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The State Bank of India Act, 1955

State Bank of India (SBI) is the oldest commercial bank in India. It was constituted under the State Bank of India Act, 1955 (Act No. 23 Of 1955). It is an Indian Multinational public sector bank and financial services statutory body with its headquarter in Mumbai, Maharashtra. Through this Act, SBI replaced the Imperial Bank of India, which was the largest commercial bank at that time and acted as Central Bank for British India.

The Imperial Bank was formed by merging The Bank of Madras into the Bank of Calcutta and the Bank of Bombay. The Government of India took control of the Imperial Bank of India in 1955, with Reserve Bank of India taking a 60% stake and renamed it as the State Bank of India.

The Act was given President's assent on May 8, 1955 and came into force on July 1, 1955. It is divided into 8 Chapters containing 57 Sections and 2 Schedules (Initially it had 5 Schedules but the Third, Fourth and Fifth Schedules were repealed by The Repealing and Amending Act, 1960). This Bank was created to expand the banking facilities to the rural and semi-urban areas and to transfer to it the undertaking of the Imperial Bank.

History
The roots of State Bank of India lie in the first decade of the 19th century when the Bank of Calcutta later renamed as the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock companies and were the result of royal charters. The Presidency banks amalgamated on 27 January 1921, and the re-organized banking entity became the Imperial Bank of India. It remained a joint-stock company but without Government's participation.

Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India, on 1 July 1955, acquired a controlling interest in the Imperial Bank of India and it became the State Bank of India. Later In 2008, the Government of India acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest as the RBI is the country's banking regulatory authority.

Incorporation of State Bank

Section 3 of the Act provides that a Bank to be called the State Bank of India shall be constituted to carry on the business of banking and other business in accordance with the provisions of this Act and for the purpose of taking over the undertaking of the Imperial Bank. It also allows the Central Government, together with such other persons as may, to become shareholders in the State Bank and so long as they are shareholders in the State Bank, they'll constitute a body corporate with perpetual succession and a common seal under the name of the State Bank of India, and shall sue and be sued in the name.
  • The State Bank shall have power to acquire and hold property, whether movable or immovable, for the purposes for which it is constituted and to dispose of the same.

Share Capital

Share Capital refers to the capital which a company raises by issuing shares at the given face value. It is the amount contributed by the shareholders by subscribing to the company's shares towards the face value. It represents the total nominal value of shares issued by the company.

Authorized Capital is the maximum amount of capital that the company, through its MoA takes power to issue during its lifetime. According to Section 4, the State Bank of India has an authorized capital of Rs. 5000 crores which has been divided into five hundred crores of fully paid-up shares of ten rupees each. The Central Board may reduce the nominal or face value of the shares with the approval of the Reserve Bank and the Central Government may in consultation with the Reserve Bank, increase or reduce the authorized capital.

Generally, a company does not issue its entire authorized share capital to the general public, i.e. only a part of it is offered for subscription and allotment to investors. Therefore, that portion of the company's authorized capital which is actually issued, to the general public for subscription is called Issued Capital.

It represents the nominal value of share capital issued to member. According to Section 5, the issued capital of the State Bank is Rs. 56250000 divided into 562500 shares (five crores, sixty two lakhs and fifty thousand rupees divided into five lakhs, sixty two thousand and five hundred shares) all of which stand allotted to the Central Government in lieu of the shares of the Imperial Bank transferred to and vested in it under section 6.

The Central Board may from time to time increase, with the previous approval of the Reserve Bank and the Central Government, the issued capital by the issue of equity or preference shares but a minimum of 51% of the issued capital shall be held by the Central Government at all times.

Transfer of undertaking of the Imperial Bank

The Imperial Bank of India was one of the oldest and the largest commercial bank of the Indian subcontinent. It performed all the normal functions which a commercial bank was expected to perform. So, when it was nationalized in 1955 it was imperative to formulate provisions regulating the transfer of assets & liabilities, service of existing officers & employees, existing provident & other funds etc.

Such provisions are stated in Section 6-9 of the Act
  1. Transfer of assets and liabilities
    Section 6 specifies that all shares in the capital of the Imperial Bank shall be transferred to, and shall vest in the Reserve Bank, free of all trusts, liabilities and encumbrances.
    It states that all rights, powers, authorities and privileges, and all property, movable and immovable, including cash balances, reserve funds, investments and all other interests and rights in, or arising out of, such property as may be in the possession of the Bank immediately before the appointed day, and all books, accounts and documents relating thereto, and all debts, liabilities and obligations of whatever kind then existing of that Bank shall be transferred to, and shall vest in the State Bank.

