State Bank of India

My conflicted heart

The struggle for the soul of India’s biggest bank

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Readers' comments



baalkee in reply to Grimreaper

This person is an imposter. Why is he hiding behind a pseudonym/
Computerisation in SBI is par excellence. One has to visit its online portal for sheer convenience of transacting business.. More than 15 crore account holders are not fools to stay with the bank if the customer service were so bad. This man/woman (gentle i would not call him ) is there just to malign the Bank without knowing the changes happening in the last 10-15 years. I strongly condemn his efforts to malign SBI.

Pratheesh Vb

1) The article is highly biased, stereotypical and exaggerated to big extend. It also reflects fake sincerity.
2) Moody’s downgrading SBI failed to impact the investor as well as the customers of this bank. People are very much aware of the fates of much hailed private/American banks, which were having greater ratings. Most of them do not exist now. Rating agencies are now being treated as funny guys.
3) This article is criticising the Govt hold in SBI. And reflects that Indian Public sector banks are poor things. Is if forgotten what happened to the non-state owned banks across the world. USA practically nationalised the “great” private sector banks in their country who failed miserably – even they fit in exactly to the idea- “how a bank should be”- conveyed by this article.
4) In fact, private banks are entering into corrupt practices and using political influence to garner business. For example: The funds for the Kochi Metro project was deposited in a new generation private bank (and not in Kochi branch), of which an employee of the branch happened to be a relative of Chief Minister of Kerala. There are many examples to site in this regard.
5) Profit making is not alone the criteria of a bank. What will you do with all these profits without being committed to the society??? The lack of social responsibility is a disease in financial sector and that attitude itself is basically wrong. This article propagates the idea of fully commercial without a trace of social commitment.
6) Economist has been successful in doubting India and china, hiding the turmoil of west and Europe, which still continues suicidal practices in financial sector. And that is giving a very bad signal.
7) We still have poor people in India and as a country we have to address that issue. The messages in this article are creepy. The worry expressed by the “rival bank” is immodest and unbecoming. The truth is they have lost a lot of business to SBI and the grudge is expressed in foulmouth.


The State Bank of India (SBI) is like a miniature India. It truly represents the quintessential diversity, strengths and weaknesses of India. Wherever you go in India, you will find an SBI branch within easy reach. If you are meek and can put up with a complete absence of a welcoming smile anywhere, you can get your business done. If you are aware of your rights as a customer, you can yell and get your business done. But your business will be done anyway.
Due its Scottish descent, till about fifty years ago, SBI was frugal, conservative in lending and scrupulous in maintaining high accounting standards and continuously increasing profits. The Bank has never incurred a loss in its entire history of over 200 years.
In the fifties the Reserve Bank of India acquired a controlling interest in SBI. In the early seventies the office of the Chairman of the Bank was brought under the administrative control of the Central Government through legislation amending the SBI Act 1959. Till then his appointment was at the pleasure of the President of India and he enjoyed full autonomy. After this SBI had more or less become an handmaid of the State.
In spite of the interference in the Bank's affairs by politicians of all hues, especially the ruling party members, in loans and appointments and promotions at the higher levels, the Bank had done a reasonably good job in the spread of Banking throughout the country and in functioning as the numero uno in financial intermediation.
Moody's downgrading of SBI last year was a one off incident and knowledgeable people do not attach much importance to it because the underlying strengths of SBI are truly off-balance sheet. It is perfectly understandable that rating agencies want to regain their lost credibility post the GFM of 2008. (Great Financial Meltdown)
SBI's manpower is its greatest asset. Its recruitment system is one of the best in the country.
SBI's fixed assets (it had acquired prime locations for operations all over the country) are phenomenal. For a going concern it doesn't really affect the bottom line obviously, but it gives an idea of the Bank's strength.
Forbes listed SBI as the 29th Most Reputed Company among six hundred such companies world over in 2009 as given out by the Reputation Institute's Annual Survey. (
The 'conflicted heart' situation is something the top guys in every big enterprise have to face anywhere. If it is a State controlled entity, like in China and to a lesser degree in India, the bureaucrats will meddle, politicians will raid. If it is laissez faire capitalism, if there is such a thing, electoral politics will dictate campaign funding of all contestants to differing degrees. Commercial professionalism and political considerations will have to be balanced wherever large amounts of money pass through. So it is with SBI.
For the first time in Independent India's history, a retired soldier form the Army, Anna Hazare, brought about an economic and social revolution in his village Malegaon in Maharashtra, the largest Western State of India. This village is now free of poverty, alcohol, gambling, and corruption due to his untiring and selfless war against them. He stole the limelight in 2011 by going on a fast unto death in India's capital forcing the Government to give in to his demand for an effective anti-graft legislation. This is in the pipeline. It can be asserted now that across the length and breadth of India the masses have awakened and there is a silent rage against corruption. The Prime Minister, though not a great speaker, is also a man of total integrity. It now looks as though India is cleaning its Aegean stables, considering that a Central Minister has been charged and arrested for graft, top corporate honchos kept him company behind bars and the top investigative wing of the Government, albeit under the unremitting scrutiny of the Supreme Court of India, is firing on all cylinders. More and more high octane shenanigans are being investigated than ever before. The credit surley goes to the Anna Hazare movement to a large degree and the Courts undoubtedly. This has never before happened in India. India can do with all the help it can get from the rest of the world in its rebuilding efforts. The poor country has been mercilessly ravaged and plundered beyond recognition.
When this process of rebuilding gathers momentum, the Chairman of SBI, along with all the top echelons of Public Sector Undertakings are likely to assert their autonomy and begin to exercise professionalism and give back to the people of India what is their due, which has been long denied to them : decent profits on public funds entrusted to them. Therein lies the 'struggle for the soul of India's biggest bank' as The Economist so evocatively puts it. It is not going to be an easy struggle, but it can be won.


