COMMERCIAL BANKS –ASSET MANAGEMENT, LOANS & ADVANCES AND INVESTMENTS

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• A commercial bank is a bank is a financial institution whose primary activity is to

act as a payment agent for customers and to borrow and lend money

• A Commercial bank raises funds:

• by collecting deposits from businesses and consumers

• via checkable deposits, savings deposits, and time (or term) deposits

• It makes loans to businesses and consumers available.

• It also buys corporate bonds and government bonds

• Its primary liabilities are deposits

• Its primary assets are loans and bonds

Commercial Banks

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Commercial Banks In India

PUBLIC SECTOR

• State Bank of India

• Allahabad Bank

• Punjab National Bank

• Bank of Baroda

• Dena Bank

PRIVATE SECTOR

• HDFC Bank • ICICI Bank• ING Vysya

Bank• Axis Bank• Induslnd Bank

FOREIGN SECTOR

• ABN AMRO• Deutsche Bank• HSBC Bank• Citibank• Standard

Chartered Bank

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Case Study on

State Bank Of India (SBI)

From Banks Point of View &

Investor Point Of View

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IntroductionState Bank Of India

• In existence for 200 years, largest commercial bank• Full range of services, Corporate, Commercial and Retail• OP Bhatt ,current Chairman• Large ATM Network across the country

Share Holding In SBI

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ORGANISATION STRUCTURE

•Investment Banking •Funds Management•Primary Dealership•Factoring•Credit Cards•Insurance

State Bank of IndiaCorporate Centre

Corporate BankingGroup

International BankingGroup

Development &Personal Banking

Network

CommercialNetwork

Mid-sizedcorporates, large SSIs

& Agri.

SSIs/Agriculture

/Small business

Government Business

Personal customers

High net-worth

Individuals

Corporate Accounts

Group

Dedicated focus on Top

Corporates

Project Finance SBU

Focus on Infrastructre, Telecom, Transport & Hydrocarbon financing

LeasingSBU

Focus on Infrastructre & Capital intensive projects

National BankingGroup

Associates &Subsidiaries

7 Associate Banks

100% owned banking

subsidiary

Non-Banking Subsidiaries &

Affiliates

Local Head Offices

Org

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State Bank of IndiaC

orpo

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Gov

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Cor

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rshi

p

Inte

rnal

Con

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s

Pro

duct

Inno

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Hum

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Customer Focused Organisation Structure

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SBI Branches and ATM Network

8S

erv

ice

Qu

ali

ty

Rural

Urban

Lo

wH

igh

Regional

Citibank

ABN Amro

State Bank of India

ICICI Bank

HDFC

Indus Bank

ING Vysya

Karur Vysya

PNB

Andhra Bank

Canara Bank

Co-operative Banks

Rural Banks

Bank of Baroda

Bank of India

Stan C

HSBC

SBI’s Market & Positioning

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From Bank’s Point Of View

SBI’s Asset Management,

Investments ,Loans & Advances

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Components of a Bank Balance Sheet

Liabilities Assets1. Capital2. Reserve & Surplus3. Deposits4. Borrowings5. Other Liabilities

1. Cash & Balances with RBI

2. Bal. With Banks & Money at Call and Short Notices

3. Investments4. Advances5. Fixed Assets6. Other Assets

• We would be discussing on Assets

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Components of AssetsCash & Bank Balances with RBI

I. Cash in hand (including foreign currency notes)

II. Balances with Reserve Bank of India In Current Accounts In Other Accounts

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BALANCES WITH BANKS AND MONEY AT CALL & SHORT NOTICE

I. In Indiai) Balances with Banks

a) In Current Accounts b) In Other Deposit Accounts

ii) Money at Call and Short Notice a) With Banks b) With Other Institutions

II. Outside India a) In Current Accounts b) In Other Deposit Accounts c) Money at Call & Short Notice

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InvestmentsI. Investments in India in : 1) Government Securities (REC Bond)2) Other approved Securities3) Shares4) Debentures and Bonds5) Subsidiaries and Sponsored Institutions6) Others (UTI Shares , Commercial Papers, COD & Mutual Fund Units etc.)

