Bank of Baroda - Bank Profile

Introduction: Bank of Baroda aka BOB is an Indian multinational, Public Sector banking and financial services company. It is the second largest bank in India after State Bank of India. It provide wide range of Banking Solutions and Financial Services to its corporate and retail customers. Government holds highest shares in BOB.

Branches: 5400 approx.

International Branches (foreign offices): 104 approx. over 24 countries

ATMs: 8000 plus

Rank: Second Largest bank in India.

History: Maharaja Sayajirao Gaekwad III set up the Bank of Baroda (BOB) at Baroda, now Vadodara in Gujarat, in 1908. Two years later, BOB established its first branch in Ahmedabad. In 1958 BOB acquired Hind Bank, which became BOB's first domestic acquisition. In 1961, BOB merged in New Citizen Bank of India. This merger helped it increase its branch network in Maharashtra. In 1963, BOB acquired Surat Banking Corporation in Surat, Gujarat. The next year BOB acquired two banks: Umbergaon People’s Bank in southern Gujarat and Tamil Nadu Central Bank in Tamil Nadu state. In 1988, BOB acquired Traders Bank, which had a network of 34 branches in Delhi. Bank of Baroda also get expansion in all major countries during expansion period in India.

Non-banking subsidiaries:
  •     BOB Capital Markets
  •     Bobcards Ltd
  •     IndiaFirst Life Insurance Company
Shareholding: Government of India holds 57% shares and other Financial companies & Insurance companies holds 34% Shares. The equity shares of BOB are listed on the Bombay Stock Exchange BSE and National Stock Exchange of India NSE.

Employees: More than 50,000 

Important Recognition:
  • Bank of Baroda has won National Prize – First Rank in Innovative Training Practices for the year 2014
  • Bank of Baroda has won the Champion of Champions Award at the 54th annual ABCI Awards 2015.
  • Bank of Baroda has won 3 Awards at The IBA Banking Technology Awards 2014-2015.
  • Bank of Baroda awarded as Best PSU Bank at 5th Dalal Street Investment Journal
  • Bank of Baroda conferred winner of ASSOCHAM Social Banking Excellence
  • Bank of Baroda conferred Special Award for Best IT Team at IDRBT Banking
  • Technology Excellence Awards 2012-13
  • Bank of Baroda conferred Best Public Sector Bank Award
  • Bank of Baroda bags Forbes India Leadership Award
  • Bank of Baroda bags 4 prizes from R.B.I.
  • Bloomberg UTV Financial Leadership Awards – Best PSU Bank Award
  • NDTV Profit Business Leadership Awards 2011
  • Business World Best Bank 2011 Awards
  • Golden Peacock Award

State Bank of India - Bank Profile

Introduction: State Bank of India aka SBI is an Indian multinational, the largest bank of India, Public Sector banking and financial services company. It is a government-owned bank with have headquarters in Mumbai.

Branches: 17000 approx.

                 66% SBI Branches are in rural and Semi-urban areas

                 14 Regional Hubs 

                 57 Zonal Offices

International Braches (foreign offices): 190 approx. over 36 countries

ATMs: 53,000 plus


Rank: Largest bank in India. SBI is one of the Big Four banks of India, along with Bank of Baroda, Punjab National Bank and ICICI Bank.

History: There were 3 major presidency bank in India during 18th Century. 
  • Bank of Bengal
  • Bank of Madras
  • Bank of Bombay
All three Presidency banks were incorporated as joint stock companies and later in 1921, and the re-organised banking entity took as its name Imperial Bank of India. 

The Reserve Bank of India, which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 1 July 1955, the imperial Bank of India became the State Bank of India. Recently in 2008, the Government of India acquired the RBI's stake in SBI so as to remove any conflict of interest because the RBI is the country's banking regulatory authority.

Due to Government SBI (Subsidiary Banks) Act, 8 princely states banks become SBI subsidiaries. 

SBI has also acquired local banks in rescues like Bank of Bihar, National Bank of Lahore, Krishnaram Baldeo Bank, State Bank of Travancore.

Associate Banks: To streamline the process more and more SBI started to merge its Associate banks to create mega bank. State Bank of Saurashtra merged with SBI in 2008. Then in 2009 State Bank of Indore merged with SBI.

