform has enabled us to conduct Government Business efficiently and seamlessly throughout the country.

- Bank is handling pension payment to 32.72 lacs pensioners through its 14 Centralized Pension Processing Cells (CPPCs), established across the country. These cells provide efficient services & timely payment of pension & arrears to the pensioners, leading to a steady growth in pension accounts. From this year, pension details are being sent to the pensioners on their registered mobile number through SMS.

- "THIRD PARTY E-TAX", a new product enables all our branches to pay taxes online, on behalf of all customers/ non customers who either do not have access to Internet Banking or are not comfortable using it.

- E-AUCTION Project of Indian Railways for Payment/ Registration Fee/EMD/Auction Money was successfully implemented on 06.03.2012.

- Electronic Data Integration (EDI) Model of Fee Collection of UPSC/SSC etc. was launched with relevant details of the customers being auto uploaded in CBS. The Product is also being used for collecting fee for Recruitment Boards, Examination Fee for Colleges, Schools, State Public Service Commissions etc.

- Fund cum Authorization Model for Social Sector Flagship Schemes like National Literacy Mission (NLM) has been successfully implemented by the Bank in coordination with MoHRD. Out of the 26 States identified for implementation of the NLM Scheme, SBI is a partner in 22 States.

- The Bank is proud to be associated with Central Government Projects like Government e Payment Gateway (GePG). By integrating with GePG portal, the Bank has been enabled to make electronic payments to employees/vendors of Central Government, across the country.

- Bank has partnered in all 77 Passport Seva Kendra (PSK) opened by the Ministry of External Affairs (MEA).

- Bank is providing the facility of online payment of various taxes in most of the States and Union Territories and is expected to become operational throughout the country in 2012-13.

D.5 RURAL BUSINESS UNIT (RBU)

AGRI BUSINESS

- The Bank has crossed the milestone (Agri Priority level) of Rs1,00,000 crores (Rs1,16,910 crores) by covering more than 1,00,00,000 farmers, taking Agri Priority Advances to 17.60% of Adjusted Net Bank Credit (ANBC) as against 16.59% last year.

- Direct Agri Advances have grown from 12.09% to 13.10% to ANBC.

- The Bank achieved highest ever growth of Rs18,348 crores (27%) under Direct Agri against the last years growth of Rs5,911 crores (9%) and also achieved highest growth of Rs22,084 crores under Total Agri Priority advances against last years growth of Rs10,675 crores.

- The Bank has disbursed credits aggregating to Rs53,214 crores in FY 12 and financed 13.31 lacs new farmers during this year.

Position of Agri Advances and Agri institutional Deposits:

(Rs in Crores)

Particulars As on As on Growth % 31.03.2011 31.03.2012

a) Direct Agri Advances 68,663 87,011 27%

b) Indirect Agri Advances 26,163 29,899 14%

Agri Priority Advances (a+b) 94,826 1,16,910 23%

Agri Institutional Deposits 19,724 24,309 23%

Other Highlights

- The Bank has extended advances to the tune of Rs71,382 crores as on 31.03.2012 to the weaker sections, which is 10.75% of ANBC against the benchmark of 10 % set by Reserve Bank of India.

- Against GoI stipulated target of 15% of the total Priority Sector Lending (PSL) to Minority Communities, the Bank has achieved a level of 16.17% as on 31.03.2012.

- Special focus has been given for creation of efficient Warehouses and Cold Storages in line with GoIs policy for augmenting storage capacity.

- During the year 199 villages were adopted under "SBI Ka Apna Gaon Scheme" taking the total to 1,063 villages & 220 Farmers Clubs were formed taking the total to 10,047 Farmers Club.

- Under the guidance of Ministry of Rural Development (MoRD), GoI, the Bank has set up 106 Rural Self Employment Training Institutes (RSETIs) as on 31.03.2012 in the allotted districts across the country; conducted 4,186 training programmes, trained 1,11,049 candidates and helped to settle 45,285 trainees.

- The Bank has opened 133 new branches in under-banked/unbanked areas in Minority Community Districts(MCDs) taking the total number of such branches to 3,266 as on 31.03.2012.

- The Bank has infused additional capital amounting to Rs125.64 crores to 9 identified RRBs to enable them to achieve Capital to Risk Weighted Assets Ratio (CRAR) of at least 9% by March 2012 on a sustainable basis.

- All the 2,960 branches of SBI sponsored RRBs have migrated to CBS platform in order to provide better customer service.

Micro Finance:

- The Bank is the market leader (market share around 25.55%) in SHG-Bank Credit Linkage programme having credit linked so far 20.73 lac SHGs (1.79 lac SHGs credit linked during FY 11-12) and disbursed loans to the extent of Rs17,837 crores (cumulative) up to 31.03.2012. Under the scheme for financing NGOs / MFIs for on-lending to SHGs, the Bank has covered 174 units with outstanding of Rs927 crores as on 31st March 2012. Micro Insurance product - Grameen Shakti has been introduced & 1.14 million lives have been covered.

KYC/AML/CFT Measures

The Bank has put in place the Board approved revised policy on Know Your Customer (KYC) / Anti Money Laundering (AML) / Combating Financing of the Terrorism (CFT) measures in line with Master Circular issued by Reserve Bank of India on the subject.

Monitoring of Transactions is done with a view to submit various reports to Financial Intelligence Unit-India mandated by rules of Prevention of Money Laundering Act, 2002.

The Bank has decided to observe 1st August every year as "KYC Compliance and Fraud Prevention day" to maintain appropriate awareness and involvement levels across the Bank as also to create proper understanding of KYC issues among the members of public.

E. INTERNATIONAL BANKING

E-1. Operation of Foreign Offices

The asset level of foreign branches rose by 12%, from USD 32.04 bn in March 2011 to USD 35.826 bn in March 2012. During FY12, net customer credit grew by 9% from USD 24.525 bn to USD 26.681 bn, customer deposits grew by 15%, from USD 10.490 bn to USD 12.075 bn and net profit rose by 21%, to USD 396 mn.

Overseas Expansion

The number of foreign offices increased from 156 as on 31st March 2011 to 173 as on 31st March 2012 spread across 34 countries. The offices comprised 50 branches, 8 Representative Offices, 103 offices of the six foreign banking subsidiaries and 12 other offices.

Resource Management

Despite widespread risk aversion and volatile market conditions, the Banks foreign offices maintained comfortable liquidity position. The Bank has a USD 10 bn Medium Term Note (MTN) programme in place under which the outstanding at the close of FY-2012 was USD 4.43 bn. Under the MTN programme USD 200 mn (Rs1,017.50 crores) was raised by way of reverse inquiries. The Bank was able to redeem bonds worth USD 800 mn (Rs4,070 crores) without having any impact on the liquidity at its foreign offices.

The Bank raised USD 460 mn funds through Syndication Arrangement for three years at a competitive pricing of 145 basis points over 3 months LIBOR in June 2011. During the fiscal the Bank also raised a sum of USD 367.08 mn (Rs1,867.52 crores) by way of bilateral loans of different maturities.

Remittance

Remittances grew from Rs46,396 crores in FY11 to Rs61,457 crores in FY12, clocking a growth of 32%. The Bank had a tie-up with 26 exchange companies and four banks in Middle-East countries for routing remittances through SBI. During the year, new remittance products like SBI Rupee Instant, SBI Express WorldWide were launched to boost remittances business.

E-2. Domestic Operations Merchant Banking

The Bank retained the leadership as Mandated Lead Arranger and Book Runner for syndicated loans in Asia Pacific (excluding Japan but including Australia) for the year ended March 2012.

During the year, fourteen high value transactions for financing ECB requirements of Indian Corporates, as well as their acquisition related financing requirements aggregating USD 4758 mn, were syndicated successfully with a participation of USD 1423 mn. Apart from this, a large number of bilateral deals aggregating USD 2190 mn were also concluded with Indian Corporates.

A fee income of USD 86 mn was earned from syndications and bilateral deals concluded during the year.

Global Link Services (GLS)

In the year 2011-12, GLS on behalf of domestic branches, handled 1,09,413 export bills and 1,09,086 foreign currency cheque collections aggregating USD 13.36 billion. In addition, it handled 58,53,632 inward remittances transactions amounting to USD 5.89 billion from various centres in the Middle East, UK and USA.

Correspondent Relations

The Bank maintains correspondent banking arrangement with 476 reputed International Banks to extend seamless services to varied clients. These correspondent Banks are located in 118 countries. The Bank also has 1,871 Relationship Management Application (RMA) arrangements with SWIFT, facilitating speedier flow of financial messages.

