State Bank of India- an unlikely mirror of Indian history

Most of us have dealt with this icon of Public Sector banking at some point or the other in our lives. Many of us happily and many grudgingly (yours truly belonging to the latter category). But despite its infamous babugiri , SBI is a surprising saga of Indian history.

It has, for example, as its subsidiaries Bank Of Hyderabad, Bank of Patiala and State Bank of Bikaner and Jaipur, all established at various times by the then Rajas of the Princely states to mange their finances. The Hyderabad subsidiary even managed the Osmania Sicca- the state currency of Hyderabad. At the time when the various Princes still ruled their roosts, these subsidiaries must have given them a sense of control, but now as the SBI looks to merge them into the parent company it is an indication of the maturity of the banking system of the country and how the country is leaving its past behind.

A look at what happened to PSU Banks and especially SBI during the past year also holds a mirror to our financial system and the Indian mentality. During the recent economic crisis the top IT companies of the country chose PSU banks over private sector banks to deposit over Rs.20, 000 Crore. While ICICI and HDFC Banks were reeling under the shock of steep rise in cash withdrawals, almost all PSU Banks saw a record jump in new accounts and deposits. So much so that led by the SBI, PSU Banks were the first to cut loan rates.

And this is what we Indians really are- we may talk of liberalization, efficiency of the private sector banks, the new approach to buying everything on credit- but when push comes to shove, we will trust the good old SBI and PSU banks. Why? Because we know the conservative Indian Government governs them, and we will put money in fixed deposits rather than risk them in the stock market. SBI was built by and for the Indian way of dealing with money.

As SBI moves forward with its consolidation and modernization efforts, it stands as an example of modern India- one that is learning to accept that competition today demands agility but at the same time understands that at a basic level nothing much has changed. An average Indian even today is still far more concerned with saving for tomorrow than spending today.