STATE BANK OF INDIA:
TRANSFORMING A STATE OWNED
GIANT
Group 4
Aman Kanojia PGP/20/130
Navdeep Singh PGP/20/160
Raj Sagar PGP/20/171
Sathyavathi S PGP/20/365
Shashank Kaushik PGP/20/180
Sourav Roy PGP/20/184
INTRODUCTION
Traces its ancestry back to the Bank of Calcutta , which
was established in 1806
Oldest commercial bank in the Indian subcontinent
191 foreign
Government-owned and is the
offices across 36
Largest bank in India
countries
Assets (INR 27
Ranked 232nd Largest Branch
Trillion)
on the Fortune and ATM
20% of Market
Global 500 network
share
SIGNIFICANT ISSUES THAT BHATT FACED AS HE
SOUGHT TO TRANSFORM THE BANK
Tough competition from new entrants
• The forces to change were the new entrants like private and foreign banks in the market giving SBI tough competition
• SBI lost their market share to the new entrants
Weak technological capabilities and Inferior product offering
• Technology infrastructure as well as the product offering of SBI were inferior compared to the private and foreign banks that
entered the market
• Poor connectivity and complexity damaged SBI’s ability to serve customers
• The poor roll out of the CBS initially left the employees frustrated, and Bhatt had to halt the implementation to clear bugs
• The new offerings like “Anywhere, Anytime Banking” gave the new banks advantage over SBI’s physical branch network system
Lack of customer focus
• “Customers were neither respected nor treated well” at SBI which caused them to lose customers to competition
• SBI policies at the organization level had no focus on market share or customer segmentation
• “Relationship banking” by new entrants lured the younger customers, while SBI never focused on the young customer
SIGNIFICANT ISSUES THAT BHATT FACED AS HE
SOUGHT TO TRANSFORM THE BANK
Employee apathy
• Bureaucratic culture existed in the organization. Previously, the leaders had a closed hierarchical
approach which sapped the enthusiasm of employees
• Faulty HR policies sapped employee potential. The HR policies on promotions and transfers were
outdated.
• VRS scheme resulted in talent drain to competitors
• Employees were demotivated as they felt that no one cared about them and that there was no
appreciation for hard work.
Non-inclusive communication approach
• Communication was one way, top to bottom. There was no inclusion of ideas from the employees
at the lower levels. This negatively impacted employee motivation
Resistance to change
• Lack of zeal and mind set of employees attuned towards resisting any new technology.
CHANGES BROUGHT BY BHATT AND ITS EFFECT ON THE
ISSUES FACED BY HIM AT THE BEGINNING OF HIS TENURE
AS CHAIRMAN
• Bhatt’s open and non hierarchical approach was praised by everyone. Employees felt motivated and
Open and non-hierarchical empowered by their increased participation and importance
approach of communication • Encouraged reverse feedback and ideas from bottom up
• Employees felt reassured and strong due to Bhatt’s support and direction in times of crisis
• Bhatt created four new strategic business groups headed by Deputy Managing Directors
• Bhatt created a new department “Corporate Communication & Change”, a new strategic business group
Changes in Organization structure called “Wholesale Banking Group” to rebuild profitable wholesale banking
and Established sense of urgency • Bhatt tried to create sense of urgency among employees, worry them about the state and excite them about
among employees
the change
• Organized series of conclaves at different levels like one for MDs and DMDs, next for CGMs and GMs,
next trade unions
• Realigning the strategy and vision of the organization to the changing environment was discussed at the
Aamby Valley conclave and building the plan in detail was discussed at the subsequent conclaves
Organized series of conclaves at • Brought about employee participation and inclusive approach to the system, in contrast to the past
different levels for communicating • Provided an informal climate where the employees expressed and debated the concerns passionately
vision
• Family members were invited for conclaves, thus increasing feeling of loyalty and affiliation with the
organization
CHANGES BROUGHT BY BHATT AND ITS EFFECT ON THE
ISSUES FACED BY HIM AT THE BEGINNING OF HIS TENURE
AS CHAIRMAN
Improved technological and
organizational capabilities Parivartan
through various initiatives
Mass internal communication program to build awareness and
IT platform: Successful implementation of CBS, which enabled need for change and a call for duty among all employees.