Country Risk and Bank Exposures

The Bank has in place Country Risk Management Policy in tune with RBI guidelines. The policy outlines robust risk management model with prescriptions for Country, Bank, Product and Counter party exposure limits. Both Country- wise and Bank-wise exposure limits are monitored and reviewed on a regular basis. The exposure ceilings and classifications are moderated in line with the dynamics of their risk profiles. Periodical corrective steps are initiated to safeguard the Banks interests.

2. CUSTOMER SERVICE QUALITY INITIATIVES

- The Grievance Redressal Policy of the Bank is based on the Model Policy Framed by Indian Banks Association and provisions of the revised Code of Commitments to Customers released by Banking Codes and Standards Board of India. The Bank has been able to redress majority of the customer grievances within a maximum period of three weeks of receipt as against the time limit of 30 days. Bank has also been able to resolve almost all ATM related complaints within the RBI stipulated period of 7 days.

- The Standing Committee on Customer Service constituted at the Local Head Offices with representatives from customers including Senior Citizens review the overall position of Customer Service in the Circle. Analysis of the consolidated data for Customer Grievances for all Circles is being put up to the Customer Service Committee of the Central Board every quarter to identify common systemic issues that require rectification, and also review the remedial measures taken by the Bank for improving the Customer Service.

- The web based Complaint Management System (CMS), launched in December 2009 for early resolution of ATM related complaints, has since been extended to accept all types of complaints. The customers can register their complaints at the Toll Free number of Contact Centre or online at www.sbi.co.in and obtain a unique complaint number which helps them to trace the status of complaints thereafter through Contact Centre.

- The Bank also has a mobile and web based service for customer grievance redressal - SMS Unhappy Service with resolution within 48 hours.

DAMODARAN COMMITTEE REPORT ON CUSTOMER SERVICE, 2010

Keeping in view the far reaching impact the Report would have on Customer Service in the Banking Industry, the Bank has constituted a High Level Committee which has deliberated on each of the recommendations. Over 50% of the recommendations have already been implemented.

3. NPA MANAGEMENT

The position of NPA reduction as on 31.03.2012 is given hereunder:

Asset Quality (Rs in crores)

1 Gross NPAs 39,676

Gross NPA percentage 4.44%

2 Net NPAs 15,819

Net NPA percentage 1.82%

3 Cash Recovery in NPA 4,159

4 Up gradation to Standard Assets 5,459

5 Write offs 744

6 Gross reduction in NPAs (3+4+5) 10,362

7 Fresh Slippages of Standard Assets 24,712 to NPA category

8 Recovery in written off accounts 962

Stressed Assets Management Group (SAMG) :

In order to give focussed attention to high value NPAs in SME and Corporates, Stressed Assets Management Group (SAMG) was created in April 2011 headed by a Deputy Managing Director.

SAMG has 14 Stressed Assets Management Branches (SAMBs) and 1 Resident Office under its wings. The Group opened two new branches in March 2012 (one each at Ludhiana and Ernakulam). These branches handle NPAs and AUCAs with outstandings in excess of Rs1 crore. Each branch has dedicated, trained staff including a legal expert for expeditious resolution and is able to effect significant recoveries by resorting to action under SARFAESI Act, DRT Act, sale to ARCs and negotiated settlements.

In addition, 115 Stressed Assets Resolution Branches/ Centres (SARB/SARCs) have also been functioning under NBG across the country in Metro/ Urban centres for quicker resolution of NPAs with outstandings upto Rs1 crore in MSME and Personal segments.

The performance of SAMG for the period 2011-12 is given below:

(Amount in crores)

1 Cash Recovery in NPA 826

2 Upgradations in Standard Assets 154

3 Write - Offs 9

4 Gross reduction in NPAs (1+2+3) 989

5 Recovery in written off accounts 216

Total Resolution 1205

- Restructured assets

Adequate importance is being given to restructuring of standard assets under stress, as well as viable non-performing assets. This is done under the Banks own guidelines as well as through CDR mechanism, for arresting additions to NPAs and reducing existing level of NPAs.

48 cases with the Banks aggregate exposure of Rs9,131 crores were referred to CDR mechanism during 2011-12, out of which 24 cases aggregating Rs3,782 crores have been approved and 24 cases aggregating Rs5,349 crores are under process. In these cases, timely intervention has given the Corporates an opportunity to recover from the stress.

Initiatives for NPA Management

To give thrust to recovery efforts and to prevent slippages, various measures were undertaken, which included, timely identification of SMAs and dissemination of information to operating units, etc., brief details of which are as under:

Tightening of appraisal norms / loan eligibility criteria (e.g: The minimum income criteria for Auto Loans has been raised from Rs 1 lac to Rs2.5 lacs p.a.).

Risk Scoring Models have been developed for all P-Segment Loans on the basis of statistical models for objective assessment.

Account Tracking & Monitoring online (AT@M) launched for updation of account wise follow up in P-Segment.

NPA Dashboard is being utilised as a data tool for real time monitoring of NPAs.

To provide relief to stressed MSME sector, Bank has launched non-discretionary and non- discriminatory scheme named "SBIOTS-MSME- 2012", for one time settlement of loan outstanding with liberal terms.

ATCs have been operationalised in all Circles to contact borrowers with outstanding up to Rs25 lacs in SMAs and soft NPA accounts in SME.

4. CORPORATE STRATEGY AND NEW BUSINESSES

A. Merchant Acquiring Business

In order to tap huge potential available in the market and also to create a comprehensive electronic payment infrastructure to activate our more than 108 million debit cards, Bank has entered into Merchant Acquiring Business (MAB). Bank has, so far, approved deployment of more than 28,000 PoS terminals. Bank has already entered into several corporate tie-ups with prominent players in different segments.

B. Financial Planning & Advisory Services

It is strategising to provide financial solutions driven by customer segmentation and offer relationship banking to high end customers.

C. Private Equity

The Banks maiden Private equity foray, the SBI Macquarie Infrastructure Fund, set up in collaboration with Macquarie Group of Australia and International Finance Corporation, Washington closed for subscription and raised a corpus of Rs5,265 crores. The Fund has made five investments worth Rs3,092 crores in Key infrastructure sectors such as airports, telecom towers, thermal power and hydro power. Since its inception, the fund has been rated as the Number one Private Equity Fund in 2010 and adjudged as the "Most Admired Infrastructure Equity F inancier 2011".

The Joint venture with State General Reserve Fund of Sultanate of Oman, the largest sovereign fund of Oman, named Oman India Joint Investment Fund has been operationalised with an initial corpus of USD 100 million.

D. Debit Cards

State Bank Group continues to lead the Debit Card market with over 110 million

Debit Cards as on 31st March 2012 which constitutes about 40% of the total Debit Cards in the country. Debit Card spends of State Bank Group crossed Rs11,000 crores which constitutes around 20.5% of total Debit Card spends in the industry. State Bank Group has also switched over to issuance of 16-digit variants with a view to making its Debit Cards more Point of Sale/ e-Commerce friendly. State Bank of India also introduced State Bank Virtual Card, an e-Card that can be created by Banks Internet Banking customers and used online, to provide a fillip to e-Commerce.

E. Prepaid Cards

i. Vishwa Yatra Foreign Travel Cards (VYFTC)

Vishwa Yatra Foreign Travel Cards (VYFTC) is now a CHIP based EMV Compliant Card and is available in eight currencies, viz. US Dollar (USD), Great Britain Pound (GBP), Euro, Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yan (JPY), Saudi Riyal (SAR) and Singapore Dollar (SGD). Sales for FY 2011-12 were to the tune of USD 59.93 million.

ii. eZ-Pay Cards are aligned with most of the Government social schemes in addition to salary payments by Corporate entities, thus reaching millions of households. Sales for FY 2011-12 were to the tune of Rs860.87 crores.

iii. Gift Cards

Customers can create Gift Cards online. Sales registered for FY 2011-12 was Rs106.44 crores.

F. The Green Channel Counter

The Green Channel Counter launched in 2010 is available at 5,660 branches.

i. Self Service Kiosk (SSK)

SSK launched on 1st July, 2011 through which a customer can make various financial and non-financial transactions by using his Debit Card has been completed in 59 branches across India. Currently, 20 types of transactions including Pass Book Printing are enabled.

ii. Cash Deposit Machine (CDM)

CDM is a machine wherein customer can deposit cash by using his Debit Card. During the year, Bank had deployed 35 CDMs across the country. On each day, average 50 Cash Deposits are being made through each CDM.

iii. Green Remit Cards (GRC)

In order to facilitate Non-Home Cash deposits, Bank introduced Green Remit Cards on 3rd January, 2012 to the remitters who need not be the account holders of the Bank. This facility does not require filling up pay-in-slips by the remitter. All Branches with Green Channel Counters are enabled to offer this facility.

5. FINANCIAL INCLUSION

Bank has achieved 100% coverage of allotted 12,931 villages under Financial Inclusion Plan (FIP) 2011-12 and has opened 40 lacs accounts in FIP villages during the FY 12.

