State Bank of India: Competitive Strategies of a Market Leader

Next came the Bank of Bombay in April 1840 followed by the Bank of Madras on July 1843. By 1876, the three presidency banks, together with their branches, agencies and sub-agencies, covered major inland trade centers in India. Bank of Bengal had 18 branches while the other two had 15 branches each. Initially, the business of these banks was restricted to discounting bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. The last quarter of the 19th century witnessed rapid commercialization in India owing to the expansion of the railway network, to cover all major geographic regions of the country.

However, the quasi-central bank role performed by the Imperial Bank ended with the formation of the Reserve Bank of India (RBI) as the central bank of India in 1935. RBI's establishment was a catalyst in the conversion of the Imperial Bank into a purely commercial bank. At the time of Independence in 1947, the Imperial Bank had acquired a paramount position in the country's banking industry.

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.