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STATUTORY REQUIRMENTS OF STATE BANK OF INDIA
MASTER OF COMMERCE
ADVANCED ACCOUNTANCY
SEMESTER – 1
ACADEMIC YEAR (2014-2015)
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIRMENT FOR
THE AWARD OF DEGREE OF
MASTER OF COMMERCE
ADVANCED FINANCIAL ACCOUNTING
BY
OLIA UTPAL BISWAS
SEAT NO
JAI HIND COLLEGE
‘A’ ROAD, CHURCHGATE, MUMBAI- 400020
DECLARATION
I hereby declare that the project work entitled
"STATUTORY REQUIREMENT OF STATE BANK OF INDIA”
submitted to the JAI HIND COLLEGE Churchgate, is done by me
OLIA UTPAL BISWAS, and this project work is submitted in the
partial fulfillment of therequirements for the award of the degree of
Master of commerce in accounts. The results embodied in this project
have not been submitted to any other University or Institute for the
award of any degree or diploma.
OLIA UTPAL BISWAS
Seat no.
INDEX
Sr.no
.
Particulars Page no.
1 Introducion
About SBI 4
History of SBI 5
Vision, mission and values 13
SWOT analysis 14
Major competitors 17
2 Operation spread 18
Domestic presence 19
International presence 19
3 Important legal aspects 20
Licensing of banking companies (sec.22) 23
Prohibiting trading (sec.8) 27
Disposal of immovable property (sec. 9) 28
Minimum aggregate value of paid up Capital and
reserve (sec. 11)
29
Management (sec. 10) 33
Capital structure (sec. 12) 34
Commission on sale of shares (sec. 13) 35
Statutory reserve (sec. 17) 36
Restriction on payment of dividend (sec 15) 37
4 Guidelines for Appointment of Statutory Auditors in
Public Sector Banks By RBI
38
5 Facilities provided by SBI 44
6 Preparation of financial statement 52
7 Comparative standalone P&L statements of preceeding four
years
54
8 Comparative standalone balance sheet of preceeding four
years.
55
9 conclusion 56
10 Bibliography 59
Introduction
About SBI
State Bank of India (SBI) is a multinational banking and financial
services company based in India. The Bank is actively involved since
1973 in non-profit activity called Community Services Banking. All
their branches and administrative offices throughout the country sponsor
and participate in large number of welfare activities and social causes.
Their business is more than banking because we touch the lives of
people anywhere in many ways
Their commitment to nation-building is complete & comprehensive
It is a government-owned corporation with its headquarters in Mumbai,
Maharashtra. As of December 2013, it had assets of US$388 billion and
17,000 branches, including 190 foreign offices, making it the largest
banking and financial services company in India by assets.
State Bank of India is one of the Big Four banks of India, along
with ICICI Bank, Punjab National Bank and HDFC Bank.
State Bank of India is a regional banking behemoth and has 20% market
share in deposits and loans among Indian commercial banks.
HISTORY OF SBI
The origin of the State Bank of India goes back to the first decade of the
nineteenth century with the establishment of the Bank of Calcutta in
Calcutta on 2 June 1806. Three years later the bank received its charter
and was re-designed as the Bank of Bengal (2 January 1809). A unique
institution, it was the first joint-stock bank of British India sponsored by
the Government of Bengal. The Bank of Bombay (15 April 1840) and
the Bank of Madras (1 July 1843) followed the Bank of Bengal. These
three banks remained at the apex of modern banking in India till their
amalgamation as the Imperial Bank of India on 27 January 1921.
Primarily Anglo-Indian creations, the three presidency banks came into
existence either as a result of the compulsions of imperial finance or by
the felt needs of local European commerce and were not imposed from
outside in an arbitrary manner to modernise India's economy. Their
evolution was, however, shaped by ideas culled from similar
developments in Europe and England, and was influenced by changes
occurring in the structure of both the local trading environment and
those in the relations of the Indian economy to the economy of Europe
and the global economic framework.
Bank of Bengal H.O.
Establishment
The establishment of the Bank of Bengal marked the advent of limited
liability, joint-stock banking in India. So was the associated innovation
in banking, viz. the decision to allow the Bank of Bengal to issue notes,
which would be accepted for payment of public revenues within a
restricted geographical area. This right of note issue was very valuable
not only for the Bank of Bengal but also its two siblings, the Banks of
Bombay and Madras. It meant an accretion to the capital of the banks, a
capital on which the proprietors did not have to pay any interest. The
concept of deposit banking was also an innovation because the practice
of accepting money for safekeeping (and in some cases, even investment
on behalf of the clients) by the indigenous bankers had not spread as a
general habit in most parts of India. But, for a long time, and especially
upto the time that the three presidency banks had a right of note issue,
bank notes and government balances made up the bulk of the investible
resources of the banks.
Group photo of central board(1921)
Business
The business of the banks was initially confined to discounting of bills
of exchange or other negotiable private securities, keeping cash accounts
and receiving deposits and issuing and circulating cash notes. Loans
were restricted to Rs.one lakh and the period of accommodation
confined to three months only. The security for such loans was public
securities, commonly called Company's Paper, bullion, treasure, plate,
jewels, or goods 'not of a perishable nature' and no interest could be
charged beyond a rate of twelve per cent. Loans against goods like
opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and
silk goods were also granted but such finance by way of cash credits
gained momentum only from the third decade of the nineteenth century.
All commodities, including tea, sugar and jute, which began to be
financed later, were either pledged or hypothecated to the bank. Demand
promissory notes were signed by the borrower in favour of the
guarantor, which was in turn endorsed to the bank. Lending against
shares of the banks or on the mortgage of houses, land or other real
property was, however, forbidden.
Old Bank of Bengal
Major change in the conditions
A major change in the conditions of operation of the Banks of Bengal,
Bombay and Madras occurred after 1860. With the passing of the Paper
Currency Act of 1861, the right of note issue of the presidency banks
was abolished and the Government of India assumed from 1 March 1862
the sole power of issuing paper currency within British India. The task
of management and circulation of the new currency notes was conferred
on the presidency banks and the Government undertook to transfer the
Treasury balances to the banks at places where the banks would open
branches. None of the three banks had till then any branches (except the
sole attempt and that too a short-lived one by the Bank of Bengal at
Mirzapore in 1839) although the charters had given them such authority.