- 1.36 crores No Frills accounts have been opened in 400 districts of 32 States/UTs.

- Bank has set up around 30,000 BC Customer Service Points through alliances both at national and regional level. Also, 113 Financial Inclusion Centres to support the Business Correspondent (BCs) have been set up across the country.

- All products offered through Business Correspondent (BC) channel are technology enabled. Savings Bank, RD, remittance & SB-OD facilities are the products offered through BC channel.

- SBI is one of the Registrars of UIDAI. After State Governments, SBI is the top enroller with more than 252 lac enrollments. Aadhaar enabled Account opening started from data received from UIDAI.

- To facilitate Electronic Benefit Transfer to the rural poor / low income group populace under the MGNREGS, Social Security Pension payments, etc. the Bank has opened more than 27 lac accounts so far and disbursed Rs310 crores during FY 2011- 12 (Rs167 crores disbursed during FY 2010-11).

Multiple IT enabled channels for Financial Inclusion:

The Bank has gone beyond the usual domains of technology in terms of platform, solution, operational details and service contents in a very aggressive manner to serve the excluded common citizen with minimal costs. Some of these channels are:

SBI Tiny Card - About 10 lac customers have been enrolled during the Financial Year (cumulative more than 62 lac customers). Tiny Cards now support Savings Bank, Recurring Deposit, SB-Cum- Overdraft and Remittance products.

Kiosk Banking - The Banks own Technology Initiative, operated at internet enabled PC (Kiosk) with bio-metric validation at 9,211 CSPs, covering 29 lac customer enrollments, has been rolled out in 30 states and 412 districts.

Mobile Rural Banking - The Banks own technology on mobile platform, operable also in low cost mobile introduced and covered 70 CSP outlets.

Cell Phone Messaging Channel - This cost effective model, working on low - cost simple mobile phones and well secured through PIN / signature based security has been rolled out in

7 states across 14 districts and covered 1803 CSP outlets.

Urban Financial Inclusion - To cater to Urban excluded populace, more than 3,600 BC outlets have been set up in Urban/Metro centers. 88 lac remittance transactions for Rs3,888 crores were registered during FY 12.

SUPPORT & CONTROL OPERATIONS

1. INFORMATION TECHNOLOGY

A. Core Banking:

A major infrastructure upgrade of hardware and data storage system has been undertaken for the Primary and the Disaster Recovery set up to ensure uninterrupted and efficient operations, reduce processing time and make provision for scalability for future requirements. Milestones of managing 307 million accounts, 56 million transactions in a day and 2,067 transactions per second have been achieved.

A centralized functionality to generate and provide statements of accounts to all Current Account customers, Home Loan interest/installment payments certificates and TDR/STDR interest paid during the year with TDS particulars have been rolled out. Similar customer service initiatives are on the anvil. A centralized Credit Data Processing (CCDP) functionality fully integrated with CBS has been implemented to collate data for annual closing activities.

B. Expanding foot prints through Alternate Channels:

March 11 March 12 ATMs No. of ATMs of the Group 25,005 27,286

No. of ATMs of SBI 20,084 22,141

Average hits per day 285 285

Debit Cards (in lakh) 728 910

Internet No. of Customers Banking (in lakh) 62.57 89.63

No. of transactions during the Financial year (in lakh) 1,437.46 2,610.32

Mobile Registered Mobile Banking users (in lakh) 10.13 36.45

No. of successful financial transactions (in lakh) 49.30 190.65

No. of Non financial transactions (in lakh) 95.23 317.72

Contact No. of registered Centre customers (in lakh) 9.96 15.31

(i) ATM

State Bank Group has in its stable, variants of ATMs namely Bunch Note Acceptors, Bio metric ATMs, Low Cost Rural ATMs, Solar Powered ATMs, Multi function Kiosks - for printing passbooks, statement of accounts, bar code readers for utility bill payments, internet banking etc. While cash deposit facility has been activated at some of the ATMs, we are now going to deploy a large number of Cash Deposit Machines (Bunch Note Acceptors) at ATM locations which customers can use 24x7 to deposit cash. 50 such machines have already been deployed and we plan to deploy another 600 Cash Deposit Machines this year.

Cash out incidents in ATMs have been eliminated.

(ii) Mobile Banking:

As on 31st March 2012, there were 3.65 Million customers using the Service with more than 1.20 lacs daily transactions, around 46% of which are financial transactions amounting to Rs2.45 crores.

SBI is the market leader in this space, both in the number and value of the financial transactions with 83.70% market share in number of transactions and 49% share in transaction value (source: RBI data on mobile banking transactions - Feb 2012).

StateBank Freedom Premium, the new GPRS based mobile banking service has been rolled out.

SBI has launched mobile technology based prepaid payment services under the brand name of StateBank MobiCash on pilot basis in Delhi and Mumbai Circles of the bank.

(iii) Internet Banking:

Internet banking service is available through www.onlinesbi.co.in for both retail and corporate customers of the bank. Retail Internet Banking: SBI Instapay for utility bills payment, Corporate Internet Banking: CINB Saral- a simplified single user Corporate Internet Banking facility for small entrepreneurs etc. have been added during the year.

C. Foreign Offices:

137 branches in 24 countries, including 2 OBUs in India, run their operations on a common banking applications software, with their databases connected to a Central Data Centre backed up by a synchronized Disaster Recovery Site. All foreign offices use Internet Banking channel and 130 ATMs at various locations abroad cater to the Banks overseas customers with most of the ATMs connected to the centralized ATM Switch in India

D. Enterprise Data Warehouse:

The second phase of Enterprise Data Warehouse Project is under implementation. Dashboards have been developed and deployed to facilitate decision making by top executives of the Bank. Campaign Management tool has been implemented and campaigns through emails/ SMS have been launched by various Business Units targeting customers under various segments.

E. Payment System Group:

NEFT and RTGS continue to remain the most cost-effective and efficient modes for remittance. Our Bank has maintained 2nd position as on 31st March 2012 with market share of 13.70% in NEFT and continues to be the market leader in RTGS with a share of 13.85 % as on 31st March 2012. Cheque Truncation System (CTS) has been implemented in Chennai which will become part of the southern Grid for CTS. Swift Gateway has been centralized by shifting UK, US and Frankfurt operations to Swift Operation Centre, Mumbai.

F. Networking:

The Bank has implemented a secured, robust WAN architecture network built with equipment owned by SBI, connecting branches/offices and ATMs of State Bank Group through leased lines, VSATs and CDMA technology. While leased lines have been procured for the primary link for connectivity, ISDN lines or VSATs have been provided as backup. Wherever leased lines have not been found feasible, VSATs have been provided to the branches for connecting to Banks network. The bandwidth for VSATs is being upgraded from 32 kbps to 64 kbps at all locations. The Bank is also exploring alternate technologies like 3G, CDMA- EVDO, etc. to provide alternate connectivity. The Bank proactively monitors the bandwidth utilization and upgrades wherever warranted.

The Bank has in operation a state of the art video conferencing facility connecting all administrative offices and important branches.

2. RISK MANAGEMENT & INTERNAL CONTROLS Risk Management in SBI Risk Management Structure

- An independent Risk Governance Structure is in place for Integrated Risk Management covering Enterprise, Credit, Market, Operational and Group Risks. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.

Basel Implementation

- In accordance with RBI guidelines, the Bank has migrated to the Basel II framework, with the Standardised Approach for Credit Risk and Basic Indicator approach for Operational Risk w.e.f. March 31, 2008, having already implemented the Standardised Measurement Method for Market Risk w.e.f. March 31, 2006.

- RBI has issued Guidelines on Implementation of Basel III Capital Regulations in India on 2nd May, 2012. These Guidelines will become effective from January 1, 2013. Bank is in the process of putting in place appropriate mechanism to comply with these guidelines.

Enterprise Risk Management

- During the year, the Bank has set in motion the due process required for filing of application/letter of intent to RBI for implementing Advanced Approaches under Basel II, comprising of the three Pillar I Risks viz. Internal Rating Based (IRB) approach for Credit Risk, Internal Model Approach for Market Risk and Advanced Measurement Approach for Operational Risk.

- The Bank has in place the Internal Capital Adequacy Assessment Process (ICAAP) Document as required by Pillar II of New Capital Adequacy Framework under Basel II as prescribed by RBI.

- The ICAAP process covers identification, measurement, management, capital assessment and stress testing of material risks and also detailed additional capital requirements on account of such risks. Besides the aforesaid three Pillar I Risks, the ICAAP also covers Pillar II Risks such as Liquidity Risk, Interest Rate Risk in the Banking Book, Credit Concentration Risk, Reputation Risk, Strategic Risk etc.

