FINANCIAL PRINCIPLES AND TECHNIQUES

Managing Financial Principles and Techniques

State Bank Of India

Task: 1

Investment Projects of State Bank of India

SBI (State bank of India), India's largest and oldest bank and financial institution headquartered in Mumbai. The bank established in the year 1806 in Calcutta. SBI is the leading commercial bank operating in India with service offerings in commercial banking, retail banking, treasury operations, international banking and investment banking. The bank has employed around 200,299 people in India.

State Bank of India Gold Fund

The largest bank of India (SBI) has launched SBI mutual fund which is an open ended fund aimed at providing return that are almost parallel to the state bank of India gold exchange traded scheme (Robinson 2006, pp. 28-29). The new scheme will provide the investor with systemic investments plans. The newly offered fund is an investor friendly product that will provide an opportunity to the investors to enjoy high returns parallel to gold investment without directly investing in physical gold. To take advantage of the recent rally in gold prices, investors could avail gold loans from the country's largest lender State Bank of India for gold exchange traded funds.

Issue Opens

22 Aug 2011

Issue Closes

5-Sep-11

Fund Class

Hybrid

Fund Type

Open-Ended

Investment plan

Dividend / Growth

Minimum Investment

Rs 5000

Investment in Information Technology

Investments in information technology will decrease transaction costs of SBI. SBI is working on new initiatives in the area of Mobile Banking as also consolidation of Payment Solutions business to achieve efficiency in operations, reduce costs and avoid duplication of efforts. SBI is investing INR30000 million in information technology to ensure robust net banking, mobile banking and ATM systems, which will shift 50 per cent transactions from branches to alternative channels. This move will not only help ease pressure at the over 10,000 SBI branches but also lower costs for the bank. SBI plans to increase ATM's to 20,000 by end 2010-11.

While a transaction at a branch costs around INR50, one at an ATM works out to INR18. Transactions through the internet are even cheaper at INR10 each. At present, the average daily transaction under the core banking channel is estimated at over 20 million, or over six billion, annually whereas that of alternative channels like ATMs is estimated at 25%, or 1.5 billion (Hammonds 2006, Pp. 23-62). By end 2010-11, SBI expects the number of transactions to reach 10 billion, and the target is to encourage customers to use the alternative channels for 50%, or five billion, of transactions. SBI also plans to launch e-freight and e-trade, SBI and its partners can use digitized documents and transact online. This will not only improve the efficiency of the bank, but also makes customer's transactions easier and simpler.

Recommendations

After analyzing both the investment projects of the bank it is anticipated that the completion of both these projects will further strengthen the financial performance of the company and the revenue will increase. There is a requirement and obligation on bank to fulfill the outlined objectives of the project.

Task: 3

Cost Forecasting for State Bank of India

3/31/2009

3/31/2010

Percentage Change

3/31/2011

Currency

INR

INR

INR

Scale

Thousands

Thousands

Thousands

Interest ...