But as soon as the three presidency bands were assured of the free use of
government Treasury balances at places where they would open
branches, they embarked on branch expansion at a rapid pace. By 1876,
the branches, agencies and sub agencies of the three presidency banks
covered most of the major parts and many of the inland trade centres in
India. While the Bank of Bengal had eighteen branches including its
head office, seasonal branches and sub agencies, the Banks of Bombay
and Madras had fifteen each.
bank of Madras note date 1961 for Rs.10
EVOLUTION OF SBI
The origin of the State Bank of India goes back to the first decade of the
nineteenth century with the establishment of the Bank of Calcutta in
Calcutta on 2 June 1806. Three years later the bank received its charter
and was re-designed as the Bank of Bengal (2 January 1809). A unique
institution, it was the first joint-stock bank of British India sponsored by
the Government of Bengal. The Bank of Bombay (15 April 1840) and
the Bank of Madras (1 July 1843) followed the Bank of Bengal. These
three banks remained at the apex of modern banking in India till their
amalgamation as the Imperial Bank of India on 27 January 1921.
Primarily Anglo-Indian creations, the three presidency banks came into
existence either as a result of the compulsions of imperial finance or by
the felt needs of local European commerce and were not imposed from
outside in an arbitrary manner to modernise India's economy. Their
evolution was, however, shaped by ideas culled from similar
developments in Europe and England, and was influenced by changes
occurring in the structure of both the local trading environment and
those in the relations of the Indian economy to the economy of Europe
and the global economic framework.Presidency Banks Act
The presidency Banks Act, which came into operation on 1 May 1876,
brought the three presidency banks under a common statute with similar
restrictions on business. The proprietary connection of the Government
was, however, terminated, though the banks continued to hold charge of
the public debt offices in the three presidency towns, and the custody of
a part of the government balances. The Act also stipulated the creation
of Reserve Treasuries at Calcutta, Bombay and Madras into which sums
above the specified minimum balances promised to the presidency banks
at only their head offices were to be lodged. The Government could lend
to the presidency banks from such Reserve Treasuries but the latter
could look upon them more as a favour than as a right.
Bank of Madras
Bank of Madras
The decision of the Government to keep the surplus balances in Reserve
Treasuries outside the normal control of the presidency banks and the
connected decision not to guarantee minimum government balances at
new places where branches were to be opened effectively checked the
growth of new branches after 1876. The pace of expansion witnessed in
the previous decade fell sharply although, in the case of the Bank of
Madras, it continued on a modest scale as the profits of that bank were
mainly derived from trade dispersed among a number of port towns and
inland centres of the presidency.
Presidency Banks of Bengal
The presidency Banks of Bengal, Bombay and Madras with their 70
branches were merged in 1921 to form the Imperial Bank of India.
Imperial Bank
The Imperial Bank during the three and a half decades of its existence
recorded an impressive growth in terms of offices, reserves, deposits,
investments and advances, the increases in some cases amounting to
more than six-fold. The financial status and security inherited from its
forerunners no doubt provided a firm and durable platform.
STAMP OF IMPERIAL BANK
VISION
My SBI.
My Customer first.
My SBI: First in customer satisfaction
MISSION
We will be prompt, polite and proactive with our customers.
We will speak the language of young India.
We will create products and services that help our customers
achieve their goals.
We will go beyond the call of duty to make our customers feel
valued.
We will be of service even in the remotest part of our country.
We will offer excellence in services to those abroad as much as we
do to those in India.
We will imbibe state of the art technology to drive excellence.
VALUES
We will always be honest, transparent and ethical.
We will respect our customers and fellow associates.
We will be knowledge driven.
We will learn and we will share our learning.
We will never take the easy way out.
We will do everything we can to contribute to the community we
work in.
We will nurture pride in India
SWOT analysis of SBI
SBI has its roots since 1806 which was later transformed under various
names, finally SBI Was established after the act in parliament on May
1955. In the year 1959 SBI took over 8 state owned banks and since then
it started to grow up carrying its heritage of servicing people at various
economic levels.
Strengths
SBI is the largest bank in India in terms of market share, revenue
and assets.
As per recent data the bank has more than 13,000 outlets and
25,000 ATM centres
The bank has its presence in 32 countries engaging currency trade
all over the world
The bank has a merged with State Bank of Saurashtra, State bank
of Indore and the bank is planning to go further acquisition in the
current FY2012.
SBI has the first mover advantage in commercial banking service
SBI has recently changed its vision and mission statements
showing a sign of inclination towards new age banking services
Weakness
Lack of proper technology driven services when compared to
private banks
Employees show reluctance to solve issues quickly due to higher
job security and customers’ waiting period is long when compared
to private banks
The banks spends a huge amount on its rented buildings
SBI has the largest number of employees in banking sector, hence
the bank spends a considerable amount of its income in employee’s
salary compensation
In spite of modernization, the bank still carries the perception of
traditional bank to new age customers
SBI fails to attract salary accounts of corporate and many
government sector employees salary accounts are also shifted to
private bank for ease of operations unlike before
Opportunities
SBI’s merger with five more banks namely State Bank of
Hyderebad, State bank of Patiala, State bank of Bikaber and Jaipur,
State of bank of Travancore and State bank of Mysore are in
approval stage
Mergers will result in expansion of market share to defend its
number one position
SBI is planning to expand and invest in international operations
due to good inflow of money from Asian Market
Since the bank is yet to modernize few of its banking operations,
there is a better scope of using advanced technologies and software
to improve customer relations
Young and talented pool of graduates and B schools are in rise to
open new horizon to so called “old government bank”
Threats
Net profit of the year has decline from 9166.05 in the year FY
2010 to 7,370.35 in the year FY2011
This shows the reduce in market share to its close competitor
ICICI
Other private banks like HDFC, AXIS bank etc
FDIs allowed in banking sector is increased to 49% , this is a major
threat to SBI as people tend to switch to foreign banks for better
facilities and technologies in banking service
Other government banks like PNB, Andhra, Allahabad bank and
Indian bank are showing
Customer prefer to switch to private banks and financial service
providers for loans and mortgages, as SBI involves stringent
verification procedures and take long time for processing.
Major competitors
Some of the major competitors for SBI in the banking sector are Axis
Bank, ICICI Bank, HDFC Bank, Punjab National Bank, Bank of
Baroda, Indusind Bank, Canara Bank and Bank of India. However in
terms of average market share, SBI is by far the largest player in the
market.
