• View

  • Download

Embed Size (px)


  • 7/29/2019 BUSINES STRTAEGY




    Business Strategy in Indian Banking Sector with

    special focus on State Bank Of India


    Prof. Rajan Mani Soumya Shree Kumar

    Shubham Anand

    Malvika Mathur



    Group - 15

  • 7/29/2019 BUSINES STRTAEGY


  • 7/29/2019 BUSINES STRTAEGY


    3 | P a g e


    Sui generis, as it is, todays corporate world thrives on the buzzword which rules the roostin any

    business entity in general and in business decisions in particular. The magnum opus word indeedis Strategy.


    In laymans term Strategy is a plan of action or policy designed to achieve a major or overall


    But, taking a look at the traditional definition, strategy comes out to be the direction and scope of

    an organization over the long term, which achieves advantage in a changing environment

    through its configuration of resources and competences with the aim of fulfilling stakeholders


    Strategy basically deals in setting a definite set of options which can prove to be savior in times

    of uncertainty.

    Michael E. Porter has given a wonderful in-depth to Strategy.

    According to him, the very word strategy revolves around three important aspects

    How to position yourself - uniquely and valuably How to decide on trade-offsi.e. by competing to chose what not to do How to find a wonderful fit between components i.e. by integrating many well done


    Business strategy, complex as it is indeed, being decided amidst uncertainties makes direct

    impact on operational decisions of a company.

    Inevitably they it requires an integrated approach and demands for dynamic change.Hence, it exist at three different levels of the company

    1. Corporate level2. Business Level3. Operational Level.

  • 7/29/2019 BUSINES STRTAEGY


    4 | P a g e

    Objective of the Project

    The primary objective of this very project is to get into the details of the business strategyof Indian Banking sectors with special reference to State Bank of India (SBI).

    Structure of the Project Report

    The project report mainly concentrates on the below -

    Elements of business strategy in the service sector How important and different arethey.

    A note on the banking sector in India along with its strategies. Analysis of business strategies of State Bank of India in details. Major Findings. Finally, Conclusion and recommendations.

    Methodology Adopted

    The research methodology consists of two stages:

    1. Data Collection2. Analysis of the data to get into the findings

    Source of Information

    The study has been extensively done by collecting resources from secondary sources including

    websites, Journals, Magazines, Newspapers and various articles.

    Scope of the Study

    This study would be of immense help to-

    Understand the strategies followed by banks in India Know how companies use strategic management for their success. Understanding the practical implementation of important strategic concepts like SWOT

    Analysis, Porters Five Forces Model, Marketing Mix, Key Success Factors (KSFs), etc.

  • 7/29/2019 BUSINES STRTAEGY


  • 7/29/2019 BUSINES STRTAEGY


    6 | P a g e

    4. How is the pricing strategy?

    Its vital to look at pricing strategy and give a strong thinking on the economic and psychological

    effects, in case the strategy changes in future.

    5. For developing and testing new services what process are we using?

    As it is difficult to develop protectable competitive positions, the service-oriented company must

    pay particular attention to this area. The process of new-service development and testing must

    recognize the abstract, perishable nature of services, in order to make the make the business

    more sustainable.

  • 7/29/2019 BUSINES STRTAEGY


    7 | P a g e


    Indian Banking Industry, valued currently at Rs 64 trillion (US$ 1.17 trillion) is governed by the

    Banking Regulation Act of India, (1949) and is closely monitored by the Reserve Bank of India(RBI).

    RBI, the Govts Bank, maestro as it is, manages the country's money supply and foreign

    exchange and also serves as a bank for the commercial banks of India. As per 2012 data,70 % of

    the Indian banking assets are managed by Public sector banks.

    Overview in Brief

    India has a robust banking system, governed by stringent regulations. An intense supervision by

    the Reserve Bank of India (RBI) has resulted in stringent regulatory and compliance

    requirements on capital adequacy and risk management practices which have strengthened the

    overall banking system in India. Liberal policies, Government support and huge development in

    other economic segments have made the Indian banking industry more progressive and inclusive

    with regard to global banking standards.

