State Bank of India

Economic Backdrop and Banking Environment
 
 After growing at 5.0% in 2006 and 4.9% in 2007, IMF estimates global
 GDP growth to decelerate to 3.7% in 2008 in the wake of the current
 financial crisis. The financial market turbulence in developed
 economies following the US sub-prime mortgage crisis has reduced
 financial leverage, lowered credit availability and negative wealth
 effects have emerged as risks to consumption and growth in advanced
 economies, especially in the US. Continuing inflationary pressures from
 food and commodity prices as well as high and volatile crude oil prices
 are other risks being faced by the global economy.
 
 India continued to be one of the fastest growing economies of the
 world. During 2007-08, the Indian economy grew at a robust pace for the
 fifth consecutive year. Real GDP growth, estimated at 8.7% in 2007-08,
 is in tune with the average annual GDP growth of 8.7% in the five year
 period 2003-04 to 2007-08. Agriculture and allied activities are
 estimated to grow by 2.6% in 2007-08, which is in line with the average
 growth of 2.6% per annum during 2000- 01 to 2007-08. Foodgrains
 production touched a record high in FY08, with total foodgrains
 production placed at 227.3 million tonnes, surpassing the target of
 221.5 million tonnes and recording an increase of 4.6% over the
 previous year. Industrial growth at 8.6% during 2007-08 has moderated
 somewhat against 10.6% in the previous year. The services sector
 maintained its double-digit growth at 10.6% during 2007-08, higher than
 the long term average of 8.9% (2000-01 to 2007-08). Within services,
 transport and communications and financial services recorded
 double-digit growth for the last two years and are expected to maintain
 the growth momentum. Trade and hotels showed higher growth of 12.1% in
 2007-08 against 11.8% growth in 2006-07. Another positive feature
 underpinning growth is the sharp rise in the rate of savings and
 investment in recent years, which rose to 34.8% and 35.9% respectively
 in 2006-07.
 
 Towards the close of the fiscal year, higher inflation rate was noticed
 due to rise in global prices of food, metals and crude oil. Inflation
 based on WPI declined from 6.4% at the beginning of the fiscal year to
 a low of 3.1% by mid-October 2007, partly reflecting moderation in the
 prices of some primary food articles and manufactured products. After
 hovering around 3% during November 2007, inflation began to edge up
 from early December 2007 to touch 7.4% by 29 March 2008, mainly
 reflecting hardening in prices of primary articles such as fruits and
 vegetables, oilseeds, raw cotton and iron ore, as well as fuel and
 manufactured products such as edible oil/oil cakes and basic metals,
 partly due to international commodity price pressures. However, fiscal
 and monetary measures are being taken to contain inflation and maintain
 high growth.
 
 Despite Rupee appreciation, exports continued to show a healthy growth,
 rising by 23% in dollar terms during 2007-08 against 22.6% in the
 previous year. Overall exports growth was driven by petroleum and crude
 products, gems and jewellery, iron ore, non-basmati rice, cotton,
 transport equipment, etc. While Indias exports to USA, its single
 largest trading partner, showed deceleration, exports to UAE and China
 remained robust. In the same period, imports increased by 27.0% against
 24.5%, mainly due to higher oil imports; non-oil imports were led by
 capital goods, chemicals and related products, edible oils, gold,
 silver and pearls, precious and semi- precious stones. Due to higher
 growth in imports than exports, the trade deficit widened by 35.5% to
 USS 80.4 bn during 2007-08 from US$ 59.3 bn in the previous year.
 
 The overall stance of RBIs monetary and credit policy during the year
 was to ensure price stability and financial system stability along with
 continuation of the growth momentum, emphasis on credit quality and
 credit delivery including financial inclusion. During 2007-08, the Bank
 Rate,
 
 Repo and Reverse Repo rates were kept unchanged.  To manage the
 liquidity in the economy, RBI raised the Cash Reserve Ratio four times:
 in April, August and November 2007 from 6% to 7.50%. In line with
 liquidity tightening, PLRs and deposit rates of rnajor banks were hiked
 during the year. While lending rates rose to 12.25-12.75% from 12.25-
 12.50%, deposit rates (for more than one year maturity) rose to
 8.25-9.0% from 7.5-9.0% in the previous financial year. However, in the
 month of February 2008, to keep up the growth momentum in the economy,
 some banks announced cuts in their PLR and interest rate on housing
 loans below Rs.20 lakh.
 
 The tight monetary policy followed by RBI to control inflation and
 money supply had a moderating impact on credit growth, which increased
 by 21.6% in 2007-08 against 28.1% in 2006-07. Deposit growth also
 moderated to 22.2% in 2007-08 from 23.8% in 2006-07.
 
 For the current year, despite slowdown in the major economies of the
 world, the Indian economy will continue to grow at 8-8.5% driven by
 investment. Due to a number of fiscal and monetary measures taken by
 the Government and RBI to put a check on prices, inflation is expected
 to come down to 5-5.5% by March 2009.
 
 
 Profit
 
 The Operating Profit of the Bank for 2007-08 stood at Rs. 13,107.55
 crore as compared to Rs.9,999.94 crore in 2006-07, registering a growth
 of 31.08%.  The Bank has posted a Net Profit of Rs 6729.12 crore for
 2007-08 as compared to Rs.4,541.31 crore in 2006-07, registering a
 growth of 48.18%.
 
 While Net Interest Income recorded a growth of 13.04% and Other Income
 increased by 28.52%.  Operating Expenses increased by 6.64%.
 
 Dividend
 
 The Bank has increased dividend to 215%.
 
 Net Interest Income
 
 The Net Interest Income of the Bank registered
 a growth of 13.04% from Rs.15,058.20 crore in 2006-07 to Rs. 17,021.23
 crore in 2007-08. This was due to growth in interest income on
 advances.  The Net Interest Margin was at a healthy 3.07% in 2007-08.
 
 The gross interest income from global operations rose from Rs.
 37,242.33 crore to Rs. 48,950.31 crore during the year. This was mainly
 due to higher interest income on advances.
 
 Interest income on advances in India registered an increase from
 Rs.22,872.66 crore in 2006-07 to Rs 32,162.68 crore in 2007-08 due to
 higher volumes.  Also average yield on domestic advances increased from
 8.67% in 2006-07 to 9.90% in 2007-08.  Interest income on advances at
 foreign offices also increased due to higher volumes.
 
 Income from resources deployed in Treasury operations in India
 increased by 11.03% despite decline in average yield mainly due to
 higher average resources deployed. The average yield, which was 6.99%
 in 2006-07, declined to 6.92% in 2007-08.
 
 Total interest expenses of global operations increased from
 Rs.22,184.14 crore in 2006-07 to Rs. 31,929.08 crore in 2007-08.
 Interest expenses on deposits in India during 2007-08 recorded an
 increase of 45.56% compared to the previous year, whereas the average
 level of deposits in India grew by 22.09%. This resulted in increase in
 the average cost of deposits from 4.69% in 2006-07 to 5.59% in 2007-08.
 
 Non-Interest Income
 
 Non-interest income stood at Rs.8,694.93 crore as against Rs.6,725.26
 crore in 2006-07.
 
 During the year, the Bank received an income of Rs. 197.41 crore
 (Rs.598.12 crore in the previous year) by way of dividends from
 Associate Banks/ subsidiaries and joint ventures in India and abroad.
 
 Operating Expenses
 
 There was marginal decline of 1.84% in the Staff Cost from Rs.7,932.58
 crore in 2006-07 to Rs 7,785.87 crore in 2007-08. Staff Cost included
 an amount of Rs.575.00 crore towards Wage arrears.
 
 Other Operating Expenses have also registered an increase of 23.94%
 mainly due to increase in expenses on rent, taxes and lighting,
 insurance, postage, telegrams and telephones, repair and maintenance,
 audit fees and miscellaneous expenditure.
 
 Operating Expenses, comprising both staff cost and other operating
 expenses, have registered an increase of 6.64%.
 
 Provisions and Contingencies
 
 Major amounts of provisions made in 2007-08 were as under:
 
 - Rs. 88.68 crore (writeback) towards provision for depreciation on
 investments, excluding amortization of premium on Held to Maturity
 category (as against Rs.379.23 crore in 2006-07).
 
 - Rs.3,823.50 crore towards Provision for Tax, excluding deferred tax
 credit of Rs. 219.43 crore (as against Rs. 3,014.61 crore in 2006-07
 excluding deferred tax credit of Rs.  19.83 crore).
 
 - Rs. 105.00 crore towards Fringe Benefit Tax (as against 88.50 crore
 in 2006-07).
 
 - Rs. 2,000.94 crore (net of write-back) for non- performing assets (as
 against Rs. 1,429.50 crore in 2006-07).
 
 - Rs. 566.97 crore towards Standard Assets (as against Rs. 589.19 crore
 in 2006-07). Including the current years provision, the total
 provision held on Standard Assets amounts to Rs. 2,069.38 crore.
 
 Reserves and Surplus
 
 - An amount of Rs.4,839.07 crore (as against Rs. 3,358.11 crore in
 2006-07) was transferred to Statutory Reserves.
 
 - An amount of Rs. 304.35 crore (as against Rs.321.15 crore in 2006-07)
 was transferred to Other Reserves.
 
 - An amount of Rs. 62.18 crore was transferred to Investment Reserves.
 (Nil in 2006-07)
 
 - An amount of Rs. 4,075.64 crore was withdrawn from Other Reserves
 towards transitional liability for complying with Accounting Standard -
 15 (Revised) - Employee Benefits
 
 Assets
 
 The total assets of the Bank increased by 27.35% from Rs.5,66,565.24
 crore at the end of March 2007 to Rs. 7,21,526.31 crore as at end March
 2008.  During the period, the loan portfolio increased by 23.55% from
 Rs.3,37,336.49 crore to Rs. 416,768.19 crore. Investments increased by
 27.06% from Rs.1,49,148.88 crore to Rs 1,89,501.27 crore. A major
 portion of the investment was in the domestic market in government and
 other approved securities.  The Banks market shares in domestic
 advances was 15.28% as of March 2008.
 