Operations
SBI provides a range of banking products through its network of
branches in India and overseas, including products aimed at non-resident
Indians (NRIs). SBI has 14 regional hubs and 57 Zonal Offices that are
located at important cities throughout India.
Domestic presence
SBI has 14,816 branches in India, as on 31 March 2013, of which 9,851
(66%) were in Rural and Semi-urban areas.[1] In the financial year 2012-
13, its revenue was INR 200,560 Crores (US$ 36.9 billion), out of which
domestic operations contributed to 95.35% of revenue. Similarly,
domestic operations contributed to 88.37% of total profits for the same
financial year.
Under the Pradhan Mantri Jan Dhan Yojana of financial inclusion
launched by Government in August 2014, SBI held 11,300 camps and
opened over 30 lakhs accounts by September, which included 21.16 lakh
accounts in rural areas and 8.8 lakh accounts in urban areas.
International presence
The Israeli branch of the State Bank of India located in Ramat Gan.
As of 28 June 2013, the bank had 180 overseas offices spread over 34
countries. It has branches of the parent in Moscow, Colombo, Dhaka,
Frankfurt, Hong Kong, Tehran, Johannesburg, London, Los Angeles,
Male in the Maldives, Muscat, Dubai, New York, Osaka, Sydney, and
Tokyo. It has offshore banking units in the Bahamas, Bahrain,
and Singapore, and representative offices in Bhutan and Cape Town. It
also has an ADB in Boston, USA.
The Canadian subsidiary, State Bank of India (Canada) also dates to
1982. It has seven branches, four in the Toronto area and three in
theVancouver area.
SBI operates several foreign subsidiaries or affiliates. In 1990, it
established an offshore bank: State Bank of India (Mauritius). SBI
(Mauritius) has 15 branches in major cities/towns of the country
including Rodrigues.
State Bank of India Branch atJaffna, Sri Lanka
SBI Sri Lanka, Oldest Bank in Sri Lanka now has three branches located
in Colombo, Kandy and Jaffna. The 3rd branch was opened inJaffna,
Northern Province on 09th September 2013. On 1st July 2014 SBI Sri
Lanka celebrated their 150th year presence in Sri Lanka.
State Bank of India (S.B.I.) Branch at Tsim Sha Tsui, Hong Kong
In Nepal, SBI owns 55% of Nepal SBI Bank, which has branches
throughout the country. In Moscow, SBI owns 60% of Commercial
Bank of India, with Canara Bank owning the rest. In Indonesia, it owns
76% of PT Bank Indo Monex.
The State Bank of India already has a branch in Shanghai and plans to
open one in Tianjin.
In Kenya, State Bank of India owns 76% of Giro Commercial Bank,
Associate banks
Main Branch of SBI in Mumbai.
SBI has five associate banks; all use the State Bank of India logo, which
is a blue circle, and all use the "State Bank of" name, followed by the
regional headquarters' name:
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore
Non-banking subsidiaries
Apart from its five associate banks, SBI also has the following 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 DFHI Ltd
SBI Life Insurance Company Limited
SBI General Insurance
In March 2001, SBI (with 74% of the total capital), joined with BNP
Paribas (with 26% of the remaining capital), to form a joint venture life
insurance company named SBI Life Insurance company Ltd.
IMPORTANT LEGAL ASPECTS
Section 22 in BANKING REGULATION ACT,1949
22. Licensing of banking companies
(1) Save as hereinafter provided, no company shall carry on banking
business in India unless it holds a licence issued in that behalf by the
Reserve Bank and any such licence may be issued subject to such condi-
tions as the Reserve Bank may think fit to impose.]
(2) Every banking company in existence on the commencement of this
Act, before the expiry of six months from such commencement, and
every other company before commencing banking business [in India],
shall apply in writing to the Reserve Bank for a licence under this
section: Provided that in the case of a banking company in existence on
the commencement of this Act, nothing in sub-section (1) shall be
deemed to prohibit the company from carrying on banking business until
it is granted a licence in pursuance of 3[this section] or is by notice in
writing informed by the Reserve Bank that a licence cannot be granted
to it: Provided further that the Reserve Bank shall not give a notice as
aforesaid to a banking company in existence on the commencement of
this Act before the expiry of the three years referred to in sub-section (1)
of section 11 or of such further period as the Reserve Bank may under
that sub-section think fit to allow.
(3) Before granting any licence under this section, the Reserve Bank
may require to be satisfied by an inspection of the books of the company
or otherwise that the following conditions are fulfilled, namely:— 5[(a)
that the company is or will be in a position to pay its present or future
depositors in full as their claims accrue;
(b) that the affairs of the company are not being, or are not likely to be,
conducted in a manner deterimental to the interests of its present or
future depositors that the general character of the proposed management
of the company will not be prejudicial to the public interest or the
interest of its depositors;
(d) that the company has adequate capital structure and earning
prospects;
(e) that the public interest will be served by the grant of a licence to the
company to carry on banking business in India;
(f) that having regard to the banking facilities available in the proposed
principal area of operations of the company, the potential scope for
expansion of banks already in existence in the area and other relevant
factors the grant of the licence would not be prejudicial to the operation
and consolidation of the banking system consistent with monetary
stability and economic growth;
(g) any other condition, the fulfilment of which would, in the opinion of
the Reserve Bank, be necessary to ensure that the carrying on of banking
business in India by the company will not be prejudicial to the public
interest or the interests of the depositors. 7[(3A) Before granting any
licence under this section to a company incorporated outside India, the
Reserve Bank may require to be satisfied by an inspection of the books
of the company or otherwise that the conditions specified in sub-section
(3) are fulfilled and that the carrying on of banking business by such
company in India will be in the public interest and that the Government
or law of the country in which it is incorporated does not discriminate in
any way against banking companies registered in India and that the
company complies with all the provisions of this Act applicable to
banking companies incorporated outside India.] 8[(4) The Reserve Bank
may cancel a licence granted to a banking company under this section —
(i) if the company ceases to carry on banking business in India; or
(ii) if the company at any time fails to comply with any of the conditions
imposed upon it under sub-section (1); or
(iii) if at any time, any of the conditions referred to in sub-section (3) 9
and sub-section (3A)] is not fulfilled: Provided that before cancelling a
licence under clause (ii) or clause (iii) of this sub-section on the ground
that the banking company has failed to comply with or has failed to fulfil
any of the conditions referred to therein, the Reserve Bank, unless it is of
opinion that the delay will be prejudicial to the interests of the
company’s depositors or the public, shall grant to the company on such
terms as it may specify, an opportunity of taking the necessary steps for
complying with or fulfilling such condition.
