State Bank of India – Governance in Public Sector

Balancing Profitability with Social Responsibility

1. State Bank of India – Governance in
Public Sector
Balancing Profitability with Social Responsibility
Team 7
Anjani KumarAnkit KumarAbhinavAthesham

2. Introduction to State Bank of India
account_balance
India's largest commercial bank in terms of assets, deposits, branches,
customers, and employees
history
Over 200 years of legacy and trust
public
57% state-owned by Government of India, remaining publicly traded
store
22,000+ branches across India
people
448 million customers nationwide
trending_up
23% market share in Indian banking sector

3. SBI's Corporate Governance Practices
groupsBoard Composition: Chairman,
Managing Directors, and
independent directors
gavelCodes of Conduct: Adherence to
ethical business practices
visibilityTransparency: Regular
disclosures and financial
reporting
verifiedRegulatory Compliance:
Adherence to RBI and
government regulations
securityRisk Management: Robust
framework for identifying and
mitigating risks
volunteer_activismCSR Initiatives: Through SBI
Foundation for social
development

4. Agency Theory and its Application to SBI
psychologyAgency Theory: Focuses on relationship between principals (shareholders)
and agents (managers)
balanceCore Issue: Potential conflicts of interest when agents pursue personal
goals over principals' interests
sync_problemAgency Problem: Information asymmetry between principals and agents
creates monitoring challenges
Application to SBI
account_balancePrincipals: Government (57% shareholder) + other shareholders
groupsAgents: Bank's management and executives
trending_upConflict Areas: Social objectives vs. profitability goals
handshakeAlignment Mechanisms: Performance incentives, board oversight,
regulatory compliance

5. Stakeholder Theory and its Application to SBI
peopleStakeholder Theory: Considers broader range of stakeholders beyond just
shareholders
balanceCore Principle: Business decisions should consider interests of all affected
parties
sync_altValue Creation: Balancing competing interests creates sustainable long-
term value
SBI's Key Stakeholders
account_balance
Government (57% owner)trending_up
Shareholders
groups
Employeesperson
Customers
savings
Depositorsaccount_balance_wallet
Borrowers
public
Society at large
handshakeDual Mandate: Serving all Indians while meeting shareholder
expectations
volunteer_activismEngagement: CSR initiatives, financial inclusion programs, rural
development

6. SBI's Balance of Profitability and Social Responsibility
₹204.10 Cr
CSR Spend FY2022
1%
Of Net Profit
2015
SBI Foundation Established
categoryKey CSR Focus Areas
home
Rural & Slum Developmentlocal_hospital
Healthcare
school
Educationeco
Environment
people
Tribal Welfarediversity_3
Women Empowerment
coronavirusCOVID-19 Relief: ₹108 Cr staff donation + ₹30 Cr for COVID-related CSR
location_citySBI Gram Seva Program: Impacted 11,836 households & 54,065 individuals

7. Challenges in SBI's Governance
balance
Balancing Objectives
arrow_rightSocial vs. profitability goals
arrow_rightGovernment mandates vs. market
demands
groups
Stakeholder Management
arrow_rightDiverse expectations
arrow_rightCompeting interests
devices
Digital Transformation
arrow_rightServing traditional customers
arrow_rightTechnology integration
person_off
Human Resources
arrow_rightStaff shortage
arrow_rightStagnant recruitment
gavel
Regulatory Compliance
arrow_rightComplex banking environment
arrow_rightIncreasing scrutiny
trending_up
Market Competition
arrow_rightPrivate sector banks
arrow_rightFintech disruption

8. Recommendations for Improving SBI's Governance
groups
Board Enhancement
arrow_rightStrengthen independence
arrow_rightEnhance expertise diversity
visibility
Transparency
arrow_rightClear decision-making processes
arrow_rightRegular stakeholder communication
handshake
Stakeholder Framework
arrow_rightComprehensive engagement strategy
arrow_rightBalance competing interests
devices
Digital Transformation
arrow_rightInvest in technology
arrow_rightMaintain traditional services
person_add
Human Resources
arrow_rightStrategic recruitment
arrow_rightContinuous training
assessment
Performance Metrics
arrow_rightBalanced financial & social KPIs
arrow_rightRegular evaluation

9. Conclusion
balanceSBI's governance framework balances public sector responsibilities with
commercial objectives
psychologyAgency theory highlights principal-agent relationship between
government/shareholders and management
peopleStakeholder theory emphasizes SBI's broader responsibilities to society
volunteer_activismSBI has made significant efforts in CSR while maintaining profitability
trending_upContinuous improvement in governance is essential for meeting evolving
expectations
updateFuture success depends on adapting to market dynamics while fulfilling
public sector mandate
account_balance
Balancing Profitability with
Social Responsibility