 Liabilities
 
 The Banks aggregate liabilities (excluding capital and reserves) rose
 by 25.64% from Rs. 5,35,266.68
 
 Table : 1 Key Performance Indicators
 
 Indicators                           SBI                 SBI Group
                               2007-08    2006-07     2007-08   2006-07
 
 Return on Average Assets (%)     1.01      0.84         0.99      0.87
 Return on Equity (%)            17.82     14.24        17.93     15.08
 
 Expenses to Income (%)
 Operating
 Expenses to Total Net Income)   49.16     54.18        56.64     58.15
 Basic Earnings Per Share (Rs.) 126.62     86.10       168.61    120.66
 Diluted Earnings Per Share 
 (Rs.)                          126.50     86.10       168.45    120.66
 
 Capital Adequacy Ratio (%) 
 (Basel I)                       13.47     12.34        13.49     12.36
 Tier I                           9.14      8.01         8.95      8.05
 Tier II                          4.33      4.33         4.54      4.31
 Net NPAs to Net Advances         1.78      1.56         1.43      1.31
 
 crore on 31st March 2007 to Rs. 6,72,493.65 crore st on 31 March 2008.
 The increase in liabilities was mainly contributed by increase in
 deposits and borrowings.  The Global deposits stood at Rs.5,37,403.94
 crore as on 31st March 2008, representing an increase of 23.39 % over
 the level on 31st March 2007. The Banks market share in deposits was
 15.44% as of March 2008.
 
 Performance Highlights Core Operations
 
 A Global Markets
 B Wholesale Banking Group
 C Mid Corporate Group
 D National Banking Group
 E Rural Business Group
 F Corporate Strategy & New Business
 G International Banking Group
 H Associates & Subsidiaries
 I Asset Quality
 J Information Technology
 
 A.  GLOBAL MARKETS
 
 A.1 In keeping with its integrated approach to all treasury activities
 in various markets in different time zones i.e., Forex, Interest Rates,
 Bullion, Equity and Alternative Assets, the Bank redesignated its
 Treasury Operations into Global Markets
 
 A new state-of-the-art Dealing Room with online connectivity to all
 active forex intensive Branches across the country was inaugurated at
 Corporate Centre in Mumbai with facilities matching the best in the
 industry. This facility ensures continuous availability of market
 determined forex rates to our customers.
 
 The year witnessed volatility in 10-year base yields which moved
 upwards to 8.38% during the year and finally closed at 7.94% as on 31st
 March 2008.  Marginal slow down in credit growth led to increase in
 overall Domestic investment portfolio by Rs.36311.76 crore over 31st
 March 2007. Liquidity position remained comfortable during most part of
 the year which helped the Bank to bring down high cost bulk deposits.
 In the backdrop of higher interest rate regime, Bond Market conditions
 were less conducive to trading opportunities. The Bank diversified its
 trading activity to Equity and Mutual Fund portfolio to encash the
 opportunities available through the buoyant capital markets during the
 year.
 
 A.2 While trading profits from Fixed Income portfolio came under
 pressure because of higher interest rate regime, Global Markets
 profits were contributed primarily by trading in equity and mutual
 funds. Trading profits from equity and mutual funds portfolio has
 increased by 321%.  Interest income from investment portfolio increased
 in absolute terms due to the increase in the overall Fixed Income
 portfolio from Rs. 1,36,927.48 crore to Rs.1,73,239.24 crore. RBFs
 decision to increase CRR rate from 6.00% to 7.50% in four stages during
 the year and withdrawal of interest payable on CRR balances impacted
 overall income from Treasury operations. Average yield on treasury
 operations net of income on CRR balances increased from 6.45% to 7.35%.
 
 A. 3 The Bank contained the interest rate risk of the Fixed Income
 Portfolio through a combination of measures including reduction in the
 duration of the portfolio and shifting of securities with a book value
 of Rs.9,662 crore from Available for Sale portfolio to Held to Maturity
 portfolio.
 
 A.4 Trading volumes in forex operations increased substantially from
 Rs.7,67,889 crore to Rs.ll,74,029 crore thereby increasing the exchange
 income from these operations by 59 % Y-O-Y to Rs.321.64 crore from
 Rs.202.20 crore.
 
 
 B.1 The Banks Wholesale Banking Group consists of three Strategic
 Business Units viz., Corporate Accounts Group, Project Finance &
 Leasing SBU and Stressed Assets Management Group.
 
 The Bank has recently launched the Wholesale Banking Initiative to
 harness the SBI Group synergy for the benefit of the corporate
 customers by providing them with a One Stop Shop facility for all
 their banking needs. The initiatives aim at providing comprehensive,
 customised and specialized banking solutions to the corporates thereby
 enhancing Banks share of business with them.
 
 Table : 2 WBG - Highlights
 
                                   Amount in Rs. crore)
 Particulars                       As on  As on Growth
                              31.03.2007    31.03.2008      %
 
 Deposits                           6669        9823       47
 Advances                          37989       46042       21
 
 B.2 Corporate Accounts Group (CAG)
 
 The loan portfolio of CAG constituted about 23% of the Banks
 Commercial and Institutional non-food credit and 12% of the total
 domestic credit portfolio as on 31.03.2008.
 
 Initiatives taken:-
 
 - With focused initiatives on fee-based services, fee-based income
 registered an impressive 62% growth during the year.
 
 - CAG continued on the growth trajectory in forex business registering
 a YOY growth of 79% and contributed 49% of the total domestic forex
 turnover of the Bank.
 
 - SBI FAST, the Cash Management Product (CMP), in addition to offering
 collections and payments services, also facilitates the corporates
 liquidity management by offering various value added products. These
 include auto sweep facility, customized MIS and reconciliation support,
 automated bulk NEFT, ECS and RTGS payments with reconciliation support
 etc. It has started processing of centralized payments in bulk (Income
 Tax Refund Orders) and has put in place a call centre for this purpose.
 CMP is well poised to enter new areas like customized e-payments and
 e-collections with Straight Through Processing.
 
 B.3. Project Finance & Leasing SBU
 
 The Project finance SBU focuses on funding core projects like power,
 telecom, roads, ports, airports, SEZ and others. It also handles
 non-infrastructure projects with certain ceilings on minimum project
 costs. During the year, the focus was on syndication and underwriting
 of project loans. Project Finance- SBU took up projects involving total
 debt of Rs.  92,558 crore and achieved sanctions of Rs. 20,195 crore,
 while it syndicated Rs. 54,951 crore with other banks during the year
 07-08.
 
 In view of the unfavourable climate and availability of alternative
 funding options at cheaper cost, the Bank decided not to write leases
 during the current year also. As at the end of March 2008, the
 disbursements and capitalization were NIL and profit amounted to
 Rs.8.81 crore.
 
 B.4. Stressed Assets Management Group (SAMG)
 
 The performance of SAMG during the year 2007-08 is given in Table No. 3
 below.
 
 Table : 3 SAMG - Highlights
 
                                               (Amount in Rs. crore)
 
 1      Cash Recovery in NPA                             337
 2      Upgradation to Standard Assets                    53
 3      Write Off                                        368
 4      Gross reduction in NPAs (1+2+3)                  758
 5      Recovery in written off accounts                 336
 
 Stressed Assets Management Group (SAMG) was initially set up to take
 over all NPAs with outstanding of Rs. 5 crore and above for focused
 efforts in resolution of NPAs. The coverage has now been extended to
 Rs.1.00 crore and above across the country.
 
 92 Stressed Assets Resolution Centres (SARCs) have been opened across
 the country for more focused resolution of NPAs with outstandings upto
 Rs. 1 crore in SME and Personal segments. Out of these, 44 independent
 SARCs are being brought under SAMG in a phased manner to give further
 fillip to the Banks recovery efforts. In this direction, 9 SARCs have
 already been brought under the control of SAMG during the year. The
 performance of SARCs is encouraging and we expect to make substantial
 progress in the Management of NPAs.
 
 C.1.The Mid-Corporate Group (MCG) has been immensely successful in
 attracting the business of Mid-Corporate units through relationship
 management and quicker credit processing. To give added focus to this
 segment during the year, a Dy. Managing Director & Group Executive
 (Mid- Corporates) was posted to independently head the operations of
 the Mid-Corporate Group.
 
 Table : 4 MCG - Highlights
 
                                           (Amount in Rs. crore)
 Particulars                 As on             As on     growth
                        31.03.2007        31.03.2008          %
 
 Advances
 (incl. food)              68,446            76,338        11.5
 Advances
 (excl. food)              60,138            73,874          23
 Offsite
 advances                  27,445            35,128          28
 Total                     87,583          1,09,002          24
 advances
 (excl. food)
 Deposits                  10,011            11,648          16
 
 - The Group handles about 30% of the total non- food advances of the
 Bank and operates through 8 Regional Offices situated across the
 country. It is estimated that 38% of the Mid-Corporate universe in the
 country is covered by the Bank.  The coverage is expected to be
 extended to more centres during the current year.
 
 - 695 new mid corporate clients were added to the MCG during the year.
 
 - The total credit portfolio (fund based) of the Group stood at Rs
 1,09,002 crore as on 31st March, 2008. This is more than the aggregate
 business handled by many of the top banks in the country.
 
 - The average yield on advances went up from 8.76% in March 2007 to
 9.73% in March 2008.
 
 Initiatives Taken
 
 - Syndication Desks have been created at two Regional Offices, Mumbai
 and Chennai, to tap the opportunities available for syndicating working
 capital facilities.
 
 - Project Finance Cells have been set up in Chennai and New Delhi
 Regions.
 
 - Substantial business in the form of IPOs/ Private Equity/Debt
 Syndication/Foreign Currency Loans/Overseas Acquisitions/External
 Commercial Borrowings has been arranged for MCG clients through
 SBICAPS/Foreign Offices.
 
 New Products
 
 - A new product, Construction Equipment Loan, to cater to Construction
 Companies has been launched.
 
 C.2 Gold Banking
 
 A separate Department, Precious Metals Department, has been created at
 the Banks Corporate Centre for the purpose of boosting the Gold
 Banking business.
 
