Group 3 idbi bank (strategy)

REPORT ON STRATEGIES OF
IDBI BANK

Submitted To Submitted By

Dr. Deepak Singh Group # 3

Aarti Sharma PGFB1101

Abhishek Kapoor PGFB1102

Anuja Srivastava PGFB1106

Shreya PGFB1144

Siddharth Rai PGFB1146

JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3

OVERVIEW OF BANKING SECTOR

Recently, the RBI took a few important steps to make the Indian Banking industry more robust
and healthy. This includes de-regulation of savings rate, guidelines for new banking licenses and
implementation of Basel Norm III. Since March 2002, Bankex (Index tracking the performance
of leading banking sector stocks) has grown at a compounded annual rate of about 31%. After a
very successful decade, a new era seems to have started for the Indian Banking Industry.
According to a Mckinsey report, the Indian banking sector is heading towards being a high-
performing sector

Growth Drivers in Indian Banking Industry.

High growth of Indian Economy: The growth of the banking industry is closely linked with the
growth of the overall economy. India is one of the fastest growing economies in the world and is
set to remain on that path for many years to come. This will be backed by the stellar growth in
infrastructure, industry, services and agriculture. This is expected to boost the corporate credit
growth in the economy and provide opportunities to banks to lend to fulfill these requirements in
the future.

Rising Per Capita Income: The rising per capita income will drive the growth of retail credit.
However, with an increase in disposable income and increased exposure to a range of products,
consumers have shown a higher willingness to take credit, particularly, young customers.

New Channel: Mobile banking is expected to become the second largest channel for banking
after ATMs, New channels used to offer banking services will drive the growth of banking
industry exponentially in the future by increasing productivity and acquiring new customers.

Financial Inclusion Program: Currently, in India, 41% of the adult population doesn’t have
bank accounts, which indicates a large untapped market for banking players. Under the Financial
Inclusion Program, RBI is trying to tap this untapped market and the growth potential in rural
markets by volume growth for banks.


Future Outlook of the Banking Industry

Currently, there are many challenges before Indian Banks such as improving capital adequacy
requirement, managing non-performing assets, enhancing branch sales & services, improving
organization design; using innovative technology through new channels and working on lean
operations. Apart from this, frequent changes in policy rates to maintain economic stability,
various regulatory requirements, etc. are additional key concerns. Despite these concerns, we
expect that the Indian banking industry will grow through leaps and bounds looking at the huge
growth potential of Indian economy. High population base of India, mobile banking – offering
banking operations through mobile phones, financial inclusion, rising disposable income, etc.
will drive the growth Indian banking industry in the long-term. The Indian economy will require
additional banks and expansion of existing banks to meet its credit needs.

Current Situation

Today, the banking sector in India is fairly mature in terms of supply, product range and reach.
As far as private sector and foreign banks are concerned, the reach in rural India still remains a
challenge. In terms of quality of assets and capital adequacy, Indian banks are considered to have
clean, strong and transparent balance sheets relative to other banks in comparable economies in
its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the
government. The stated policy of the Bank on the Indian Rupee is to manage volatility but
without any fixed exchange rate. Till now, there is hardly any deviation seen from this stated
goal which is again very encouraging.


PROFILE OF IDBI BANK

IDBI Bank Ltd. is today one of India's largest commercial Banks. For over 40 years, IDBI Bank
has essayed a key nation-building role, first as the apex Development Financial Institution (DFI)
(July 1, 1964 to September 30, 2004) in the realm of industry and thereafter as a full-service
commercial Bank (October 1, 2004 onwards). As a DFI, the erstwhile IDBI stretched its canvas
beyond mere project financing to cover an array of services that contributed towards balanced
geographical spread of industries, development of identified backward areas, emergence of a
new spirit of enterprise and evolution of a deep and vibrant capital market. On October 1, 2004,
the erstwhile IDBI converted into a Banking company (as Industrial Development Bank of India
Limited) to undertake the entire gamut of Banking activities while continuing to play its secular
DFI role. Post the mergers of the erstwhile IDBI Bank with its parent company (IDBI Ltd.) on
April 2, 2005 (appointed date: October 1, 2004) and the subsequent merger of the erstwhile
United Western Bank Ltd. with IDBI Bank on October 3, 2006, the tech-savvy, new generation
Bank with majority Government shareholding today touches the lives of millions of Indians
through an array of corporate, retail, SME and Agri products and services.

