FUNCTIONS OF SBI

The functions of SBI can be

grouped under two
categories,
1. Central Banking functions
and
2. Ordinary banking functions.

FUNCTIONS OF SBI
A. Central Banking Functions:
The SBI acts as agent of the RBI at the
places where the RBI has no branch. Accord
ingly, it renders the following functions:
(a) Banker to the government
(b) Banker to banks in a limited way
(c) Maintenance of currency chest
(d) Acts as clearing house
(e) Renders promotional functions

CENTRAL BANKING
FUNCTIONS
(1) Banker to the Government:
The SBI functions as the banker to the central and
state governments. It receives and pays money on
behalf of the governments. Especially it renders the
following functions as directed by the RBI in this
regard.
(a) Collection of charges on behalf of the government
e.g. collection of tax and other payments
(b) Grants loans and advances to the governments
(c) provides advises to the government regarding
economic conditions, etc.,

CENTRAL BANKING
FUNCTIONS
(2) Banker's Bank:
Commercial Banks have accounts with
SBI. When the banks face financial
shortage, the SBI provides assistance to
them as it is considered a big brother in
the banking industry. It discounts the bills
of the other commercial banks. Due to the
functions on this line the SBI is considered
in a limited sense as the banker's bank.

CENTRAL BANKING
FUNCTIONS
(3) Currency Chest:
The RBI maintains currency chests at its own
offices. But RBI Offices are situated only in big
cities. SBI, buy its wide network of branches
operate in urban as well as rural areas. RBI
therefore, in such places keeps money at currency
chests with SBI.
Whenever needs arise, the currency is withdrawn
from these chests under proper accounting and
reporting to RBI. Presently RBI entrust currency
chest to other Public Sector Banks and a few
Private Sector Banks also.

CENTRAL BANKING
FUNCTIONS
(4) Acts as Clearing House:
In all the places, where RBI has no
branch, the SBI renders the functions
of clearing house. Thus, it facilitates
the inter bank settlements. Since, all
the banks in such places have
accounts with SBI; it is easy for the
SBI, to act as clearing house.

CENTRAL BANKING
FUNCTIONS
(5) Renders Promotional Functions:
State Bank of India also renders various
promotional functions. It provides various facilities
to the following priority sectors:
(i) Agriculture
(ii) Small - Scale Industries
(iii) Weaker sections of the society
(iv) Co-operative sectors
(v) Small - traders
(vi) Unemployed Youth
(vii) Others.

ORDINARY BANKING
FUNCTIONS
B. General Banking Functions
Besides the above specialized functions, the SBI renders
the following functions under Section 33 of the Act.
1. Accepting deposits from the public under current,
savings, fixed and recurring deposit accounts.
2. Advancing and lending money and opening cash
credits upon the security of stocks, securities, etc.
3. Drawing, accepting, discounting, buying and selling of
bills of exchange and other negotiable instruments.
4. Investing funds, in specified kinds of securities.
5. Advancing and lending money to court of wards with
the previous approval of State Government.

ORDINARY BANKING
FUNCTIONS
6. Issuing and circulating letters of credit.
7. Offering remittance facilities such as, demand drafts,
mail transfers telegraphic transfers, etc.
8. Acting as administrator, executor, trustee or otherwise.
9. Selling and realizing the movable or immovable
properties that come into the banks in satisfaction of
claims.
10. Transacting pecuniary agency business on
commission stocks.
11. Underwriting of the issue of authorized shares
debentures, and other securities. (This function is done
through subsidiaries now)

ORDINARY BANKING
FUNCTIONS
12. Buying and selling of gold and silver.
13. It operates Public Provident Fund Accounts for
the general public.
14. It operates Non-Resident External Accounts
and Foreign Currency Accounts.
15. Providing Factoring service (through
subsidiaries).
16. Provides shipping finance.
17. Promotes Export through Export Credit.
Provides Project Export Finance.
18. Provides Merchant Banking Facilities.