"The trick for Mr Chaudhuri will be to maintain an outward appearance of modest evolution, but to push for behind-the-scenes change and keep the state at arm’s length. "

Nice try! But this point was settled a long time ago on July 20 1969 by a woman named Indira Gandhi! Two key events happened on that day: first moon landing and banks in India were NATIONALIZED!

So it aint gonna happen. SBI is a (quasi) government undertaking. Plus its books aint that bad. And SBI is one of the better run and better managed banks in India. There are far worse banks with much higher NPAs (Non Performing Assets) on their books. Even THEY seem to be doing.

And if you look at other industries, the picture is even bleaker. Oil PSUs (Public Sector Undertakings) and the national airlines are deeply in the red: it is not millions but BILLIONS of dollars in losses. And EVEN THEY seem to be operating fine. Compared to the West, in Asia generally, companies rarely die. And in India the involvement of the govt. pretty much SEALS THE FATE of even a terrible company. Of course there is a cost to somebody in all of this. Not hard to guess who that is!

India is a weird country. Things that SHOULD work DO NOT. And things that should have stopped working long time back STILL CONTINUE TO FUNCTION! Highly messed up.

Mr. Cave Man in reply to Grimreaper

I am sorry but when did you retire from SBI. I hope that was not in 90s . I have been a customer of top 5-6 banks in India since last 7 years . I find SBI's services to be most satisfying .Its ATMs are everywhere (even at the top of himalayas and in remote villages ) plus it gave me a credit card which has no annual charges(Yuva Card); online banking also works fine. Only problem was staff's attitude which has also improved in last few years . As for Other Private sector banks,they are nothing but a bunch of soft skilled looters (with HDFC leading the pack).

Paul Marks

The banks in the West did not fail because of some special "gene" they failed because of vast credit money expansion (backed every step of the way by governments - via such entities as the Bank of England and the Federal Reserve) - i.e. lending that is not from REAL SAVNGS.

The Economist magazine writes as if banks were honest money lenders - who take in savings from people and then invest them by lending them out to productive industry.

This is not what modern banking is about - most loans are now financed by credit-money expansion (for example the HUNDREDS OF BILLIONS now being created by the European Central Bank) and go to finance CONSUMPTION.

Either the consumption of private individuals (such as people buying houses they can afford) or the consumption of GOVERNMENTS. Via banks being lent money (money created, from NOTHING, by the Federal Reserve, Bank of England, European Central Bank, Bank of China) on the undertanding they will lend back this money to the govnement - to finance the Welfare States. Corporate welfare (the sweetheart. low interest rate, loans from Central Banks to commercial banks) going to finance general welfare statism.

The whole thing is a house of cards - a vast bubble which did not go away in 2008, for it continues right now.

The West is no longer based on honest savings and productive investment - it is based on credit-money expansion and consumption.

A vast confidence trick - masked in the "scientific" langauge of Keynesianism.

India is aleady making the first steps down this road - setting up unsustainable "public services" (such as giving people welfare payments to win their votes - a more serious form of corruption than any payments a private company might make).

The collapse of the West will become obvious soon (2013 is when it will start to become obvious).

India should reverse course away from creating a Welfare State and a credit bubble financial sytem - while there is still time.


"Will it evolve into a Western-style private bank (preferably without the kamikaze gene), a path that the previous management team favoured? "

What the heck is a "kamikaze gene"? Is it me or does that seem a tad "r^^*st"? It reminded me of a friend of mine who resides in Canada and has a BIG sticker in his car that says KAMIKAZE WARRIOR. Hope he doesn't get pulled over by an observant Canadian cop or worse yet by the CBP guys when he occasionally travels to the US :)

In any case the answer is NO. India is generally a pretty conservative country. So most often it's BAU (Business as Usual) unless there is a crisis that requires new steps and drastic actions. People in India call it the "chalta hai" (anything goes) attitude.

Mr. Cave Man in reply to Grimreaper

"the concept of a Profit and Loss Account is alien to 99% of the Institution." In other words, It is not greedy like others, Isn't that a virtue instead of vice? Banks are not merely profit making shops. They have the crucial job of extending credit to the masses at a reasonable rates. SBI does this job fine.
As for your 20 year stint at the bank , don't you think it took you a little too long to realise that you should have been in a private bank ripping people to make your divine profits instead of being part of a national bank actually serving the common man.