Rest of Banks will be merged in upcoming years.
  •     State Bank of Bikaner & Jaipur
  •     State Bank of Hyderabad
  •     State Bank of Mysore
  •     State Bank of Patiala
  •     State Bank of Travancore

Non-banking subsidiaries:
  •     SBI Capital Markets Ltd
  •     SBI Funds Management Pvt Ltd
  •     SBI Factors & Commercial Services Pvt Ltd
  •     SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)
  •     SBI Discount and Finance House of India (DFHI) Ltd
  •     SBI Life Insurance Company Limited
  •     SBI General Insurance

Shareholding: Government of India holds 58.60% shares and other Banks & Insurance Companies holds 16.79% Shares. The equity shares of SBI are listed on the Bombay Stock Exchange BSE and National Stock Exchange of India NSE, where it is a constituent of the index at both exchange.

Employees: More than 2,30,000 

Important Marks & Recognition:
  • SBI is having an asset value which is higher than the total reserves of RBI.
  • SBI is having an asset value which is more than that of LIC.
  • SBI was ranked 73rd largest bank in the world, according to 2014 SNL financial data.
  • SBI was ranked as the top bank in India based on tier 1 capital by The Banker magazine in a 2014 ranking.
  • Best Online Banking Award
  • Best Customer Initiative Award
  • The Bank of the year 2009, India
  • Best Bank – Large and Most Socially Responsible Bank by the Business Bank Awards 2009
  • Best Bank 2009 by Business India
  • The Most Trusted Brand 2009 by The Economic Times.
  • SBI was named the 29th most reputed company in the world according to Forbes 2009 rankings
  • Most Preferred Bank & Most preferred Home loan provider by CNBC
  • SBI was 50th Most Trusted brand in India as per the Brand Trust Report 2013

Recent Trends in Banking Industry of India

Computerization and developments in information technology brought in new trends in banking business. One of the offshoots of this development is internet banking. This facility enables customers to access their accounts and perform a variety of bank transactions from anywhere. This saves time, cost and paper work for the banks as well as the clients. However internet banking has inherent risks such as security risk, technology risk and financial frauds. 

Banks also face legal risk since the jurisdiction in which the bank is operating could be different from its registered place of operation. Another development in the banking sector is the introduction of virtual banks that do not have any physical presence and all banking operations are in electronic mode. The bank exists on a virtual ground with the internet address as the only link with its customers. New products have been introduced by the banks to cope with increasing competition and customer needs. 

They can be categorized into investment based products and innovative services offered by the banks. Investment products include offer of gold and silver coins, marketing of insurance products and floating of mutual funds, and issue of different types of credit and debit cards.

Innovative services include establishing ATM facilities and providing ASBA (Applications Supported by Blocked Accounts) facility to investors applying for initial public offerings of the corporate sector. Technological developments enable banks to offer electronic fund transfer facility to meet their customer requirements. National electronic fund transfer facility has been created at Mumbai to offer this service.

Functions of Banks in an Economy

Banks being financial intermediaries provide money in the economy through credit creation and facilitating liquidity. Banks are able to generate credit many times more than the initial deposits they receive from the public subject to regulations relating to cash reserves to be maintained and customers' cash requirements. The resources of banks are generated mainly through a variety of deposits, both short time and long term from the public.

The ability of the bank to generate more deposits depends on the interest rate offered and the marketing skills of the bank. Shorter duration and higher interest on deposits will add to the operational risk of the banks. Bank's role in the economy is necessitated on account of differences in the preference of public in terms of maturity requirements, risk requirements, denomination of currency and access to adequate information. The existence of market imperfection such as transaction and contracting cost also strengthen the need for the functioning of banks. 

Banking industry differs from other industries in the economy in terms of its asset structure and legal obligations and developmental functions. Besides offering a variety of loans and advances to different needy clients, banks also provide a lead role in translating the development objectives of the government through lead bank schemes and priority sector lending and financial inclusion. In the process of performing these functions, banks have to manage a variety of risks which are inherent in banking operations.

