State Bank of India Working and progress

1. Expansion of Rural Branches:

The branch expansion of the State Bank has been largely rural – oriented. Out of the total 12486 branches of the State Bank Group at the end of March 1990, 5811 (i.e., 44.8%) were located in the rural areas with population less than 10,000; 3483 (i.e., 27.9%) were in semi-urban areas with population 10,000 to less than 1 lakh; and 3192 (i.e., 25.6%) in the urban areas and metropolitan cities.

1. Agricultural Finance:

The State Bank has been extending financial help to agriculture. In 1969, the total agricultural advances by the State Bank were Rs. 92 crore, which increased to Rs. 14982 crore in March 2001.

The State Bank of India has identified and is expanding its involvement in the following critical areas in agricultural lending:

(i) The Bank has contributed to the spread of minor irrigation schemes;

(ii) To increase productivity at the farm level, the Bank provides production finance directly to the farmers.

(iii) To develop dryland farming, the Bank- (a) grants loans for agricultural development in dryland areas, and (b) prepares and finances dryland farming projects in compact areas on the watershed basis.

(iv) The bank finances the farmers to install drip irrigation schemes in Karnataka, Tamil Nadu and Maharashtra.

(v) The Bank provides assistance to farmers to take up cultivation on waste lands under social forestry schemes for raising nurseries and planting of trees for fuel, fodder, etc.

(vi) The Bank provides financial help for modernising agricultural practices and raising farm productivity through the use of tractors and other agricultural implements.

III. Village Adoption Scheme:

The State Bank has undertaken a village adoption scheme. Under this scheme, a village is selected for development by meeting its complete financial requirements, including the requirements of the farmers, artisans and others.

The total number of villages adopted by the State Bank (other than those covered by the agricultural development banks) in 1987 was 54207. The total amount of credit and the number of farmers financed under this scheme stood at Rs. 1559 crore and 26.4 lakh respectively in March 1989.

IV. Integrated Rural Development Programme:

Integrated rural development scheme aims at all round and integrated development (i.e., economic, social, cultural, etc.) of the rural areas. The total loans disbursed by the State Bank upto the end of March 1999 under this programme amounted to Rs. 3212 crore spread over 69 lakh beneficiaries.

V. Regional Rural Banks:

Regional rural banks have been started with a view to provide credit to the small and marginal farmers and other weaker sections of the society. The State Bank is providing financial assistance to these banks. Upto the end of March 2001 the State Bank had sponsored 30 regional rural banks, covering 85 districts in the country.

VI. Agricultural Development Branches:

An important feature in the field of agricultural financing by the State Bank is the expansion of special agricultural development branches. These branches aim at financing all – round development of agriculture and function in close cooperation with Agricultural Refinance Development Corporation (ARDC), now called National Bank for Agriculture and Rural Development (NABARD). Upto March 1999, the Bank has contributed Rs. 1681 crore to NABARD.

VII. Remittance Facilities:

The State Bank provides liberalised remittance facilities to the institutions operating in the rural areas like state and central cooperative banks, land development banks, etc. With the implementation of the branch expansion programmes, the State Bank is now in a position to extend these liberalised remittance facilities more effectively to the rural and semi-urban areas.

VIII. Short-Term Credit to Cooperative Banks:

The State Bank has been providing short-term credit facilities to the state and central cooperative banks against government securities at a rate half per cent below the usual rate charged by it.

IX. Assistance to Land Development Banks:

The State Bank also gives financial assistance to the land development banks which provide long-term credit to agriculture:

(a) The State Bank subscribes to the debentures issued by the land development banks.

(b) The State Bank grants advances on the security of such debentures. This improves the marketability and popularity of these debentures in the money market.

(c) The State Bank provides loans and advances to cooperative central land development banks.

X. Finance for Marketing and Processing Societies:

The State Bank gives direct financial help to marketing and processing cooperative societies in the areas where the central cooperative banks are not in a position to assist them. The marketing societies can get advance by pledging their produce at favourable prices. Processing cooperative societies such as cooperative sugar mills, cotton ginning and pressing societies, etc. are also provided similar credit facilities by the State Bank of India.

XI. Warehousing Finance:

Warehousing aims at scientific storage of the products and is essential for the development of agricultural marketing. The State Bank has been actively associated with the warehousing development scheme and provides advances against warehousing receipts.

It has also been making efforts to improve its procedures and terms with a view to promote and popularise the warehousing scheme. Moreover, the State Bank has permitted its officers to serve on the advisory committees for warehouses.

State Bank and Industrial Finance:

The State Bank of India has been extending financial help for the promotion of industrial growth in the economy.

Various forms of assistance to the industries by the Bank are given below:

1. Industrial Finance:

In tune with the rapid industrial growth in the country, the loans and advances of the State Bank to the industrial sector has shown substantial growth over the years. As compared to the amount of Rs. 9771 crore at the end of 1987, the advances to the industrial sector (including the small scale sector) increased to Rs.15519 crore at the end of March 1990.

Bank’s Corporate Banking Group:

It consists of three strategic business units, i.e.- (a) Corporate Accounts Group (CAG), (b) Leasing Strategic Business Units (Leasing SBU) and (c) Projects Finance Strategic Business Unit (Project Finance SBU).

(i) The CAG is a single window shop for the entire range of financial services needed for the large corporates. At present it caters to a more than 200 corporates in India. CAGs advances were Rs. 16943 crore at end March 2001.

(ii) The Leasing SBU performs its role as a leading provider of big-ticket leases to corporates.

(iii) The Project Finance SBU, an active infrastructure advisory services group, focuses on core and infrastructure sectors like power, telecommunications, oil and gas, roads, bridges, ports and urban infrastructure.

1. Finance to Small Scale Industries:

The State Bank of India’s finance to small scale industries has also increased substantially over the years. In 1969, the advances to small scale industries were Rs.104 crore, which increased to Rs. 12718 crore in March 2001. Similarly, the Bank’s small business finance increased from Rs. 7 crore in 1969 to Rs. 3711 crore in March 1998.

Other facilities provided by the Bank to small-scale and cottage and village industries are as given below:

(i) The Bank offers technical and financial consultancy to the units on its books to enable them to overcome problems of technological obsolescence, marketing, management, etc.

(ii) Under its Equity Fund Scheme, the Bank makes available the equity assistance in the form of interest – free loans repayable on a long – term basis to the needy entrepreneurs to set up new small- scale units.

(iii) The Bank conducts Entrepreneurial Development Programmes to promote entrepreneurship for the development of ancillaries near large project areas and of high – tech industries, such as electronics, computer peripherals, etc.

(iv) To assist the export efforts of the small – scale industrialists, arrangements have been made to extend the Whole Turnover Packing Credit Guarantee Scheme (WTPCG Scheme) to small – Scale industries from January 1, 1988.

(v) To increase opportunities for self – employment in the tertiary sector, the Bank provides finance to small business enterprises.

(vi) Project Uptech, set up by the Bank in 1988 for bringing about technology upgradation of small and medium enterprises, has taken up 19 projects upto March 2001. Six new projects are in the pipeline.

Conclusion:

The State Bank of India has been progressing well in the right direction. It has made remarkable achievements in the fields of expanding banking facilities in the rural and semi- urban areas, and providing financial help to agriculture, cooperative institutions and small scale industries.