Credit Risk Management (CRM)

- In addition to implementing the Standarised Approach, well defined credit risk practices such as use of Credit Risk Assessment (CRA) Models, Industry Exposure Norms, Counterparty Exposure Limits, Substantial Exposure Norms, Macro Economic Stress Tests etc., have also been put in place to improve credit risk management

- The Bank has now set in process a project to migrate to Internal Rating Based (IRB) Approach.

* Models for estimation of Probability of Default (PD), Loss Given Default (LGD), and Exposure At Default (EAD) are being developed.

* Credit risk data mart is being set up.

* Retail scoring and behavioural scoring models are being implemented.

Market Risk Management (MRM)

In accordance with RBI guidelines, Market Risk Management is governed by the Board approved policies covering Investment, Trading, Foreign Exchange, Derivatives, Value at Risk & Stress Testing which stipulate limits for various products and risk types in the portfolio. These limits along with Management Action Triggers & Stop Loss Triggers are monitored on a daily basis and in case of breaches; appropriate actions are initiated by the business units as per the policy prescriptions.

Operational Risk Management(ORM)

- The main objectives of the Banks ORM are to continuously review systems and control mechanisms, create awareness of operational risk throughout the Bank, assign risk ownership, alignment of risk management activities with business strategy and ensuring compliance with regulatory requirements.

- The Operational Risk Management Policy of the Bank establishes a consistent framework for systematic and proactive identification, assessment, measurement, monitoring and mitigation of operational risk & applies to all business and functional areas within the Bank, and is supplemented by operational systems, procedures and guidelines which are periodically updated.

Group Risk Management (GRM)

- A Group Risk Management policy is in place which applies to all Associate Banks, Banking and Non- banking Subsidiaries and Joint Ventures of the State Bank Group under the jurisdiction of specified regulators and complying with the relevant Accounting Standards, where SBI has investment in equity shares of 30% and more with control over management of the entity.

- All Group entities are encouraged to align their policies and practices with the Group, follow Basel prescriptions, guidelines of their regulators besides international best practices.

- The Group ICAAP Document for the State Bank Group is also prepared and submitted to RBI as required by Pillar II of New Capital Adequacy Framework.

- Chief Information Security Officer [CISO]

Bank has implemented a robust IT policy and Information System Security policy which are in line with the international best practices. These policies are reviewed periodically and suitably strengthened in order to address emerging threats. Regular security drills and employee awareness programs are conducted to ensure security and increase awareness among staff. Business Continuity Management System (BCMS) has been implemented at Global IT centre, Belapur. Bank is also among the forerunners in the process of implementing the new RBI Guidelines for the Banking Sector in this area.

INTERNAL CONTROLS

The Bank has in-built internal control systems with well- defined responsibilities at each level and conducts internal audit through its Inspection & Management Audit Department. Audit Committee of the Board (ACB) exercises supervision and control over the functioning of the department. The inspection system plays an important and critical role in identification, control and management of risks by using international best practices in the internal audit function which is regarded as one of the most important components of Corporate Governance. The Bank carries out mainly two streams of audits - Risk Focussed Internal Audit (RFIA) and Management Audit covering different facets of Internal Audit requirement. All accounting units of the Bank like branches, Business Process Reengineering (BPR) entities, major critical corporate centre departments like Foreign Account Office, Treasury operations, Central Accounts Office etc., are subjected to RFIA. Management Audit covers administrative offices and examines policies and procedures besides quality of execution thereof.

Besides the above, the department conducts Credit Audit, Concurrent Audit, Information Systems Audit, Home Office Audit (audit of foreign offices) and Expenditure Audit. Risk Focussed Internal Audit (RFIA) helps in appropriately capturing all types of risks residing in operating units. Credit Audit is conducted for units with large credit limits and Concurrent Audit is carried out at branches including BPR outfits having large deposits, advances & other risk exposures. Expenditure Audit, involving scrutiny of accounts and correctness of expenditure incurred, is conducted at administrative offices including Corporate Centre Establishments and Lead Bank Offices, etc. To verify the level of rectification of irregularities by branches, audit of compliance at select branches is also undertaken. The Information System Audit (IS Audit) of the centralised IT establishments is also being conducted.During the year, 8416 domestic branches/ BPR entities were audited covering more than 99% of branches falling due for audit. No branch remained due for audit beyond the periodicity prescribed by RBI.

VIGILANCE

The concept of Vigilance as an investigative process and an exercise for punitive action has evolved to that of "Vigilance for Corporate Growth", the emphasis getting shifted from punitive vigilance to "Preventive and Proactive Vigilance" through an active participation of all concerned.

In this context, two important issues deserve a special mention viz. (i) Preventive Vigilance Committee (PVC) Meetings being held at the branches and the BPR outfits and (ii) Whistle Blower Scheme. Through PVC meetings every employee can share his views on preventive vigilance, suggest and implement various measures specifically suited to his workplace and participate in a collective exercise of ensuring watchfulness and alertness in his official functions. Under "Whistle Blower Scheme" the staff members are expected to advise appropriate authorities about irregular and unethical practices, if any, being indulged in by colleagues and even seniors.

While Vigilance Administration seeks, as one of its functions, to suitably punish the delinquent employees, it also protects the legitimate and bona fide decisions taken in the interest of the organization. The number of vigilance case brought to conclusion during the year 2011-12 is 1447, in which 1307 employees have been inflicted with various penalties for their proven misconducts.

The number of officers retired under Rule-19(3) of SBI Officers Service Rules has substantially come down from 54 to 11 during the year. All efforts are made to conclude such cases in the shortest possible time.

Considering the size of our Bank, we have set up Vigilance Departments at each of the 14 Circles, headed by Deputy General Managers. The apex Vigilance Department at Corporate Centre is headed by the Chief Vigilance Officer of the rank of Chief General Manager. The Department reports to the Chairman directly and conducts its affairs in an independent manner. The guidelines of the Central Vigilance Commission (CVC) are followed by the vigilance set-up in its functioning.

Fraud Prevention & Monitoring

The measures taken for prevention of frauds are as under:

- The KYC Compliance and Fraud Prevention day was observed on 1st August every year.

- The Preventive Vigilance Committees are formed at the branches having staff strength of 10 or more (including SAM branches) and at CPCs/Cells irrespective of their staff strength, as per the revised scheme approved by the Vigilance Department at Corporate Centre.

- To encourage/popularize Whistle Blower Policy, DGM (Vigilance) at Corporate Centre and DGM (Vigilance) at LHO have been made the Designated Officers for the purpose.

- Biometric authentication by users is being implemented in 100 sensitive Branches shortly and remaining branches by September 2012 in phases.

- Fraud Analysis Cell (FAC) has been created at Jaipur to monitor transactions through alerts being thrown by the software

3. BUSINESS PROCESS RE-ENGINEERING (BPR)

BPR initiatives have been undertaken by the Bank with the objective to "transform the Bank into a world class financial institution by proactively reaching out to acquire new high net worth customers, building deep and lasting relationships with existing customers and providing all customers with the best quality of service across multiple channels". The usage of Multi City Cheques has been popularised & these instruments can be paid at all the branches of the Bank across the country. The BPR initiatives have resulted in handling increased volume with deriving the benefits of standardisation, skill pooling, economies of scale, improved ambience, significantly increased and proper customer space. Under future initiatives, the BPR would be focussing on new processes & technology upgrades in order to create and sustain market - leading practices so as to retain leadership position in the Indian Banking Industry.

14 Liability Centralised Processing Centres (LCPSs) have been opened across the country as against 4 previously, in order to handle increased volume of account opening and faster delivery of personalised cheque books & ATM cards to the customers. They have also contributed in improving the quality of scrutiny of the Account Opening Forms in terms of KYC compliance.

Drop Boxes at onsite ATMs

6660 Drop Boxes have been installed at all onsite ATMs for providing 24x7 facility to the customers to deposit cheques / collection instruments.

4. HUMAN RESOURCES (HR)

NEW HR INITIATIVES:

A number of key initiatives have been taken by the Bank during the current year to motivate the employees and increase productivity so as to achieve the Banks growth plans.

PERSONNEL MANAGEMENT

A Whistle Blower Policy has been put in place for reporting any unethical practices or behaviour by the employees for violation of their service rules with a provision for protection of interest/identity of the whistleblower.

Investment of the Pension Fund, Provident Fund, Gratuity Fund

a) After persistent efforts of many years, Rule 10 of the SBI Employees Pension Fund could be amended to permit additional contributions to the Pension Fund Corpus as per the actuarial valuation. The Corpus has now been invested in market securities. This has led to insulating the funds from the solvency risk of the Bank.

b) The Pension, Provident and Gratuity Fund Corpus, which were held as deposits with the Bank, have been separated from the Banks balance sheet and are invested in market determined securities through our Portfolio Managers, as per the approved investment pattern of GOI/IT Rules. This was made in the larger interests of the stakeholders by making an amendment in Rule 13 of the SBI Employees Provident Fund Rules in FY 2011-12.