Headquartered in Mumbai, IDBI Bank today rides on the back of a robust business strategy, a
highly competent and dedicated workforce and a state-of-the-art information technology
platform, to structure and deliver personalized and innovative Banking services and customized
financial solutions to its clients across various delivery channels.

As on March 31, 2012, IDBI Bank has a balance sheet of Rs.2.91 lakh crore and business size
(deposits plus advances) of Rs.3.92 lakh crore. As a Universal Bank, IDBI Bank, besides its core
banking and project finance domain, has an established presence in associated financial sector
businesses like Capital Market, Investment Banking and Mutual Fund Business. Going forward,
IDBI Bank is strongly committed to work towards emerging as the 'Bank of choice' and 'the most
valued financial conglomerate', besides generating wealth and value to all its stakeholders.


1. Industrial banking expertise 1. Less penetration across
for businesses India especially rural areas
2. State of art IT support and
technological innovations 2. Strong competition from
3. Customised banking solutions
other powerful branded banks
3. Extremely low number of
4. Has a strong employee base
branches and ATM’s
of over 14,000
STRENGTHS Weaknesses

Opportunities Threats
1. Personal banking and improved 1. Economic crisis
customer service 2. Highly competitive environment
2. Favourable Government schemes due to Indian and foreign banks
3. Complex financial products by
foreign banks

Major competitors of IDBI bank are HDFC and ICICI bank in private sector and SBI in Public
Sector.

HDFC BANK Market Strategy Emphasizes The Following:

Increase market share in India’s expanding banking and financial services industry by

following a disciplined growth strategy focusing on quality and not on quantity and

delivering high quality customer service.

Leverage our technology platform and open scalable systems to deliver more products to

more customers and to control operating costs.

Maintain current high standards for asset quality through disciplined credit risk management.

Develop innovative products and services that attract the targeted customers and

address inefficiencies in the Indian financial sector.

Continue to develop products and services that reduce bank’s cost of funds.

Focus on high earnings growth with low volatility.


SWOT ANALYSIS OF HDFC BANK

Right strategy for the right products. Customer service staff needs training.
Superior customer service vs. Sectoral growth is constrained by low
competitors. unemployment levels and
competition for staff.
Lower response time with efficient and
effective service Weaknesses
Strength

Threats
opportunities
Legislation could impact.
Could extend to overseas broadly.
Very high competition prevailing in
Could seek better customer deals.
the industry.
Fast-track career development
Lack of infrastructure in rural areas
opportunities on an industry-wide basis.
could constrain investment.

MARKETING STRATEGY OF ICICI BANK

• India’s second largest bank
• 614 branches and extension counters
• 2200 ATM’S
• Biggest private sector bank in India
• Most valuable bank in India in terms of market capitalization
• Described by the competitors and industry expert in one word – “Aggressive”


Large Capital base. Workforce Responsiveness.

Low operating costs Not Equal to International
Standards.
Strengths
Weakness

Opportunity Threats

Market Expansion. Entry of many Foreign Banks.

Outsourcing of Non Core Increased Competition from
Business. other private banks.


SBI`s Strategies in the current scenario.

SBI have set up capacity in places where they are not very strong. Its time for them to follow
overall SBI philosophy of planning new branches, given the huge untapped potential. Besides,
this is also the best time to benefit from their past expansion, since there is a lot of trust in SBI.
Brand SBI is very strong, while people may be generally cautious about some other brands. They
can not only tap the potential better but can also provide a safe and transparent insurance
alternative to the public. The bank is entering into many new businesses with strategic tie ups –
Pension Funds, General Insurance, Custodial Services, Private Equity, Mobile Banking, Point of
Sale Merchant Acquisition, Advisory Services, structured products etc – each one of these
initiatives having a huge potential for growth.

