SUMMER TRAINING REPORT

ON

BUSINESS PROCESS RE-ENGINEERING IN SBI

SUBMITTED BY: SANA JAN ROLL NO-12 MFC PART-II BATCH 2010-2012 In Partial Fulfillment of the Requirements for the Degree of MASTER OF FINANCE AND CONTROL

SUBMITTED TO:

COMPANY GUIDE MR. RAJIV SHYAM SINGH DEPUTY MANAGER COMMERCE

Regional business office of SBI

ACADEMIC GUIDE PROF.(Dr.)JYOYI SHEKHAR DEPT.OF APPLIED ECONOMICS &

PATNA UNIVERSITY PATNA

DECLARATION

I, Sana jan, Roll no-12, MFC programme, Dept.of Applied Economics & Commerce,PATNA UNIVERSITY, batch of 2010-2012 do hereby solemnly declare that this Dissertation is an original work of mine and this has not been submitted to any other institute/ University towards any other degree/diploma.

SANA JAN

ACKNOWLEDGMENTS

My sincere thanks goes to Mr. ANIL KUMAR SHARMA, REGIONAL MANAGER (Regional business office of SBI) GAYA, for giving me an opportunity to do project and for extending his valuable time and guidance and support throughout my project.

I would also like to extend my sincere thanks to Mr. RAJIV SHYAM SINGH, SME, DEPUTY MANAGER (Regional Business office of SBI) GAYA, for his continuous support and help to make me understand about the topic and for the completion of this project.

I would also like to extend my gratitude to my parents, friends for their consistent encouragement, suggestions and moral support.

SANA JAN

CONTENT
CHAPTER 1: INTRODUCTION History of bank Commercial role of bank Banks in the economy History of banking in India CHAPTER 2: COMPANY PROFILE Brief on State Bank Of India Vision Mission Organizational Structure CHAPTER 3 : CHAPTER 4 : OBJECTIVE OF THE STUDY RESEARCH METHODOLOGY Research Design Sampling Methodology Tools of Analysis Limitation of study CHAPTER 5 : BUSINESS PROCESS RE-ENGINEERING IN SBI History of BPR BPR IN SBI BPR Initiatives

Contribution of IT in SBI CHAPTER 6 : CONCLUSION

BANK

A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities. Banks are a fundamental component of the financial system, and are also active players in financial markets. The essential role of a bank is to connect those who have capital (such as investors or depositors), with those who seek capital (such as individuals wanting a loan, or businesses wanting to grow). Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location. The current set of global standards are called Basel II. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the keiretsu. In France, bancassurance is prevalent, as most banks offer insurance services (and now real estate services) to their clients. The most recent trend has been the advance of universal banks, which attempt to offer their customers the full spectrum of financial services under the one roof. The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.

HISTORY

Banks date back to ancient times. During the 3rd century AD, banks in Persia and other territories in the Persian Sassanid Empire issued letters of credit known as akks. Muslim traders are known to have used the cheque or akk system since the time of Harun al-Rashid (9th century) of the Abbasid Caliphate. In the 9th century, a Muslim businessman could cash an early form of the cheque in China drawn on sources in Baghdad, a tradition that was significantly strengthened in the 13th and 14th centuries, during the Mongol Empire.Fragments found in the Cairo Geniza indicate that in the 12th century cheques remarkably similar to our own were in use, only smaller to save costs on the paper. They contain a sum to be paid and then the order "May so and so pay the bearer such and such an amount". The date and name of the issuer are also apparent.

The earliest known state deposit bank, Banco di San Giorgio (Bank of St. George), was founded in 1407 at Genoa.

COMMERCIAL ROLE OF BANKS

The commercial role of banks is not limited to banking, and includes:

issue of banknotes (promissory notes issued by a banker and payable to bearer on demand) processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means issuing bank drafts and bank cheques accepting money on term deposit lending money by way of overdraft, installment loan or otherwise providing documentary and standby letters of credit (trade finance), guarantees, performance bonds, securities underwriting commitments and other forms of offbalance sheet exposures safekeeping of documents and other items in safe deposit boxes currency exchange acting as a 'financial supermarket' for the sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products.

CHANNELS

Banks offer many different channels to access their banking and other services:

A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers. ATM is a computerised telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the bank's account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank.

Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers.

Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity).

Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website.

Mobile banking is a method of using one's mobile phone to conduct simple banking transactions by remotely linking into a banking network.

Video banking is a term used for performing banking transactions or professional banking consultations via a remote video and audio connection. Video banking can be performed via purpose built banking transaction machines (similar to an Automated teller machine), or via a video conference enabled bank branch.

BANKS IN THE ECONOMY

Economic functions
The economic functions of banks include: 1. issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. These claims on banks can act as money because they are negotiable and/or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the payee may bank or cash. 2. netting and settlement of payments banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economise on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them. 3. credit intermediation banks borrow and lend back-to-back on their own account as middle men. 4. credit quality improvement banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position. 5. maturity transformation banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets).

BANKING IN INDIA

Currently, India has 96 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 49,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

EARLY HISTORY

Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India. Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India. It was not the first though. That honor belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Shimla. The Bank of Bengal, which later merged with the Bank of Bombay and the Bank of Madras to form the Imperial Bank of India in 1921. The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India.

FROM WORLD WAR I TO INDEPENDENCE

The period during the First World War (1914-1918) through the end of the Second World War (1939-1945), and two years thereafter until the independence of India were challenging for Indian banking. The years of the First World War were turbulent, and it took its toll with banks simply collapsing despite the Indian economy gaining indirect boost due to war-related economic activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following table: Years 1913 1914 1915 1916 1917 1918 Number of banks Authorised capital Paid-up Capital that failed (Rs. Lakhs) (Rs. Lakhs) 12 274 35 42 710 109 11 56 5 13 231 4 9 76 25 7 209 1

POST-INDEPENDENCE

The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included:

In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.

However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons. This changed with the nationalisation of major banks in India on 19 July 1969.

NATIONALIZATION

The RBI was nationalized on January 1, 1949 in terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).[Reference www.rbi.org.in] By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the possibility to nationalise the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969. A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason for the nationalization was to give the government more control of credit delivery. With the second dose of nationalization, the GOI controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy. The nationalised banks were credited by some, including Home minister P. Chidambaram, to have helped the Indian economy withstand the global financial crisis of 2007-2009.

LIBERALISATION

In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 74% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks.All this led to the retail boom in India. People not just demanded more from their banks but also received more. Currently (2007), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true.