CADRE MANAGEMENT

a) The Performance Management System (PMS) has been rationalized -a feedback system-on the performances of the officers in Scale V and above.

b) To meet requirement of the skilled manpower and to tap the emerging business opportunities, 166 Specialist Management Executives with qualification of CA/ICWA/ MBA (Finance, Marketing) were recruited during the year.

c) 7 Special Technical Executives with B.E./ B.Tech qualification in the fields of Chemical, Mechanical, Electrical, Metallurgical Engineering appointed for manning consultancy cells in Circles.

d) Further, 917 Probationary Officers and 118 other Specialist Officers have been recruited during FY 2011-12. This will take care of the Banks requirements of officers in operations and specialised areas.

e) Besides successfully holding online examination for promotion from JMGS I to MMGS II, all promotion exercises in respect of officers up to the grade of Deputy Managing Director were completed in time during the year.

INDUSTRIAL RELATIONS

Cordial industrial relations were maintained with both Officers and Staff Federation through meaningful dialogue / discussions with them during the year. However, there was a strike call from the Officers Federation on 8th and 9th November 2011 which would have closed the Bank for public transactions for a continuous period of 5 days. The Management took appropriate steps and the strike did not materialise. Meanwhile, issues raised by both the Federations were duly examined and addressed.

HUMAN RESOURCES MANAGEMENT SOLUTIONS (HRMS)

1. Processing and payment of salary of all the employees of SBI, SBP, SBM & SBH is being done through a centralised platform.

2. Automation of centralised PF related services has facilitated faster settlement of terminal benefits.

STRATEGIC TRAINING UNIT (STU)

The Strategic Training Unit (STU), operationalized on 5th April 2010, has undertaken a number of initiatives during the year to increase the efficiency and effectiveness of the Banks training system. Some of the major initiatives in this regard are as follows:

1. Over 2 lacs ( 96.7% of Banks staff strength ) employees were trained at 5 ATIs and 47 SBLCs.

2. State Bank Training Management System has been operationalised for creating a comprehensive database and tracking of training of all employees.

3. E-learning through HRMS portal has been expanded to over 213 courses and about 83% of the staff are now registered on the portal.

4. Leadership Development Programmes were organised for Top Executives and Senior Management.

5. Research studies by the Bank officials were recognised by various outside publications / agencies like Bancon, ICRIER, IBFA.

STAFF STRENGTH

The Bank had a total permanent staff strength of 2,15,481 on the 31st March, 2012. Of this, 80,404 (37.32%) are officers, 95,715 (44.42%) clerical staff and the remaining 39,362 (18.26%) were sub-staff.

It has been decided to recruit 9500 new clerical staff during the FY 2012-13 to meet the growing business needs of the Bank.

5 YEARS COMPARISION OF STAFF STRENGTH

The category wise staff strength of the Bank for the year ended March 2008, 2009, 2010, 2011 and 2012 was as under :

31.03.08 31.03.09 31.03.10 31.03.11 31.03.12

officers 57765 64685 70622 79728 80404

Assistants 76818 96974 87356 102701 95715

subordinate 44622 44237 42321 40504 39362

Total 179205 205896 200299 222933 215481

Addition during the 6183(-) 26691 5597(-) 22634 7452(-) year

INTELLECTUAL CAPITAL

Out of a total staff strength of 2,15,481 as on 31.03.2012, the academic qualifications of the employees are as under:

Graduate - 1,14,943 (53.34 % ), Post - Graduate - 37,263 ( 17.30 % ) MBA - 3,239 ( 1.50 % ), Engg / Technical - 165 ( 0.08 % ) Doctorate - 166 ( 0.08 % )

IMPLEMENTATION OF PERSONS WITH DISABILITIES (PWD) ACT 1995

Our Bank provides reservation to persons with disabilities (PWDs) as per the guidelines of the Government of India and section 33 of the PWD Act 1995. The Bank undertook the work of identifying roles that could be handled by challenged employees, so as to ensure their better integration and productivity through suitable training. The total number of persons with disabilities who were employed as on 31.03.2012 was 2,332 (details given as under).

Category Total No. of Persons With Disabilities

Officers 80,404 554

Assistants 95,715 1,557

Sub-staff 39,362 221

TOTAL 2,15,481 2,332

REPRESENTATION OF SCHEDULED CASTES AND SCHEDULED TRIBES VIS-A-VIS OTHER EMPLOYEES

As on the 31st March, 2012, 41,019 ( 19.03 %) of the Banks total staff strength belonged to Scheduled Caste, 15,267 (7.08 % ) belonged to Scheduled Tribes and 1,59,195(73.89%) belonged to other categories.

In order to discuss issues relating to reservation policy and effectively redress the grievances of the SC/ST employees, Liaison Officers have been designated at all Local Head Offices of the Bank as also at the Corporate Centre at Mumbai.

The Bank has been conducting workshops on reservation policy for SCs/STs/OBCs to impart up-to-date knowledge/latest operative instructions about the reservation policy and related areas to the SC/ST cell officers, representatives of SC/ST welfare Association and the Liaison officers.

Government of India representatives, inspected the reservation roasters for SCs/STs/OBCs/PWDs at all the 14 Circles and found this maintained satisfactorily.

Pre-recruitment and pre-promotion training programmes are being conducted to enable SC/ST candidates to achieve the prescribed standards to effectively compete with other candidates.

5. OFFICIAL LANGUAGE

Efforts have been made by the Bank during the year for meeting various requirements and targets fixed by GOI with regard to the implementation of Official Language policy in the Bank. The task of providing facility of Hindi in Core Banking System (CBS) has been completed with all earnestness and provision of facility to work in Hindi in CBS have been successfully activated in all the branches of the bank. ATM hits through Hindi medium were 52063356 this year, as compared to 48811432 hits recorded last year reporting an increase of about 6.70%. To augment the usage of Hindi by staff in office correspondence, the provisions of Official Language Policy of the Government have been uploaded in the Banks Intranet Site. Further, the Banks in-house Hindi Magazine "Prayas" bagged 1st prize in the Hindi In-house Magazine Competition organised by RBI for the year 2010-11. This is the sixth time that our magazine touches this glorious adornment.

6. COMPENSATION POLICY FOR DEFICIENCY IN SERVICE

As a premier Bank of the nation, SBI always strives to create and maintain highest standards of customer service and in any unlikely event of any slippage in services extended to customers, the Bank has put in place a Board approved Compensation Policy to compensate for such slippages. The policy ensures that appropriate financial compensation is provided to the recipients to these services, without requesting for it.

7. BANKS OUTSOURCING POLICY

RBI have permitted banks to outsource non-core functions and the Bank has accordingly put in place a Board approved Outsourcing Policy.

8. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility has always been a part of the State Bank of India covering various social, environmental and welfare activities.

In SBI, we believe that we owe a solemn duty to the less fortunate and underprivileged members of the society to make a sustainable social change in their development.

The Executive Committee of the Central Board has approved in August 2011 a comprehensive policy for Corporate Social Responsibility.

Focus areas for our CSR activities are:

- Supporting Education

- Supporting Healthcare

- Supporting Girl Children & Child development.

- Assistance to poor & underprivileged.

- Environment protection.

- Clean Energy.

- Entrepreneur development programme.

- Help in National calamities.

State Bank wins Golden Peacock Award for Corporate Social Responsibility-2012

The year 2011-12 saw the CSR activities of the Bank scaling new heights of achievement and glory with our Bank winning the prestigious Golden Peacock Award for Corporate Social Responsibility in 2012.

As per the Reserve Bank of India instructions, our Bank earmarks 1% of previous years net profit, as CSR spend budget for the year. In terms of CSR policy of the Bank, CSR donations are given to only those organizations that enjoy IT exemption under Sec 80. This ensures that the Banks support is extended to deserving cases only.

The comparative chart of CSR spends for the last three years is as under:

Rs in crores

2009-10 2010-11 2011-12 Actual Actual Actual

National Donations 5.15 2.00 5.50

(To provide succor to victims of natural calamities)

Normal Donations & other direct activities 14.57 22.44 65.68

Total CSR spend 19.72 24.44 71.18

For the first time in the last decade, the budget for CSR spend (normal donations and other direct activities) has been surpassed even though the allocation was much higher than the previous years.

Sector wise Deployment:

The breakup of sectoral deployment of our CSR spends during the year has been as under:

Amount (Rs in crores)

National Donations 5.50

Supporting Education 38.33

Supporting Healthcare 15.03

Assistance to underprivileged 5.37

Research & Development 3.75

Supporting Culture 1.15

Environment Protection 0.67

Other projects 1.38

Total 71.18

Supporting Education:

- To support school education and to bring happiness to millions of school children specially the underprivileged children, Bank provided 1,20,000 electric fans to 12,000 schools across India.