II. Investments outside India :

  Subsidiaries and/or Associates abroad

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Advances

A. i) Bills Purchased and Discounted

ii) Cash Credits, Overdrafts & Loans repayable on demand

iii) Term Loans

B. Particulars of Advances :

i) Secured by tangible assets (including advances against Book Debts)

ii) Covered by Bank/ Government Guarantees

iii) Unsecured

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Fixed Asset I. Premises

II. Other Fixed Assets (Including furniture and fixtures)

Other Assets I. Interest accrued

II. Tax paid in advance/tax deducted at source (Net of Provisions)

III. Stationery and Stamps

IV. Non-banking assets acquired in satisfaction of claims

V. Deferred Tax Asset (Net)

VI. Others

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SBI’s Cash & Balances With RBI

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SBI’s Balances With Banks & Money AtCall & Short Notice

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SBI’s - Investments

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Outside India

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SBI’s - Advances

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SBI’s - Diversified Advance Book

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SBI’s - Fixed Assets

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SBI’s - Other Assets

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Snapshot of SBI’s Total Assets

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From Customers point of view..SBI & The General Public

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What are Investments ?

• Using savings to get returns in future is known as Investment

• Where to invest ???

• Physical Assets• Real Estate ,Gold/ Jewellery

• Financial Assets• Savings Bank Account• Fixed Deposits • Post office(Kisan vikas)• Government Bonds• Provident Funds

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SBI Investment

s

Stock

SBI CAP

Mutual Fund

SBI Mutual Fund

Fixed Deposits

SBI Bank

SBI Investment Options

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SBI InvestmentsSBI CAPITAL Market

Limited• Primary Market• Instruments issued for first time• Used by

• Government/ Corporate /PSU’s• IPO

• Initial Public Offering

• Secondary Market• Trading of already issued (securities)

• Stocks • Bonds

• Stock Exchange

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SBI Mutual Funds• A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities

• Types of mutual fund schemes• Open - ended Fund/ Scheme• Close - ended Fund/ Scheme

• Growth scheme

• Income scheme

• Balanced scheme

• Tax Fund Scheme

• Money Market Fund

• Indexing Fund

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• Net Asset Value (NAV)

•Load or no-load charges

• Sales or repurchase/redemption price

• Systematic Investment Plan (SIP)

• Account Statement (CAMS)

• The investors redress their complaints(SEBI)

• Income earned from mutual fund is taxable under Income tax

Important Terms

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What are Loans?

• An amount of money granted by financial institutions

• To individuals/enterprises to carry out daily activities which are prolonged in nature

• Against a security and assurance of repayment with interest

• SBI Offers various Loans for the customers.

SBI Loans

Home Loans

Educational Loans

Vehicle Loans

Personal Loans

Agricultural Loans

Project Financing

Documents Required For Loans

• Completed application form

• Passport size photograph

• Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License

• Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property tax

receipt/ Passport/ Voters ID

• Proof of business address in respect of businessmen/ industrialists

• Sale Deed, Agreement of Sale, Letter of Allotment, Non encumbrance

certificate, Land/ Building Tax paid receipt etc. (as applicable and subject to

satisfaction report from our empanelled lawyer)

• Copy of approved plan and approval from the Local Body

• Statement of Bank Account/ Pass Book for last 6 months

Home Loans

• Home Purchase Loans

• Home Improvement Loans

• Home Construction Loans

• Home Extension Loans

• Home Conversion Loans

• Land Purchase Loans

• Bridge Loans

Interest rates

• Upto 30 lakhs: 8% (for 1 year), beyond 1 year: 9%• Beyond 30 lakhs: 8% (for 1 year), beyond 1 year: 9.25%• NO PROCESSING FEE TILL 30th Sept. 2009

Loans for SME

• Loans issued starting Rs.25000 to 5 Crore under various schemes• No third party guarantee required• Margin between 25% to 35%• Repayment 3 to 5 years• Interest Rates Minimum of 8.5% (depending upon scheme)

Points for considering

• How badly do you need the money?• Will it be to start up or expand your business? • Or is it just to ensure things go smoothly?• Are you in great risk if you don't receive the loan?• Will your company fall without this boost in funding? • What state is your business currently in? • Growing, stable, falling? • Businesses that are not fairing as well will not have as good funding terms. • How capable is your management? • Without a key focus on what you are going to do with the money it may not be

easy to get a loan.• Lenders are very keen on knowing what is going to be done with the money,

and how you plan on repaying it.

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References

• www.statebankofindia.com

• www.wikipedia.com

• www.sbicaps.com

Thank you..!!!

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