    It further provides that all contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately before the appointed day and to which the Imperial Bank is a party or which are in favor of the Imperial Bank shall be of as full force and effect against or in favor of the State Bank, as the case may be, and may be enforced or acted upon as fully and effectually as if instead of the Imperial Bank the State Bank had been a party thereto or as if they had been issued in favor of the State Bank.

    Also, if on the appointed day any suit, appeal or other legal proceeding of whatever nature is pending by or against the Imperial Bank, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer to the State Bank of the undertaking of the Imperial Bank or of anything contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the State Bank.
     
  2. Transfer of service of existing officers and employees
    Section 7 formulates that the status of officers and employees of the Imperial Bank will remain uninterrupted on transfer. Every officer or other employee of the Imperial Bank who is in the employment of the Imperial Bank immediately before the appointed day shall become an officer or other employee of the State Bank and shall retain his/her office or service therein by the same tenure, at the same remuneration, and upon the same terms and conditions and with the same rights and privileges as to pension, gratuity and other matters as he would have held the same on the appointed day if the undertaking of the Imperial Bank had not vested in the State Bank.

    Second clause of the section provides that any person entitled to or in receipt of, a pension or other superannuation or compassionate allowance or benefit from the Imperial bank shall be entitled to be paid by, and to receive from, the State Bank, the same pension, allowance or benefit so long as he observes the conditions on which the pension, allowance or benefit was granted, and if question arises whether he has so observed such conditions, the question shall be determined by the Central Government and the decision of the Central Government thereon shall be final.

    But these provisions are inapplicable on the managing director, the deputy managing director or member of any Local Board of the Imperial Bank. Such person shall be deemed to have vacated his office as such on the appointed day and he shall not be entitled to any compensation from the Imperial Bank or the State Bank for the loss of office or for the premature termination of any agreement or contract relating to his employment, except such pension, compensation or other benefit which the State Bank may grant to him.
     
  3. Existing provident and other funds of the Imperial Bank
    Section 8 provides that the Central Government shall substitute the persons who were trustees of following funds immediately before the appointed day with such other persons as it may specify by general or special order:
    1. The Imperial Bank of India Employees Provident Fund;
    2. The Imperial Bank of India Employees' Pension and Guarantee Fund;
    3. The Bank of Bombay Officers Pension and Guarantee Fund;
    4. The Bank of Madras Pension and Gratuity Fund;
    5. The Bank of Madras Officers Provident and Mutual Guarantee Fund.
       
  4. Compensation to be given to the shareholders of Imperial Bank
    Section 9 states that each shareholder of Imperial Bank shall be compensated with an amount calculated at the rate of Rs 1765 and 10 annas (one thousand seven hundred and sixty-five rupees and ten annas) per share in the case of a fully paid up share and Rs 431, 12 annas and 4 pies (four hundred and thirty-one rupees, twelve annas and four pies) per share in the case of partly paid up share {The provisions are contained in the First Schedule}.
If any other person has an interest in such shares held by the shareholder, he shall be entitled to enforce his interest against the compensation awarded to the holder of such share but not against the Reserve Bank.

Shares

A share is an indivisible unit of ownership in a company or financial asset. Companies divide its capital into shares which may be purchased by an investor. The Central Government holds not less than 51% of the issued capital in The State Bank and the remaining shares are freely transferable. (Section 10)

The shareholders are registered in book or computer floppies or diskettes or any other electronic form kept by the State Bank at its Central Office. (Section 13) A copy of, or extract from, the register of shareholders, certified to be a true copy under the hand of an officer of the State Bank authorized in this behalf shall be admissible in evidence in all legal proceedings. Following particulars shall be entered therein:
  1. The names, addresses and occupations, if any, of the shareholders and a statement of the shares held by each shareholder, distinguishing each share by its denoting number.
  2. The date on which each person is so entered as a shareholder.
  3. The date on which any person ceases to be a shareholder.
  4. Such other particulars as may be prescribed.

In 2010, Section 10A was inserted which allows a registered shareholder or joint holders to nominate an individual to whom all his/their rights in the shares shall vest in the event of his/ their death. If such nominee is a minor then he can also nominate any other person to become entitled to the shares during such minority. On the death of the shareholder, the nominee becomes entitled to all his rights in relation to such shares and all other persons shall be excluded unless the nomination is varied or cancelled.