- During the year, the Bank also provided large number of buses/vans to needy schools. Preference has been given to schools for physically/mentally challenged children, and children belonging to economically weaker sections etc. We also assisted them with computers, furniture and other accessories.

- To transform and upgrade the efficacy of education in schools run by Municipal Corporation of Greater Mumbai, we are extending funding support.

Supporting Healthcare:

The focus of the Bank has been to help provide the basic infrastructure support to ameliorate the condition of the common man. Ambulances, medical vans to enable medical camps in remote areas and mobile blood collection vans and host of other medical equipments were donated to needy organizations/hospitals by our 14 Circles for speedy transportation of critical patients as well as to provide medical services to the remotest parts of the country.

The Bank has donated 95 such vehicles with an expenditure of Rs7.40 crores during the year. Medical equipments costing Rs6.10 crores were donated to needy hospitals/healthcare institutions.

- Healthcare to Children- Providing safe drinking water has always been a challenge for schools. Recently we took up the project, and installed 13,600 water purifiers in as many schools, ensuring clean & safe drinking water to millions of children in schools.

Responsibility to the Nation:

- Girl Child adoption- Our branches have adopted girl children from underprivileged class and assist them financially for their education. Bank has adopted 17627 girl children.

- Assistance for Natural Calamities: SBI has always been at forefront to help the States affected by natural calamities. During the current fiscal, the Bank has lent its helping hand to the following states, with donations of Rs 5.50 Crores to the Chief Ministers Relief Fund of the respective states to provide help to the people affected by natural calamities.

State Calamity Amount (Rs in Crores)

Odisha Flood 1.00

Puducherry Cyclone 0.50

Sikkim Earthquake 1.00

Tamil Nadu Cyclone 2.00

West Bengal Earthquake 1.00

Total 5.50

- Our branches across the country made special drives to plant fruit bearing trees to improve green coverage. Fruits will also help birds.

- Our offices/branches undertake various other social welfare activities like blood donation camps, medical camps, tree plantations, adult literacy classes, imparting skills to local community.

Green Banking:

- We effectively propagate and implement sustainable usage of resources including renewable energy.

- Adopted energy efficient measures.

- Our Bank is the largest deployer of solar ATMs in the World. Saving more than 2000 tons of CO2 per year.

- Paperless Banking transaction- Green Channel Banking.

- The Bank has installed windmills with capacity of

15 MW in three states for internal energy needs.

- The Bank extends project loans on concessionary interest rates to encourage customers to reduce Green House gases by adopting efficient manufacturing practices.

Internal CSR

- We are an equal opportunity organization.

- We provide best of the facilities and healthcare to our employees. A large number of Employee Welfare schemes are in place as motivational incentive.

- Extensive in-house training facilities.

- Motivational incentives, Freedom of Association.

R & D Fund:

The Bank supports research work relevant broadly to the activities of the Bank from its Research & Development Fund. The Bank makes an annual contribution of GBP 100,000 towards a Chair set up by the Bank jointly with RBI at the Asia Research Centre at London School of Economics.

SBI Childrens Welfare Fund:

The Bank constituted SBI Childrens Welfare Fund as a Trust in 1983. The Corpus of the Fund is made up of contributions by staff members and matching contribution provided by the Bank. Grants are extended to institutions engaged in the welfare of underprivileged/downtrodden children like orphans, destitute, challenged and deprived, etc. During the FY 2011-12, 8 projects were assisted with Rs7.26 lacs.

SBI Youth for India:

- SBI Youth for India Fellowship- Bank has granted fellowship to educated youth and deployed them to rural areas to undertake innovative projects to address local problems of rural poor.

- This touched upon many projects like Rural Employment Guarantee Schemes, IVRS helpline for farmers & fishermen, career guidance, Enhancing marketability of farm produce, Education of rural youth through ICT, Environment protection, and many others.

Looking ahead:

We will continue with our multi pronged efforts to meaningfully contribute towards more sustainable development of the society and Green Planet.

9. ASSOCIATES AND SUBSIDIARIES

The State Bank Group with a network of 20193 branches including 5096 branches of its five Associate Banks dominates the banking industry in India. In addition to banking, the Group, through its various subsidiaries, provides a whole range of financial services, which include Life Insurance, Merchant Banking, Mutual Funds, Credit Card, Factoring, Security trading, Pension Fund Management, Custodial Services, General Insurance (Non Life Insurance) and Primary Dealership in the Money Market.

CROSS SELLING

The large network of branches of the State Bank Group is being leveraged to deliver products of SBI Life Insurance Co., SBI Mutual Fund, SBI Card, SBICap Securities Ltd., SBI General and other third party companies having tie-up arrangements with the Bank, thereby offering a wider range of financial products to our customers.

During the year, the Bank covered 5.93 lac lives under various schemes of SBI Life Insurance. Rinn Raksha, a Group insurance product was made available for all retail borrowers. Also, for encouraging investment among small investors, the Bank distributed the SIP (Systematic Investment Plan) product by which middle income group customers can invest regularly in the Mutual Funds. A total of 1.99 lac customers were covered in the year under the scheme. SBI General, the Banks non-life insurance JV, rolled out 46 products designed to meet various needs of SME and Retail clients. The Personal Accident Insurance cover for savings bank account holders of the Bank has been rolled out by SBI General, as a pilot, in Mumbai and Ahmedabad Circles. An over the counter payment option has been extended to SBI Card customers, thus making the company the industry leader in payment options.

1 Associate Banks

SBIs five Associate Banks had a market share of 6.02% in deposits and 6.05% in advances as on the last Friday of March 2012.

Table: Performance Highlights of Associate Banks (ABs) together :

(Rs in Crores)

As on 31.03.2011 As on 31.03.2012 Change (%)

Total Assets 3,73,963 4,34,947 16.31

Agg. Deposits 3,11,645 3,61,589 16.03

Total Advances 2,40,423 2,89,149 20.27

Operating Profit 7,568.68 8,213.91 8.53

Net Profit 3,598.43 3,626.35 0.78

Credit Deposit Ratio 77.29% 79.97% 268 bps

Capital Adequacy Ratio 13.25 13.16 -0.09 bps

Gross NPA 5,066.50 8,537.95 68.52

Net NPA 2,443.69 4,417.76 80.78

Return on Equity 19.08% 15.64% -344 bps

Important Developments during the year in Associates & Subsidiaries:

- A total of 10,20,670 equity shares of SBI Global Factors Ltd. were sold by SBI to SIDBI on 30.11.2011 at a consideration of Rs32/- per share (FV Rs10/- and premium Rs22/-) bringing down the stake of SBI from 86.82% to 86.18%. This was part of the Rights Issue of SBIGFL which was subscribed by SBI, pending SIDBI receiving approval for this investment.

- SBICAP Ventures Ltd bought back 9,38,000 (18.39% of total shares) at Rs12.26 per share- Rs1,14,99,880/-

- An amount of Rs585 crore, as equity, was infused in SBBJ by SBI in April, 2011, representing its 75% share in the Rights Issue.

- SBICI Bank Ltd. was acquired by SBI on 29.07.2011. As a result, the shareholding of SBI in SBBJ went up from 75% to 75.07%, as the stake of SBICI Ltd. in SBBJ has now come into the books of SBI.

2 SBI Capital Markets Limited (SBICAP)

SBICAP is a full service investment banking outfit offering Project Advisory Services, arrangements for Structured Finance, Capital Market Services like Equity Issuances, Mergers & Acquisitions and arrangement for Private Equity, etc. SBICAP is a leader in India in Project Finance, with over 40% market share.

The following are some of the many awards / recognitions won by the Company during the year:

- Ranked No 1 Mandated Lead Arranger for Project Finance Loans for Global Asia Pacific by Project Finance International (PFI).

- Ranked No 1 Mandated Lead Arranger for Project Finance Loans for Global by Dealogic.

- Ranked No 1 Financial Advisor for Loans for Asia Pacific by Dealogic.

- Ranked No1 Loans Mandated Arranger for Asia Pacific Ex- Japan by Bloomberg.

- Ranked No 1 Loans Book Runner for Asia Pacific Ex-Japan by Bloomberg.

- Ranked No 1 Qualified Institutional Placements in India by Bloomberg.

- Ranked No1 in Rights Issues in India by PRIME.

- Ranked No 1 in Public Issues of Bonds in India by PRIME.

SBICAP on standalone basis posted a PBT of Rs492.66 crores (before fee sharing) during the FY 2011-12 as against Rs579.35 crores earned in FY 2010-11 and a PAT of Rs250.98 crores in FY 2011-12 as against a PAT of Rs374.72 crores for FY 2010-11.