    Indias banking sector includes 169 scheduled commercial banks of which 82 are regional rural

    banks, 4 non-scheduled commercial banks, 1,645 urban cooperative banks (53 scheduled

    cooperative banks) and 95,765 rural cooperative banks. [As on March, 2012]

    A look at Key Statistics

    The number of banked centers of SCBs by the end of 2012 stood at 36,391 out of which28,458 were single office centers and 72 centers had 100 or more bank offices.

    The growth (yoy) in aggregate deposits moderated to 13.8 per cent in March 2012 ascompared with 17.9 per cent in March 2011. Population group-wise, aggregate deposits

    of rural, semi-urban, urban and metropolitan branches grew by 16.4 per cent, 17.6 per

    cent, 14.7 per cent and 12.1 per cent, respectively in March 2012.

  • 7/29/2019 BUSINES STRTAEGY


    8 | P a g e

    Gross bank credit growth decelerated to 18.3 per cent in March 2012 from 21.9 per centin the previous year. The growth of gross bank credit extended by rural branches at 42.2

    per cent and by metropolitan branches at 16.6 per cent are not comparable with the

    corresponding figures a year ago, mainly due to shifting of some large credit accounts

    from metropolitan to rural branches. Adjusted for such accounts, gross bank credit for

    rural and metropolitan branches stood at 24.1 per cent and 18.6 per cent respectively.

    Gross bank credit of semi-urban and urban branches grew by 19.3 per cent and 14.0 per

    cent respectively.

    Nationalized Banks accounted for 53.0 per cent of the aggregate deposits, while StateBank of India and its Associates accounted for 21.8 per cent. The share of New Private

    Sector Banks, Old Private Sector Banks, Foreign Banks, and Regional Rural Banks in

    aggregate deposits was 13.0 per cent, 4.8 per cent, 4.4 per cent and 3.0 per cent,

    respectively. Nationalized Banks accounted for the highest share of 52.0 per cent in gross

    bank credit followed by State Bank of India and its Associates (22.5 per cent) and New

    Private Sector Banks (13.5 per cent). Foreign Banks, Old Private Sector Banks and

    Regional Rural Banks had relatively lower shares in the gross bank credit at 4.8 per cent,

    4.8 per cent and 2.4 per cent, respectively.

    The All-India credit-deposit (C-D) ratio of all SCBs stood at 78.1 per cent as on March31, 2012. Among the States/Union Territories, the highest C-D ratio was observed in

    Tamil Nadu (116.2 per cent) followed by Chandigarh (113.6 per cent) and Andhra

    Pradesh (110.4 per cent). At the bank group level, C-D ratios of Foreign Banks (85.1 per

    cent), State Bank of India and its Associates (80.6 per cent) and New Private Sector

    Banks (80.7 per cent) were higher than the All-India average.

    The distribution of the offices of SCBs by size of deposits showed that offices withdeposits of Rs.100 million or more accounted for 70.9 per cent of the bank offices, 97.8

    per cent of aggregate deposits and 95.8 per cent of gross bank credit. The offices with

    outstanding credit of Rs.100 million or more accounted for 47.6 per cent of the offices,

    79.7 per cent of deposits and 95.7 per cent of total bank credit.

    Another statement released by RBI revealed that banks' advances grew 0.1 per cent toUS$ 913 billion in July-September 2012, while deposits expanded by 1 per cent. The RBI

    projects credit growth at 17 per cent and deposit growth at 16 per cent in 2012-13.

  • 7/29/2019 BUSINES STRTAEGY


    9 | P a g e

    Foreign exchange reserves stood at US$ 294.81 billion for the week ended September 28,2012 wherein the value of gold reserves was recorded at US$ 28.133 billion and that of

    foreign currency assets (FCAs) was at US$ 259.96 billion.

    Growth Promoting Factors of Banking sector in India

    The banking sector is highly correlated with the economy of the country. The GDPgrowth is estimated at 7.6 per cent for FY13, so the economy is expected to recover and

    be back on the growth track in FY13. This will also result in the banking space

    witnessing a spurt in growth in business next fiscal.

    There has been a constant increase in the disposable income and at the same time,exposure to a range of products. This has led consumers, particularly the young ones

    towards a higher willingness to take credit.

    Increasing spread of mobile banking, which is expected to become the second largestchannel for banking after ATMs, will accelerate growth of the sector.

    Financial Inclusion Program: Currently, in India, 41