(5) Any banking company aggrieved by the decision of the Reserve
Bank cancelling a licence under this section may, within thirty days
from the date on which such decision is communicated to it, appeal to
the Central Government.
(6) The decision of the Central Government where an appeal has been
preferred to it under sub-section (5) or of the Reserve Bank where no
such appeal has been preferred shall be final.
Section 8 in BANKING REGULATION ACT,1949
8. Prohibition of trading.—Notwithstanding anything contained in
section 6 or in any contract, no banking company shall directly or
indirectly deal in the buying or selling or bartering of goods, except in
connection with the realisation of security given to or held by it, or
engage in any trade, or buy, sell or barter goods for others otherwise
than in connection with bills of exchange received for collection or
negotiation or with such of its business as is referred to in clause
(i) of sub-section (1) of section 6: 42 [Provided that this section shall not
apply to any such business as is specified in pursuance of clause (o) of
sub-section (1) of section 6.] Explanation.—For the purposes of this
section, “goods” means every kind of movable property, other than
actionable claims, stocks, shares, money, bullion and specie, and all
instruments referred to in clause (a) of sub-section (1) of section 6.
Section 9 in BANKING REGULATION ACT,1949
9. Disposal of non-banking assets.—Notwithstanding anything
contained in section 6, no banking company shall hold any immovable
property howsoever acquired, except such as is required for its own use,
for any period exceeding seven years from the acquisition thereof or
from the commencement of this Act, whichever is later or any extension
of such period as in this section provided, and such property shall be
disposed of within such period or extended period, as the case may be:
Provided that the banking company may, within the period of seven
years as aforesaid deal or trade in any such property for the purpose of
facilitating the disposal thereof: Provided further that the Reserve Bank
may in any particular case extend the aforesaid period of seven years by
such period not exceeding five years where it is satisfied that such
extension would be in the interests of the depositors of the banking
company.
Section 11 in BANKING REGULATION ACT,1949
11. Requirement as to minimum paid-up capital and reserves.—
(1) Notwithstanding anything contained in 73 [section 149 of the
Companies Act, 1956 (1 of 1956)], no banking company in existence on
the commencement of this Act, shall, after the expiry of three years from
such commencement or of such further period not exceeding one year as
the Reserve Bank, having regard to the interests of the depositors of the
company, may think fit in any particular case to allow, carry on business
74 [in India], and no other banking company shall after the
commencement of this Act, commence or carry on business 74 [in India]
75 [unless it complies with such of the requirements of this section as
are applicable to it].
76 [(2) In the case of a banking company incorporated outside India—
(a) the aggregate value of its paid-up capital and reserves shall not be
less than fifteen lakhs of rupees and if it has a place or places of business
in the city of Bombay or Calcutta or both, twenty lakhs of rupees; and
(b) 77 [the banking company shall deposit and keep deposited with the
Reserve Bank either in cash or in the form of unencumbered approved
securities, or partly in cash and partly in the form of such securities—
(i) an amount which shall not be less than the minimum required by
clause (a); and
(ii) as soon as may be after the expiration of each 78 [***] year, an
amount calculated at twenty per cent of its profit for that year in respect
of all business transacted through its branches in India, as disclosed in
the profit and loss account prepared with reference to that year under
section 29:] Provided that any such banking company may at any time
replace—
(i) any securities so deposited by cash or by any other unencumbered
approved securities or partly by cash and partly by other such securities,
so however, that the total amount deposited is not affected;
(ii) any cash so deposited by unencumbered approved securities of an
equal value.]
79 [(2A) Notwithstanding anything contained in sub-section (2), the
Central Government may, on the recommendation of the Reserve Bank,
and having regard to the adequacy of the amounts already deposited and
kept deposited by a banking company under sub-section (2), in relation
to its deposit liabilities in India, declare by order in writing that the
provisions of sub-clause (ii) of clause (b) of sub-section (2) shall not
apply to such banking company for such period as may be specified in
the order.]
(3) In the case of any banking company to which the provisions of sub-
section (2) do not apply, the aggregate value of its paid-up capital and
reserves shall not be less than—
(i) if it has places of business in more than one State, five lakhs of
rupees, and if any such place or places of business is or are situated in
the city of Bombay or Calcutta or both, ten lakhs of rupees;
(ii) if it has all its places of business in one State none of which is
situated in the city of Bombay or Calcutta, one lakh of rupees in respect
of its principal place of business, plus ten thousand rupees in respect of
each of its other places of business situated in the same district in which
it has its principal place of business, plus twenty-five thousand rupees in
respect of each place of business situated elsewhere in the State other-
wise than in the same district: Provided that no banking company to
which this clause applies shall be required to have paid-up capital and
reserves exceeding an aggregate value of five lakhs of rupees: Provided
further that no banking company to which this clause applies and which
has only one place of business, shall be required to have paid-up capital
and reserves exceeding an aggregate value of fifty thousand rupees: 80
[Provided further that in the case of every banking company to which
this clause applies and which commences banking business for the first
time after the commencement of the Banking Companies (Amendment)
Act, 1962 (36 of 1962), the value of its paid-up capital shall not be less
than five lakhs of rupees;]
(iii) if it has all its places of business in one State, one or more of which
is or are situated in the city of Bombay or Calcutta, five lakhs of rupees,
plus twenty-five thousand rupees in respect of each place of business
situated outside the city of Bombay or Calcutta, as the case may be:
Provided that no banking company to which this clause applies shall be
required to have paid-up capital and reserves exceeding an aggregate
value of ten lakhs of rupees. Explanation.—For the purposes of this sub-
section, a place of business situated 81 [in a State] other than that in
which the principal place of business of the banking company is situated
shall, if it is not more than twenty-five miles distant from such principal
place of business, be deemed to be situated within the same State as such
principal place of business.
(4) Any amount deposited and kept deposited with the Reserve Bank
under 82 [***] sub-section (2) by any banking company incorporated 83
[outside India] shall, in the event of the company ceasing for any reason
to carry on banking business 84 [in India], be an asset of the company on
which the claims of all the creditors of the company 84 [in India] shall
be a first charge.