Section 11 imposes restrictions on voting rights of shareholders other than the Central Government. Only the Central government or such shareholder as the Central Government may, after consultation with the Reserve Bank, specify, shall be entitled to exercise voting rights in respect of any shares held by him in excess of ten percent of the issued capital.

Section 12 starts with a non-obstante clause and states that the Shares of the State Bank are included among the securities enumerated in section 20 of the Indian Trusts Act, 1882 and are also approved securities for the purpose of the Insurance Act, 1938.

Section 15 further provides that no notice of any trust, express, implied or constructive, shall be entered on the register of shareholders or be receivable by the State Bank.

Management

Structure
Section 17 of the Act provides that general superintendence and direction of the affairs and business of the State Bank shall be entrusted to the Central Board. Such Board shall exercise all powers and do all such acts and things as may be exercised or done by the State Bank.

The Central Board in discharging its functions shall act on business principles with due regard to public interest. Section 21 makes provision for Local Boards-one Local Board to be constituted at each place where the State Bank has a local head office.

The Central Board may also constitute a Local Committee for any area under Section 21C. It shall exercise such powers and perform such functions and duties as the Central Board may confer on or assign to it.

Local Committees
Offices, Branches and Agencies
The State Bank shall have local head offices in Mumbai, Kolkata and Chennai and the Central office or the Corporate Centre shall be at Mumbai as given in Section 16. The Central Government may determine other places also, for local head offices, but only after consultation with the Central Board.

All branches or agencies of the Imperial Bank which were in existence immediately before the appointed day shall be maintained by the State Bank as its own branches or agencies and no such branch may be closed without the previous approval of the Reserve Bank. In addition to these branches or agencies, it is also empowered to establish branches or agencies at any place in or outside India and not less than four hundred branches shall be established within five years of the appointed day.

Composition
  • Central Board
    According to Section 19, the Central Board shall consist of the following:
    1. A Chairman to be appointed by the Central Government in consultation with the Reserve Bank.
    2. 4 or less number of Managing Directors, as may be appointed by the Central Government in consultation with the Reserve Bank.
    3. If the total amount of the holdings of the shareholders, other than the Central Government, whose names are on the register of shareholders three months before the date fixed for election of directors is:
      1. > 25% of such capital, 4 directors, to be elected in the prescribed manner by such shareholders.
         
    4. 1 Director, from among the employees of the State Bank, who are workmen, to be appointed by the Central Government.
    5. 1 Director, from among such of the employees of the State Bank, as are not workmen, to be appointed by the Central Government.
    6. 2-6 Directors to be nominated by the Central Government from among persons having special knowledge of the working of co-operative institutions and of rural economy or experience in commerce, industry, banking or finance.
    7. 1 Director to be nominated by the Central Government.
    8. 1 Director, possessing necessary expertise and experience in matters relating to regulation or supervision of commercial banks to be nominated by the Central Government on the recommendation of the Reserve Bank.

Furthermore, Reserve Bank, under Section 19B, has the power to appoint one or more persons as additional directors of the State Bank whenever it is necessary for the interest of banking policy or in the public interest or in the interests of the State Bank and such an additional director shall not be taken into account for the purpose of reckoning any proportion of the total number of Directors of the State Bank. He shall:
  1. hold the office during the pleasure of Reserve Bank and subject thereto for a period not exceeding three years or such further periods not exceeding three years at a time as the Reserve Bank may specify.
  2. not incur any obligation or liability by reason only of his being an additional director or for anything done or omitted to be done in good faith in the execution of the duties of his office or in relation thereto.
  3. not be required to hold qualification shares in the State Bank.

Local Board

According to Section 21, the Local Board shall consist of the following:
  1. The chairman, ex officio or the Managing Director nominated by the chairman.
  2. The Chief General Manager of the local head office, appointed by the State Bank, ex-officio.
  3. 6 Members to be nominated by the Central Government.[ The Central Government after consultation with the Chairman, shall appoint one of these members to be the President thereof]
  4. All such directors elected or nominated to the Central Board under points 3 to 6 mentioned above in Central Board as are ordinarily resident in the area falling within the jurisdiction of the local head office. [ The Central Government after consultation with the Chairman, shall appoint one of these members to be the Vice-President thereof]

Local Committees

According to Section 21C, the Local Committee shall consist of such number of members as may be prescribed. The Chairman or the Managing Director nominated by him shall be an ex-officio member of every such Local Committee.