The asset quality is much poorer than the books reflect,the quality of management is very low and gets worse as it reaches the Board,the unions are all powerful and the staff levels bloated.Frankly speaking it is not a Bank but merely a government department,the concept of a Profit and Loss Account is alien to 99% of the Institution.It differs from other government departments only in one way,it is very much less corrupt and you can get basic banking services without greasing the counter clerk's palm.I should know,I joined the Bank as a Management Trainee and worked my way upto Senior Management during a 20 year stint and then quit when I realised that the place was beyond redemption.
The Institutions poor condition can be put down to simply one factor, meddling by the federal government's bureaucrats and politicians,who want it to be a government department with spending targets and not a Bank with a proper Profit and Loss Account.A move which would reflect the realistic position is simply to drop the word 'Bank ' from its name and call it 'The State of India'.

Public Dude

"Perhaps a quarter of loans made, some to farmers, are not profitable, but over time SBI’s deep national presence will prove a decisive advantage, Mr Chaudhuri says." Blame the Indian politicians for forcing banks to give loans to credit-unworthy farmers.

Regarding Air India, the sooner this blood-sucking monster goes bankrupt, the sooner other private airlines will give a sigh of relief. It goes on losing money, provides lousy service, can't raise ticket prices, the government comes to its rescue and the taxpayer carries the burden.


WhenI started with SBI in the early seventies,the SBI had 30% of all banking business in India.Today it has fallen to 20%.Infact the SBI is slowly losing market share.Comparing American Banks with SBI is misleading in asmuch as SBI is not a Bank.And as long as the Government stranglehold on the neck of SBI remains it will never be a Bank.
Does anyone realise that in customer service for the retail client/depositor that in the last 40 years there have been only 2 changes,Saving Passbooks are updated by a computer and access to a ATM.Thats it.The rest of the procedures for delivering services are more than 40 years old.One would think in a growing economy like India,which is full of challenging opportunities a market leader like SBI would have innovated more.I could go on and on about SBI,but to what avail.The Bank in its current 'AVATAR'is beyond redemption.


Whatever the flaws of SBI it has a critical role to play in Indias development and one that it has been performing really well. It must provide banking services to the poorest and in the remotest parts of the country where running a branch costs much more than the savings it generates. Private banks will not do this and having a bank account for savings and investment for everyone is critical for long term prosperity. SBI is duty bound to the people of India to provide these services and it has so .... kudos to the SBI.

dayal in reply to Premikan

Govt. of India is truly scared of bankers. Since independence, no banker has been appointed to the post of Governor of Reserve Bank of India (India's Central Bank). It is also evident from the act of amending the SBI Act and bringing the appointment of Chairman of SBI under the government's purview. With this amendment, Govt. of India has ensured that SBI will forever run as an Ox-Ford.

baalkee in reply to Cute Dog

Cute Dog, be a man and learn the realities of life. SBI POs take pride in calling themselves so. Are you the other name of grimreaper? Only a person who has not joined the bank as PO will use the term Management trainee.

If he served the bank for twenty years why is his knowledge so poor about the technological developments in the last 15 years in the bank. SBI's CBS software and online banking are one of the best anywhere in the world. It is serving more than 150 million account holders well. Let him be honest enough to give his details like name, when he joined the bank his PF number so that his claim can be authenticated. Such black sheep have only one goal-to attack people and organisations without knowing the true positon and themselves remain under a smoke screen. As for me, my name is Bal krishna Gupta, I joined the bank as PO in 1975 and retired recently.

Cute Dog in reply to baalkee

Most (almost all) banks had a management intake program known as "Probationary Officer" which could easily be termed as Management Trainee.
I guess you got to go a long way before making such claims.


In my comments of 20th inst. I had erroneously mentioned SBI as of
Scottish descent. It is actually of Irish descent.
A point of some gravitas made in the article is the possible evolution of SBI into a “Western-style private bank (preferably without the kamikaze gene)”. I think this needs some serious thinking for Banking as a whole in the non-Western economies. I am assuming that the Western economies have learnt their lessons post the meltdown. Strong regulatory measures are getting to put a leash on activities of Banks that precipitated the domino like fall of Banks in the West. Broadly these activities can be brought under the heads of (a) over-gearing or over-leveraging of capital (b) excessive speculative investments in credit derivatives of doubtful underlying worth, particularly in a 'bubble environment'.
The 'kamikaze' gene in Banks is the villain here. Over time Western Bankers slowly lost sight of the fundamental principles of sound banking and started sort of playing the market to improve bottom lines rather recklessly. SBI should not go down this path is what the Economist seems to convey. This is certainly sound thinking. Not only SBI, all Banks would do well to keep this on the front burner in their operational strategies. This will ensure that all players in the Banking, insurance and hedging universe slowly get to some discipline in risk management. Such a discipline will counterbalance the forces behind 'bubbles' in the economy which will get more and more global and destructive in scale, not less and less, in future.


there are probably 3 or 4 banks in the world with atleast $300B in assets growing both deposits and loan book in excess of 20% year after year..SBI is one of them. SBI is India banking and India banking is SBI....they are the elephant in the room


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