 The Bank launched retail sale of gold coins which is now available at
 250 branches across the country. The scheme would be extended to cover
 1000 branches in a phased manner during the current year.
 
 While 52 branches are authorized for metal loans and bulk sale of gold
 to jewellery manufacturers the number is being increased to 70.
 
 Gold Deposit Scheme has been revived for institutions like temples,
 trusts, etc.
 
 The Banks National Banking Group (NBG) consists of three Business
 Groups viz., Personal Banking, Small & Medium Enterprise (SME), and
 Government Banking.
 
 During the year Bank achieved a milestone by opening its 10,000th
 Branch at Puduvayal, Sivaganga District in Tamil Nadu, which was
 inaugurated by Hon. Finance Minister Shri P. Chidambaram.
 
 During the year, as many as 965 branches were opened, and at the end of
 March 2008 the Bank has a vast network of 10,186 branches to reach out
 to customers, even in the remotest parts of the country.
 
 Table : 5 NBG - Highlights
 
 (Amount in Rs. crore)
 
 Particulars                    As on           As on           %
                           31.03.2007      31.03.2008      growth
 
 Deposits
 (excluding
 inter bank)                 3,67,524       4,54,883        23.77
 Advances
 (including food
 but excluding
 inter bank)                 1,98,701       2,44,617        23.11
 Advances
 (excluding food)            1,95,531       2,43,068        24.31
 
 D.1 Personal Banking Business Unit
 
 During the year, Personal Banking domestic deposits have grown from
 Rs.1,90,870 crore to Rs.2,36,645 crore, showing a growth of Rs.45775
 crore (23.98 %) as against Rs.27,684 crore during the previous year.
 
 During the year, Personal Banking Advances have grown from Rs. 73,590
 crore to Rs. 88,549 crore, showing a growth of Rs.14,959 crore (20.33%)
 as against Rs.12,530 crore during the previous year.
 
 SBI emerged as a leader this year in terms of Individual Home Loan
 disbursements among SCBs & HFCs as on 31.12.2007. Bank was voted, for
 the second year in a row, as The Most Preferred Housing Loan Provider
 in CNBC AWAAZ Consumer Awards for 2007 along with the Most Preferred
 Bank Award in a survey conducted by CNBC TV 18 in association with AG
 Nielsen & Company covering more than 10,000 respondents across 21
 cities and 13 small towns.
 
 New Products introduced during the year were SBI Reverse Mortgage Loan
 and SBI Home Plus in the area of Home Loans. Repayment period for Home
 Loans has now been increased upto 25 years to facilitate lower
 repayment obligations and applications are now accepted online through
 Banks website.
 
 The Bank had opened 78.65 lac new Savings Bank Accounts during the year
 as against 62.40 lac previous year.
 
 The Auto Loan portfolio has shown a healthy growth of Rs.1,645 crore in
 absolute terms, which is 29.89 % higher than last years growth.
 
 SBI is market leader in Education Loans and has a market share of 24%
 amongst PSU Banks. The growth in Education Loans during the year is
 Rs.1,112 crore which is 33.67% higher over March 2007.
 
 SBI Scholar Loan is extended to the students joining 52 elite
 institutions like IIMs/ IITs/AIIMS/ Management Institutes etc. at
 concessional interest rates and terms.
 
 Web based registration of applications for Education Loans was launched
 by Honble Finance Minister on 14th November 2007. In principle
 sanctions are given online for SBI Scholar Loans.
 
 D.2 SME Business Unit (SMEBU)
 
 SME Business Unit is implementing multiple strategies to maintain
 Banks premier position in SME financing.
 
 Advances to SME sector increased to Rs. 76,329 crore as on 31.03.2008
 from Rs.58,674 crore of the previous year registering a Y-O-Y growth of
 30%.
 
 Deposits under SME sector increased to Rs.1,65,168 crore as at the end
 of March 2008 from Rs.1,23,054 crore of previous year, recording a
 growth of 34% during the year.
 
 Initiatives taken
 
 - Customer Relationship Executives have been recruited from the Market
 and placed in potential SME branches for serving effectively Medium
 Enterprises.
 
 - Traders Bonanza campaign has been conducted and loans sanctioned to
 more than 60,000 traders.
 
 D.3  Government Business Unit (GBU)
 
 The following initiatives were taken in Government Business.
 
 a) Electronic Accounting System in Excise and Service Tax (EASIEST) for
 indirect taxes was extended to the entire country.
 
 b) E-Payment of Central Excise, Service Tax, Customs Duty, Rail Freight
 introduced.
 
 c) Centralised Pension Processing Centres (CPPC) were established at
 all LHOs covering 5814 branches (18.80 lac accounts). Remaining
 branches will be covered in a phased manner.
 
 d) Cyber Treasury for online collection of State Government taxes has
 been extended to the State of Madhya Pradesh, Chhatisgarh, Rajastan and
 Gujarat for collection of VAT/CST and the solution is being offered to
 other State Governments shortly.
 
 
 
 During the year 2007-08, Rural Business Group of the Bank comprising
 rural and semi urban branches, accounting for about 70% of the branch
 network of the Bank grew by Rs.29,807 crore in deposit representing a
 growth of 22.8% and Rs.18,734 crore in advances representing a growth
 of 23.4%. This was against a growth of Rs.16,367 crore in deposit and
 Rs.17,684 crore in the advances in the previous year. Market share of
 Rural and Semi Urban branches during the year upto December 2007 has
 improved by 0.92% in deposit and 0.98% in advances. Banks share in
 current year growth upto December 2007 was 32.04% in deposits and
 31.97% in advances.
 
 Table : 6 Agriculture - Highlights
 
                                          (Amount in Rs.crore)
 Particulars           As on             As on        Growth
                      31.03.07         31.03.08         %
 
 Deposits               6,460              8058          25
 Advances              33,857             42806          26
 
 As against the benchmark of 18% set by RBI, the Bank for the first time
 crossed the benchmark and recorded its Agricultural Advances at 18.37%
 of Adjusted Net Bank Credit (ANBC) as at March 2008.
 
 The following important themes have been adopted by the Bank to foster
 its Agricultural business:
 
 Growth with Quality
 
 Thrust is laid on contract farming and value chain financing. Special
 scoring model has been introduced for financing tractors which aims to
 improve the quality of the advance.
 
 The Bank, in order to diversify its Agricultural business portfolio,
 prepared three year National Business Plan covering Horticulture,
 Dairy, Fisheries, Food processing and Biotechnology.
 
 Bonding with farmers
 
 As a sustainable business strategy, the Bank is focussing on Bonding
 with Farmers. Under the scheme of SBI Ka Apna Gaon, one of the broad
 business themes is adoption of villages for overall development and
 economic upliftment and so far 237 villages have been adopted.  2400
 Farmers Clubs were promoted and as many as 30,000 Farmers meets
 (Credit and Recovery Camps) were organized by the Bank during the year.
 
 Micro Finance and Financial Inclusion
 
 A major initiative taken in the area of financial inclusion has been
 the introduction of SBI Tiny Smart Cards to the financially excluded.
 This, in simple terms can be defined as a Bank in a box. The Card is
 highly secured as it works on the bio-metric validation of the
 customer. More than two lacs SBI Tiny Smart Cards have been issued as
 at the end of March 2008.  The Smart Card project together with the
 Business Correspondent model has been successfully piloted and rolled
 out nation-wide. The Bank has been able to cover more than 10 thousand
 unbanked villages, including far flung areas of North-Eastern, Eastern
 and Central parts of the country. SBI Tiny Cards are used for opening
 No Frills Accounts and providing basic banking services. These cards
 are also used to route government payments direct to beneficiaries in 6
 Districts of Andhra Pradesh for example, payment of wages under
 National Rural Employment Guarantee Programme (NREGP) and Social
 Security Pension scheme (SSP). The scheme is being extended to other
 States as various other State Governments have approached the Bank for
 the purpose.
 
 Self Help Groups (SHGs)
 
 The Bank is the market leader in SHG-Bank Credit Linkage Programme
 since its inception. In the year 2003, Bank had set a challenging
 target of credit linking 1 million SHGs by March 2008 which has been
 achieved. Cumulatively, the Bank has credit linked 10,18,481 SHGs and
 disbursed loan to the extent of Rs.5077.72 crore so far. Bank has
 brought out unique products for SHGs, viz., SHG Credit Card / SHG Gold
 Card, Sahayog Niwas - a housing product for SHGs. Bank has also
 introduced a Scheme for financing NGOs / MFIs for on-lending to SHGs.
 We are the first bank to recruit officers from market exclusively for
 promoting micro finance. SBI has won awards for topping in SHG- Bank
 Credit Linkage in Orissa, Jharkhand, Maharashtra, Uttarakhand, Tamil
 Nadu and Uttar Pradesh. SBI has sponsored and financially supported NGO
 SAMANWITA in collaboration with Government of Orissa.
 
 The Rural Business Strategy
 
 The Rural Business strategy drawn up by the Bank envisaged setting up a
 multi-pronged sourcing force, coupled with back-end processing capacity
 by way of Rural Central Processing Centres. The front end marketing
 force comprised, besides the branches, alternate channels like Officers
 Marketing & Recovery (OMR) and the Business Facilitators/ Business
 Correspondents.
 
 MRT Channel: The OMRs not only source high value Agriculture segment
 loans, but also all types of deposits, loans and cross-selling products
 across all the segments. The Bank has more than 3000 OMRs and is
 planning to recruit additional 3000 OMRs during 2008-09.
 
 Business Facilitators (BF)/ Business Correspondents (BC) Channel:
 Utilizing the liberalization permitted by RBI, the Bank has entered
 into various national level alliances with entities such as India Post,
 ITC Limited, Drishtee Foundation and Zero Microfinance And Savings
 Support Foundation.
 
 INDIA POST has been engaged as a Business Correspondent (BC). The BC
 alliance with India Post is currently functioning in 110 post offices
 in six states. The India Post alliance is being extended to other
 states also. Besides, BCs and BFs are also being engaged at the
 regional levels. The BC model has enabled the Bank to reach hitherto
 unbanked and under banked areas.
 
