Can State Bank of Indian Become a Natural Monopoly?

Abstract

State Bank of India (SBI) has grown as the commoners’ bank over the years since 1st. July, 1955. In order to compete internationally, the bank has begun increasing its scale of operations. In order to expand, it has begun consolidation of the consortium of associated banks.

The article which is only a review research endeavors to understand whether SBI can become a natural monopoly and can compete with the international banks. Since, SBI is immune by virtue of it being a statutorily constituted body, also enjoys special patronage by the government. Though also available to other banks internationally, like Bank of America, it is pertinent for the author to understand whether the bank would be able to strategize well in order to grow and develop. The study is a focused research upon the prospects of SBI while, in the process of becoming a Natural Monopoly. The study takes into account only the broader parameters of judging, if SBI could become a Natural Monopoly.

A comparison has been done with the Bank of America, the largest bank in the world, to understand the pros and cons, merits and demerits, viability and feasibility of the great aspirations of SBI.

Keywords: natural monopoly, consolidation, scale economies