Qualifications for election of Directors

Section 19A lays down necessary qualifications as:
  1. The elected Directors shall have special knowledge or experience in respect of one or more of the following areas:
    1. agriculture and rural economy
    2. banking
    3. co-operation
    4. economics
    5. finance
    6. law
    7. small-scale industry
    8. any other area the special knowledge of, and experience in, which in the opinion of the Reserve Bank shall be useful to the State Bank.
       
  2. The person shall have fit and proper status based upon track record and integrity. [ The Reserve Bank may notify from time to time other criteria also]

Disqualifications for Directorship of Central Board or Membership of Local Boards or of Committees

As per Section 22, no person shall be qualified to hold any of these positions if:
  1. He holds the office of director, provisional director, promoter, agent or manager of any banking company already established or advertised as about to be established
  2. He is a salaried officer of Government not specially authorized by the Central Government to be a director or member.
  3. He has been removed or dismissed from the service of Government on a charge of corruption or bribery.
  4. He holds any office of profit under the State Bank other than the office of chairman, managing director, chief general manager or legal or technical adviser.
  5. He is or at any time has been adjudicated an insolvent or has suspended payment of his debts or has compounded with his creditors.
  6. He is declared lunatic or becomes of unsound mind.
  7. He is or has been convicted of any offence involving moral turpitude.
  8. In the case of an elected director, he is not registered as a holder in his own right of unencumbered shares in the State Bank, either as sole holder or as first named holder when jointly held, of a nominal value of at least five thousand rupees.

Also, following points are to be kept in mind:
  • No two persons who are partners of the same firm or are directors of the same private company or one of whom is an agent of the other or holds a power of attorney from a firm of which the other is a partner may be directors of the Central Board or members of the same Local Board or Local Committee at the same time.
     
  • The appointment, nomination or election as director or member of a Local Board or of a Local Committee of any person who is a member of Parliament or the Legislature of any State shall be void unless within two months of the date of his appointment, nomination or election he ceases to be a Member of Parliament or the State Legislature.
     
  • If any director or member of a Local Board or of a Local Committee is elected or nominated as a Member of Parliament or any State Legislature, he shall cease to be a director or member of the Local Board or of the Local Committee as from the date of such election or nomination.

Term of office

Section 20 and 21A

  • The Chairman and each Managing Director shall hold office for such term, not exceeding five years, as the Central Government may fix while appointing them and shall be eligible for reappointment.
  • A Director shall hold office for three years and shall be eligible for re-election. Such a Director can hold office for not more than 6 years continuously.
  • But a Director appointed or nominated under points 4 to 8 of the Central Boards composition shall hold office during the pleasure of the authority appointing or nominating him, as the case may be.
  • A Member of a Local Board shall hold office for such term, not exceeding three years, as the Central Government may specify in this behalf and shall be eligible for re-nomination. Such a member can hold office for not more than 6 years continuously.
  • The president and the Vice-President of a Local Board shall each hold office for two years or the remaining period of his office as a member of the Local Board, whichever is shorter, and shall be eligible for re-appointment so long as he is a member of the Local Board.

Powers

  • Powers of Central Board
    1. Power to constitute Executive and other committees
      Section 30 provides that the Central Board may constitute an executive committee and so many other committees of itself as it deems fit to exercise such powers and perform such duties as may be delegated to them by the Central Board.
       
    2. Power to appoint officer and other employees
      Section 43 provides that the State Bank may appoint such number of officers, advisers and employees as it considers necessary or desirable for the efficient performance of its functions, and determine the terms and conditions of their appointment and service.
       
    3. Power to make Regulations
      Section 50 provides that the Central Board may, after consultation with the Reserve Bank and with the previous sanction of the Central Government by notification in the official Gazette make regulations which are not inconsistent with this Act.
       
  • Powers of Chairman
    The chairman shall preside at all meetings of the Central Board and, subject to such general or special directions as the Central Board may give, exercise all such powers and do all such acts and things as may be exercised or done by the State Bank.
     
  • Powers of Managing Director
    A managing director
    1. shall be a whole-time officer of the State Bank
    2. Shall exercise, subject to the general control of the chairman, such powers and perform such duties as may be entrusted or delegated to him by the Central Board.
    3. When authorized by the chairman, shall preside at the meetings of the Central Board in his absence.
       
  • Powers of Local Board
    The Local Board shall exercise such powers and perform such duties and functions as may be entrusted or delegated to it by the Central Board.
     
