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Functions of State Bank of India

The State Bank of India enjoys the status of being the largest bank in India. Recently due to the merger, it became the largest banks in terms of asset size in the world. Thus, there are a lot of functions being handled by SBI daily. So, below are the functions of State Bank of India.

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Functions of State Bank of India

Functions of State Bank of India

The functions of the State Bank of India is largely divided into two main categories. These are ordinary banking functions and central banking functions. Both these categories are broadly divided into many subcategories.

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Central Banking Functions

SBI acts as an agent to the RBI, where there are no branches RBI available. Accordingly, there are many functions which are rendered by the SBI. These are

  • Maintaining the currency
  • Government’s bank
  • Bank’s banker
  • Acts as a clearinghouse
  • Maintaining the currency

RBI is reporting for maintaining its own currency. But the offices of RBI are only available in big cities. But the branches of SBI are available everywhere in the country. The network of SBI works in rural as well as urban areas.

In such places, RBI maintains its currency with SBI. The currency is withdrawn from these branches whenever required by RBI.

Government’s Bank

SBI caters to the needs of both the government, central as well as the state. On behalf of the government, it receives the money and deposits it. It collects the charges on behalf of government like tax collection and other payments. It also grants advances and loans to the government.

Learn more about Important Banks in India here in detail.

Bank’s Bankers

Many commercial banks have their accounts with SBI. These banks resort to help SBI whenever they face the financial shortage. It also discounts the bills for these commercial banks. Due to this function, SBI is also considered as the banker’s bank but only in a limited sense.

Acts as a Clearinghouse

In places where RBI has no branches, SBI acts as a clearinghouse for them. There, it facilitates the services of interbank settlements and many other services. All the banks have accounts with SBI, so the process of clearing becomes easier for SBI.

General Banking Functions

There are many functions that SBI beyond the above-mentioned services. These services are rendered by SBI under section 33A. These are:

  • It accepts the deposits from the people in the form of savings, fixed, current, and recurring deposit accounts.
  • Based on the security of stocks, securities, SBI gives advances and loans to the public.
  • SBI gives the facility of drawings, accepting, and buying and selling the bills of exchange.
  • It also issues and circulates the letters of credit.
  • SBI also invests in funds or any special kind of security.
  • The bank also acts as a trustee, executor, or otherwise, based on the circumstances.
  • It is also entrusted with selling and purchasing of either movable or immovable properties that come in the bank.
  • SBI also functions for selling and buying of gold and silver.
  • For the general public, it helps in the opening of public provident fund accounts.
  • It underwrites any issue related to the securities or the debentures that are authorized.
  • It provides the facility of shipping finance as well as various factoring services.
  • There are many leading bank schemes in which SBI participates.

Practice Questions

Q. Which is the largest commercial bank in India?

A. HDFC bank            B. Axis bank                  C. SBI bank                   D. PNB

Answer: C. SBI bank

Q. SBI lends money to other commercial banks.

A. True                        B.False

Answer: A. True

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