the customer to be a “Bank Customer”, rather than a “Branch
Customer”
Transformation of people, helped in reviving the pride of a “SBI
man”
Efficient Operating Process and Branch Business Network
Process Reengineering: Staff closer to the customer, all physical Changed training and capability building system: Increased
and mental barriers removed, branches focused on sales and expansion and recruitment; Removed VRS scheme
service, better turn around time and processing quality
Changing Individual Performance Management System:
Introducing more awards for employees to increase motivation
Developing Consistent Customer Service: Adopted new vision,
which focussed on customer. SBI leveraged technology to
improve customer service, introduced “sms unhappy” service. Other Initiatives like Win Back the Indian Middle Class
This improved customers’ relationship with bank. Customer, Own Rural India, ‘Smart’ Global Expansion, etc to
increase their market share and customer base
IMPACT OF THE CHANGES
The change led to complete
transformation of the bank as it focussed
on:
• Issues directly related to business like where should its In January 2008, SBI became number one State Bank is now the country’s 5th largest
presence, which business to abandon This change won back the Indian middle
in India in terms of market cap, overtaking company in terms of market cap, from
• Facilitated business like business processes, risk class and young customers
management, performance management, technology, ICICI Bank 14th in 2006
incentives
• The third group centred on people like training,
recruitment and motivation
Business and profit per employee soared
Customer service improved tremendously. In 2007, SBI was rated the best bank in
SBI entered the Fortune Global 500 from Rs 3 crores and 2 lakhs in 2005-06 to
SBI customer changed from a “branch India in terms of customer service, brand
Listing over Rs 5.5 crores and 5 lakhs respectively
customer” to a “Bank customer” loyalty, and branch strength
in 2008-09.
Bank also expanded at breakneck speed.
The share of non-interest income grew
The number of SBI branches grew by over
from 62 percent to 68 percent. Treasury The bankers ranking of SBI in 2014 is 46.
50 percent. The number of ATMs grew
profits started contributing almost a with total assets of $400 billon.
almost four fold, from 5443 in March 2006
quarter of SBI’s total profits
to over 21,000 in 2010.
ALTERNATIVE OF THE CHANGES
Should have merged all the associate banks to monitor and control them easily
Raise some more capital for the bank to give out bigger loans to companies so as to be able to gain more
customers
Hold more organizational confrontation meetings so that the managers could regularly meet to evaluate
the effectiveness of SBI in meeting its goals and maintaining its position in the market
Build Quality circles so that the employees can form groups to meet regularly to discuss the way work is
done and to suggest new ways of improving efficiency, as the banking sector is growing in competition
and SBI needs to keep on adapting to keep ahead of competition
CONSIDER BHATT’S STATEMENT, “INDIA NEEDS A VERY STRONG BANKING SYSTEM TO
SUSTAIN ITS CURRENT GROWTH RATE OF ABOUT 9% OVER THE NEXT DECADE.
CURRENTLY INDIA LACKS THIS SYSTEM; HOWEVER, SBI IS IN THE BEST POSITION TO
TAKE THIS LEAP IN TERMS OF SIZE, SOPHISTICATION AND REACH” . DO YOU THINK THAT
THE CHANGES BHATT INTRODUCED ARE ENOUGH?
Building on technological capabilities with the implementation of ERP and SAP
Improving the efficiency of resource allocation by enabling real-time information access of allocated
and unallocated resources
Advancement and innovation in areas of human capital management and enterprise resource planning
such as e- learning, virtual classrooms, career development ,competency assessment, performance
management
SBI retrieving its leadership in corporate banking
Roll out of more training to employees so as to build on their abilities to attract more multinational
companies, as currently SBI’s presence is low in that domain.
Thank You