 Rural CPC
 
 To meet the requirement of processing of the increased business flowing
 from the alternate channels, 10 Rural Central Processing Centres
 (RCPCs) have been set up across the country, which is proposed to be
 scaled upto 100 RCPCs in the year 2008-09.
 
 E.2. Regional Rural Banks (RRBs)
 
 Post amalgamation Bank has got 16 RRBs with a network of 2,351 branches
 spread over 115 districts and 16 states in the Country. The aggregate
 deposits and advances of the sponsored RRBs stood at Rs.13,573 crore
 and Rs.7,856 crore respectively as on 31st March 2008. The profit have
 jumped from Rs.32.77 crore as on March 2007 to Rs.115.68 as on March
 2008. During the year, a remittance product - Gramin Pay Order (GOP)
 was introduced for facilitating remittances from remote areas to
 increase fee income in RRBs. Post amalgamation, RRBs have broad based
 their product profile by introducing Debt Swap Scheme, Ware House
 Receipt Financing.
 
 E.3. CreditAssistance provided to Scheduled Castes and Scheduled
 Tribes
 
 The credit assistance provided by the Bank to SCs and STs stands at
 Rs.6,883 crore out of total priority sector advance of Rs.1,32,300
 crore.
 
 Table No : 7 Recovery position of
 SC/ST borrowers (Scheme-wise) :
 
 Scheme                                             Recovery %
 
 Prime Ministers Rozgar Yojana                        31.85
 (PMRY) 
 
 Swarnajayanti Gram Swarozgar                          35.57
 Yojana (SGSY)
 
 Swarnajayanti Shahari Rozgar                          36.25
 Yojana (SJSRY)
 
 Scheme for Liberation &                               29.53
 Rehabilitation of Scavengers (SLRS)
 
 Differential Rate of Interest (DRI)                   65.82
 
 Prime Ministers New 15 Point Programme for the
 Welfare of Minorities.
 
 All commercial banks have been advised to ensure smooth flow of bank
 credit to minority communities (Sikhs, Muslims, Christians,
 Zoroastrians and Buddhists).The Government of India directed the banks
 to prepare a road map laying down specific State-wise annual targets
 over the next 3 years to ensure that Priority Sector lending to
 Minority Communities is raised to 15% by the end of 2009- 10. The
 number of Minority concentration districts (MCDs) which were 44 in
 March 2007, has been enhanced to 121 in the financial year 2007-08.
 (our present lendings to Minority Communities in identified districts
 constitute 13.50% of the priority sector advances of these identified
 districts).
 
 During the financial year 2007-08, our Ban); has opened 256 new
 branches in the MCDs. Further, 140 centres have been identified for
 opening of new branches. Nodal officers have been designated far
 co-ordinating Minority cell related work at all our Local Head Offices.
 Our Lead District Managers have been advised to monitor the credit flow
 to Minorities at monthly intervals and take corrective steps wherever
 the performance is low.
 
 Our financial assistance to Minority Communities in the identified
 Minority concentration districts is furnished hereunder:
 
 Table No : 8 Credit Assistance to Minorities
 
                                      (Amount in Rs. crore)
 Period             No of          No.of         Amount
                    districts      A/cs
                    identified
                    by GOI
 
 Mar.   2006            44         5.93   lacs     1016
 Mar.   2007            44         7.94   lacs     2106
 Mar.   2008           121         9.88   lacs     3516
 
 Our Local Head Offices have been advised to have special publicity
 campaigns for creating awareness of our schemes to Minorities. Village
 level meetings are being conducted to create awareness of financial
 assistance to Minorities in all the service area villages of the bank
 apart from Visual and Print media. 28 Training Camps and Melas were
 arranged by our branches in MCDs wherein 1,87,153 members of minority
 communities participated.
 
 Information on assistance to Minorities has been put up on our Banks
 Website. We are now targeting two schemes- SBI Talent Awards Scheme
 and Adoption of a Girl Child Scheme, at our branches in MCDs.
 
 F. CORPORATK STRATEGY & NEW BUSINESSES
 
 In order to maintain our premier position in the financial services
 arena the Bank has institutionalized innovation and change. Against
 this backdrop, and in order to quickly identify and respond to emerging
 opportunities the Bank created the position of Dy Managing Director
 (Corporate Strategy & New Businesses) in the year 2006. During the last
 one and a half year, various new business initiatives have been
 undertaken by the Bank, as under:
 
 E.1. Pension Fund Business:
 
 State Bank of India has been appointed as a sponsor of Pension Fund
 Manager (PFM) by PFRDA to manage the pension funds of Central and State
 Govt.  employees under New Pension System (NPS) of Govt.  of India. SBI
 Pension Funds Pvt. Ltd. has been incorporated as a wholly owned
 subsidiary of State Bank of India to manage the pension funds under
 NPS. The Company has been allocated the largest share (55%) in the
 pension fund corpus.
 
 F.2. Financial Planning and Advisory Services (FP&AS):
 
 Financial Planning and Advisory Services initiative is focused on
 deepening the existing relationship of the Bank with mass affluent and
 high-end customers and help them in managing their assets through a mix
 of products/strategies. Our relationship managers will advise the
 customers to meet their needs of protection, invest in various classes
 of assets through investment planning, tax planning, retirement and
 real estate plans. Going forward, we plan to commence wealth management
 services by March 2009 and further introduce private banking by March
 2012.
 
 F.3. Mobile Banking:
 
 The proliferation of mobiles has led to the emergence of a new channel
 for the delivery of basic banking services and small value e-commerce
 services.  Considering the immense potential and the cost effectiveness
 of delivery, the Bank has decided to introduce mobile telephone based
 banking services which we plan to commence before the end of the first
 quarter of 2008-09.
 
 F.4. Private Equity:
 
 The Bank has identified private equity in different areas as a key new
 business. The rapid expansion of Indian economy, especially in growth
 sectors like Technology, Pharma, Health Care, Realty and
 Infrastructure, has opened up large opportunities of equity funding
 which have continuously shown superior returns. The Bank is at an
 advanced stage of preparedness for setting up various equity funds.
 Regulatory approval processes and JV formation are under implementation
 and a few funds are expected to be floated by the end of first half of
 the financial year.
 
 F.5. Custodial Services:
 
 With increasing securities transactions originating from domestic and
 foreign investors, there is an excellent demand for providing full
 range of custodial services. Accordingly, the bank has decided to
 expand its present capabilities in the domestic custody and offer these
 services as a new business in collaboration with a leading global
 custodian. The process of forming the Joint Venture is at an advanced
 stage. In addition to Custody (local and foreign institutional) &
 Depository services the JV would provide other value added services
 like Fund administration and securities lending and borrowing services
 on a full- fledged Straight Through Processes (STP) and web enabled
 environment.
 
 F.6. Non- Life Insurance:
 
 While SBI Life is meeting a part of the requirements under Protection
 Services, the insurance offering bouquet will be complete with the
 inclusion of General Insurance products, greatly enhancing the customer
 value proposition at our vast branch network and enhancing the brand
 value of the Bank.  With this end in view the Bank has decided to enter
 General Insurance Business through the joint venture route. The Bank
 aspires to be amongst the top 3 players in the General Insurance space
 within a period of 10 years. It is expected that the JV partner will be
 identified shortly and MOU/ Definitive Agreement(s) will be signed
 during the quarter ending June 08.  After this process, Insurance
 Regulators (IRDA) and RBI will be approached for seeking regulatory
 clearances. We anticipate the start of the business by the year end.
 
 F.7. Merchant Acquisition Business:
 
 The increase in usage of cards of various kinds provides huge
 opportunities. We are in the process of entering merchant acquisition
 services through a Joint Venture subsidiary in order to bring in the
 best practices and services at par with international benchmarks. We
 expect this business to grow substantially over the next few years and
 achieve market leadership position.
 
 Operations of Foreign Offices
 
 As on 31.03.2008, the Bank had a network of 84 overseas offices spread
 over 32 countries covering all,, time zones.
 
 Net Profit from Banks overseas operations (including subsidiaries and
 joint ventures with more than 50% shareholding) registered a growth of
 84% during the fiscal year mainly driven by significant growth of 48%
 in Net Customer Credit.
 
 Resource Management
 
 The bank was able to manage growth despite tight liquidity position in
 the global markets due to issues arising out of the US sub-prime
 mortgage crisis. This was because the core focus area remained on
 primary deposit mobilisation which stood in good stead in this period
 of extreme volatility.
 
 Despite volatile and challenging global market conditions, the Bank
 successfully entered the Malaysian Ringgit denominated bond market.
 This represented first ever MYR bond issue by an Indian borrower in the
 Malaysian market.
 
 NRI Business
 
 NRI remittances business routed through Banks foreign offices during
 the year registered a growth of more than 160%. The online USD and GBP
 remittance products more than doubled in the year. SBI -Nepal Express
 Remit has been launched from select Indian branches for enabling speed
 remittances to Nepal.
 
 Instant Transfer remittance facility, launched in Mar 07, was extended
 to 51 foreign offices in 18 countries. Internet enabled Instant
 Transfer was launched from Nepal and Bahrain offices; this product will
 be extended to other countries shortly.
 
 Tie ups with two exchange companies in Oman and UAE in addition to the
 existing ten were operationalised to expand the Banks outreach in the
 Middle East and boost remittance business.  A tie up with Arab National
 Bank for remittances from Saudi Arabia was entered into in 2007-08.
 
 Overseas Expansion
 
 SBI became the first Indian bank to receive approval from Monetary
 Authority of Singapore for Qualifying Full Bank licence, which enables
 a foreign bank to open up to 25 offices/ branches in Singapore. During
 the year 2007- 08, SBI received approval from local regulators to open
 one more branch each in New York, USA and Male. Besides, process of
 opening of a branch at Jeddah, Saudi Arabia was initiated in 2007-08.
 
 Domestic Operations
 
 Export Credit
 
 The Banks outstanding export credit stood at Rs.26,531 crore, thereby
 registering a growth of more than 21% over previous year.
 