85 (5) For the purposes of this section,—
(a) “place of business” means any office, sub-office, sub-pay office and
any place of business at which deposits are received, cheques cashed, or
moneys lent;
(b) “value” means the real or exchangeable value, and not the nominal
value which may be shown in the books of the banking company
concerned.]
(6) If any dispute arises in computing the aggregate value of the paid-up
capital and reserves of any banking company, a determination thereof by
the Reserve Bank shall be final for the purposes of this section.
Section 10(1) in BANKING REGULATION ACT,1949
(1) No banking company—
(a) shall employ or be managed by a managing agent; or
(b) shall employ or continue the employment of any person—
(i) who is, or at any time has been, adjudicated insolvent, or has
suspended payment or has compounded with his creditors,or who is, or
has been, convicted by a criminal court of an offence involving moral
turpitude; or
(ii) whose remuneration or part of whose remuneration takes the form of
commission or of a share in the profits of the company: 44 [Provided
that nothing contained in this sub-clause shall apply to the payment by a
banking company of—
(a) any bonus in pursuance of a settlement or award arrived at or made
under any law relating to industrial disputes or in accordance with any
scheme framed by such banking company or in accordance with the
usual practice prevailing in banking business;
(b) any commission to any broker (including guarantee broker), cashier-
contractor, clearing and forwarding agent, auctioneer or any other
person, employed by the banking company under a contract otherwise
than as a regular member of the staff of the company; or]
(iii) whose remuneration is, in the opinion of the Reserve Bank,
excessive; or
(c) shall be managed by any person—
45 [(i) who is a director of any other company not being—
(a) a subsidiary of the banking company, or
(b) a company registered under section 25 of the Companies Act, 1956
(1 of 1956): Provided that the prohibition in this sub-clause shall not
apply in respect of any such director for a temporary period not ex-
ceeding three months or such further period not exceeding nine months
as the Reserve Bank may allow; or]
(ii) who is engaged in any other business or vocation; or
(iii) 46 [whose term of office as a person managing the company is] for
period exceeding five years at any one time: 47 [Provided that the term
of office of any such person may be renewed or extended by further
periods not exceeding five years on each occasion subject to the
condition that such renewal/extension shall not be sanctioned earlier
than two years from the date on which it is to come into force: Provided
also that where the term of office of such person is for an indefinite
period, such term, unless it otherwise comes to an end eallier, shall come
to an end immediately on the expiry of five years from the date of his
appointment or on the expiry of three months from the date of
commencement of section 8 of the Banking Laws (Miscellaneous
Provisions) Act, 1963 (55 of 1963), whichever is later:] Provided further
that nothing in this clause shall apply to a director, other than the
managing director, of a banking company by reason only of his being
such director. Explanation.—For the purpose of sub-clause (iii) of clause
(b), the expression "remuneration”, in relation to person employed or
continued in employment, shall include salary, fees and perquisites but
shall not include any allowances or other amounts paid to him for the
purpose of reimbursing him in respect of the expense actually incurred
by him in the performance of his duties.
Section 12 in BANKING REGULATION ACT,1949
86 [12. Regulation of paid-up capital, subscribed capital and authorised
capital and voting rights of shareholders.—
(1) No banking company shall carry on business in India, unless it
satisfies the following conditions, namely:—
(i) that the subscribed capital of the company is not less than one-half of
the authorised capital, and the paid-up capital is not less than one-half of
the subscribed capital and that, if the capital is increased, it complies
with the conditions prescribed in this clause within such period not
exceeding two years as the Reserve Bank may allow;
(ii) that the capital of the company consists of ordinary shares only or of
ordinary shares or equity shares and such preferential shares as may
have been issued prior to the 1st day of July, 1944: Provided that
nothing contained in this sub-section shall apply to any banking
company incorporated before the 15th day of January, 1937.
(2) No person holding shares in a banking company shall, in respect of
any shares held by him, exercise voting rights 87 [on poll] 88 [in excess
of 89 [ten per cent.]] of the total voting rights of all the shareholders of
the banking company.
(3) Notwithstanding anything contained in any law for the time being in
force or in any contract or instrument no suit or other proceeding shall
be maintained against any person registered as the holder of a share in a
banking company on the ground that the title to the said share vests in a
person other than the registered holder: Provided that nothing contained
in this sub-section shall bar a suit or other proceeding—
(a) by a transferee of the share on the ground that he has obtained from
the registered holder a transfer of the share in accordance with any law
relating to such transfer; or
(b) on behalf of a minor or a lunatic on the ground that the registered
holder holds the share on behalf of the minor or lunatic.
(4) Every chairman, managing director or chief executive officer by
whatever name called of a banking company shall furnish to the Reserve
Bank through that banking company returns containing full particulars
of the extent and value of his holding of shares, whether directly or
indirectly, in the banking company and of any change in the extent of
such holding or any variation in the rights attaching thereto and such
other information relating to those shares as the Reserve Bank may, by
order, require and in such form and at such time as may be specified in
the order.]
Section 13 in BANKING REGULATION ACT,1949
13. Restriction on commission, brokerage, discount, etc., on sale of
shares.—Notwithstanding anything to the contrary contained in 91
[sections 76 and 79 of the Companies Act, 1956 (1 of 1956)], no
banking company shall pay out directly or indirectly by way of
commission, brokerage, discount or remuneration in any form in respect
of any shares issued by it, any amount exceeding in the aggregate two
and one-half per cent. of the paid-up value of the said shares.
Guidelines for Appointment of Statutory Auditors in Public Sector
Banks By RBI
Based on the recommendations of a Working Group (WG) to review the
norms for empanelment of statutory auditors for public sector banks and
other related issues and after seeking the approval of GoI, it has been
decided to revise the guidelines on appointment of statutory auditors in
public sector banks with effect from the year 2013-14. The revised
eligibility norms for empanelment of SCAs as prescribed by RBI in
consultation with the WG have been indicated in Annex 1. The
categorization/eligibility norms for empanelment of branch auditors
which have been kept unchanged are indicated in Annex 2.