STATE BANK OF INDIA

COMPANY PROFILE:-

Type

Public (BSE: 500112, LSE: SBID) Banking Financial services 1 July 1955

Industry Founded

Headquarters Mumbai, Maharashtra, India Key people O. P. Bhatt (Chairman) Investment Banking Consumer Banking Commercial Banking Retail Banking Private Banking Asset Management Pensions Mortgages Credit Cards Revenue Profit Total assets $28.212 billion (2010) $2.473 billion (2010) $323.043 billion (2010)

Products

Total equity Owner(s) Employees Website Total ATM

$18.519 billion (2010) Government of India 205,896 (2010) Statebankofindia.com 21000

Symbol and slogan:

-> Symbol is the Key Hole, whose meaning is "Welcome to SBI".

-> Slogans are:

With you all the way Pure banking nothing else The Banker to every Indian The Nation banks on

LIST OF BANKS DIRECTORS AND LOCAL BOARD MEMBERS CENTRAL BOARD:Shri O.P. Bhatt Shri S.K. Bhattacharya Shri R. Sridharan Dr. Ashok jhunjhunwala Shri Dileep C Choksi Shri S Venkatachalam Shri D. Sundaram

Dr. Devanand Balodhi

VISION:My SBI My Customer first My SBI: First in customer satisfaction

MISSION:We will be prompt, polite and proactive with our customers. We will speak the language of young India. We will create products and services that help our customers achieve their goals. We will go beyond the call of duty to make our customers feel valued. We will offer excellence in services to those abroad as much as we do to those in India.

VALUES:We will always be honest, transparent and ethical. We wil respect our customers and fellow associates. We will be knowledge driven. We will learn and we will share our learning. We will never take the easy way out. We will nurture pride in India.

Organizational Structure

As of April 1, 2010

State Bank of India (Hindi: ) (SBI) (BSE: 500112, LSE: SBID) is the largest state-owned banking and financial services company in India, by almost every parameter - revenues, profits, assets, market capitalization, etc. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. The Government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the Government took over the stake held by the Reserve Bank of India. SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at NRIs. The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. With an asset base of $260 billion and $195 billion in deposits, it is a regional banking behemoth. It has a market share among Indian commercial banks of about 20% in deposits and advances, and SBI accounts for almost one-fifth of the nation's loans. SBI has tried to reduce over-staffing by computerizing operations and "golden handshake" schemes that led to a flight of its best and brightest managers. These managers took the retirement allowances and then went on to become senior managers in new private sector banks. The State bank of India is the 29th most reputed company in the world according to Forbes. State Bank of India is the largest of the Big Four Banks of India, along with ICICI Bank, Punjab National Bank and Canara Bank its main competitors.

INTERNATIONAL PRESENCE

State Bank of India (SBI), Mumbai Main Branch. The bank has 131 overseas offices spread over 32 countries as on 31st Dec 2009. It has branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Johannesburg, London and environs, Los Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town SBI operates several foreign subsidiaries or affiliates. In 1990 it established an offshore bank, State Bank of India (Mauritius). In 1982, the bank established a subsidiary, State Bank of India (California), which now has eight branches - seven branches in the state of California and one in Washington DC that it opened on 23 November 2009. The seven branches in California are located in Los Angeles, Artesia, San Jose, Canoga Park, Fresno, San Diego and Bakersfield.

The Israeli branch of the "State Bank of India" located in Ramat Gan.

HISTORY

The roots of the State Bank of India rest in the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal and two other Presidency banks, namely, the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock companies, and were the result of the royal charters. These three banks received the exclusive right to issue paper currency in 1861 with the Paper Currency Act, a right they retained until the formation of the Reserve Bank of India. The Presidency banks amalgamated on 27 January 1921, and the reorganized banking entity took as its name Imperial Bank of India. The Imperial Bank of India continued to remain a joint stock company. Pursuant to the provisions of the State Bank of India Act (1955), the Reserve Bank of India, which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 30 April 1955 the Imperial Bank of India became the State Bank of India. The Govt. of India recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest because the RBI is the country's banking regulatory authority.

Offices of the Bank of Bengal In 1959 the Government passed the State Bank of India (Subsidiary Banks) Act, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries. On 13 September 2008, State Bank of Saurashtra, one of its Associate Banks, merged with State Bank of India.

ASSOCIATE BANKS

SBI has five associate banks that with SBI constitute the State Bank Group. All use the same logo of a blue keyhole and all the associates use the "State Bank of" name followed by the regional headquarters' name. Originally, the then seven banks that became the associate banks belonged to princely states until the government nationalised them between October, 1959 and May, 1960. In tune with the first Five Year Plan, emphasizing the development of rural India, the government integrated these banks into State Bank of India to expand its rural outreach. There has been a proposal to merge all the associate banks into SBI to create a "mega bank" and streamline operations. The first step towards unification occurred on 13 August 2008 when State Bank of Saurashtra merged with State Bank of India, reducing the number of state banks from seven to six. Then on 19 June 2009 the SBI board approved the merger of its subsidiary, State Bank of Indore, with itself. SBI holds 98.3% in the bank, and the balance 1.77% is owned by individuals, who held the shares prior to its takeover by the government. The acquisition of State Bank of Indore added 470 branches to SBI's existing network of 12,448 and over 21,000 ATMs. Also, following the acquisition, SBI's total assets will inch very close to the Rs 10-lakh crore mark. Total assets of SBI and the State Bank of Indore stood at Rs 998,119 crore as on March 2009. The process of merging of State Bank of Indore was completed by April 2010.

The subsidiaries of SBI are:

State Bank of Indore State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore

GROUP COMPANIES:

SBI Capital Markets Ltd SBI Mutual Fund (A Trust) SBI Factors and Commercial Services Ltd SBI DFHI Ltd SBI Cards and Payment Services Pvt Ltd SBI Life Insurance Company Limited - Bancassurance (Life Insurance) SBI Funds Management Pvt Ltd SBI Canada

BRANCHES OF SBI:

SBI has 21000 ATMs. SBI has 26500 branches, inclusive of branches that belong to its Associate banks. SBI alone has 18500 branches. SBI is the only bank consisting 26% participation in public sector banks and 39% participation in commercial banks in India.

OBJECTIVE OF THE STUDY

To analyse and design the workflows and processes within and between the organization.

To determine the efficiency and effectiveness of various BPR initiatives in State Bank of India.

To examine the customers expectations.

To study about the enhancement of customer service quality.

To understand the various contribution of I.T in SBI.