SBICAP and its 4 subsidiaries posted a PBT of Rs513.68 crores (before fee sharing) during the FY 2011-12 as against Rs593.89 crores earned during FY 2010-11, and a PAT of Rs265 .30 crores in FY 2011-12 as against Rs384.56 crores in FY 2010-11. The profits are lower due to the dampened activity in Capital Markets.

2.1 SBICAP Securities Limited (SSL)

SSL, a wholly owned subsidiary of SBI Capital Markets Ltd., besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in Sales and Distribution of other financial products like Mutual Funds, etc. SSL has 89 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 2.52 lac customers on their books. The Company posted a profit of Rs4.03 crores during the FY 2011-12 as against a PAT of Rs4.59 crores during the FY 2010-11. The profits are lower on account of subdued Capital Markets.

2.2 SBICAPS Ventures Limited (SVL)

SVL is a wholly owned subsidiary of SBI Capital Markets Ltd. SVL earned a net profit of Rs0.23 crore during 2011-12 as against Rs0.56 crore in 2010-11.

2.3 SBICAP (UK) Ltd. (SUL)

SUL is a wholly owned subsidiary of SBI Capital Markets Ltd. During the year, SUL booked a revenue of Rs9.29 crores and posted a net profit of Rs4.82 crores during FY 2011-12, as against Rs0.20 crore during FY 2010-11, despite the global recessionary scenario.

SUL is positioning itself as a Relationship outfit for SBI Capital Markets in UK and Europe. Relationships are being built with FIIs, Financial Institutions, Law Firms, Accounting Firms, etc to market the business products of SBICAP.

2.4 SBICAP Trustee Co. Ltd. (STCL)

STCL, a wholly owned subsidiary of SBI Capital Markets Ltd., which commenced security trustee business with effect from 1st August 2008, has earned a Gross Income of Rs11.62 crores and a Net Profit of Rs5.86 crores during 2011-12, as against Gross Income of Rs8.31 crores and Net Profit of Rs4.43 crores during 2010-11.

3 SBI DFHI Ltd. (SBI DFHI)

- SBI group holds a 71.56% share in the Company, which is a primary dealer to support the book building process in Primary Auctions and to provide depth and liquidity to secondary markets in G-Secs.

- For the period ended 31st March 2012, the Companys PAT was Rs43.50 crores as against Rs56.94 crores earned during FY 2010-11. The profit is lower because of the high interest regime leading to higher MTM provisions.

- The market share of SBIDFHI amongst market participants has increased from 3.41% as on 31.03.2011 to 4.34 % as on 31.03.2012.

- The secondary market turnover during the year was Rs1,51,680 crores as against Rs97,885 crores during the corresponding period in 2011 (YoY growth of 55%).

4 SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

- SBICPSL, the only stand-alone credit card issuing company in India, is a joint venture between State Bank of India and GE Capital Corporation, wherein SBI holds a 60% stake.

- The "Cards in Force" (CIF) of the Company stood at 22.25 lacs as at 31st March 2012. The average receivables stood at Rs2,178 crores as at the end of March 2012, as against Rs1,795 crores at the end of March 2011.

- The Company posted a net profit of Rs37.90 crores as on March 2012 as against Rs7.10 crores earned during the year ended March 2011.

5 SBI Life Insurance Company Limited (SBILIFE)

- SBI Life is Joint Venture Company between SBI and BNP Paribas Cardiff, in which SBI holds a 74% stake.

- SBI Life has a unique multi-distribution model comprising Bancassurance, Retail Agency and Institutional Alliances and Group Corporate Channels for distribution of insurance products.

- The Gross Premium of the Company crossed Rs13,000 crores.

- SBI Life has a market share of 19.9% in respect of New Business Premium (NBP) amongst Private Life Insurers . The overall market share (including Life Insurance Corporation of India) of SBI Life in terms of NBP stood at 5.7% as on 31st March 2012.

- In NBP, SBI Lifes ranking improved to the FIRST position amongst Private Life Insurers during FY 2011-12 from the Second position during FY 2010-11.

- SBI Life recorded a PAT of Rs555.80 crores as on 31.03.2012 as against Rs366.30 crores as on 31.03.2011 recording a YoY growth of 51.73%.

- The Assets under Management of SBI Life recorded a growth of 16% YoY to reach Rs46,576 crores as on 31st March 2012.

- SBI Life expanded its branch network by adding 85 branches during the year bringing the total number of branches to 714.

- ICRA has reaffirmed its iAAA rating to the company indicating highest claim paying ability.

- CRISIL has reaffirmed its highest financial rating of AAA/ Stable.

The following are some of the awards / recognitions received by the Company during 2011-12:

- Winner of NDTV Profit Business Leadership Award twice in a row, 2011 and 2010.

- Awarded the Most Trusted Private Life Insurance Brand 2011 by The Economic Times, Brand Equity Most Trusted Brand Survey.

- Won IMC Ramkrishna Bajaj National Quality Awards 2011 - Certificate of Merit.

- Winner of ICAI Award for Excellence in Financial Reporting for FY 10 - 11.

- Winner of Best Presented Accounts Award by SAFA.

- SBI Life leads globally at Million Dollar Round Table (MDRT) 2011.

6. SBI Funds Management (P) Ltd. (SBIFMPL)

- SBIFMPL, the Asset Management Company of SBI Mutual Fund, is the 6th largest Fund House in terms of average "Assets Under Management" and is a leading player in the market with 6 million investors.

- The Annual Rankings have improved for almost all Equity Schemes.

- The schemes of the Fund House have performed consistently over the years, and have emerged as the preferred investment for investors.

- The company has posted a PAT of Rs60.52 crores during FY 2011-12.

- The average "Assets Under Management" (AUM) of the company for Jan-Mar 2012 quarter stood at Rs42,042 crores as against Rs41,672 crores during Jan-Mar 2011 quarter.

The following are some of the awards / recognitions received by the Company during 2011-12:

- Nominated for Best Fund House of the Year in Fixed Income Category - Bloomberg UTV Awards.

- Nominated amongst 3 Best Funds in Ultra Short Term Fund and Liquid Fund Category- CRISIL CNBC Award.

- Won 5 awards at ICRA Award Ceremony.

7. SBI Global Factors Ltd. (SBIGFL)

- SBIGFL is one of the leading factoring companies in India which has the highest market share in domestic as well as export & import factoring.

- During the year ended 31st March 2012, the turnover of the company increased to Rs9,014 crores from Rs7,605 crores as on 31st March 2011, registering a YoY growth of 18.53%.

- The company incurred a loss of Rs66.78 crores during the year ended 31.03.2012 as against a loss of Rs125.62 crores incurred during the year ended 31.03.2011. The Company has turned around and has started making operating profits since Sept 2011.

8. SBI Pension Funds Pvt. Ltd. (SBIPF)

- SBIPF is one of the three Pension Fund Managers (PFM) appointed by Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the National Pension System (NPS) for Central Government (except Armed Forces) and State Government Employees.

- PFRDA has appointed 4 more PFMs for the informal sector under the NPS.

- SBIPF, a wholly owned subsidiary of the State Bank Group, commenced operations from April 2008. The total "Assets Under Management" of the company as on 31st March 2012 were Rs6,022 crores (YoY growth of 60 %).

- The Company maintained its lead position amongst the 7 Pension Fund Managers in terms of AUM, for both the organized and Informal sectors.

- The overall AUM market share in the Informal sector was 52.31%, while in the organized sector it was 39.41%.

- The Company recorded a net loss of Rs33.45 lacs during the FY 2011-12 mainly on account of lower interest management of fee (0.0009% of AUM).

9. SBI General Insurance Company Ltd. (SBIGIC)

- SBIGIC is a joint venture between State Bank of India and IAG Australia, in which SBI holds a 74% stake.

- SBIGIC has completed its second year of full operations during FY 2011-12.

- Gross Written Premium stood at Rs250 crores (including Rs10.94 crores of re-insurance) as at 31st March 2012.

- The Company recorded a net loss of Rs95.35 crores as against the estimated loss of Rs135.20 crores during the FY 2011-12 and a loss of Rs26.82 crores was incurred during the FY 2010-11.

- SBIGIC has a multi-distribution model comprising Bancassurance, Agents, Broker and Direct Channels for distribution of insurance products.

10. SBI SG Global Securities Services Pvt. Ltd. (SBISG)

- SBISG, a joint venture between State Bank of India and Societe Generale of France, was set up to offer high quality custody and fund administration services to complete the bouquet of financial services on offer by a financial conglomerate.

- SBISG commenced commercial operations in Custody in May 2010 and Fund Accounting Services in Sept 2010.

- The Company recorded a net profit of Rs24.71 lacs during the FY 2011-12 as against a net loss of Rs137.47 lacs during the FY 2010-11.