  • Powers of Local Committees
    A Local Committee shall exercise such powers and perform such functions and duties as the Central Board may confer on or assign to it.

Remuneration

  1. Remuneration of directors ( Section 26)
    Without prejudice, the directors shall be paid such fees and allowances for attending the meetings of the Central Board or of any of its committees and for attending to any other work of the State Bank as may be prescribed. No fees shall be payable to a managing director or any other director who is an officer of the Central Government or the Reserve Bank.
     
  2. Remuneration of Chairman (Section 27)
    The chairman shall receive such salary, fees, allowances and perquisites as may be determined by the Central Government.
     
  3. Remuneration of Managing Director (Section 29)
    A managing director shall receive such salary and allowances as may be determined by the Central Government.

Vacation of Office

A vacancy is created in the office of a Director or a member when he:
  1. becomes subject to any of the disqualifications mentioned in section 22.
  2. resigns his office by giving notice in writing under his hand, in the case of the chairman and a managing director, to the Central Government and in the case of other directors or members of Local Boards or Committees, to the Central Board, and the resignation is accepted.
  3. is absent without leave of the Central Board, the Local Board or the Local Committee of which he is a director or member, as the case may be, for more than three consecutive meetings thereof, his seat shall thereupon become vacant.( Section 23)

Moreover under Section 25, if the Chairman or a Managing Director is rendered incapable of discharging his duties by reason of infirmity or is absent on leave or otherwise in circumstances not involving the vacation of his office, the Central Government may, in consultation with the Reserve Bank, appoint another person to officiate in the vacancy. In case any other casual vacancy occurs, it shall be filled:
  1. in the case of an elected director, by election.
  2. in the case of a nominated director or a nominated member of a Local Board, by nomination.
Such an elected or nominated person shall hold office for the unexpired portion of the term of his predecessor.

Removal from Office

Section 24 gives the provisions for removal from office of directors, etc.:
  • The Central Government may, after consulting the Reserve Bank, remove from office the chairman or a managing director.
  • The Central Government may remove from office any director and appoint or nominate as the case may be in his stead another person to fill the vacancy.
  • The shareholders, other than the Central Government, may, by a resolution passed by majority of the votes of such shareholders holding in the aggregate not less than one-half of the share capital held by all such shareholders, remove any director and elect in his stead another person to fill the vacancy.
No person shall be removed from his office unless he has been given an opportunity of showing cause against his removal.

Decision making by the Central Board

Decisions are made by the Central Board by conducting meetings.
  • According to Section 31 the Central board may meet in person or through videoconferencing or such other electronic means as may be prescribed, which are capable of recording and recognizing the participation of the directors and the proceedings of such meetings are capable of being recorded and stored. The time, place and procedure followed by the Board shall be in conformity with the State Bank of India General Regulations, 1955.
     
  • All questions at the meeting shall be decided by a majority of the votes of the directors present in the meeting or through videoconferencing or such other electronic means and in the case of equality of votes the chairman or, in his absence, the managing director authorized by the chairman and in absence of both of them, any director, authorized by the chairman in writing in this behalf and in the absence of such authorization, any director elected by the directors present from amongst themselves, shall preside at the meeting and, in the event of equality of votes, shall have a second or casting vote.
     
  • A director who is directly or indirectly interested in any contract, loan, arrangement or proposal entered into by or on behalf of the State Bank should disclose the nature of his interest to the Central Board at the earliest possible opportunity. He shall not be present at any meeting of the Central Board when any such contract, loan, arrangement or proposal is discussed unless his presence is required by the other directors for the purpose of eliciting information.

Except when such director is only:
  1. A shareholder holding not more than two percent of the paid-up capital in any public company as defined in the Companies Act, 1956 (1 of 1956), or any corporation established by or under any law for the time being in force in India or any co-operative society, with which or to which the State Bank has entered into or made, or proposes to enter into or make, a contract, loan, arrangement or proposal, or
  2. A director ex-officio of the State Bank or a director of a subsidiary bank, or
  3. An officer or other employee of the State Bank, if he is a director appointed under clause (ca) or clause (cb) of section 19.

Decision making by the Local Board
Decisions are made by the Local Boards by conducting meetings under Section 31A. It provides that:
  1. A Local Board shall meet at such time and place and shall observe such rules of procedure in regard to the transaction of business at its meetings as are prescribed in the State Bank of India General Regulations, 1955.
     
