CRISIL "AAA" for SBI''s Rs33 billion bond programme

Rs. 33 Billion Bonds Programme (Tier II)	AAA/Stable (Assigned)
Rs. 25 Billion Bonds Programme (Tier II)	AAA/Stable (Reaffirmed)

The ratings continue to reflect State Bank of India's (SBI's) dominant position in the Indian banking sector in terms of its size, reach, market share, business diversity and position in the government segment. SBI's dominance is being reinforced by the integration of its associate banks and subsidiaries with itself. This makes the bank extremely important for India's economy and financial system.

The rating also reflects SBI's comfortable capital position, good earnings profile and average asset quality sound management, and its recent technology initiatives, which will enable it to maintain its dominant position in the banking sector.

SBI dominates the Indian banking sector with a market share of around 20 per cent in terms of total banking sector deposits. SBI's strong franchise gives it access to a steady source of stable retail funds, which constituted around 59 per cent of the bank's total resources as on March 31, 2005. SBI's return on assets (profit after tax / average assets) has been consistent at around 1 per cent over the past three years.

SBI is adequately capitalised, with a Tier I capital adequacy ratio of 8.04 per cent and a large capital base of Rs. 240.72 billion as at March 31, 2005. The bank has considerably improved its net worth coverage for net NPAs to 4.4 times as at March 31, 2005 due to lower slippages reflecting an improving asset quality witnessed across the entire banking sector.

However, the bank continues to have a high level of gross NPAs at 5.95 per cent of gross advances as at March 31, 2005, as compared with 4.9 per cent for all scheduled commercial banks taken together.

Outlook:
CRISIL expects SBI to continue to maintain its dominant business and financial position in the Indian financial sector. In CRISIL's view, SBI will remain extremely important to the Indian economy and the financial system and continue as the principal banker to the government of India (GoI).

About the bank:
SBI is the largest bank in India with net advances of Rs 2024 billion and deposits (including RIB/IMD) of Rs3,670 billion as at March 31, 2005. Moreover, the government of India transacts a significant portion of its business through SBI, which gives the bank tremendous scope to conduct fund- and fee-based business. SBI's financial health is, in fact, crucial for the efficient running of the Indian economy, the onus of which falls on the central government.

The bank had a domestic network of 9,102 branches, and 54 overseas branches spread across 28 countries as at March 31, 2005. SBI earned a net profit of Rs43.05 billion in the year ending March 31, 2005, on an asset base of Rs4,598.83 billion.