To study about redesigning the process as a whole in order to achieve the greatest possible benefits to the Bank and their customers.

To understand and examine the new technologies that are being used by competitors.

RESEARCH METHODOLOGY

Research methodology is a systematic way, which consists of series of actions or steps necessary to effectively carry out research and the desired sequencing of these steps. The research is a process of involves a number of interrelated activities, which overlap and do rigidly follow a particular sequence. It consists of the following steps:

Formulating the objective of the study. Designing the methods of data collection. Selecting the sample plan. Collecting the data. Processing and analyzing the data. Reporting the findings.

RESEARCH OBJECTIVES:

To study about the contribution of Business Process Re-engineering in state bank of India.

RESEARCH DESIGN

Research design specifies the methods and procedures for conducting a particular study. A Research design is the arrangement of conditions for collection and analysis of

the data in a manner that aims to combine relevance to the research purpose with economy in procedure. Research Design is broadly classified into three types as: Exploratory Research Design Descriptive Research Design Hypothesis testing Research Design

On the basis of the objective of the study, the study which is concerned with describing the characteristics of a particular individual or of group of individual under study comes under Descriptive Research Design.

DESCRIPTIVE RESEARCH DESIGN:-

In this research design the objective of study is clearly defined and has accurate method of measurement with a clear-cut definition of population that is to be studied. The Research Design used in this study is descriptive which includes interviewers, and unit fact- findings enquiries with the employees.

COLLECTION OF DATA

The procedure for collection of data depends upon various considerations, availability of resources like money, time, manpower etc also affects the choice of procedure.

PRIMARY DATA SECONDARY DATA

Secondary data mean that are already available that is they refer the data which have already been collected and analyzed by some one else when the researcher utilizes secondary data that has to look into various sources where he can obtain. In this case he certainly not confronted with the problems that are usually data nor unpublished data associated with the collection of original data secondary data may either be published.

TOOLS OF ANALYSIS:

Analysis may be categorized as descriptive analysis and (inferential analysis is often known as statistical analysis). DESCRIPTIVE ANALYSIS:Descriptive analysis is largely the study of distribution of one variable this study provide us profile of companies, workgroups and person and other subject on any of a multitude of characteristics such as size composition.

Data collection method: The report will be prepared mainly using secondary data via,

SECONDARY DATA: www.sbi.com Company manuals Commercial Banks Book

The techniques, which would be used for the study: 1. Discussions with bank guide and customers. 2. By studying projects reports. 3. Using Project Techniques.

LIMITATION OF THE STUDY

In my view the study of the BPR IN SBI has certain limitation, because i just spent only 8 weeks in SBI. And whatever information during that short period I could gather, I worked upon that. Thus the study does not present an overall view of the assessment of BPR at SBI.

BUSINESS PROCESS REENGINEERING

Business process reengineering is one approach for redesigning the way work is done to better support the organization's mission and reduce costs. Reengineering starts with a high-level assessment of the organization's mission, strategic goals, and customer needs. Basic questions are asked, such as "Does our mission need to be redefined? Are our strategic goals aligned with our mission? Who are our customers?" An organization may find that it is operating on questionable assumptions, particularly in terms of the wants and needs of its customers. Only after the organization rethinks what it should be doing, does it go on to decide how best to do it.

Business process reengineering (BPR) began as a private sector technique to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. A key stimulus for reengineering has been the continuing development and deployment of sophisticated information systems and networks. Leading organizations are becoming bolder in using this technology to support innovative business processes, rather than refining current ways of doing work.

Reengineering guidance and relationship of Mission and Work Processes to Information Technology

"Business Process Reengineering, although a close relative, seeks radical rather than merely continuous improvement. It escalates the efforts of JIT and TQM to make process orientation a strategic tool and a core competence of the organization. BPR concentrates on core business processes, and uses the specific techniques within the JIT and TQM toolboxes as enablers, while broadening the process vision."

Within the framework of this basic assessment of mission and goals, reengineering focuses on the organization's business processesthe steps and procedures that govern how resources are used to create products and services that meet the needs of particular customers or markets. As a structured ordering of work steps across time and place, a business process can be decomposed into specific activities, measured, modeled, and improved. It can also be completely redesigned or eliminated altogether. Reengineering identifies, analyzes, and redesigns an organization's core business processes with the aim of achieving dramatic improvements in critical performance measures, such as cost, quality, service, and speed.

Reengineering recognizes that an organization's business processes are usually fragmented into subprocesses and tasks that are carried out by several specialized functional areas within the organization. Often, no one is responsible for the overall performance of the entire process. Reengineering maintains that optimizing the performance of subprocesses can result in some benefits, but cannot yield dramatic improvements if the process itself is fundamentally inefficient and outmoded. For that reason, reengineering focuses on redesigning the process as a whole in order to achieve the greatest possible benefits to the organization and their customers. This drive for realizing dramatic improvements by fundamentally rethinking how the organization's work should be done distinguishes reengineering from process improvement efforts that focus on functional or incremental improvement.

HISTORY

In 1990, Michael Hammer, a former professor of computer science at the Massachusetts Institute of Technology (MIT), published an article in the Harvard Business Review, in which he claimed that the major challenge for managers is to obliterate non-value adding work, rather than using technology for automating it. [2] This statement implicitly accused managers of having focused on the wrong issues, namely that technology in general, and more specifically information technology, has been used primarily for automating existing processes rather than using it as an enabler for making non-value adding work obsolete. Hammer's claim was simple: Most of the work being done does not add any value for customers, and this work should be removed, not accelerated through automation. Instead, companies should reconsider their processes in order to maximize customer value, while minimizing the consumption of resources required for delivering their product or service. A similar idea was advocated by Thomas H. Davenport and J. Short in 1990[3], at that time a member of the Ernst & Young research center, in a paper published in the Sloan Management Review the same year as Hammer published his paper. This idea, to unbiasedly review a companys business processes, was rapidly adopted by a huge number of firms, which were striving for renewed competitiveness, which they had lost due to the market entrance of foreign competitors, their inability to satisfy customer needs, and their insufficient cost structure[citation needed]. Even well established management thinkers, such as Peter Drucker and Tom Peters, were accepting and advocating BPR as a new tool for (re-)achieving success in a dynamic world[citation needed]. During the following years, a fast growing number of publications, books as well as journal articles, were dedicated to BPR, and many consulting firms embarked on this trend and developed BPR methods. However, the critics were fast to claim that BPR was a way to dehumanize the work place, increase managerial control, and to justify downsizing, i.e. major reductions of the work force [4], and a rebirth of Taylorism under a different label. Despite this critique, reengineering was adopted at an accelerating pace and by 1993, as many as 65% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so [citation needed]. This trend was fueled by the fast adoption of BPR by the consulting industry, but also by the study Made in America[citation needed], conducted by MIT, that showed how companies in many US industries had lagged behind their foreign counterparts in terms of competitiveness, time-to-market and productivity.

