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The State Bank of India is the largest commercial bank in India, with over 8,000 branches, visible in every small town across the length and breadth of India, and accounting for 20 per cent of all banking business in the country.

The genesis of the State Bank occurred in the early 19th century, when the three Presidency banks -- Bank of Bengal, Bank of Bombay, and Bank of Madras -- were set up. These three banks were merged in 1921 to form the Imperial Bank of India, which became the State Bank of India in 1955.

The early years of the State Bank saw the thrust with setting up branches in semi-urban and rural areas (76 per cent), which perhaps account for the high number of employees. The State Bank employees 233,000 people, the highest for any bank in the world. With a socialist-oriented government, the thrust remained in helping out the weaker sections, and often in areas that conservative bankers would avoid.

Today, the country's economic liberalisation and reforms have opened up new vistas and challenges. It has also exposed the country's premier bank to increasing competition from foreign banks, and new private banks coming up. While few banks can match State Bank's size and incredible reach, better services and quicker responses might given them an edge.

Appreciating the new avenues available and preparing for the competition, the State Bank is preparing to meet the new challenges of the market economy. It recently issued its Global Depository Receipts in the European capital markets, which reduced the share holding of the Reserve Bank of India, and increased that of the foreign institutional investors. It is embracing technology and decentralising its working to be more responsive to the market place.

But will this see the bank neglect its traditional areas, and the poorer segments who can never expect much from private and foreign banks? In the need to be more competitive and ensure the bottom line, will the small rural branches be neglected and forgotten? And a core question, should India's premier commercial bank allow foreigners, who might be more interested in profits than in the development of the Indian economy, to increase their stake?

Sitting in the hot seat of the chairman at this crucial juncture in State Bank's journey, is P G Kakodkar. Joining the bank in 1957 as a probationary officer (the lowest officer cadre), Kakodkar has risen through the ranks to occupy the top post at the bank. In doing so, he served in various departments and capacities, and thus has a deep insight into the working of State Bank in particular, and Indian banking in general.

What are the State Bank's plans for the next few years? What role will it play as the Indian economy strives to reach the magical growth rate figure of 10 per cent? Is State Bank capable with its vast social responsibilities, and subject to government rules and control? Can State Bank remain effective given its vast bureaucracy and huge number of employees? Should the State Bank retain its central role among the country's commercial banks?

Ask P G Kakodkar on the Rediff Chat.