 Project Export Finance
 
 State Bank of India is an active participant in financing project
 export activities involving bidding and execution of turnkey / civil
 construction contracts and export of engineering goods on deferred
 payment basis, as also service exports.
 
 During the period April 2007 to March 2008, the Bank supported 31
 project export proposals with contract value aggregating Rs.13,489
 crore, in 13 countries. Banks aggregate exposure as at the end of
 March 2008 was Rs.993 crore.
 
 Merchant Banking
 
 The Bank further intensified its thrust in the area of syndicated
 foreign currency loans and participated in corporate syndicated loan
 deals amounting to USD 27,575 million during April 2007 to March 2008,
 besides extending several bilateral facilities aggregating US$ 933
 million.
 
 Bank has participated to the extent of US $ 3,038 million in 31 Merger
 and Acquisition deals aggregating US $ 22,561 million in 2007-08 as
 against participation to the extent of US $ 1,073 million in 13 deals
 aggregating US $ 5,375 million during the previous year.
 
 
 
 The Bank was ranked No. 1 in the Asia Pacific (excluding Japan and
 Australia) in the mandated arranger/book runner league table for
 syndicated loans by IFR Asia.
 
 Global Link Services Activities (GLS) GLS of the Bank facilitates
 export payments, other overseas collections and inward remittances,
 thereby improving the profitability of the Banks foreign exchange
 operations. During the fiscal year 2007-08, GLS, on behalf of domestic
 branches of the Bank, handled 153715 export bills and 232468 foreign
 currency checks aggregating USD 19.55 billion during the year against
 USD 13.30 billion in the previous year.  In addition, GLS handled
 764,341 transactions amounting to USD 914.84 million under inward
 remittance facility.
 
 Correspondent Relations
 
 To cater to the needs of a large customer base of the Bank and also to
 supplement the efforts of our foreign offices in the area of
 international banking, the Bank has developed a network of
 correspondent banks numbering 523, consisting of reputed international
 banks spread over 124 countries. The Bank also has about 1100 Bilateral
 Key Exchange (BKE) arrangements for SWIFT, which facilitates a seamless
 flow of financial messages covering trade, remittances, etc.
 
 Country Risk & Bank Exposures
 
 Country risk management policy was formulated in line with the RBI
 guidelines. Detailed country- wise and bank-wise risk analysis is
 undertaken to arrive at respective exposure limits. Both country and
 bank exposure limits (product wise] are being monitored on a regular
 basis.
 
 H.1 The State Bank Group with a network of 15118 branches including
 4932 branches of its seven 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 and primary dealership in the Money
 Market.
 
 H.2 Associate Banks
 
 SBIs seven Associate Banks had a market share of 7.29% in deposits and
 7.44% in advances in March 2008.
 
 Table : 9 Performance Highlights of Associate Banks (ABs)
 
                                        As on            Growth
                                   31.03.2008               (%)
 
 Agg.  Assets                          289642             21.07
 Agg.  Deposit                         234167             19.07
 Agg.  Advances                        178375             21.64
 Operating profit                        4336              1.03
 Net profit                              2277             12.11
 
                                        Growth %      Growth %
                                        As on            As on
                                        31.03.2007  31.03.2008
 
 Credit Deposit Ratio                   74.57            76.17
 Capital Adequcy                        12.22            12.50
 Ratio
 Gross NPA                               1.83             1.48
 Net NPA                                 0.76             0.61
 Return on                              17.71            18.50
 Equity
 
 H.3 SBI Commercial & International Bank Ltd.
 (SBICI)
 
 As at the end of March 2008, the aggregate deposits and total advances
 of SBICI stood at Rs. 446.07 crore and Rs. 363.75 crore respectively.
 The Bank recorded an operating and net profit of Rs.12.37 crore and
 Rs.12.85 crore respectively. The net NPA as at the end of March 2008
 was Nil.
 
 H.4 SBI Capital Markets Limited (SBICAP)
 
 SBICAP has successfully positioned itself as a full service investment
 banking outfit offering Project Advisory Services, arrangement of
 Structured Finance, Capital Market Services like Equity issuances,
 Mergers and Acquisitions Advisory Services, arrangement of Private
 Equity, etc. The company consolidated further its dominant position as
 arrangers of debt for the corporate sector both in the infrastructure
 as well as non-infrastructure sectors. The following achievements are
 some of the many recognitions won by the Company during the year:
 
 - Ranked No.l Mandated Lead Arranger for the third consecutive year in
 the Asia Pacific Region by Thomson Financials Project Finance
 International (Global Ranking No.9).
 
 - Ranked No.l Loans Mandated Arranger in Asia Pacific Region by
 Bloomberg and IFR Asia.
 
 - Syndication of credit facilities to Guru Gobind Singh Refineries
 Ltd., lead arranged by the Group, adjudged best Petrochemical deal in
 Asia Pacific by Thomson Financials Project Finance International.
 
 - Companys league table ranking for IPOs improved from 9th position
 last year to 3rd position in 2007-08.
 
 The company has posted a PAT of Rs.142.19 crore in March 2008 as
 against Rs.71.18 crore last year.
 
 H.5 SBICAP Securities Limited (SSL)
 
 SSL, which commenced its operations in June 2006, is a broking company
 offering equity broking services to retail and institutional clients
 both in the cash as well as in the Futures and Options segments. It is
 also engaged in Sales & Distribution of other financial products like
 Mutual Funds, etc. It launched E-broking services to the clients of SBI
 and 5 of the Associate Banks during the year. The Companys net profit
 for the year increased three folds to Rs.12.21 crore from Rs.4.04 crore
 last year.
 
 H.6 SBICAPS Ventures Limited (SVL)
 
 SVL has set up a USD 100 million Knowledge Sector Fund, jointly with
 SBI Holding Inc. Softbank, Japan.
 
 H.7 SBICAP (UK) Ltd.
 
 SBICAP (UK) Ltd. has been aggressively marketing for potential clients
 and arranging for them Foreign Currency Convertible Bonds (FCCBs),
 Private Equities (PEs) and Cross-border Mergers and Acquisitions (M&As)
 transactions.
 
 H.8 SBI DFHI LTD
 
 SBI group holds 67.01% of the Companys Paid Up Capital, while other
 Nationalized Banks hold 22.46%.  All India Financial Institutions and
 Private Sector Banks hold 5.84% and the Asian Development Bank holds
 4.69% as on March 31, 2008.
 
 For the period upto March 2008, the Company had earned a PAT of
 Rs.85.68 crore. The Company prudently diversified into profitable
 Non-SLR avenues resulting in better profits this year.
 
 Total Secondary market turnover of the company was Rs.49491.26 crore.
 The market share under Proprietary trading was 3.10%.
 
 H.9 SBI Cards & Payments Services Pvt. Ltd.  (SBICSPL)
 
 During the year 5.3 lac additional cards were issued increasing the
 Cards in Force (GIF) to 32 lacs as at the end of March 2008. The total
 receivables stood at Rs.2666 crore as at the end of March 2008 and were
 5.25% higher than receivables of Rs.2533 crore as at the end of March
 2007.
 
 Table : 10 The Performance Highlights of the Associate Banks as at
 March 2008 are as under:
 
                                              (Amount in Rs. crore)
 
 Name of the Bank                    SBIs share           Deposits
                                     in the capital (%)
 
 State Bank of
 
 Bikaner &. Jaipur                           75               32701
 Hyderabad                                  100               51796
 Indore                                   98.05               24076
 Mysore                                   92.33               26781
 Patiala                                    100               48186
 Saurashtra                                 100               15968
 Travancore                                  75               34658
 All 7 Banks                                 -               234167
 
 Advances         Operating        Net Profit
                  Profit
 
  25319             661.18             315.00
  35915             991.19             556.99
  18352             451.20             234.01
  21315             567.52             318.86
  36706             779.33             413.73
  12325             176.85              51.99
  28442             709.09             386.11
 178375           4,336.36           2,276.69
 
 H.10. SBI LIFE INSURANCE COMPANY LIMITED (SBILIFE)
 
 SBI Life has a unique multi-distribution model comprising
 Bancassurance, Retail Agency & Institutional Alliances and Group
 Corporate Channels for distribution of Insurance products. Gross
 premium income was over Rs.5,622 crore for the period ended March 2008.
 The Company has added 19 lac new lives during the year.  SBI Life has
 been rated as The Most Trusted Private Sector Life Insurance Company
 according to a survey conducted by Brand Equity in association with AC
 Nielsen ORG-MARG and the Economic Times. It has also received the
 highest financial rating AAA from CRISIL. SBI Life has achieved the
 prestigious CMMI Level 3 certification for Information Systems Group
 (ISG) and has recently been awarded ISO 9001:2000 certification for
 Claims department. It has been ranked 5* across the world in terms of
 number of Million Dollar Round Table members for 2007.
 
 H.11. SBI Funds Management (P) Ltd. (SBIFMPL)
 
 SBIFMPL was conferred with CNBC AWAAZ Consumer Award 2007 for the most
 preferred Brand of Mutual fund and also received the Outlook Money and
 NDTV Profit Awards for the Best Equity Fund House and the Overall Best
 Fund House for 2007. The Lipper Global Ranking study rated two schemes
 managed by SBIFMPL, namely SBI Magnum Tax Gain and SBI Magnum COMMA
 Fund among the best performing 100 schemes across the world for the
 period ended 31st December, 2007.  Magnum Balanced Fund, Magnum Taxgain
 Scheme and Magnum Sector Funds Umbrella-Contra Fund were ranked Seven
 Star Funds by ICRA and won ICRA Mutual Fund Gold Awards: for best
 performance in their respective categories for the period ended 31st
 December, 2007 ICRA Mutual Fund Silver Awards was also won by five of
 the schemes managed by SBIFMPL for performance among the top 10% for
 the period ended 31st December, 2007 in various categories. Ranking in
 terms of Assets Under Management improved by one notch from 7th to 6th
 position as on 31.03.2008
 
 The total net assets under management stood at Rs. 26490 crore as on
 31.03.2008 as against Rsl7,016 crore as on 31.03.2007. The value of
 portfolio assets managed was Rs.5,003 crore as on 31.03.2008 as against
 Rs.1,372 crore as on 31.03.2007. SBIFMPL reported a net profit of
 Rs.70.37 crore after tax as on 31.03.2008 as against Rs.29.78 crore for
 the previous year.
 
