The State Bank of India (SBI) has a legacy dating back 218 years to 1806, often leading to the misconception that it is an outdated and slow-to-evolve institution. However, this is far from the truth. Despite its deep historical roots, SBI remains a dynamic and relevant player in India's competitive banking sector, actively engaging with new-age fintech companies and technology-driven private lenders.

Originally founded as the Imperial Bank of India, it was the central commercial bank in British India until 1935, when the Reserve Bank of India (RBI) was established. The Imperial Bank itself was the result of merging three colonial-era Presidency banks—The Bank of Bengal, The Bank of Bombay, and The Bank of Madras—in 1921. Post-Independence, on July 1, 1955, the bank was rebranded as the State Bank of India, with the RBI holding the majority stake.

SBI operates under its own legislative framework, in addition to being regulated by the Companies Act, the Banking Regulation Act, and the RBI Act. These laws provide the bank with a strong foundation for leadership, governance, and operational autonomy, allowing it to pursue its mission effectively.

Pioneering Financial Inclusion and Rural Credit
From its early days, SBI played a critical role in expanding financial inclusion. By 1960, the bank had successfully established 400 branches, paving the way for rural credit programs and small business lending, which later extended to women entrepreneurs. In the 1990s, when private banks were still hesitant to venture into microfinance, SBI took the lead by recruiting officers specifically to promote microfinance initiatives. It embraced the NABARD's SHG-Bank Credit Linkage, contributing significantly to rural credit growth across the country.

SBI's steadfast commitment to empowering rural India stems from the core vision of the State Bank Act of 1955, which aimed not just to take over the Imperial Bank but to rejuvenate the lives of the Indian peasantry and strengthen rural communities. This vision has continued to guide the bank's operations over the decades.

Strategic Evolution and Innovation
SBI's focus on rural development has not hindered its evolution into a modern banking institution. In 1970, to cope with its rapid expansion, SBI sought the expertise of the Indian Institute of Management (Ahmedabad) to streamline its internal structure, creating a system of regional circles to better manage the growing pressure on its local offices. By the mid-1980s, SBI also began lending aggressively to priority sectors, including agriculture, boosting its contributions to the national economy.

Throughout the years, the bank has engaged with global consulting firms such as KPMG and McKinsey to upgrade its operations and meet the challenges of a liberalized banking environment. This led to the formation of Strategic Business Units (SBUs) in the 1990s, giving SBI a more focused approach to tackling new market demands.

Adapting to the Changing Financial Landscape
SBI’s leadership has consistently guided the bank through periods of transformation. During the post-liberalization era, it revamped its processes to align with international banking standards, including the adoption of the Basel framework for maintaining capital adequacy.

In recent years, under the leadership of notable figures like Arundhati Bhattacharya and Rajnish Kumar, SBI has focused on improving asset quality and reducing non-performing assets (NPAs). Bhattacharya, who became the bank's first woman chairperson, successfully shifted the bank's focus towards retail lending and small businesses, while Kumar continued this work by emphasizing stress asset resolution and reforming the bank’s credit review systems.

Meeting National Responsibilities
Beyond its commercial success, SBI has often played a key role in national financial stability. In 2020, when a private sector bank faced collapse, SBI, in collaboration with the government and the RBI, stepped in to rescue it. This marked the first instance of a public sector bank bailing out a private lender, demonstrating SBI’s ability to adapt to crises while upholding its national responsibilities.

The Path Forward
As of 2024, SBI continues to thrive with a robust balance sheet and strong profitability. The bank's ability to balance its commercial priorities with its mandate for financial inclusion ensures that it remains not just a relic of the past, but a vital institution for India’s future.