DEVELOPMENT AFTER 1995

With the publication of critiques in 1995 and 1996 by some of the early BPR proponents, coupled with abuses and misuses of the concept by others, the reengineering fervor in the U.S. began to wane. Since then, considering business processes as a starting point for business analysis and redesign has become a widely accepted approach and is a standard part of the change methodology portfolio, but is typically performed in a less radical way as originally proposed. More recently, the concept of Business Process Management (BPM) has gained major attention in the corporate world and can be considered as a successor to the BPR wave of the 1990s, as it is evenly driven by a striving for process efficiency supported by information technology. Equivalently to the critique brought forward against BPR, BPM is now accused of focusing on technology and disregarding the people aspects of change.

THE ROLE OF INFORMATION TECHNOLOGY

Information technology (IT) has historically played an important role in the reengineering concept.It is considered by some as a major enabler for new forms of working and collaborating within an organization and across organizational borders.

Early BPR literature identified several so called disruptive technologies that were supposed to challenge traditional wisdom about how work should be performed.

Shared databases, making information available at many places Expert systems, allowing generalists to perform specialist tasks Telecommunication networks, allowing organizations to be centralized and decentralized at the same time Decision-support tools, allowing decision-making to be a part of everybody's job Wireless data communication and portable computers, allowing field personnel to work office independent Interactive videodisk, to get in immediate contact with potential buyers Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found High performance computing, allowing on-the-fly planning and revisioning

In the mid 1990s, especially workflow management systems were considered as a significant contributor to improved process efficiency. Also ERP (Enterprise Resource Planning) vendors, such as SAP, JD Edwards, Oracle, PeopleSoft, positioned their solutions as vehicles for business process redesign and improvement.

RESEARCH AND METHODOLOGY

Although the labels and steps differ slightly, the early methodologies that were rooted in IT-centric BPR solutions share many of the same basic principles and elements. The following outline is one such model, based on the PRLC (Process Reengineering Life Cycle) approach developed by Guha.

Simplified schematic outline of using a business process approach, examplified for pharmceutical R&D: 1. Structural organization with functional units 2. Introduction of New Product Development as cross-functional process 3. Re-structuring and streamlining activities, removal of non-value adding tasks

Benefiting from lessons learned from the early adopters, some BPR practitioners advocated a change in emphasis to a customer-centric, as opposed to an IT-centric, methodology. One such methodology, that also incorporated a Risk and Impact Assessment to account for the impact that BPR can have on jobs and operations, was described by Lon Roberts (1994).Roberts also stressed the use of change management tools to proactively address resistance to changea factor linked to the demise of many reengineering initiatives that looked good on the drawing board.

Some items to use on a process analysis checklist are: Reduce handoffs, Centralize data, Reduce delays, Free resources faster, Combine similar activities. Also within the management consulting industry, a significant number of methodological approaches have been developed.

CRITIQUE

Reengineering has earned a bad reputation because such projects have often resulted in massive layoffs.This reputation is not altogether unwarranted, since companies have often downsized under the banner of reengineering. Further, reengineering has not always lived up to its expectations. The main reasons seem to be that:

Reengineering assumes that the factor that limits an organization's performance is the ineffectiveness of its processes (which may or may not be true) and offers no means of validating that assumption. Reengineering assumes the need to start the process of performance improvement with a "clean slate," i.e. totally disregard the status quo. According to Eliyahu M. Goldratt (and his Theory of Constraints) reengineering does not provide an effective way to focus improvement efforts on the organization's constraint .

Abrahamson (1996) showed that fashionable management terms tend to follow a lifecycle, which for Reengineering peaked between 1993 and 1996 (Ponzi and Koenig 2002). They argue that Reengineering was in fact nothing new (as e.g. when Henry Ford implemented the assembly line in 1908, he was in fact reengineering, radically changing the way of thinking in an organization). Dubois (2002) highlights the value of signaling terms as Reengineering, giving it a name, and stimulating it. At the same there can be a danger in usage of such fashionable concepts as mere ammunition to implement particular reform. Read Article by Faraz Rafique. The most frequent and harsh critique against BPR concerns the strict focus on efficiency and technology and the disregard of people in the organization that is subjected to a reengineering initiative. Very often, the label BPR was used for major workforce reductions.

Michael Hammer similarly admitted that: "I wasn't smart enough about that. I was reflecting my engineering background and was insufficient appreciative of the human dimension. I've learned that's critical." Other criticism brought forward against the BPR concept include:

It never changed management thinking, actually the largest causes of failure in an organization lack of management support for the initiative and thus poor acceptance in the organization. exaggerated expectations regarding the potential benefits from a BPR initiative and consequently failure to achieve the expected results. Underestimation of the resistance to change within the organization. Implementation of generic so-called best-practice processes that do not fit specific company needs. over trust in technology solutions. Performing BPR as a one-off project with limited strategy alignment and longterm perspective. Poor project management.

BUSINESS PROCESS RE-ENGINEERING(BPR) A NEW SBI

Inspite of SBI's dominant position in the Indian Banking scenario, globalisation and deregulation in the banking industry have led to severe competition. Further in the backdrop of changing tools of business and growing customer expectations, only those organisations will remain ahead in business that meet international standards in every respect. In the aforesaid background, a BPR team has been constituted at the Corporate Centre for Business Process Reengineering with McKinsey & Company as consultants. The objectives for the Project include increasing customer satisfaction and convenience, freeing up time for Branch Manager and Branch Staff to focus on sales and marketing and simplifying process for employees. To meet these objectives, new processes and supporting organisational structures are being defined. It will lead to major changes.