 H.12 SBI Factors and Commercial Services Pvt. Ltd.  (SBIFACTORS)
 
 Asset level of the Company increased by 56% (from Rs.1,220 crore to
 Rs.1,908 crore).  It recorded a growth of 53% (year-on-year) in total
 income and ended the year with a PBT of Rs. 43.17 crore as against
 Rs.20.36 crore last year and PAT of Rs.28.38 crore, as against Rs.
 13.17 crore last year.
 
 H.13 Global Trade Finance Ltd (GTFL)
 
 State Bank of India acquired 91% stake in GTFL, by acquiring
 shareholdings held by EXIM Bank (40%), International Finance
 Corporation, Washington (12.50%), and FIM Bank (38.50%) in GTFL. Due to
 further infusion of capital, present shareholding of SBI in GTFL is
 92.03%.
 
 GTFL is one of the leading Factoring Companies in India and has the
 highest market share (85%) in Export & Import Factoring. The NBFC,
 which is into trade financing in the business-to-business (B2B)
 segment, has reported a 155% jump in its net profit to Rs.73.60 crores
 for the financial year ended March 31, 2008, as against Rs.28.90 crores
 in the corresponding period last year.
 
 NPA MANAGEMENT
 
 The position of NPA reduction as on 31.03.2008 is given in the table
 below:
 
 Table No : 11 Asset Quality
 
                                        (Amount in Rs. crore)
 
 Particulars                                         Amount
 
 1 Gross NPA                                     12,837.34
 2 Gross NPA Percentage                               3.04%
 3 Net NPA                                        7,424.34
 4 Net NPA Percentage                                 1.78%
 5 Cash Recovery in NPA                           1,732.15
 6 Upgradation to Standard Assets                 1,516.84
 7 Write Off                                      1,242.52
 8 Gross Reduction (3+4+5)                        4,491.51
 9 Recovery in written off account                  838.64
 
 1.1.2. Restructuring of impaired Standard Assets as well as viable non
 performing assets, both under CDR mechanism as well as under Banks own
 scheme, has been given top priority for arresting new additions and
 reducing the existing level of NPAs. The machinery for identification
 and monitoring of Special Mention Accounts as per the guidelines of RBI
 by making prompt review and taking quick corrective action has also
 been geared up for the purpose.
 
 CDR system has done well as a resolution option for stressed assets
 which are seen to have the potential for revival. Out of 165 companies
 brought under CDR from the entire Banking System, SBI has an exposure
 in 61% cases (i.e. in 101 companies with exposure of Rs. 7,649 crore).
 
 Outof these, 21% of CDR cases i.e. 22 companies carrying 29% exposure
 (Rs. 2196 crore) have been revived and have since exited CDR due to
 improved performance - a few of these being now high growth companies.
 23 other cases have been withdrawn from CDR system. Live cases under
 CDR as on 31.03.2008 number 56, amounting to Rs. 4,409 crore, of which,
 34 cases with Rs.3,408 crore (77%) exposure are classified as
 Standard.
 
 1.1.3.  Two Financial Assets involving principal outstanding of
 Rs.25.22 crore have been sold to other banks / ARCIL during the year.
 
 1.1.4. One asset with an exposure of Rs.9.00 crore has been purchased
 with which a beginning has been made in purchase of NPAs by the Bank.
 
 Our IT initiatives have played a major role in transforming the Bank
 into a highly responsive organization to meet the challenges of a
 globalised economy. The Bank is pursuing an aggressive IT policy as a
 strategic initiative to meet the growing competition for business,
 achieve efficiency in internal operations and meet customer
 expectations.  With this end in view, the reach of our IT initiatives
 was expanded to cover more banking touch points and overall business.
 
 J.1. Core Banking: Core Banking Solution (CBS) presently covers 9390
 domestic branches transacting more than 98% of the Banks domestic
 business. CBS offers anytime anywhere banking through Multicity Cheques
 and other products. Our 407 branches have been enabled for Core
 integrated Trade Finance solution. We have provided to our customers a
 full featured internet frontend eTradeSBT for their trade related
 transactions.
 
 J.2. Internet Banking: Internet Banking has been implemented at 9112
 domestic branches, and is used by retail banking as well as Corporate
 customers for enquiry, downloading account statements, e-mail, e-
 ticketing for Indian Airlines, e-tax, fee payment, e- pay (online
 utility bill payment), Bulk payments by corporates, funds transfer to
 customers of our Bank as well as of other banks through Visa Money
 Transfer, RTGS and NEFT. Our Corporate Internet Banking (CINB) enables
 our corporate customers to transact almost all of their banking
 transactions through internet. Through our fully featured CINB account
 Vistaar (Freedom), corporates can make transactions upto an amount of
 Rs 500 crore per transaction from their own offices. CINB customers can
 also submit online requests for issue of drafts. They can also make
 payments to EPFO, DGFT and OLTAS besides making payments to their
 suppliers and vendors.
 
 J.3. Foreign Offices Project: Finacle software for Treasury and Core
 Banking Solution has been implemented at 82 foreign offices in 32
 countries.  Our 70 foreign offices have been enabled in 17 countries to
 offer Internet Banking. INR remittance facility through Internet
 Banking has been provided to branches in 11 countries. This facility
 will be extended to all the foreign branches soon.  ATM facilities have
 also been provided in 7 of our foreign offices.
 
 J.4. ATMs: We have the largest ATM network in the country with 8460
 ATMs of State Bank Group installed throughout the length and breadth of
 the country. Our ATMs are enabled for various value added services like
 payment of utility bills, mobile top up, SBI card bill payment, SBI
 Life premium payment, donation to Trusts / Temples and funds transfer.
 Further, bilateral sharing of ATMs with thirteen banks has brought
 additional 10500 ATMs within the reach of our customers. We have plans
 to scale up our ATM network to 15000 by March 2009 and to 25000 by
 March 2010.
 
 J.5. Payment Systems Group: Through our Payment Systems Group (PSG), we
 have enabled 8817 branches for RTGS and 9425 branches for NEFT. We also
 introduced Instant Inward Rupee remittances from Foreign Offices (FOs)
 for direct credit to CBS accounts in any of the State Bank Group
 branches.  This facility has also been integrated with RTGS and NEFT
 enabling Foreign Offices to send Rupee remittances to any Bank in the
 country. On-line Rupee remittance facility to beneficiaries in Nepal
 from authorised CBS branches of SBI is another product introduced
 during the year. Other banks in the country can also effect Rupee
 remittances to Nepal through this facility by originating the
 transactions at their end and forwarding them through NEFT to the
 Payment Hub at PSG.
 
 J.6. Information Security: IT Policy and IS Security Policy have been
 implemented after being benchmarked against best global practices. The
 Banks Information Systems are regularly reviewed to ensure that these
 are adequately secure.
 
 J.7. Networking: State Bank Connect, the Wide Area Networking (WAN)
 project of the Bank, is capable of carrying data, voice and video in a
 secure way. All Applications requiring connectivity now ride on the
 State Bank Connect backbone. A total of 14625 branches / offices have
 so far been brought under State Bank Connect.
 
 Miscellaneous Operations
 
 K Risk Management & Internal controls
 
 L Business Intelligence
 
 M Customer Service & Community Services Banking
 
 
 
 RISK MANAGEMENT IN SBI
 
 K.1. Risk Management Structure
 
 - An independent Risk Governance structure in line with the
 international best practices has been put in place in the Bank. In view
 of the growing volume and complexity in business, risk management has
 assumed critical importance.  Accordingly, the Bank has elevated the
 risk function to Board level by appointing the Managing Director as
 Chief Risk Officer to ensure this crucial function gets the importance
 it deserves.
 
 - The Bank has Board approved policies and procedures in place to
 measure, manage, mitigate various risks such as Credit, Market,
 Operational, Liquidity, and Interest Rate Risks across all its
 portfolios.
 
 - The Risk Management Committee of the Board oversees the policy and
 strategy for risk management. In addition, various Risk Committees,
 namely the Credit Risk Management, Asset Liability, Market Risk
 Management and Operational Risk Management Committees are in place to
 monitor risks in their respective areas on an ongoing basis.
 
 K.2. Migration to Basel II
 
 - The Bank, as per RBI Guidelines, has migrated to Basel II as on 31st
 March 2008 with the Standardized Approach for Credit Risk and Basic
 Indicator Approach for Operational Risk, having already implemented
 Standardized Duration Method for Market Risk with effect from
 31.03.2006. Simultaneously, processes have been set in train for
 fine-tuning Systems & Procedures, Information Technology capabilities
 and Risk Governance Structure to meet the requirements of the Advanced
 Approaches.
 
 K.3. Credit Risk Management
 
 - Credit Risk Management processes encompass identification,
 assessment, measurement, monitoring and control of the credit
 exposures.
 
 - The Bank has multiple Credit Risk Assessment models in place covering
 Manufacturing, Trade, Non-Banking Financial Corporations, Banks and
 Primary Dealers. The Credit Risk Models developed for Manufacturing and
 Trading sectors have been refined to conform to the requirements under
 Advanced Internal Based Approach of Basel II. The other models are also
 being reviewed.
 
 - The Bank conducts Industry studies to assess the Risk prevalent in
 each industry and also gives guidelines to operating functionaries in
 lending to these industries. Industry wise exposure limits are fixed
 and monitored regularly.
 
 - The Bank manages its portfolio of loan assets with a view to limiting
 concentrations in terms of risk quality, geography, industry, maturity
 and large exposure.
 
 K.4. Market Risk Management
 
 - Market risk is the risk that the value of the on & off balance
 sheet positions of the Bank will be adversely affected by movements in
 market variables viz: interest rates, exchange rates, equity and
 commodity prices.
 