- The Assets Under Custody as on 31st March 2012 stood at Rs28,659.47 crores, while the Assets Under Administration were at Rs42,671.35 crores.

INFORMATION WITH REGARD TO SUBSIDIARIES & JOINT VENTURES AS ON 31.03.2012

A. Domestic Banking Subsidiaries

(Amount in crores)

S. Name of SBI Share of Total Agg. Total Op. No the Bank ownership Assets Deposits Adva- Profit nces Amt. %

1 State Bank of Bikaner 676.12 75.07 72528 61255 49986 1490 & Jaipur

2 State Bank of Hyderabad 367.55 100 117568 100552 78336 2653

3 State Bank 628.63 92.33 60404 49663 40652 1060 of Mysore

4 State Bank of Patiala 445.10 100 98498 79154 64140 1763

5 State Bank of Travancore 120.85 75.01 85949 70965 56034 1249

Name Net CD CAR Gross Net Return the Bank Profit Ratio % NPAs NPA on % % Equity %

State Bank 652 81.60 13.76 3.30 1.92 15.66 of Bikaner & jaiput

State Bank of Hyderabad 1298 78.08 13.56 2.56 1.30 19.98

State Bank of mysore 369 81.86 12.55 3.70 1.93 9.26

State Bank of patiala 796 81.03 12.30 2.94 1.35 16.66

State Bank of Travancore 511 78.96 13.55 2.66 1.54 13.62

B. Non Banking Subsidiaries (Amount in crores)

S. Ownership % of Net Profit No Name of the Subsidiary Company (State Bank Ownership (Loss) for the interest) FY 2011-12

1 SBI Capital Markets Ltd. (Consolidated) 58.03 100 265.30

2 SBI DFHI Ltd. 139.15 63.78 43.50

3 SBI Payment Services Pvt. Ltd. 2.00 100 (0.76)

4 SBI Mutual Fund Trustee Company Pvt Ltd. 0.10 100 3.21

5 SBI Global Factors Ltd. 137.79 86.18 (66.78)

6 SBI Pension Funds Pvt. Ltd. 18.00 90 (0.33)

7 SBI Funds Management Pvt. Ltd. 31.50 63 60.52

8 SBI Cards & Payment Services Pvt. Ltd. 471.00 60 37.90

9 SBI Life Insurance Company Ltd. 740.00 74 555.80

10 SBI-SG Global Securities Services Pvt. Ltd. 52.00 65 0.25

11 SBI General Insurance Company Ltd. 111.00 74 (95.35)

C. Joint Ventures (Amount in crores)

S. Ownership % of Net Profit No Name of the Subsidiary Company (State Bank Ownership (Loss) for the interest) FY 2011-12

1 C-Edge Technologies Ltd. 4.90 49 18.96

2 GE Capital Business Process Mgt. Services Pvt. Ltd. 10.80 40 (0.40)

3 Macquarie SBI Infrastructure Mgt. Pte. Ltd. 2.25 45 20.60

4 SBI Macquarie Infrastructure Mgt. Pvt. Ltd. 18.57 45 8.81

5 SBI Macquarie Infrastructure Trustee Pvt. Ltd. 0.025 45 (0.0157) 6 Oman India Joint Investment Fund- Mgt. Co Pvt. Ltd. 2.30 50 3.32

7 Oman India Joint Investment Fund- Trustee Co Pvt. Ltd. 0.01 50 0.003

D. Foreign Banking Subsidiaries (Amount in crores)

S. Ownership % of Net Profit No Name of the Subsidiary Company (State Bank Ownership (Loss) for the interest) FY 2011-12

1 State Bank of India (California) 420.27 100 3.08

2 State Bank of India (Canada) 567.17 100 8.49

3 Commercial Bank of India Llc, Moscow 54.94 60 18.19

4 SBI (Mauritius) Ltd. 412.74 93.40 74.93

5 PT Bank SBI Indonesia 67.84 76 11.47

6 Nepal SBI Bank Ltd. 75.74 55.05 28.23

10. RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005)

Suitable structure has been put in place at Branches/Administrative Offices/Regional Business Offices/Local Head Offices for handling requests and appeals under RTI Act 2005. For convenience of the public, the bank has also created an RTI link on its website http://www.statebankofindia.com and http://www.sbi.co.in

Responsibility Statement

The Board of Directors hereby states:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2012, and of the profit and loss of the bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and

iv. that they have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT

During the year, Shri R. Sridharan, Managing Director [under Section 19(b)of SBI Act 1955], retired on attaining superannuation on 30th June 2011. Smt. Shymala Gopinath, Dy. Governor, Reserve Bank of India Nominee Director, retired on attaining superannuation, as on 20th June 2011. Dr. Ashok Jhunjhunwala, Director, elected by shareholders under Section 19(c), retired from the Board on 23rd June 2011 consequent upon completion of his second term. Dr. Rajiv Kumar, Director nominated under Section 19(d) by Govt. of India, retired from the Board on 7th September 2011 consequent upon completion of his term of three years.

Shri Dileep C. Choksi, Shri S.Venkatachalam and Shri D. Sundaram retired from the Central Board on 23rd June 2011 consequent upon completion of term of three years and were re-elected as Directors, alongwith Shri Parthasarathy Iyengar, elected for the first time, for a period of three years w.e.f. 25th June 2011, by the shareholders at the General Meeting held on 24th June 2011.

Shri D.K. Mittal was nominated as Govt. Nominee Director, vice Shri Shashi Kant Sharma, under Section 19(e), vide Notification dated 3rd August 2011. Dr. Subir V. Gokarn was nominated as RBI Nominee Director, vice Smt. Shyamala Gopinath, under Section 19(f), vide Notification dated 4th August 2011. Shri Jyoti Bhushan Mohapatra was nominated as Workmen Employee Director, under Section 19(ca), w.e.f. 21st November 2011. Shri Deepak Ishwarbhai Amin, was nominated as Director, under Section 19(d), by Govt. of India, w.e.f. 24th January 2012.

The Directors place on record their appreciation for the contribution made by Shri R. Sridharan, Smt. Shyamala Gopinath, Dr. Ashok Jhunjhunwala, Dr. Rajiv Kumar and Shri Shashi Kant Sharma to the deliberations of the Board and welcome Shri Parthasarathy Iyengar, Shri D.K.Mittal, Dr. Subir V. Gokarn, Shri Jyoti Bhushan Mohapatra and Shri Deepak I. Amin, who joined the Board, as Directors, for the first time.

The Directors express their gratitude for the guidance and cooperation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank.



For and on behalf of the

Central Board of Directors

Date : 18th May 2012 Chairman


Mar 31, 2010

V. CREDIT POLICY AND PROCEDURES DEPARTMENT (CPPD)

PERFORMANCE HIGHLIGHTS :

- Loan Policy of the Bank, has been reviewed and current RBI guidelines have been incorporated.

- Increase in the Term Loan exposure limit to Infrastructure sector to 15% from 10%. .

- Appointment of Nominee Directors Review and Authority Structure.

- Prudential Norms on Unsecured Advances.

- Guidelines on Restructuring of Advances by Banks.

- Review of Grievances redressal mechanism under Guidelines on Fair Practice Codes for Lending.

- Accounting procedures for sale of NPAs / Securitisatibn Companies / Asset Reconstruction Companies.

- Operational guidelines on Forward Exchange Contracts and Derivatives.

- Competitive Pricing - Review.

- CP linked rates for discounting of Bills under LCs.

- Policy for financing Corporates on Unsecured basis to attract new business.

- As part of the Banks Green Banking Policy, initiatives like plantation of fruit bearing trees across the Banks premises, implementation of energy saving measures, encouraging customers on reduction of Green House gases by way of extending project loans on concessionary interest rates, assisting in CDM Registration and securitization of CER receivables etc. were undertaken.

- Under the captive windmill project, the Bank has gone in for 10 windmills (1.5 MW each) which have been set up in three States viz. Maharashtra, Gujarat and Tamilnadu. Power generated from the windmills shall be set-off against the power consumption of identified offices / branches of those States. State Bank of India is the first Bank in India to have conceived the idea of Green Power generation for captive use in the Banking Industry.

NEW PRODUCT :

- Financing to Shipbreaking Units.

Responsibility Statement

The Board of Directors hereby states :

i, that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii>. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2010, and of the profit and loss of the Bank for the year ended on that date;

iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and

iv. that they have prepared the annual accounts on a going concern basis.

Acknowledgement

During the year, Shri Ashok Chawla, Finance Secretary, Govt, of India was nominated to the Board under Section 19 (e) with effect from 13th May 2009, in place of Shri Arun Ramanathan, who retired on 30th April 2009.

The Directors express their gratitude for the guidance and cooperation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies.

The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank.

For and on behalf of the Central Board of Directors

O.P. Bhatt

Date : 14th May, 2010 Chairman



 
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