The basic goal of the BPR Project is to create an operating architecture that allows us to deliver world-class services in the face of severe competition. Various aspects of the Project can be summarised under the following seven heads:-

A. BRANCH REDESIGN:

The objective is to redesign our branches to be leaner and sales and marketing focussed units. This can be achieved through migration of back office processing to Centralised Processing Centres and moving common transactions/enquiries to alternate! Channels (ATM, Call Centres etc.) As a result operating units within a branch will undergo a change as will the layout of the branches themselves. As SBI caters to a

large spectrum of customer segments, a range of branch types will be designed to efficiently cater to different segments of customers. The focus of the branch will be on sales, marketing and customer service..Accountkeeping, transaction processing, documentation/records-keeping, reconciliation etc are only back up activities even though these are essential activities..The focus of a branch should be on customer acquisition and customer retention through customer delight

B. CENTRAL PROCESSING CENTRES:

With the back office operations or a large part thereof moving into CPCs, different CPCs will be designed to effectively carry out various processes such as processing liability accounts, trade finance processing etc. The objective of creating a CPC is to increase process efficiencies, pool skills, reduce transaction costs and improve turn-around-times. The Project implementation team will decide on the appropriate level at which the CPCs would be centralised. CPCs are proposed to be set up at selected centres. CPCs will do the processing work for the branches. Cash management and cash supply to branches, documentation and stationery etc, CPCs for various activities such as loan processing/sanction, currency administration etc have been set up at many centres.

C. ALTERNATIVE CHANNELS:

Aggressive introduction of alternate channels will offer a low cost channel to serve mass market including less profitable customers in a cost effective manner. Besides, in

addition to enabling the Bank to meet the competitive offerings of progressive banks appealing to the tech-savvy mass-affluent/affluent segments, it will help free up the time of Branch staff to attend to sales and marketing. Based on the recommendations of the BPR team, the Bank has already identified and launched initiatives to improve the working of ATMs and increase the migration of customers to ATMs. The BPR team will also layout the design of a full-fledged Call Centre for the Bank and other alternate channels that might be appropriate for SBI to consider. Call centres are to be set up so that direct marketing, query handling, product promotion, PR through customer contact at significant times for the customers etc, will be possible. To start with, a contact centre at Bangalore has recently been set up to cater to the needs of customers of Bangalore and Hyderabad circle.

D. DATABASE MARKETING:

In present context, only those will get good business who identify sales and marketing opportunities and reach out to the customers. To this end a number of initiatives are proposed. These include segmentation of existing customers for getting incremental business and cross selling other products, concept of relationship manager for high value business in personal segments as well and setting up of call centres and out bound sales force to target new customers for high value business and identified thrust areas. Large and mid corporates, Government business and Trade finance customers will have to be pursued relentlessly on the basis of a structure which will use database marketing as an effective tool. Database marketing can help us in increasing revenues from cross-selling, lower cost on customer acquisition and also increased customer loyalty.

The availability of centralised data will enable us to segment the customers and market our products to identified sub-segmented customers. Call centres and field sales staff will be used for marketing.

E. CORE PROCESS DESIGN:

The introduction of core banking solution and installation of SBI connect will enhance the IT platform on which products and services are delivered to customers.the entire processes in the bank need to be redesigned so as to take maximum advantage of IT. In order to support the new architecture of sales focussed branches, alternate channels and central processing centres, many core processes will have to be redesigned. In course of this, efforts will be made to eliminate redundancies and bottlenecks thus improving the turn around time and reducing transaction cost.

F. PERFORMANCE MANAGEMENT:-

Proper performance management will be the key to any success. The new operating architecture will also create many new roles and their performance evaluation will be a new area for us. We not only need to identify specific key performance indicators for various roles but also create a system for their effective tracking.

G. ORGANISATIONAL RE-DESIGN:With new operating outfits like CPCs and Call Centres and the focus on sales and marketing through dedicated sales force, the organisation itself would require suitable changes. A new concept of Micro Market Manager for 7-10 branches in an identified geographical area for business development is one of the ideas under examination. The need for a renewed thrust in the mid corporate segment and re-evaluation of efficacy of the CNW is also under examination.

The BPR project began in June 2003 and is on track progressing well. We expect pilot testing to commence in identified cities along with the Core Banking solution some time in July 2004 and based on the above the finalisation of new procedures and structure will be made. Thereafter preparation for the national roll out will follow. The path of Business Process Re-engineering is not without challenges. Attitudinal changes, new performance culture, sales orientation, specialisation, movement of staff, re-skilling and training and performance tracking are going to be some of the major challenges. Change management will be critical for success. The success of the project will be judged by increase in market share and improvement in cost income ratio. The imperatives for success will include ownership of the Project and commitment and determination at all levels. The Project is aimed at significantly enhancing SBI?s competitiveness in the market, increasing our profitability through higher market share and improved process efficiency and greater customer satisfaction. It is also aimed at fulfilling our aspiration of becoming a world class Bank.

BPR INITIATIVES

List A contains major BPR initiatives already rolled out; List B and List C are in different stages of implementation at different centres.

INITIATIVES ROLLED OUT-LIST A

A. GRAHAK MITRA/ATM DOST:

Grahak mitra, a clerical staff is stationed in customer area in branch and his role includes welcoming them to appropriate counters, help them in their transactions and with forms and literature, as required, including alternative delivery channels like issuance of ATM card etc.

GM has been introduced to project a positive image of the bank. GM is considered necessary to help the walk-in customers to get personal attention, ensure response for their basic enquiries, facilitate migration to alternate channels and increased focus in cross selling.

OBJECTIVE:
Attain higher level of customer satisfaction and further aim to achieve customer delight.

Increase sales focus by making available product brochures after initial sharing of product information and directing them to the staff concerned.

Ensure migration to automated alternate channels- ATM, Cheque Drop Box and Internet Banking with a view to reduce transaction costs.

B. ATM Migration:
This initiative is aimed at migrating customers to ATM. At selected branches, customers who do cash transactions on SWO but do not have ATM cards are identified. Their cards are prepared and kept at branches along with PINs. Whenever such customers go to SWO next time, the system alerts about the ATM cards being available. Such customers are given ATM cards/PINs and explained how to use ATM. Besides, channel managers are appointed at ground level to manage ATMs.

C. MIGRATION TO DROP BOXES:

Concept of Drop Boxes for cheque deposit was already in the bank but migration to them has not been generally successful. A new drop box has been designed for a concerted effort to migrate customers successfully.

Drop Box will assume importance in the new operating architecture when back office processes in clearing and collection will be shifted away from branches and centralized in processing centers.DB would be treated as an alternate channel in the new operating architecture.

DB is planned to evolve as a Branded Service Product. The branches will use a standard box. The box will have three colour - coded components one each for(a)local clearing instruments (b)on branch instruments and (c)outstation instruments. The box will, however, not be used for credit cards payments, instruments with government challan and those intended for negotiation and immediate credit.

DB is expected to be located at a vantage point and be accessible to public 24x7 hours in case the proposed DB cannot be made available for 24x7 hours for security reasons, a different type of box with a single slit should be embedded in a wall to take care of security arrangements.

