The main objectives of the State Bank are:
(i) To act in accordance with the broad economic policies of the government;
(ii) To encourage and mobilise savings by opening branches in rural and semi-urban areas and to promote rural credit;
(iii) To establish government partnership in the provision of cooperative credit;
(iv) To extend financial help for the establishment of licensed warehouses and cooperative marketing societies; (v) To provide financial help to the small scale and cottage industries;
(vi) To provide remittance facilities to the banking institutions. The State Bank of India acts as an agent of the Reserve Bank in all those places where the latter does not have its branches.
State Bank performs the following functions:
(i) It acts as the government’s bank, i.e., it collects money and makes payments on behalf of the government and manages public debt.
(ii) It acts as the bankers’ bank. It receives deposits from and gives loans to commercial banks. It also acts as the clearing house for the commercial banks, rediscounts the bills of exchange of the commercial banks and provides remittance facilities to the commercial banks.
(iii) It receives deposits from the public.
(iv) It gives loans and advances against eligible securities including goods, bills of exchange, promissory notes, fully paid shares of companies, immovable property or documents of title, debentures, etc.
(v) It invests its surplus funds in government securities, railway securities and securities of corporations and treasury bills.
(vi) It buys and sells gold and silver.
(vii) It acts as agent of cooperative banks.
(viii) It underwrites issues of stocks, shares, debentures, and other securities in which it is authorised to invest funds.
(ix) It administers, singly or jointly, estates for any purpose as executor, trustee or otherwise.
(x) It draws bills of exchange and grants letters of credit payable out of India.
(xi) It buys bills of exchange payable out of India with the approval of the Reserve Bank; it subscribes buys, acquires, holds and sells shares in the capital of banking companies.
