Bpr Sbi Case Study 6c3h3g

BPR CASE STUDY STATE BANK OF INDIA

HISTORY • 18TH CENTURY BANK • BANK OF CALCATTA-BANK OF BENGAL • BANK OF BAMBAY • BANK OF MADRAS • 1921 AMALGATION IMPERIAL BANK OF INDIA • IT PERFORMED THE ROLES OF 1. BANKER TO BANKS 2. BANKER TO GOVT AND 3. AS ACOMMERCIAL BANK

• 1935 RBI CAME AND THUS ROLE AS A CENTRAL BANK GOT OVER • NOW IT WAS WORKING ONLY AS A COMMERCIAL BANK

At the time of independence • It had a capital base of Rs.118.5 mn, deposits of Rs. 2.7514 bn and advances of Rs. 729.4 mn. It had a network of 172 branches and over 200 sub-offices spread all over India. When the first Five Year Plan was launched in 1951, the rural sector was given top priority.

Liberalization of the Indian Banking Industry • Private sector banks - January 1993. • During that period, PSBs ed : threefourths of total banking industry assets. BUT THEY WERE WEIGHED DOWN WITH • • • •

huge NPAs(Non-Performing Assets), falling revenues, lack of modern technology and a massive and highly unionized workforce.

New entrants-Increased competition • the market share nationalized banks began to erode (The PSBs found it increasingly difficult to compete with the new private sector banks and the foreign banks.) • These banks also employed state-of-theart technology, which helped them to save on manpower costs and concentrate on providing better service...

Restructuring- A Major Organizational Restructuring Planned The key aspects involved • redeg of branches, • providing alternate channels; • focus on a lean structure and • technological upgradation.

BPR team was constituted in June 2003: McKinsey & Company as consultants

THE BPR'S BASIC GOAL

To create an operating architecture that would facilitate service delivery of

PROJECT OBJECTIVES

RESTRUCTURING • Increasing customer satisfaction and convenience • Freeing up time for branch manager and branch staff to focus on sales and marketing • Simplifying process for employees • Enhancing SBI's competitiveness in the market • Increasing the profitability through higher market share and improved process efficiency

NEW VALUE ADDED PRODUCTS AND SERVICES • • • • •

TELEBANKING REMOTE TRADE FINANCE SOLUTION-EXIMBILL CUSTOMISED LOAN PROGRAMS CBS ETC. THIS TO CHANGE THE IMAGECUSTOMER FRIENDLY

ALLIANCES AND TIE UPS • AUTOMOBILE (AUTO FINANCEEgMARUTI) • INSURANCE • MUTUAL FUND • PROJECT FINANCE • MEDICAL EQUIPMENT COMPANIES

MARKETTING INITIAVES TO ENHANCE REACH • • • • •

• • • •

Segregating and targeting existing high value customers, Cross sales of other products, Setting up call centers Outbound sales force to secure new customers Database marketing to pursue large and medium sized corporate, government and trade finance customers (to draw increased revenue from cross selling, lower costs and increased customer loyalty) Also it extended of hours of work Aggressive marketing through print and television media. SBI increased daily working hours by two hours Sunday banking was introduced

OUTCOMES OF REENGINEERING • An increase in profits for the fiscal 2003-04. Net profits stood at Rs 36.81 bn for the fiscal ended 2003-04 as against Rs 31.05 bn the previous fiscal, an increase of 18.55 per cent. • Operating profits stood at Rs 95.535 bn compared to Rs 77.754 bn in the fiscal 2002-03. • In spite of SBI's efforts to reduce workforce, staff costs rose by 13.3 per cent, mainly due to additional contribution to pension fund and provision for leave encashment. • The net NPA level came down from 4.5 per cent in the fiscal 2002-03 to 3.5 per cent in 2003-04. SBI aimed at 2 per cent NPA by 2004-05