The guidelines/instructions relating to the selection procedure to be
followed for appointment of statutory auditors in PSBs and details
thereof are furnished in Annex 3
Annex 1
Norms of Empanelment for Statutory Central Auditors
of Public Sector Banks applicable from the year 2013-14
As on 1 January of the relative year the firm should have
(i) minimum 7 full time chartered accountants, of which at least
5 should be full time partners exclusively associated* with
the firm. These partners should have minimum continuous
association with the firm i.e. one each should have
continuous association with the firm at least for 15 years and
10 years , two with a minimum of 5 years each and one with
a minimum of one year. The remaining 2 full-time chartered
accountants or partners, as the case may be, should also have
a continuous association with the firm for a period of one
year*. Four of the partners should be FCAs. Also at least two
of the partners should have minimum 15 and 10 years
experience in practice. In case the paid Chartered Accountant
available with the firm without any break was admitted as a
partner of the said firm at a future date, his association with
the firm as a partner will be counted from the date of his
joining the firm as a paid Chartered Accountant.
(ii) the number of professional staff (excluding typists,
stenographers, computer operators, secretary/ies and sub-
ordinate staff etc.), consisting of audit and articled clerks
with the knowledge in book-keeping and accountancy and
are engaged in outdoor audit should be 18.
(iii) the standing of the firm should be of at least 15 years which
would be reckoned from the date of availability of one full
time FCA continuously with the firm.
(iv) the firm should have minimum statutory central audit
experience of 15 years of public sector banks (before or after
nationalisation) and/or by way of statutory branch audit
thereof or that of statutory audit experience of a private
sector bank. In case any of the partner of an audit firm is
nominated / elected for a period of at least 3 years or more on
the Board of any public sector bank then his / her such
experience for a maximum period of three years will be
considered as bank audit experience, provided such
experience has not been earned by him/her concurrently i.e.
when his / her firm was assigned statutory audit of any PSB,
select all India financial Institutions or RBI.
(v) the firm should have statutory audit experience of 5 years of
the public sector undertakings (either Central or State
Government undertaking).
(vi) at least two partners of the firm or its paid Chartered
Accountants must possess DISA/CISA or any other
equivalent qualification.
(ANNEX 2) Norms for the empanelment of audit firms to be
appointed as statutory branch auditors for public sector banks
(2013-14)
Cate-
gory
No. of CAs exclusively
associated with the firm
(Full time)
No. of partners exclusively
associated with the firm
(full time) (Out of 2)
Profe-
ssional
staff
Bank audit
experience
Standing
of the
audit
firm
(1) (2) (3) (4) (5) (6)
I. 5 3 8 The firm or
at least one
of the
partners
should have
a minimum
of 8 years
experience
of branch
audit of a
nationalised
bank and/
or of a
private
sector bank
8 years
II. 3 2 6 The firm or
at least one
of the
6 years
(for the
firm or at
partners
should have
preferably
conducted
branch
audit of a
nationalised
bank or of a
private
sector bank.
least one
partner)
III. 2 1 4 The firm or
at least one
of the CAs
should have
preferably
conducted
branch
audit of a
nationalised
bank or of a
private
sector bank
for at least
3 years
5 years
(for the
firm or at
least one
partner)
IV. 2 2
Even proprietorship concern without bank audit
2 Not 3 years
experience may be considered as hitherto. (The
proprietary concerns of Chartered Accountants with 1
paid CA, 2 professional staff and not having any
statutory branch audit experience of a nationalised bank
or of a private sector bank will be treated at par with the
partnership firm after deducting their 3 years seniority
from the date of their establishment).
necessary
ANNEX 3
PROCEDURE FOR APPOINTMENT OF
STATUTORY AUDITORS IN PUBLIC SECTOR BANKS
Statutory Central Auditors (SCAs)
1. For the year 2013-14 and onwards, GoI have approved the revision in
the norms on the number of SCAs to be appointed in PSB as under:
i) Category “A” Banks (Large Banks viz. Bank of Baroda, Bank of
India, Canara Bank, Punjab National Bank, Central Bank of India and
Union Bank of India) shall not have more than 6 SCAs. However, in
case of SBI the number of SCAs shall not be more than 14.
ii) Category “B” Banks (Medium Banks viz. Allahabad Bank,
Corporation Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of
Commerce, Syndicate Bank and UCO Bank) shall not have more than 5
SCAs, and;
iii) Category “C” Banks (Small Banks viz. Andhra Bank, Bank of
Maharashtra, Dena Bank, Punjab & Sind Bank, United Bank of India,
Vijaya Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad,
State Bank of Mysore, State Bank of Patiala and State Bank of
Travancore) shall not have more than 4 SCAs.
DIFFERENT TYPES OF FACILITIES PROVIDED BY SBI
Personal Banking
Deposit Schemes: Whatever your needs - an investment of your
surplus funds or to create a fund for your childrens' education and
marriage.
You will find a product from SBI that suits your requirement, delivered
at a branch close to you.
Open an account with any of SBIs branches, all of them are fully
computerised, and realise the advantage of their vast network.
Place funds in Multi Option Deposit Scheme, a term deposit which is not
fixed at all and comes with a unique break-up facility which provides
you full liquidity as well as benefits of higher rates of returns, through
your savings bank account.
Alternately, keep that deposit intact by availing an overdraft facility, to
meet your occasional temporary funds requirements. They provide the
following:
(i) Premium Savings Account
(ii) Current Account
(iii) Savings Bank Account
(iv) Term Deposits
(v) SBI Capgains Plus (Capital Gain Scheme 1988)
Personal Finance: State Bank of India has a variety of schemes
under Personal Finance to satisfy varying needs of the banking
public. The Bank offers the following schemes with attractive rates
of interest:
a. Home Loan
b. SBI Gold Loan
c. Car Loan
d. Personal Loans
e. Loans Against Securities
f. Loans Against Property
g. Career Loan
h. Education Loan
i. Central Scheme for Interest Subsidy on Education Loans
j. EMI Calculator
Many of our branches offer loans under Personal Finance. This
section also offers an EMI calculator to facilitate computation of
monthly repayment.
Services: State Bank of India offers a wide range of services in the
Personal Banking Segment which are indexed here. Click on each
of them to access the details.
