State Bank of Patiala Analysis

State Bank of Patiala is a public sector bank in India with its headquarters at Patiala, a city in the state of Punjab. The bank is an associate of the State Bank Group and offers core banking solutions to its customers.

State Bank of Patiala (SBP) was established in 1917 by the king of the then princely state of Patiala. It was then called Patiala State Bank. After independence in 1947, the bank became a subsidiary of the state government of Punjab. In 1960, it became an associate bank of the State Bank Group. With the nationalization of the State Bank Group in 1969, SBOP became a public sector bank.

The State Bank of Patiala has identified specialized segments and designed varied products to meet the needs of such segments. The segments are for the purposes are as follow:

• Personal banking
• Agriculture & rural banking
• NRI banking
• SME & corporate banking
• Government banking
• Internet banking
• Mobile banking

The bank has now added a golden chapter to its history by fully networking all its branches on Core Banking Solutions on 08.08.2005 and become the first fully networked Public Sector Bank in the country.

Bank distribute through

As far as the distribution channel of products and services of the bank is concerned, I have come to know that state bank of Patiala has mostly indirect channels of distribution of its products and services but direct channels also to some extent. The bank is having various tie ups with many companies for the distribution of its products. If the loan section is taken bank maximum use its indirect channel for the distribution of the products which are as follow:-

Scheme for Financing of Commercial Vehicles under Tie-up with:-

• Ashok Leyland Limited
• Eicher Motors Limited
• Force Motors Limited
• Tata Motors Limited
• Maruti udhyog ltd.
• Mahindra motors

Scheme for finance of Motor Cycles and Scooters under Tie-up with:-

• Hero Honda Motors Limited:

Scheme for extending facilities to Franchisee outlets in the form of Bank Guarantee/Term Loan.

• ‘Monte Carlo’ & ‘Cotton County’

Bank is also under the Tata nano special financing scheme with the Tata motors. Moreover the bank is in the MOU for loan to the students of the Frankfinn Aviation Services Ltd. which will ensure 100 per cent financing of the tuition fee of its students for the one-year courses in aviation crew and hospitality and travel industry. Moreover for the NRI banking bank is having again indirect distribution channel and having various tie up’s with:

• Thomas cook money transfer
• Wall Street money exchange
• Western union money transfer

SBOP has also various tie ups with foreign banks for the transfer of funds, currency etc . The SBOP also provides the various services like insurance, mutual funds etc. and for its distribution the bank is having SBI- life, oriental insurance ltd, SBI- mutual funds SBI- card etc. As far as direct channels are concerned bank used the internet banking and mobile banking for its distribution of the products.

Why SBOP use indirect channel so

Now the next thing arises that why SBOP mostly use the indirect channel. As it is known that there are mainly two channels of marketing which are:

Direct Channel

A direct distribution channel is where a company sells their products direct to consumers.

Indirect Channel

The indirect channel is used by companies who do not sell their goods directly to consumers.

But the direct channel has one major drawback i.e. characteristically present in conventional retailing which means it doesn’t allow any options. Moreover, although direct selling saves channel costs, commission paid to as high as 30-35% of retail price. Also recruiting training motivating and retaining good sale people is difficult and expensive task. For direct selling face-to-face interaction must be capable of producing a significant value addition to the consumer, compared to be purchasing from retail shop. Finally channel becomes fail when circumstances changes.

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So in order to overcome from all these problems bank mostly uses the indirect channels of distribution. Moreover Suppliers and manufacturers typically use indirect channels because they exist early in the supply chain. Companies choose the indirect channel best suited for their product to obtain the best market share; it also allows them to focus on producing their goods.

So in nutshell it would be suggested to bank that the bank should try to use direct channels in more terms because while direct channels were not popular many years ago, the Internet has greatly increased the use of direct channels. Additionally, companies needing to cut costs may use direct channels to avoid middlemen markups on their products. Depending on the industry and product, direct distribution channels have become more prevalent due to the Internet. Like in present scenario everyone use the internet for any sort of information so now the days banks are concentrating more upon direct channels rather to distribute indirectly. SBOP is also doing the same.