STATE BANK OF HYDERABAD was established on 8 August 1941 under the Hyderabad State Bank Act during the reign of the last Nizam of Hyderabad, Mir Osman Ali Khan. The bank was the central bank of the then Nizam State by the name of Hyderabad State Bank. The bank managed the Osmania Sikka, the currency of the Hyderabad state, which covered present-day Telangana, some of the districts later known as Hyderabad-Karnataka of Karnataka and Marathwada of Maharashtra. The bank also did commercial banking. The bank opened its first branch on 5 April 1942 at Gunfoundry, Hyderabad. The Imperial Bank of India, which established a second branch at Hyderabad in 1868 and at Secunderabad in 1906, was Muhammad Saleh Akbar Hydari, son of Sir Akbar Hydari, the first secretary of the State Bank of Hyderabad. The Gunfoundry building was designed by Mohammed Fayazuddin, an alumnus of the Architectural Association School of Architecture, London.
By 1950, the bank had about 50 branches, including branches in parts of the erstwhile Hyderabad state, which were later shifted to other states.
After partition, on 17 September 1948, the Indian Army conducted Operation Polo, which resulted in the merger of Hyderabad with India.
In 1953, the bank merged, absorbing the Mercantile Bank of Hyderabad, which was established by Raja Pannalal Pitti in 1935. (Some accounts give the year of establishment as 1946 and the year of merger as 1952). In the same year, the bank began doing government and treasury business as an agent of the Reserve Bank of India.
In 1956, the Reserve Bank of India took over the bank as its first subsidiary and changed its name to State Bank of Hyderabad. u
The plan is to make SBI one of the top 50 affected SBH banks in the world. The scheme was introduced in 2016 and was ratified by the Government of India on 15 February 2017. SBH eventually merged with SBI on 31 March 2017, along with its co-associates State Bank of Travancore, State Bank of Mysore, State Bank of Patiala, State Bank of Bikaner & Jaipur and Bharatiya Mahila Bank.