1. eZ-trade@sbi
2. ATM SERVICES
3. GIFT CHEQUES
4. INTERNET BANKING
5. FOREIGN INWARD REMITTANCE
6. LOCKER
7. CARDS
8. GREEN REMIT CARD
Gold Banking:
1. RETAIL SALE OF GOLD COINS
2. GOLD DEPOSIT SCHEME (GDS)
AGRICULTURAL BANKING
Branches of State Bank of India have covered a whole gamut of
agricultural activities. Some of them are:
Crop production, Horticulture, Plantation crops and Forestry
Mulberry cultivation, Rearing of silk worms and grainages
Allied activities like Dairy , Fisheries, Poultry, Sheep-Goat
andPiggery
Land development and reclamation
Farm mechanization and Refurbished second hand tractors
Digging of wells, Tube wells and Irrigation projects
Construction of Cold storages and Godowns
Processing of Agri-products and finance to Agri-input dealers
Loans against pledge of warehouse receipts and Loans against
produce stored by the farmer at his own premises
Loans against Book Debts of Arthias
In fact Bank can cover any other agricultural related activities
undertaken.
Other facilities rendered to customers
BROKING SERVICES: SBI Capital Markets Ltd. has expanded
its retail broking network to help investors carry out their
broking transactions with confidence. At present the investors
can buy/sell shares at both NSE and BSE through their Retail
Broking Centres in the cash market.We furnish hereunder the
location of these Centres with full particulars of the contact
persons.All investors can approach these branches for their
broking needs.
E-PAY: Bill Payment(e-Pay) will let you to pay your
Telephone, Mobile, Electricity, Insurance and Credit Card bills
electronically over our Online SBI website
https://www.onlinesbi.com.
Say good-bye to queues: Check & Pay your bills online, 24 hours a
day, over e-Pay. You even get a Cyber Receipt for your payments
done online or scheduled over online SBI!
If your biller presents bills online, you can also give us AutoPay
instructions and we will pay the bills as and when it falls due.
The national billers like LIC,SBI Cards, SBI Life Insurance etc. can
be paid at any centre accross the country.
You can add billers online using the Add Biller link on
https://www.onlinesbi.com site or you can fill up the SBI e-Pay
Registration Form (SeRF) which is available at the branch and submit
thereat. Branch will add your Billers for payment over e-Pay.
E-RAIL: Book your Railways Ticket Online.
(i) The facility has been launched wef Ist September 2003 in
association with IRCTC. The scheme facilitates Booking of
Railways Ticket Online. The salient features of the scheme are
as under:
(ii) All Internet banking customers can use the facility.
(iii) You are required to register on www.irctc.co.in. You can
select your train depending on your journey and book your
ticket online.
(iv) On giving payment option as SBI, the user will be redirected
to onlinesbi.com. After logging on to the site you will be
displayed payment amount, TID No. and Railway reference no.
(v) On selecting the payment amount your account will be
debited. You will return to www.irctc.co.in. The ticket with
PNR No. will be displayed. You can print the ticket.
(vi) The ticket can be delivered or collected by the customer.
(vii) The user can collect the ticket personally at New Delhi
reservation counter .
(viii) The Payment amount will include ticket fare including
reservation charges, courier charges and Bank Service fee of Rs
10/.
(ix) For cancellation, the has ticket to be presented over
reservation counter.
(x) No cash will be paid at the time of cancellation. Only
cancellation ticket will be issued. Your account will be credited
after 4 days.
SAFE DEPOSIT LOCKER: For the safety of your valuables we
offer our customers safe deposit vault or locker facilities at a
large number of our branches. There is a nominal annual charge,
which depends on the size of the locker and the centre in which
the branch is located.
MICR CODES: In MICR technology the information is printed
on the instrument with a special type of ink which is made up of
magnetic material. On insertion of the instrument in the
machine, the printed information is read by the machine. MICR
system is beneficial as it minimizes chances of error, clearing of
cheques becomes easy and transfer of funds becomes faster in
order to facilitate operations.
FOREIGN INWARD REMITTANCES:
Drafts in Indian rupees can be purchased from exchange companies
or our correspondents and mailed to the branch where you have your
account.
Telegraphic or wire transfers can be made through our branches
abroad [Click here to Branches] or our correspondents to branches
having SWIFT/TT drawing arrangements. Please indicate your
account number clearly.
Cheques can be deposited for credit of your accounts. These will be
collected and credited to your accounts.
Travelers cheques can be tendered by you personally during your visit
to India.
" SBI now provides your Account balance and last 5 Transaction
details over phone round the clock.
Information on deposits/loan schemes and many more services are
available.''
PREPARATION OF FINANCIAL STATEMENT (sec 29)
29. Accounts and balance-sheet.—
(1) At the expiration of each calendar year [or at the expiration of a
period of twelve months ending with such date as the Central
Government may, by notification in the Official Gazette, specify in this
behalf,] every banking company incorporated in India, in respect of all
business transacted by it, and every banking company incorporated
4[outside India], in respect of all business transacted through its
branches 3[in India], shall prepare with reference to [that year or period,
as the case may be,] a balance-sheet and profit and loss account as on the
last working day of [that year or the period, as the case may be,] in the
Forms set out in the Third Schedule or as near thereto as circumstances
admit: [Provided that with a view to facilitating the transition from one
period, of accounting to another period of accounting under this sub-
section, the Central Government may, by order published in the Official
Gazette, make such provisions as it considers necessary or expedient for
the preparation of, or for other matters relating to, the balance sheet or
profit and loss account in respect of the concerned year or period, as the
case may be.]
(2) The balance-sheet and profit and loss account shall be signed—
(a) in the case of a banking company incorporated in India, by the
manager or the principal officer of the company and where there are
more than three directors of the company, by at least three of those
directors, or where there are not more than three directors, by all the
directors, and
(b) in the case of a banking company incorporated outside India by the
manager or agent of the principal office of the company in India.