  2. All questions at the meeting shall be decided by a majority of the votes of the members present and in the case of equality of votes, the person presiding at the meeting shall have a second or casting vote. If for any reason neither the president usually presides over the meetings and in his absence, the vice-president shall preside. If for any reason both are absent, then any member, other than the Chief General Manager, elected by the members present from amongst themselves, shall preside at the meeting.

    If the Chairman is present at a meeting, he shall preside over it and in his absence, the Managing Director shall preside if he is present and is authorized by the Chairman.
     
  3. A member who is directly or indirectly interested in any contract, loan, arrangement or proposal entered into by or on behalf of the State Bank, shall disclose the nature of his interest to the Local Board at the earliest possible opportunity and shall not be present at any meeting of the Local Board when any such contract, loan, arrangement or proposal is discussed unless his presence is required by the other members for the purpose of eliciting information.

Provided that nothing contained in this sub-section shall apply to such member by reason only of his being:
  1. a shareholder holding not more than two percent of the paid-up capital in any public company as defined in the Companies Act, 1956 (1 of 1956), or any corporation established by or under any law for the time being in force in India or any co-operative society, with which or to which the State Bank has entered into or made, or proposes to enter into or make, a contract, loan, arrangement or proposal, or
     
  2. a director ex-officio of the State Bank or a director of a subsidiary bank.

Business of the State Bank

  1. SBI acts as an agent to the RBI
    Section 32 states that the State Bank shall act as agent of the RBI at all places in India where RBI does not have a branch of its banking department.

    Under this role, SBI plays following functions:
    1. Banker to the Government
      The SBI functions as the banker to the central and state governments i.e., it collects money and makes payments on behalf of the government and manages public debt. It collects charges (taxes and other payments) on behalf of the government and grants loans and advances to it. The government may also seek advice from SBI regarding economic conditions.
       
    2. Bankers' Bank
      It is considered a bankers' bank due to its role in receiving deposits and providing financial assistance in form of loans to the commercial banks, which have their accounts with SBI, when they face financial shortage.
       
    3. Acts as a Clearing House
      SBI acts as a clearinghouse in places where RBI has no branch. All the banks in such places have accounts with SBI making it easier to enable inter-bank settlements.
       
    4. Currency Chest
      Currency chest is the place where the RBI keeps all the excess money of banks under custody. Whenever, RBI prints new currency notes, first it delivers to currency chests and then currency chests deliver these new currency notes to banks. RBI Of­fices are situated only in big cities, so it authorized PSU banks to operate currency chests on its behalf in urban as well as rural areas.
       
  2. General Banking Functions
    Other than the role as RBI's agent, SBI performs following functions under Section 33:
    1. It accepts the deposits from the people in the form of savings, fixed, current, and recurring deposit accounts.
    2. It gives advances and loans to the public.
    3. It acts as a trustee, executor, or otherwise, based on the circumstances.
    4. It gives the facility of drawings, accepting, buying and selling the bills of exchange and other negotiable instruments.
    5. It invests its surplus funds in government securities, railway securities etc.
    6. It advances and lends money to court of wards with the previous approval of the Government.
    7. It offers remittance facilities like demand drafts, mail transfers, etc.
    8. It sells either movable or immovable properties that come in the bank for satisfaction of claims.
    9. It sells and buys gold and silver.
    10. It helps in the opening of public provident fund Accounts for the general public.
    11. It provides the facility of shipping finance.
    12. It promotes export through Export Credits.
    13. It provides Merchant Banking facilities.
    14. It provides specialized services like Global Link Services.
    15. It participates in many leading bank schemes.

Prohibited functions

There are some functions, provided in Section 34, which the State Bank cannot perform. These are:
  1. State Bank shall not own or acquire any immovable property other than its own offices.
  2. It cannot grant loans against stocks and shares for a period more than six months.
Conclusion
The State Bank of India replaced the Imperial Bank and on and from the appointed day, any reference to the Imperial Bank in any law or in any contract or other instrument was, except otherwise provided in any general or special order made by the Central Government, deemed to be a reference to the State Bank. The Imperial Bank of India Act, 1920 (47 of 1920) was repealed.

References:
  1. The State Bank of India Act, 1955
  2. https://en.wikipedia.org/wiki/State_Bank_of_India
  3. Difference Between Authorized Capital and Issued Capital (with Example, FAQs, and Comparison Chart) - Key Differences
  4. State Bank of India: Establishment, Objectives, Functions and Achievements (economicsdiscussion.net)

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