 - Market Risk Management is governed by Board approved Policies for
 Investment and Trading in Bonds, Equities and Foreign Exchange. The
 identification, measurement, monitoring and reporting of Market Risk is
 done by the Market Risk Management Department which is a part of the
 independent Risk Governance Structure of the Bank.
 
 - Exposure, Stop loss and Duration limits have been prescribed. These
 limits along with other management action triggers, are tracked daily
 and necessary action initiated as required to control and manage Market
 Risk.
 
 - In addition, Value at Risk (VaR) is generated on a daily basis for
 the purpose of close monitoring. Back testing of VaR numbers is also
 carried out to validate these measurements. The portfolio is also
 subjected to Stress testing under various scenarios so that a proper
 understanding of the potential losses under extreme price movements is
 always kept in view.
 
 K.5. Operational Risk Management
 
 - Operational risk is the risk of losses resulting from inadequate or
 failed internal processes, people and systems or from external events.
 Operational risk includes legal and regulatory risk but excludes
 strategic and reputational risks.
 
 - The Bank manages Operational risks by putting in place and
 maintaining a comprehensive system of internal controls and policies.
 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. The policy applies to all business and functional areas within
 the Bank, and is supplemented by operational systems, procedures and
 guidelines which are periodically updated.
 
 - All key processes, risks and controls are documented and periodic
 assessments of risks and controls are carried out. The Bank has
 initiated steps for creation of a loss database with a view to graduate
 to Advanced Measurement Approaches under the Basel II Guidelines.
 
 - The objective of the Banks Operational Risk Management is 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.
 
 K.6. Asset Liability Management
 
 The Asset Liability Management (ALCO) of the Bank is engaged in
 evolving appropriate systems and procedures for ongoing identification
 and analysis of Market Risk which comprises mainly the Liquidity Risk
 Management and Interest Rate Risk Management.  It also conducts a
 detailed Behavioural Analysis of the components of Assets & Liabilities
 besides Balance Sheet simulation, on an on-going basis.
 
 The Market Related Funds Transfer Pricing (MRFTP), a scientific
 internal funds transfer pricing, evolved a a supplement to Assets
 Liability Management (ALM) has been rolled out to all branches under
 National Banking Group (NBG) from 1st April 2007, thus covering all
 branches of the Bank under the revised transfer pricing from 1st April
 2007. The revised transfer pricing helps in ascertaining the true
 profitability of branches by comparing the product prices with the
 market rates.
 
 K.7. Country Risk & Bank Exposure
 
 Prudent exposure risk management is being ensured by setting up
 appropriate bank exposure limits - product-wise, on a large number of
 Foreign Banks.  Substantial counterparty bank limits for handling
 letters of credit, bank guarantees, forex and money market activities
 are in place. Limits are also set up for Investment/ Lines of Credit
 related exposures on acceptable banks, in order to clear bankable
 propositions.
 
 The Country Risk Management Policy, in line with RBI guidelines for
 setting up country exposure limits, is in place, and the overall
 country risk for the Bank as a whole is monitored on a regular basis.
 
 K.8. Internal Controls
 
 K.8.1 The Bank has an in-built internal control system with
 well-defined responsibilities at each level. The Inspection &
 Management Audit Department of the Bank carries out 3 streams of audit,
 viz. Inspection and Audit, Credit Audit and Management Audit, covering
 different facets of the Banks activities.
 
 K.8.1.1 Inspection and Audit
 
 Risk Focused Internal Audit (RFIA), an adjunct to risk based
 supervision, as per RBI directives, was introduced in the Banks audit
 system on 01.04.2003.  All domestic Branches have been segregated into
 3 groups on the basis of business profile and risk exposures, and are
 being subjected to RFIA.
 
 K.8.1.2 Credit Audit
 
 Credit Audit aims at achieving continuous improvement in the quality of
 the Commercial Credit portfolio with exposures of Rs.5 crore and above.
 Duly aligned with Risk Focused Internal Audit, it examines the
 probability of default, identifies risks and suggests risk mitigation
 measures.
 
 K.8.1.3 Management Audit
 
 Management audit has been reoriented to focus on the effectiveness of
 risk management in processes and procedures. Management Audit of six
 Circles was taken up and completed during the current year.
 
 K.9. Vigilance
 
 Vigilance Department of the Bank oversees 3 primary aspects of
 vigilance: Preventive, Detective and Punitive. This is achieved through
 various means, i.e through linkages with the training system, customer
 education, Inspection & Audit Department, as well as suitable incentive
 schemes.
 
 L.  BUSINESS INTELLIGENCE
 
 MIS in the Bank is being constantly assessed, upgraded and fine tuned
 to cater to the growing information requirements of various user
 departments and operational units. A Data Warehousing Project conceived
 as a single source for all data required for support in decision
 making, analysis, forecast and reporting is under progress.
 
 M.1 Customer Service:
 
 The Bank strongly believes that customer service will be the most
 important factor in maintaining and improving its leadership in Indias
 Banking Industry.  The Bank took several initiatives during the year to
 enhance awareness among staff on the importance of good customer
 service in enhancing market share and business growth. The training
 programmes for staff were revamped to focus on marketing, attitudinal
 changes, business strategies and goals.  All the staff of the Bank were
 exposed to a training programme called Parivartan (Transformation).
 The Parivartan programme has been successful in bringing about
 attitudinal changes in employees at most of the branches.
 
 Open customer meets were conducted regularly at all important centres.
 The Banks customers, staff and senior Officials freely interacted at
 these meets on issues relating to customer grievances and service.
 
 The Banks toll free Helpline number (1800 112 211) offers
 comprehensive product information to retail customers apart from being
 available 24x7 for enqiries and grievances relating to alternate
 channels. Besides, the Bank has dedicated helpline numbers available at
 all its 14 Local Head Offices for grievance redressal. A comprehensive
 analysis Of customer grievances is done every quarter to identify
 common systemic issues that need rectification.
 
 M.2 Community Services Banking
 
 Apart from the normal banking operations, the Bank, as a responsible
 and responsive corporate citizen, seeks to reinvest part of its profit
 in various community welfare projects to improve the quality of life of
 the poor, neglected, weaker and downtrodden sections of society.
 
 In the financial year 2007-08, the Bank made donations aggregating Rs.
 8.11 crore to various Relief Funds and also to NGOs / Trusts /
 Societies for their projects with social orientation. In recognition of
 its contribution to Rural Community Development, the Bank was awarded
 the prestigious Readers Digest Pegasus Corporate Social
 Responsibilities Award 2007. Infact, it was the only Bank to have
 received this recognition.
 
 Under a new scheme named Adoption of the Girl Child over 8,300 poor
 girl children have been adopted by various branches throughout the
 country to meet their personal and educational expenses. This is not
 merely a financial assistance scheme but offers emotional and
 psychological support to the adopted girls due to the active
 involvement and care of the SBI Ladies Clubs.
 
 From the Research and Development Fund, the Bank has so far extended
 Rs.6.61 crore as research grants to 71 chairs / research projects at
 various Universities and Academic institutions. For the current year
 SBI has extended 100000 Sterling Pounds to London School of Economics
 for establishing an India Observatory and I.G.Patel Chair at their Asia
 Research Centre in participation with RBI.
 
 Miscellaneous
 
 N Corporate Communication & Change
 
 O Organisational Planning
 P Right to Information Act (RTI Act 2005)
 Q Human Resources Management
 
 R Business Process re-engineering
 
 S Official Language
 
 N. CORPORATE .COMMUNICATION & CHANGE
 
 During the year, the first Mass Internal Communication Programme named
 Parivartan was rolled out across the Bank. Over 3300 inclusive Two
 Day workshops were conducted by over 360 specially trained Trainers in
 a span of 100 days covering 1,30,000 employees. Never in the history of
 the bank had so many been trained in so short a time. The workshops
 caught the imagination of all employees and unleashed a new positive
 energy.
 
 A professional Study conducted by Xavier Institute of Management,
 Bhubaneswar, found that Parivartan had brought about a perceptible
 positive change in each of the 25 identified Customer Service
 parameters.
 
 As a part of the Transformation process, special brain storming
 Conclaves were held for the Top Management of the Bank where various
 Transformational Initiatives were identified and discussed with fixed
 time lines, for each Business and Group Head in the Bank. Many of these
 initiatives were completed during the year and many are being closely
 followed up for implementation at gras6 root level.
 
 O ORGANISATIONAL PLANNING - CHANGES IN SENIOR POSITIONS IN THE HANK
 
 New Senior positions were created during the year as part of new
 initiatives for complying with RBI guidelines relating to Risk
 Management, implementation of Basel-II accord, catering to the needs of
 large corporate customers, to drive business growth in non-farm sector
 in Rural & Semi Urban Centres and for targeting Private Equity, Realty
 and Venture Capital Fund Business.
 
 The following new positions were created during the year:
 
 1.  Managing Director & Chief Credit and Risk Officer,
 
 2.  Deputy Managing Director & GE (Wholesale Banking Group),
 
 3.  Deputy Managing Director & GE (Mid Corporate Group),
 
 4.  Deputy Managing Director & GE (Subsidiaries Business Group),
 
 5.  Deputy Managing Director & GE (Global Markets),
 
 6.  Chief General Manager (Chief Information Officer - Global IT),
 
 7.  .Chief General Manager (New Business Private
      Equity, Realty & Venture Funds),
 
 8.  Chief General Manager (Rural Business - Non-farm),
 
 9 Chief General Manager (CPPD),
 
 10.  General Manager (New Business - Pension Funds & General
 Insurance),
 
 11.  General Manager (New business -Wealth Management & Private
 Banking),
 
 12.  Deputy General Manager (Alternate Channels),
 
 13.  Deputy General Manager (Group Risk Management Department)
 
 P. RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005)
 
 Structure has been put in place for handling all matters relating to
 RTI Act 2005. All Branch Heads (except CAG), Assistant General Manager
 (COO) at CAG branches, all Heads of OAD at OLROs/RBOs/ ZOs/LHOs and
 Assistant General Manager (RTI) at Corporate Centre have been
 designated as Assistant Public Information Officers (ACPIOs). General
 Managers of Networks at Local Head Offices, Deputy General Managers &
 Branch Heads of Corporate Account Group, General Manager of Mid
 Corporate- Region, General Manager of Stressed Assets Management Group
 (SAMG) and General Manager (OL & CS) at Corporate Centres have been
 designated as Central Public Information Officers (CPIOs). The Chief
 General Managers of LHOs, Corporate Account Group, Mid Corporate Group,
 Stressed Assets Management Group have been designated as Appellate
 Authority under the Act in their respective area of control and Chief
 General Manager (Banking Operations) for Corporate Centres and its
 establishments. An exclusive RTI Department, has been created at
 Corporate Centre to handle and co- ordinate various issues under the
 Act. For the convenience of the public, the Bank has created an RTI
 link in its website http://sbi.co.in and assigned an e-mail address
 riacell@sbi.co.in.
 