(3) Notwithstanding that the balance-sheet of a banking company is
under sub-section (1) required to be prepared in a form other than the
form 3[set out in Part I of Schedule VI to the Companies Act, 1956 (1 of
1956)], the requirements of that relating to the balance-sheet and profit
and loss account of a company shall, in so far as they are not
inconsistent with this Act, apply to the balance-sheet or profit and loss
account, as the case may be, of a banking company. 9[(3A) Companies
Act, 1956 (1 of 1956), the period to which the profit and loss account
relates shall, in the case of a banking company, be the period ending
with the last working day of the year immediately preceding the year in
which the annual general meeting is held.] 10[Explanation.—In sub-
section (3A), “year” means the year or, as the case may be, the period
referred to in sub-section (1).Comparitive profit and loss a/c records
State Bank of India
Standalone Profit & Loss account ------------------- in Rs. Cr. ------------------- Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
IncomeInterest Earned 136,350.80 119,657.10 106,521.45 81,394.36 70,993.92
Other Income 18,552.92 16,034.84 14,351.45 14,930.42 14,968.15
Total Income 154,903.72 135,691.94 120,872.90 96,324.78 85,962.07ExpenditureInterest expended 87,068.63 75,325.80 63,230.37 48,867.96 47,322.48
Employee Cost 22,504.28 18,380.90 16,974.04 15,211.62 12,754.65
Selling and Admin Expenses 0.00 0.00 0.00 0.00 7,898.23
Depreciation 1,333.94 1,139.61 1,007.17 990.50 932.66
Miscellaneous Expenses 33,105.70 26,740.65 27,954.03 23,884.37 7,888.00
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Operating Expenses 35,725.85 29,284.42 26,068.99 23,015.44 24,941.01
Provisions & Contingencies 21,218.07 16,976.74 19,866.25 17,071.05 4,532.53
Total Expenses 144,012.55 121,586.96 109,165.61 88,954.45 76,796.02 Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Net Profit for the Year 10,891.17 14,104.98 11,707.29 7,370.35 9,166.05Extraordionary Items 0.00 0.00 0.00 0.00 0.00
Profit brought forward 0.34 0.34 6.05 0.34 0.34
Total 10,891.51 14,105.32 11,713.34 7,370.69 9,166.39Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 2,239.71 2,838.74 2,348.66 1,905.00 1,904.65
Corporate Dividend Tax 298.45 375.95 296.49 246.52 236.76
Per share data (annualised)Earning Per Share (Rs) 145.88 206.20 174.46 116.07 144.37Equity Dividend (%) 300.00 415.00 350.00 300.00 300.00
Book Value (Rs) 1,584.34 1,445.60 1,251.05 1,023.40 1,038.76
AppropriationsTransfer to Statutory Reserves 8,353.03 10,890.29 9,067.85 5,218.83 6,495.14
Transfer to Other Reserves 0.00 0.00 0.00 0.00 529.50
Proposed Dividend/Transfer to Govt 2,538.16 3,214.69 2,645.15 2,151.52 2,141.41
Balance c/f to Balance Sheet 0.32 0.34 0.34 0.34 0.34
Total 10,891.51 14,105.32 11,713.34 7,370.69 9,166.39
Comparitive balancesheet records of SBI
Balance Sheet of State Bank of India ------------------- in Rs. Cr. -------------------
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 746.57 684.03 671.04 635.00 634.88
Equity Share Capital 746.57 684.03 671.04 635.00 634.88
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 117,535.68 98,199.65 83,280.16 64,351.04 65,314.32
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Net Worth 118,282.25 98,883.68 83,951.20 64,986.04 65,949.20
Deposits 1,394,408.51 1,202,739.57 1,043,647.36 933,932.81 804,116.23
Borrowings 183,130.88 169,182.71 127,005.57 119,568.96 103,011.60
Total Debt 1,577,539.39 1,371,922.28 1,170,652.93 1,053,501.77 907,127.83
Other Liabilities & Provisions 96,412.96 95,455.07 80,915.09 105,248.39 80,336.70
Total Liabilities 1,792,234.60 1,566,261.03 1,335,519.22 1,223,736.20 1,053,413.73
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Assets
Cash & Balances with RBI 84,955.66 65,830.41 54,075.94 94,395.50 61,290.87
Balance with Banks, Money at Call 47,593.97 48,989.75 43,087.23 28,478.65 34,892.98
Advances 1,209,828.72 1,045,616.55 867,578.89 756,719.45 631,914.15
Investments 398,308.19 350,927.27 312,197.61 295,600.57 285,790.07
Gross Block 8,002.16 6,595.71 5,133.87 4,764.19 11,831.63
Accumulated Depreciation 0.00 0.00 0.00 0.00 7,713.90
Net Block 8,002.16 6,595.71 5,133.87 4,764.19 4,117.73
Capital Work In Progress 0.00 409.31 332.68 0.00 295.18
Other Assets 43,545.90 47,892.03 53,113.02 43,777.85 35,112.76
Total Assets 1,792,234.60 1,566,261.03 1,335,519.24 1,223,736.21 1,053,413.74
Contingent Liabilities 1,091,358.37 993,018.45 899,565.18 790,389.59 429,917.37
Bills for collection 0.00 0.00 0.00 0.00 166,449.04
Book Value (Rs) 1,584.34 1,445.60 1,251.05 1,023.40 1,038.76
ConclusionThe users of the financial statements need information about the
financial position and performance of the bank in making economic
decisions. They are interested in its liquidity and solvency and the risks
related to the assets and liabilities recognised on its balance sheet and to
its off balance sheet items. In the interest of full and complete
disclosure, some very useful information is better provided, or can only
be provided, by notes to the financial statements. The use of notes and
supplementary information provides the means to explain and document
certain items, which are either presented in the financial statements or
otherwise affect the financial position and performance of the reporting
enterprise. Recently, a lot of attention has been paid to the issue of
market discipline in the banking sector. Market discipline, however,
works only if market participants have access to timely and reliable
information, which enables them to assess banks’ activities and the risks
inherent in these activities. Enabling market discipline may have several
benefits. Market discipline has been given due importance under Basel II
framework on capital adequacy by recognizing it as one of its three
Pillars. In order to encourage market discipline, Reserve Bank has over
the years developed a set of disclosure requirements which allow the
market participants to assess key pieces of information on capital
adequacy, risk exposures, risk assessment processes and key business
parameters which provide a consistent and understandable disclosure
framework that enhances comparability. Banks are also required to
comply with the Accounting Standard 1 (AS 1) on Disclosure of
Accounting Policies issued by the Institute of Chartered Accountants of
India (ICAI). The enhanced disclosures have been achieved through
revision of Balance Sheet and Profit & Loss Account of banks and
enlarging the scope of disclosures to be made in “Notes to Accounts”. In
addition to the 16 detailed prescribed schedules to the balance sheet,
banks are required to furnish the following information in the “Notes to
Accounts”
Bibliography
http://www.rbi.org.in/
http://www.moneycontrol.com/financials/sbi/consolidated-
balance-sheet/SBI
http://www.sbi.co.in/
advanced financial accounting by L.N. chopde
http://indiankanoon.org/