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INDUSTRIAL ANALYSIS ONINDUSTRIAL ANALYSIS ONBANKING SECTOR IN INDIABANKING SECTOR IN INDIA

Presented By-Presented By- Pooja GidwaniPooja Gidwani

MBA-Ist SemMBA-Ist Sem

INTRODUCTIONINTRODUCTION

Heart of the economyHeart of the economy One of the strongest drivers of One of the strongest drivers of

India’s Economic GrowthIndia’s Economic Growth ““WE DON’T WANT SATISFIED WE DON’T WANT SATISFIED

CUSTOMERS… WE WANT CUSTOMERS… WE WANT DELIGHTED CUSTOMERS.”DELIGHTED CUSTOMERS.”… Is the … Is the New Marketing Mantra and applies New Marketing Mantra and applies to Banking Industry as well.to Banking Industry as well.

Retail and Rural Banking were Retail and Rural Banking were once considered the taboos.once considered the taboos.

Evolution of Indian Banking Sector Evolution of Indian Banking Sector In IndiaIn India

PHASES

Phase-I Phase-II Phase-III

PHASE-IPHASE-I

1786- General Bank of India1786- General Bank of India 1809- Bank of Bengal1809- Bank of Bengal 1840- Bank of Bombay1840- Bank of Bombay 1843- Bank of Madras1843- Bank of Madras 1865- Allahabad Bank1865- Allahabad Bank 1894- Punjab National Bank1894- Punjab National Bank 1906-1913- Bank of India, Central Bank of India, 1906-1913- Bank of India, Central Bank of India,

Bank of Baroda, Canara Bank, Indian Bank, Bank Bank of Baroda, Canara Bank, Indian Bank, Bank of Mysoreof Mysore

1920- Imperial Bank of India1920- Imperial Bank of India

PHASE-IIPHASE-II

1949- Enactment of Banking Regulation Act1949- Enactment of Banking Regulation Act 1955- Nationalization of State Bank of India1955- Nationalization of State Bank of India 1959- Nationalization of State Bank of India’s 1959- Nationalization of State Bank of India’s

SubsidiariesSubsidiaries 1961- Insurance cover extended to deposits1961- Insurance cover extended to deposits 1969- Nationalization of 14 major banks1969- Nationalization of 14 major banks 1971- Creation of Credit guarantee corporation1971- Creation of Credit guarantee corporation 1975- Creation of Regional Rural Banks1975- Creation of Regional Rural Banks 1980- Creation of 7 banks with deposits over 200 1980- Creation of 7 banks with deposits over 200

crore.crore.

PHASE-IIIPHASE-III

1991- 1991- M Narasimham Committee was Committee was formed for the formed for the liberalization of liberalization of banking practices.banking practices.

Technology started Technology started acting as a acting as a CatalystCatalyst

SWOT ANALYSISSWOT ANALYSIS

STRENGTHSSTRENGTHS Policy makers have made notable Policy makers have made notable

changes in policy and regulation which changes in policy and regulation which include strengthening prudential norms, include strengthening prudential norms, enhancing the payment systems and enhancing the payment systems and integrating regulations between integrating regulations between commercial and co-operative banks.commercial and co-operative banks.

Banks lending has been a significant Banks lending has been a significant driver of GDP growth and employment.driver of GDP growth and employment.

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Extensive Reach: the vast networking Extensive Reach: the vast networking & growing number of branches and & growing number of branches and ATMs.ATMs.

Indian banks have compared Indian banks have compared favorably on growth, asset quality and favorably on growth, asset quality and profitability.profitability.


WEAKNESSESWEAKNESSES Old private sector banks and PSUs have Old private sector banks and PSUs have

the need to fundamentally strengthen the need to fundamentally strengthen skill levels.skill levels.

The cost of intermediation is high and The cost of intermediation is high and bank penetration is limited to only a few bank penetration is limited to only a few customers and geographies.customers and geographies.


OPPURTUNITIESOPPURTUNITIES With increased in India, competition With increased in India, competition

from foreign banks will intensify.from foreign banks will intensify. New private banks could reach the New private banks could reach the

next level of growth by continuing to next level of growth by continuing to innovate & develop differentiated innovate & develop differentiated business models to profitably serve business models to profitably serve segments like rural, low income.segments like rural, low income.


THREATSTHREATS Failure of some weak banks has often Failure of some weak banks has often

threatened the stability of the system.threatened the stability of the system. Rise in inflation figures which leads to Rise in inflation figures which leads to

increase in interest rates.increase in interest rates. Increase in the number of foreign Increase in the number of foreign

players would pose a threat to PSUs as players would pose a threat to PSUs as well as to the private players. well as to the private players.

