The functions of SBI can be grouped under two categories, viz., the Central Banking functions and ordinary banking functions.

A. Central Banking Functions:

The SBI acts as agent of the RBI at the places where the RBI has no branch. Accord­ingly, 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


(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.,

(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.

(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Whenever needs arise, the currency is withdrawn from these chests under proper accounting and reporting to RBI.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.

(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.


(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.

In this respect SBI is like any other commercial bank.

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.

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)

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.

19. Provides specialized services like “Global Link Services “.

20. Promotes housing finance through “SBI Home Finance Ltd “.

21. Offers community services Banking. It provides grants to many socially relevant research projects undertaken by various universities and academic institutions in the country.

22. Provides Leasing Finance and Project Finance Facilities.

23. Participates in Lead Bank Scheme.

24. The State Bank may with the sanction of the Central Government, enter into ne­gotiations for acquiring the business of any other Banking Institutions.