After introduction of standard DB, the acceptance of instruments across counter/SWO will be discontinued after displaying proper notice. RBI instruction on the subject have been taken into account while finalizing the procedures.

DROP BOX FACILITY- REVISED INSTRUCTIONS:

Drop Boxes should be cleared well before commencement of the days work, to include instruments for high value and MICR clearing/clearing house and thereafter at intervals as warranted by local requirement but at least every hour. After every clearance of the drop box, the designated official will record in a register, under his initials, the date of clearance, time of clearance, total no of on branch instruments, clearing instruments and total no of outstation instruments.

D. RETAIL ASSESTS CENTRAL PROCESSING CELL(RACPC):

It covers three kinds of P segment loans viz housing, education and car loans. The loan application will be canvassed by the identified branches and forwarded to RACPC. KYC responsibility is that of the branch. The loan application will be

processed and sanctioned at RACPC. Pre-sanction visit and legal and valuation reports, as required, will be the responsibility of RACPC. Tie-up arrangements for legal opinion and valuation reports are being made. Post sanction follow up and recovery will be the responsibity of the branch.

RACPC will initially cover the following processes in respect of the above Category of products:

Appraisal of all loan accounts Sanctioning of all loan accounts Obtaining a search report and valuation report centrally Generation of documents duly filled in through a software called DREAM HOME

Consequent upon establishment of RACPC, the activities at the branch relating to the handling of applications, issue of in-principle eligibility letter, recovery of processing charges towards legal opinion, valuation report etc will be done by RACPC.

ADVANTAGES OF RACPC:
Customer gets in-principle eligibility letter quickly enabling the bank to lock in the customer. Dramatic improvement in the turnaround time. Legal opinion and valuation report arranged by RACPC. Dream home software reduces appraisal and documentation time. RACPC will be able to answer challenges posed by our competitors.

In the end state, RACPC would ensure documentation, PDC maintenance and recovery process through specialized recovery cell.

E. SMALL ENTERPRISE CREDIT CELL(SECC):

A small enterprises credit cell (SECC) has been set up, by creating a pool of skilled staff which is focused exclusively on the SME sector. The benefits of SECC would be: Quicker Turn Around Time Uniform applicability of the credit norms in the appraisal, sanction and documentation to ensure good quality credit. Branches will get time to focus on marketing of new business.

SECC STRUCTURE AND FLOW OF CREDIT:

The cell would be headed by an AGM with three credit officers and at least one marketing officer supporting him. SECC is responsible for Assessment, Appraisal, Sanction and Documentation of all SE proposals originated by the branches. SECC is also responsible for Sanction/Review/Renewal/Enhancement/Ad-hoc limit requests of all existing SE loans of the branches.

The credit flow through this cell would be as under:

Customers approaches the bank with the proposal/Branch approaches him. The branch sources the potential business, fills up the bio-data form and sends to SECC.

 SECC interacts with the customer, does site visits, collects relevant application form and other financial data etc.

SECC processes the application, sanctions the loan and submit the control report to the DGM. SECC sends the sanction letter to the customer and arranges for execution of the documents. Sanction letter and documents executed are forwarded by the SECC to the home branch for disbursement. The branch sets up the customer account and disburses the loan. The budget responsibility will be that of the branch as before.

F. CURRENCY ADMINISTRATION CELL(CAC):

CACs role includes management of currencies at branches and in due course reporting to RBI also for their currency chest management. Required no of officers and cashiers, other infrastructure like cash vans, mobile phones, computers, fax etc., will be provided. Decision regarding delivery or collection of currency notes for hand balance branches is taken by the CAC and also arranged accordingly through currency chests attached to them for the purpose.

It aimed at optimization of currency balances at branches, movement planning, insurance clauses and security arrangement.

Infrastructure-cell would be located at a main branch with computer, fax, mobile phones, currency chests boxes, currency vans etc, KUBERA software developed by BPR team for

a. Optimization of currency at branches b. Route planning c. Automated printing of aTR advices etc.

G. RELATIONSHIP MANAGER(PERSONAL BANKING):

RM(PB)s role includes identification of high net worth customers of the branch, developing relationship with them and up sell and cross sell various products.

To counter stiff competition, it is felt necessary to put in place the relationship banking concept for personal banking customers, this will strengthen the relationship further and also help attract large business share. The arrangement is initially expected to be put in place in branches having more than 250-300 mass affluent/affluent customers. The RM would be at the grade of JMG and/or MMG II.

OBJECTIVE:
To offer relationship banking facility. To demonstrate capability of the bank to extend personalized service and thereby, enhance its image. To provide value added services to the customers viz, cheque pick up, delivery of draft etc on a selective basis within the given infrastructure.

 To deepen relationship and maximize the value per account by up-selling and cross selling to the existing customers and build up customer loyalty. To cross sell fee based products. To generate new leads through existing high value customers after establishing good rapport. Sales and Service related functions have been defined clearly.

H. MICRO CREDIT PLANNING:

Metro and urban cities are to be divided into micro markets under the control of a Micro Credit Manager for proper business coverage. It is also aimed to examine adequacy of Banks net work in each micro market along with potential therein. This study will help in planning number and types of branches/other units required in the city and also in budgeting and sales process.

We have the largest network of more than 9000 branches across the length and breadth of the country which is one of our core strengths coupled with our strong brand image. However, there are certain existing feature which need to be improved to realize the full potential of our network for augmenting business and market share. Branches today are overburdened with operations and administrative work, and unable to consistently focus efforts on sales and marketing. Customers service is not differentiated by the value and type of each customer. Neither are the branches focused and customized according to the specific segments they are serving (e.g. SME, HNW individuals).

 The current control structure does not allow the controllers to play an effective role in sales. The current control structure does not allow the controllers to play an effective role in sales and marketing. Typically, one RM controls 40 branches, which is too large a number to allow him to effectively focus on business development.

Micro market approach can be described as a data driven approach, which helps a bank focus on well-defined, relatively self-contained geographic areas (called Micro markets).

The structure will lead to effective management and control over budgeting and performance monitoring and most importantly an increased role of the Micro market Head in coordinating sales and marketing across branches.

I. AMBIENCE POLICY OF SBI:

Ambience means the character and atmosphere of a place. Foreign bank/NPSBs have generally better premises and ambience which adds to their selling proposition. A good ambience attract customers, generates enthusiasm, radiate energy, improve efficiency and increase professional image.The objectives of the policy are:

Focused and concentrated efforts for creating the required ambience at the branches.

Uniformity of approach to issues related to ambience.