PESTL ANALYSISPESTL ANALYSIS

POLITICAL FACTORSPOLITICAL FACTORS Foreign Direct Investment limits.Foreign Direct Investment limits. Focus on regulation of government.Focus on regulation of government. Budget and budget measures.Budget and budget measures.


ECONOMIC FACTORSECONOMIC FACTORS More of FDI in banking industry can help More of FDI in banking industry can help

in the growth in the banking sector in the growth in the banking sector which in turn can give a boom to the which in turn can give a boom to the economy.economy.

Every RBI declares its 6 monthly policies Every RBI declares its 6 monthly policies & accordingly the various measures & & accordingly the various measures & rates are implemented which has an rates are implemented which has an impact on the banking sector.impact on the banking sector.


SOCIO- CULTURAL FACTORSSOCIO- CULTURAL FACTORS Traditional Mahajan PrathaTraditional Mahajan Pratha Change in LifestyleChange in Lifestyle PopulationPopulation Literacy RateLiteracy Rate


TECHNOLOGICAL FACTORSTECHNOLOGICAL FACTORS Automated Teller Machine (ATM)Automated Teller Machine (ATM) Automatic Voice RecorderAutomatic Voice Recorder Credit card FacilityCredit card Facility IT Services & Mobile BankingIT Services & Mobile Banking


LEGAL FACTORSLEGAL FACTORS Banking Regulation Act (1949)Banking Regulation Act (1949) Intervention by RBIIntervention by RBI

PORTER’S FIVE FORCESPORTER’S FIVE FORCES

RIVALRY AMONG COMPETING FIRMSRIVALRY AMONG COMPETING FIRMS A large no. of banksA large no. of banks High market growth ratesHigh market growth rates Homogenous products and servicesHomogenous products and services Low switching costLow switching cost Undifferented ServicesUndifferented Services


BARGAINING POWER OF SUPPLIERSBARGAINING POWER OF SUPPLIERS Nature of suppliersNature of suppliers RBI Rules and regulationsRBI Rules and regulations Suppliers not concentratedSuppliers not concentrated


POTETIAL ENTRY OF NEW COMPETITORSPOTETIAL ENTRY OF NEW COMPETITORS RBI has laid down stagnant rules and RBI has laid down stagnant rules and

regulations for new entrants.regulations for new entrants. More merger and acquisition in More merger and acquisition in

banking industry is expected in near banking industry is expected in near future and therefore less threat of future and therefore less threat of entry of new competitors.entry of new competitors.


POTENTIAL DEVELOPMENT OF POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCTSSUBSTITUTE PRODUCTS

NBFCsNBFCs Post office productsPost office products Government bondsGovernment bonds Mutual fundsMutual funds Stock marketStock market DebenturesDebentures

Age distribution of respondents Age distribution of respondents in PSBsin PSBs

Age distribution of respondents Age distribution of respondents in Private Sector Banksin Private Sector Banks


BARGAINING POWER OF CONSUMERSBARGAINING POWER OF CONSUMERS Large number of alternativesLarge number of alternatives Low switching costLow switching cost Full information about the marketFull information about the market Undifferentiated services Undifferentiated services

Gender profile of respondents in Gender profile of respondents in PSBsPSBs

Gender profile of respondents in Gender profile of respondents in Private Sector BanksPrivate Sector Banks

Education profile of respondents Education profile of respondents in PSBsin PSBs

Education profile of respondents Education profile of respondents in Private Sector Banksin Private Sector Banks

ROAD AHEADROAD AHEAD

The impressive performance of Indian The impressive performance of Indian Banks as compared to other large Banks as compared to other large economies on almost all parameters-economies on almost all parameters-profitability, cost to income ratio, NPA profitability, cost to income ratio, NPA levels, valuations net interest margins- the levels, valuations net interest margins- the industry is on the right side of average industry is on the right side of average among comparable economies.among comparable economies.

Transition from class banking mass Transition from class banking mass banking & increased customer focus is banking & increased customer focus is drastically changing the landscape of drastically changing the landscape of Indian banking.Indian banking.

CONT…CONT…

New channels (like ATMs & mobile New channels (like ATMs & mobile phones) allow transactions at a phones) allow transactions at a fractional cost.fractional cost.

Consolidation in the banking industry Consolidation in the banking industry has remained crucial to ensuring has remained crucial to ensuring technological progress, excess technological progress, excess retention capacity, emerging retention capacity, emerging opportunities & deregulation of various opportunities & deregulation of various functions and products.functions and products.

THANK YOUTHANK YOU

Economy & Finance

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