One of the major risks that affect the bank is credit risk which is reflected in the proportion of non-performing assets (NPA) held by the banks. The maturity structure of various assets and liabilities of the bank poses liquidity risk to the bank. The fluctuation in interest rates is another source of risk. Exchange rate risk arises to the bank when they provide foreign currency loans to their customers or when they make investments in foreign securities or accept foreign currency deposits.

Organization of Banking Industry in India

There are mainly three forms of banks. In India branch banking is the most applied structure of a banking entity. In this structure a single bank will have number of branches under its control operating at different places. Holding banking companies are large banking entities controlling several subsidiaries. Banks can also be classified on the basis of ownership into nationalized banks, private banks and foreign banks. Another way of classifying banks is on the basis of size. These can be large banks, small banks. The basis of classification can be capital size or deposit size.

Further banks can be classified basis of type of business and level of operations. On basis of area it can be classified as national banks, regional banks or international banks. On basis of business specialization it can be classified as development banks, core banks or service banks. 

Commercial banks primarily focus on deposit mobilization and lending operations. It has to operate under the overall regulatory environment created by central banks. Investment banks on other hands focused on investment needs of client. Also provide portfolio management service and performing corporate advisory services.

To view the different types of banks by category follow the below link:

Basic Structure of Banking Industry in India

The financial system of an economy is expected to support the changes in the economy. Financial system is reflected by the structure of banking industry. The banking industry that was functioning fully under a regulated environment shifted towards a competitive environment. Changes in technology are another factor that has contributed towards the structural change in the banking industry. The structural change in the banking industry that can be highlighted is the increased participation of international financial players in the Indian financial system as well as Indian financial players exhibiting a tendency towards becoming global players. 

The Government represented by the Ministry of Finance, the Reserve Bank of India and other regulatory bodies for the banking sector have a coordinated policy measure towards bringing in a cautious change in the structure of the banking industry. Banking industry being the backbone of the nation has to live up to meet the economic needs and provide a protective backdrop for the economic entities by assuming certain inherent risks in the financial system. Besides the change in the overall structure, the structure of each entity within the banking industry has also undergone the necessary changes to meet these economic and risk taking needs. 

Most often it has been observed that changing market requirements if not being considered by the financial system in an economy has not reflected in the expected growth rates of the productive economy. A banking structure hence is expected to be strong to support economic growth and contribute towards the long-term progress of the nation. The structure of the banking industry in this context has to be flexible enough to allow for economic expansion and simultaneously provide stability to the financial system of the economy. 

The participation of private capital in the banking industry is sought though is still being regulated and monitored to support the economic requirements of the country. Public sector participation thus dominates the structure of the banking industry and this has given the Indian financial system benefits in terms of supportive growth, reduced conflict of interest in the administration and ownership structure and the ability to meet risks that are unique to the industry. However, there is also a need to recognize the possible benefits that are foregone by our present structure in terms of cost and quality efficiency required for the ability of the financial system to meet its expectations in the economy. The structure of banking industry in India can be mapped through the functions performed by banks associated with the economy. 

The prominent role of the Reserve Bank of India as the central bank governs other banking structures in the economy. Reserve Bank of India monitors and controls the entire banking system of the Indian economic activity. These activities of the Reserve Bank of India do not deal with the government public mechanisms. This helps the Reserve Bank of India to retain its independent status of functions. The Reserve Bank of India acts as a banker to the Government and maintains the deposit and other business activities of other banks that have been allowed to operate in the economy. It is responsible for monitory and credit policies. 

Besides the primary function of accepting deposits and lending through loans and advances, banks perform a variety of services such as providing safe custody for the valuables of customers, providing foreign exchange, facilitating transfer of money and providing guarantees and letters of credit. Investment banks are specialized banks providing investment services to individuals and institutions besides arranging loans, lease and mortgage facilities. Development banks are established for the purpose of catering to long term capital needs of business and industry. 

These banks operate at three levels. State co-operative banks are apex banks in the state. District cooperative and primary co-operative banks operate at lower levels rendering localized services. Non banking finance companies offer a variety of services like leasing and hire purchase and investment services. Some NBFCs accept deposits, others render only financial intermediation. Some NBFCs operate as investment companies. Mutual funds are financial intermediaries that help investors through sale of units under different schemes and offer of returns from investments in these schemes.