System in place for excellent maintenance of premises and furniture. Creation of awareness in this regard.

All branches are classified into 4 categories:

1) Platinum branch- Excellent 2) Gold branch 3) Silver branch - Good - Tolerable

4) Bronze branch - Unacceptable

CRITERIA FOR CLASSIFICATION:

1) PLATINUM BRANCH: Matches the best branch premises of any Bank in the town/area of operation of the branch. At least meets gold branch standards.

2) GOLD BRANCH: Excellent cleanliness/ polishing/ painting of floor, wall, glass panes, furniture, including counters, and external name boards. Very well lighted with proper electrical fixtures. Excellent indication boards / indicators for customers in the banking hall. Excellent stationery arrangement including availability to customers. Locker room should be well kept without keeping any stationery, books, etc therein. All old records destroyed as per norms and current records well kept. There should be nothing that irritates a visitor.

3) SILVER BRANCH: Good cleanliness/ polishing / painting of furniture, counters and premises. Good lighting. Good external name boards. Good indication boards/ indicators for customers. Good stationery arrangement.

4) BRONZE BRANCH: Unclean premises not maintained properly. Lack of proper lighting arrangement. Broken /disfigured furniture and counters. No indication boards for customers inside hall. External name boards not proper. Stationery and records not kept properly.

LIST-B

A. CENTRAL GOVERNMENT PENSION PROCESSING CELL

B. PPF

C. WELCOME KIT

D. OUTBOUND SALES FORCE

E. RELATIONSHIP MANAGER- MEDIUM ENTERPRISES(ME)

LIST-C

A. BRANCH SIGNAGE

B. REAL ESTATE RATIONALISATION

C. RBI DRAFT REIMBURSEMENT

D. OCS IMPLEMENTATION

CONTRIBUTION OF I.T IN SBI

The bank is pursuing an aggressive I.T policy with the objective of achieving efficiency in internal operations, meeting customer/ market expectations. To carry this strategy forward, several I.T projects, as under, encompassing various facets of modern day banking have been launched.

1) AUTOMATED TELLER MACHINE (ATM):

ATM stands for Automated Teller Machine, which is increasingly becoming popular.ATM is a computerized machine used for paying/withdrawing money, statement inquiries and transfer. It offers convenience banking and anywhere-anytime service to customers. It is operated by a magnetic plastic card and Personal Identification Number (PIN). First ATM was installed in London by Barclays Bank in 1967. In India HSBC installed first ATM in 1987. SBI installed its first ATM at Jamshedpur (1993). ATM are the most dynamic retail channel today in terms of the transformation they are bringing about in banking habits and their popularity with branch customers and the staff.

ATM can be on-line and off-line. On-line ATMs are connected to the server facilitating real time access while in case of off-line ATMs the withdrawals are integrated with the server after a lapse of time. On-site ATMs are attached to branches while Off-site ATM s are located away e. g: at market place. As at Nov 2005 SBI had installed over 3670 networked ATMs.State Bank Group has over 5390 networked ATMs. All stand-alone ATMs have been moved to the networked platform. The Group has a single ATM network across all the banks of the group.

2) INTERNET BANKING:
The channel is an extremely comprehensive product for both retail and corporate customers. It has acquired real- time transaction processing capability and has been supporting the business initiatives of the bank in the area of bill payments, IT application money receipts, railway ticket bookings, credit card payments, insurance premium payments etc. More products are added regularly to meet customer demand. Corporate Internet banking provides customized products to large corporate.2225 branches are enabled for internet banking in retail segment. Internet banking is a Self Service channel through which the customers will be interacting with the branch, for a)Transacting business and b)Seeking information.

Retail Customers
Retail customers can use Internet banking to: -Transfer funds between customers different accounts with the branch

-Transfer funds to third parties within or other branches of the Bank

-View/print statement of accounts

- Set up standing instructions

-Online request for issue of Demand Drafts and Cheque Books

-Bill payment facility.

CORPORATE CUSTOMERS:
Corporate Internet Banking" enables its Corporate customers to carry out their banking activities from their desktop, aided with the power and convenience of the Internet. The service helps to remove the restrictions imposed by geography and time on the ordering of transactions, while granting full flexibility to the Corporate to manage its transactional banking, with least intervention and input from the Branch. To transact over the Internet, the Corporate should be in complete control of administration of the back-end process i.e. dynamically changing limits on banking transactions which can be carried out by executives, monitor transactions and have flexibility for granting discretionary access on banking accounts to internal users. Internet Banking Service will give the Corporate the freedom and ability to carryout all this without dependency on the Bank.

Benefits of Corporate Internet Banking :

- Transfer funds between corporate different accounts within the Bank

-Make payments to vendors and third parties

-Schedule the transactions

-Bulk uploading of transactions

-Salary credits to corporate employees

-Permit executives to operate/monitor accounts remotely and even joint authorization remotely

participate in

-E-payment of taxes (Service tax and Excise Duty)

3) MOBILE BANKING:

SBI Freedom Your Mobile Your Bank

Away from home, bills can be paid or money sent to the loved ones or balance enquiries done anytime 24x7!!! That is what SBI Freedom offers -convenience, simple, secure, anytime and anywhere banking. The service is presently available on java enabled mobile phones over SMS/ GPRS/ WAP as also non java phones with GPRS connection. The service can be availed over the free GPRS facilities offered by various mobile service providers. The services for other non-Java mobile phones are under development and will be offered using Unstructured Supplementary Services Data (USSD). The following functionalities will be provided in the Phase I: Funds transfer (within and outside the bank using NEFT)

Enquiry services (Balance enquiry/ Mini statement)

Request services (cheque book request)

Bill Payment (Utility bills, credit cards)

M Commerce (Mobile Top Up, Merchant payment, SBI life insurance premium).

4) CORE BANKING SOLUTIONS:

Core Banking Solutions (CBS) is an integrated solution for banks centralized processing. It enables a bank to offer banking services and products through multiple delivery channels. The customers data is stored in a centralized server, which can be accessed from various outlets at various geographical centers.

Follwing are some of the features of CBS:

Facilitates 24 X 7 Banking:

As a result of implementing Core Banking, most of the facilities being offered by the Bank are available to customers 24 hours a day, 7 days a week. The transactions are performed using multiple channels such as ATMs and Internet Banking. Further, the transactions using these delivery channels are updated in the Central database in real time. Facilities like Phone Banking and Mobile banking would also be interfaced in CBS in due course.

