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Abstract
A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities. The essential role of a bank is to connect those who have capital such as investors or depositors, with those who seek capital such as individuals wanting a loan or businesses wanting to grow. Banks are the fundamental component of the financial system and also active players in financial markets and do many financial services. The short term creditors like suppliers of material are concerned with the firm’s current debt-paying ability. On the other hand, long-term creditors like debenture holders, financial institutions, etc., are more concerned with the firm’s long-term solvency. Financial strength is a prerequisite for any bank in order to run its operation successfully and smoothly and also to ensure its long-term existence. State Bank of India, being a service organization requires significant amount of capital to create a large portfolio of deposits and loans, has to invest little in fixed assets. Confidence and trust is essential to the banking business, which enables it to mobilize large amount of deposits for deploying in profitable operations. In this study an attempt has been made to analyse the solvency position of State bank of India and its associate banks.