A Short Note on the State Bank of India, a State under Article 12

SBI is now India’s largest bank. It is a financial services firm that is a public sector bank with a global nature. SBI, based in Mumbai, is the world’s 43rd largest bank. The bank is descended from the Bank of Calcutta, created in 1806, making it the Indian Subcontinent’s oldest commercial bank. In total, the bank was founded through the acquisitions and mergers of roughly twenty institutions over a while. State Bank of India, a State under Article 12, is governed by the government and Parliament of India and the local and other authorities mentioned in Article 12 of the Indian Constitution. 

The Indian Constitution: Article 12

Article 12 of the Constitution describes the state as comprised of the following parts:

• The Indian Government and Parliament
• Each state’s government and legislative body.
• Local governments and other government entities.

The term “State” is defined in Article 12 of the Indian Constitution as the union and the state governments, all local or other authorities, the Parliament and state legislatures inside India or under the supervision of the Indian government.

According to that, SBI can also be controlled by local authorities and governing bodies, apart from the central governing body. Therefore, it denotes the State Bank of India, a State under Article 12. 

The State Bank of India’s History

The Bank of Calcutta was founded in 1806 and became the forerunner of SBI in the first part of the nineteenth century. Later, the name of this bank changed to the Bank of Bengal.

The Imperial Bank of India came into being in 1921 when the 3 banks, namely the Banks of Bombay, Bengal, and Madras, merged. It conducted specific central banking tasks in conjunction with its normal commercial banking activities until the Reserve Bank of India was established in 1935.

It gave up its central banking powers after the RBI (Reserve Bank of India) came into being. However, it continued to operate as the Reserve Bank’s agent in places where the RBI did not have branches. The government nationalised this bank in 1955 to create SBI or the State Bank of India.

Subsidiary banks of SBI

The seven subsidiary banks of SBI are:

• SBM or The State Bank of Mysore
• SBP or The State Bank of Patiala
• SBBJ or The State Bank of Bikaner and Jaipur 
• State Bank of Saurashtra
• SBT or The State Bank of Travancore
• SBH or The State Bank of Hyderabad
• State Bank of Indore. 

These subsidiary banks were under SBI in 1955. However, in 1959, the State Bank of India (Subsidiary) Act was passed, and all the seven subsidiaries of SBI were nationalised.  

Functions of the State Bank of India

The State Bank acts as an agent for the Reserve Bank and fulfils the following tasks:

• It serves as the government’s bank, collecting money and making payments on the government’s behalf, as well as managing public debt.
• It serves as a bank for bankers. It accepts deposits from commercial banks and lends them. It also serves as a clearinghouse for commercial banks, rediscounting their bills of exchange and providing remittance services.
• It accepts the general public’s payments and deposits.
• It offers loan facilities against qualified securities, including bills of exchange, goods, promissory notes, real estate or title papers, fully paid corporate shares, debentures, and so on.
• Corporate securities, government securities, treasury bills, and railroad securities are among the investments it makes with its surplus cash.

Objectives of SBI

The State Bank of India, a State under Article 12, was formed to operate on standard commercial principles. However, unlike the country’s other commercial banks, it considers and responds to the financial needs of small scale industries and cooperative institutions. It especially caters to the rural parts of the country progressively and liberally.

The State Bank’s key goals are as follows:

• To behave according to the government’s broad economic policies.
• Providing financial assistance to cottage industries and small-scale businesses.
• To provide banking institutions with remittance services.
• To promote rural credit and stimulate savings by setting up local branches in rural and semi-urban areas.
• To form a government-to-government collaboration to provide cooperative financing.
• Provide financial assistance for the creation of licenced cooperative marketing associations and warehouses.

Conclusion

SBI has made significant progress in the right direction. It has made tremendous headway in developing banking services in semi-urban and rural areas and offering financial support to farmers, small companies, and cooperatives. The State Bank of India, a State under Article 12, is governed by the government and Parliament of India and the local and other authorities mentioned in Article 12 of the Indian Constitution.