 
 Q.1 Learning & Development
 
 Bank has taken up several key initiatives to motivate and retain its
 manpower.
 
 In order to channelize the energy created by the Parivartan campaign,
 the Bank has launched a landmark exercise for creation of the new
 Vision Mission & Values statement which will be in place shortly.
 
 Young officers are being encouraged to takeup management education by
 way of sponsorship tie- up with the S. P. Jain Institute of Management.
 50 officers have been enrolled in the programme on a trial basis.
 
 Bank is strong in the areas of training & development through 4 apex
 level training colleges and 45 learning centres across the country,
 e-learning project has been launched to enable any where, anytime
 learning.
 
 Q.2. HRMS
 
 For leveraging technology in employee management area, the Bank has
 started automation of its HR processes through SAP-ERP-HRMS software.
 Once fully implemented, it will not only create a central repository of
 all employees data but also will make available a variety of services,
 like online request submission and viewing of individual data etc. to
 all the employees across the State Bank group on an online real time
 basis. HRMS will bring efficiency in HR operations and help the
 Management in making employee related decisions faster.  Pensioners of
 SBI, IBI and Associate Banks will also form a part of this initiative
 and their pension will be processed through HRMS.
 
 Q.3. Personnel Management
 
 The Bank has launched Performance Linked Incentive Scheme for the
 Branch Managers/AGMs(Region)/ DGMs(Module) and Team Incentive Scheme
 for the staff members of the Branch. The incentive scheme was launched
 with the aim of enthusing and motivating the staff members of the
 Branch so that the bank is placed in a position to face the competition
 unleashed due to liberalization of economy and maintain its lead over
 others. The scheme has been successful in enthusing the staff and
 garnering business for the Bank.
 
 Q.4. Employees Share Purchase Scheme (SBI ESPS-2008)
 
 The Bank also launched Employees Share Purchase Scheme alongwith the
 Rights issue with the objective of providing incentive to Eligible
 Employees, to stimulate their efforts towards the continued success of
 the Bank and to provide a means to attract, reward and retain talent in
 the Bank, to reward eligible employees as also to encourage equity
 ownership by them.
 
 The price was fixed at Rs.1590/- (the face value of 1 share is Rs.10/-)
 per equity share. The Scheme opened on 28.03.2008 and closed on
 30.04.2008.
 
 Q.5. Industrial Relations
 
 1.  A number of HR initiatives such a payment of performance linked
 incentives to staff, rationalisation of promotion policies and
 improvement in various staff loan schemes were taken up during the
 year. Such initiatives have helped in increasing the motivation level
 of staff significantly.
 
 2.  To meet requirement of staff for an ongoing branch expansion
 programme, separate recruitment exercises were undertaken to recruit
 clerical staff for metro/urban centres, rural/semi- urban centres and
 also for marketing. This also helped in reducing the age profile of
 staff and posting of younger staff at the front line.
 
 3.  The process of consultation and discussion with both the staff and
 officers federations continued during the year.
 
 4.  The industrial relations climate of the Bank remained cordial
 during the year.
 
 Q.6. Staff Strength
 
 The Bank had a total strength of 1,79,205 on the 31st March, 2008. Of
 this, 32.23% are officers, 42.87% clerical staff and the remaining
 24.90% were sub-staff.
 
 Q.7. 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 total number of persons with disabilities who were
 employed as on 31.03.2008 was as follows:
 
 Table : 12 Number of Persons with disabilities
 
 Category                    Total                No.of persons
                             strength         with Disabilities
 
 Officers                       57765                 279
 Clerical                       76818                 584
 Sub-staff                      44622                 204
 Total                         179205                1067
 
 Q.8. Representation of Scheduled Castes and Scheduled Tribes
 
 As on the 31st March, 2008, 34802 (19.42%) of the
 Banks total staff strength, belonged to Scheduled Caste
 and 11460 (6.30%) belonged to Scheduled Tribes.
 
 In order to effectively redress the grievances of the SC/ST employees,
 Liaison Officers have been designated at all administrative offices of
 the Bank.  Senior officials of the Bank hold regular meetings at
 periodic intervals with the representatives of SC/ ST Welfare
 Federation and SC/ST Welfare Association at Corporate Centre, LHOs and
 Zonal Offices. The Bank conducts workshops on reservation policy for
 SCs/STs/OBCs. So also, pre- recruitment and pre-promotion training
 programmes are conducted by the Bank to enable SC/ST candidates to
 achieve the prescribed standards to effectively compete with other
 candidates.
 
 The BPR Project aspires to transform the Bank into a world class
 financial institution by proactively reaching out to new customers,
 building strong and lasting relationships with existing customers and
 providing best quality service to all customers across multiple
 channels. Accordingly, a number of new initiatives have been designed,
 piloted and rolled out across the Bank, which resulted in the following
 benefits:
 
 - Centralised Processing Centres for Retail loans, Small & Medium
 enterprise loans, and Trade
 
 - Finance were set up and later most of them were converted into end
 state models, wherein the end to end processes have been taken over.
 
 • Positioning Relationship Managers at strategic centres to extend
 personalized service to mass affluent and HNI (high networth
 individuals).
 
 - Cross-selling of various products
 
 - Dedicated Sales Teams like Home Loans Sales Team and Multi Product
 Sales Team to target niche markets.
 
 - Assured Standard Turn Around Time for various sanction processes
 
 - Improvement in quality of Assets and Documentation.
 
 - Establishment of Clearing CPCs to Centralise clearing related
 activities and free up branches to focus on customer services
 
 Accurate and timely payment of pensions to pensioners through
 Centralised Pension Processing Centres
 
 - Creation of Document Archival Centre to free up valuable space in
 branches
 
 - Contact Centre with toll-free number for providing information on
 products to the customers on 24X7 basis
 
 - Delayering the organizational structure for increasing speed and
 efficiency and to improve customer sevice
 
 During the year the coverage of the above BPR initiatives has been
 considerably enlarged by opening
 
 - 113 Retail Assets Central Processing Centres and 113 Small & Medium
 Enterprises City Credit Centres both covering around 2400 branches
 each.
 
 - 100 Stressed Assets Resolution Centres covering 2240 branches.
 
 - 18 Trade Finance Central Processing Centres covering 966 branches.
 
 - 14 Centralised Pension Processing Centres (CPPC) covering 5814
 branches.
 
 - 3 7 Centralised Clearing Processing Centres (CCPC) covering 938
 branches.
 
 - 4 Liability Central Processing Centres (LCPC) covering 3120 branches.
 
 - 97 Currency Administration Cells (CAC) covering 1877 branches and
 1221 off-site-ATMs.
 
 - 2112 Branches have also been redesigned across the country to provide
 more convenience to customers.
 
 - Mid Corporate Loan Administration Units have been set up in 8 centres
 covering 68 branches to take care of post sanction activities.
 
 All these initiatives have helped the Bank in creating a new operating
 architecture capable of meeting global competition.
 
 S. OFFICIAL LANGUAGES
 
 During the year statutory requirements relating to the official
 language policy were complied with by the Bank. Several initiatives
 were taken to increase use of Hindi. Some of them are :
 
 SBI Gold International Debit Card (VISA) which was launched during the
 year is now being issued bilingual. This is first International debit
 card issued bilingual.
 
 Publicity/ Educational material are now being made in Hindi and
 regional languages.
 
 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 2008, 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.
 
 During the year, Shri T.S. Bhattacharya, Managing Director, on his
 attaining the age of superannuation, laid down office on 31.01.2008.
 Further, Shri S.K.  Bhatttacharyya was appointed as Managing Director
 with effect from 08.10.2007, in place of Shri. Yogesh Agarwal who
 resigned from the Board on 30.06.2007 on his appointment as Chairman
 and Managing Director of IDBI Bank Ltd. Prof. M.S. Swaminathan resigned
 from the Board on 11.04.2007, on his nomination to the Rajya Sabha.
 Shri Ajay G Piramal retired from the Board on 31.08.2007 on completion
 of his term. Shri Amar Pal, non-workmen Director on the Board, retired
 on attaining superannuation, as at the close of business on 31.03.2008.
 Further, Dr. Deva Nand Balodhi and Prof. Md. Salahuddin Ansari (both
 with effect from 09.07.2007) and Dr. (Mrs.) Vasantha Bharucha (with
 effect from 25.02.2008) were nominated to the Central Board under
 section 19(d) by the Government of India.  Shri Arun Singh, Shri Rajiv
 Pandey and Shri Piyush Goyal ceased to be members of the Board on
 completion of their term. Shri Arun Ramanathan, Secretary (Financial
 Services), was nominated to the Board with effect froml8.01.2008, in
 place of Shri Vinod Rai, who resigned on 06.01.2008, on his appointment
 as Comptroller and Auditor General of India.
 
 The Directors place on record their appreciation of the contributions
 made by Shri Vinod Rai, Shri. T.S.  Bhattacharya, Shri Yogesh Agarwal,
 Prof. M.S.  Swaminathan, Shri Ajay G Piramal, Shri Amar Pal, Shri Arun
 Singh, Shri Rajiv Pandey and Shri Piyush Goyal to the deliberations of
 the Board.
 
 The Directors 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
 
                                O.P. Bhatt
 Date : 2nd May, 2008           Chairman