Anywhere Banking: Customers can avail of banking services across all branches and channel network irrespective of location where their accounts are maintained. Products like CORE POWER and MULTICITY CHEQUE have been introduced in this direction. Besides, CBS facilitates swifter remittance of funds across Banks through its in-built RTGS & NEFT functionalities. All branches of the Bank are RTGS enabled.

Integration with strategic sectors:

Core Banking integrates all strategic sectors of banking such as domestic banking and trade finance including forex. As a result, the information related to these areas is centrally available for use or reference. Treasury and Asset Liability Management functions will also be integrated to CBS in due course.

5) REAL TIME GROSS SETTLEMENT (RTGS):

Consequent to introduction of Core Banking Solution all our branches have been enabled to effect RTGS transactions. This facility enables seamless transfer of funds between accounts of customers of different banks / branches that have been RTGS enabled. Transfer of funds between banks is also to be done through RTGS.

There are two types of transaction in RTGS i.e.

R41- Customer Transactions. R42- Inter Bank Transactions.

Operating session timings

Days Saturday Customer Transactions 9.00 hrs to 13.30 hrs Interbank Transactions 9.00 hrs to 18.00 hrs 9.00 hrs to 15.00 hrs Monday Friday 9.00 hrs to 16.30 hrs

Inter Bank Transactions: 9.30Hrs to 18.00Hrs 9.30Hrs to 14.00Hr Salient features of the scheme:
RTGS is managed by RBI, enabling member banks to receive and send payment across bank/ branches.

The payments/ receipts are effected normally on real time basis.

Branches need to be RTGS enabled to undertake these transactions.

Currently the facility is not available on Sundays.

6) NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT) SYSTEM:

Reserve Bank of India has introduced a new payment product called NEFT System. This payment system is available for all the branches of our Bank for transfer of funds to the customers of other Bank branches. In other words, the system facilitates Inter Bank transfer of funds.

Method for putting through the transactions:

. NEFT system is applicable for transfer of funds between Banks approved by RBI. Only authorized branches of participating Bank can receive and send messages. . A bank customer(i.e. sender or originator) willing to avail of the remittance facilities offered by a sending bank shall submit an "NEFT Application Form" authorizing the bank to debit the sender's account and transfer funds to the beneficiary specified in the NEFT Application Form. . A transaction within the NEFT system will be initiated when the sending bank accepts application form indicating the date of transfer of funds. . Currently, the clearing settlement for NEFT takes place at RBI in six batches between Mondays to Fridays at 0930 hrs, 1030 hrs, 1200 hrs, 1300 hrs, 1500 hrs and 1600 hrs. On Saturdays there will be three settlements 0930 hrs, 1030 hrs and 1200 hrs.

CHARGES for NEFT transactions are as listed in the following table:

Facility Outward Remittances Charge 1. For outward Upto Rs 1.00 lac Rs 5/- per transaction + Cash Handling charges Above Rs 1.00 lac Rs 25/per transaction + Cash Handling charges 2) Inward -Nil-

CONCLUSION

SBI has shown tremendous growth over the years. It contains the five year summary of Profit and Loss and Balance Sheet data. The table shows growth in all financial parameters.

In Financial Year 2010, it earned a net profit after taxes of Rs. 9166.05 crore which is much more than of what it earned in 2004 i.e. Rs. 3681 crore. SBI earned a total revenue of Rs. 85962.62 crore in FY 2010. Net Assets grew to Rs. 1053413.09 crore which is depicting a great progress from previous years.

However the ROE (Return on Equity) of F.Y 2006 is much less compared to the organizations performance in the previous years, particularly F.Y 2004. Net Interest Margin Rate has been increased by Rs. 0.36 crore from 2004 to 2006. Also EPS has been increased from Rs. 69.94 crore in 2004 to Rs. 182.82 crore in 2010. However, the kind of technology used and the efficiency of operations would provide the much needed competitive edge for success in retail banking business. Furthermore, in all these customers interest is of paramount importance. The banking sector in India is demonstrating this and I do hope they would continue to chart in this traded path.

Today, the Indian banking sector has become a one-stop shop for various financial services and the future of retail banking sector looks very promising. In order to reach global standards, Indian banks have been innovating continuously, thinking out-of-the-box, and diversifying into various segments via expansion of branches, tie-ups with other industry players, and adding additional financial services. Key features like easy accessibility; anywhere anytime banking, increased use of technology and rapid introduction of innovative customized products to meet consumer demands have changed the banking scenario in the country. While retail banking offers excellent opportunities for growth, it poses significant challenges as well. Further, with the increasing competition across the industry and with the changing consumer trends, there is a need for constant innovation in retail banking with product differentiation, customization and technological up gradation.

Thus, SBI discloses a large amount of informations and this transalates in bringing a high level of satisfaction to customers, employees, investors and the society at large which ensures Predictability, Sustainability and Profitability of revenue year after year.

RECOMMANDATION

Now it is moved to the core of banking. No doubts SBI

is not as technologically

advanced as their counterparts in the developed world, but they are majority of the international trends on the IT front to rise up to the expectations from all sides. The new SBI showed the way and others had no choice than to follow tech infusion to retain and attract profitable customers. There is a need of constant innovation in retail banking. In bracing for tomorrow, a paradigm shift in bank financing through innovative products and mechanisms involving constant up-gradation and revalidation of the banks internal systems and processes is called for. Banks now need to use retail as a growth trigger. This requires product development and differentiation, innovation and business process reengineering, microplanning, marketing, prudent pricing, customization, technological up gradation, home / electronic / mobile banking, cost reduction and cross-selling. While retail banking offers phenomenal opportunities for growth, the challenges are equally daunting. How far the retail banking is able to lead the growth of the banking industry in future would depend upon the capacity building of the banks to meet the challenges and make use of the opportunities profitably. In the next few decades, the retail banking industry will be forced to adapt to rapidly changing customer expectations. Customer diversity and individualism will pervade buying behavior, and how customers perceive value will change as a result of pronounced shifts in demographics and value systems. Population growth will increase the relative numbers of both the oldest and youngest customer segments, posing significant new challenges and opportunities for banks. While older customers tend to require more high-touch service and are generally more loyal, youthful customers are fickle, technology savvy, and highly inclined to research and negotiate the best deals.

BIBLIOGRAPHY
WEBSITE:
www.google.com www.wikipedia.com www.statebankofindia.com www.rbi.org.in

BOOKS:
FINANCIAL MANAGEMENT by I.M Pandey LITERATURE OF STATE BANK OF INDIA

MAGAZINES:
BUSINESS MAGZINES AND NEWS PAPERS SBI Journals.