Brand name Minor hindrances
Market Leader Hierarchical
Wide Distribution Network management
Government Owned Lags modernisation
Diversified Portfolio
Weaknesses
Strengths

Opportunities
Threats
Merger of associate banks
with SBI Net profit of the year has decline from
Opportunities for public 9166.05 in the year FY 2010 to 7,370.35 in the
sector banks year FY2011
New Branches and ATM's This shows the reduce in market share to its
Expansion on Foregin soil close competitor ICICI
Customer prefer to switch to private banks
and financial service providers for loans and
mortgages, as SBI involves stringent
verification procedures and take long time for
processing.


Mission Statement of IDBI Bank

Delighting Customers with our excellent service and comprehensive suite of best-in-class
financial solutions; Touching more people’s lives with our expanding retail footprint while
maintaining our excellence in corporate and infrastructure financing; Continuing to act in an
ethical, transparent and responsible manner, becoming the role model for corporate governance;
Deploying world class technology, systems and processes to improve business efficiency and
exceed customer’s expectations; Encouraging a positive. Dynamic and performance-driven work
culture to nurture employees, grow them and build a passionate and committed work force;
Expanding our global presence; Relentlessly striving to become a greener bank.

Mission Evaluation Matrix

COMPONENTS DESCRIPTION
Customers YES
Products or services YES
Markets NO
Technology YES
Concern for survival, growth, and profitability YES
Philosophy YES
Self-concept YES
Concern for public image YES
Concern for employees YES

Vision

To be the most preferred and trusted bank enhancing value for all stakeholders.

Objectives of IDBI Bank

Objectives

The main objectives of IDBI are to serve as the apex institution for term finance for industry in India. It
includes:

(1) Co-ordination, regulation and supervision of the working of other financial institutions such as IFCI,
ICICI, UTI, LIC, Commercial Banks and SFCs.

(2) Supplementing the resources of other financial institutions and thereby widening the scope of their
assistance.

(3) Planning, promotion and development of key industries and diversifications of industrial growth.

(4) Devising and enforcing a system of industrial growth that conforms to national priorities.


PESTEL ANALYSIS:

POLITICAL

Government
policy and
budget
LEGAL Monetary
ECONOMICAL
RBI policy change Policy
Inflation rate
in cash reserve ratio FDI Limits
and statutory Hike in
interest rate
liquidity ratio.

PESTEL
ENVIRONMENTAL
SOCIO CULTURAL
Government regulations
Demographic of large
like subsidiaries
population

Changes in life style
TECHNOLOGICAL

Core banking
solutions

ATM

E-banking

M-banking


FIVE PORTER’S MODEL: Bargaining power of buyers

o High bargaining
Threat of new entrants THREATS power
OF NEW
o Homogenous service
o Low barriers ENTRANTS-
LOW o Large number of
o Globalization &
alternatives
liberalization
o Low switching cost
o Government
policies are
supportive Rivalry among existing firms

o Intense competition as there is competitors
like SBI, PNB, Allahabad Bank, etc.

COMPETITIVE BARGAINING POWER OF
BARGAINING POWER RIVARLY- HIGH
OF SUPPLIER- HIGH BUYER- HIGH

THREAT OF
Bargaining power of suppliers SUBSITUTES- Threat of substitutes
HIGH
o RBI rules o High threat from
o Few alternatives available mutual funds,
government
securities etc


VRIN Analysis of IDBI Bank

TANGIBLE RESOURCES V R I N
Physical Resources:
Land, Building, Branches, ATMs, Infrastructure x
Financial Resources:
Deposits x
Equity x
Loans and Interest x
Insurance x x
Mutual Funds x x
Technological Resources:
Finacle Software x
Organizational Resources:
KIOSK x
NEFT/RTGS X

INTANGIBLE RESOURCES
Human Assets and Intellectual Capital :
Number of Employees x
Training x x x x
Experience x x x x
Share holders and Stake Holders

Brand, company image, reputational assets:
Ranking x x
Awards and Recognitions x x x x

Relationships:
Customer Relationship Management x x x
Customized Service x x x x

Company culture and incentive system:
Employee Referral x x
Contract Hiring x x x x
Appraisal System x x x


Value Chain Analysis

Infrastrusture (Use of finacle software,Vast number of employees)
HRM Recruitment through exam and campus placement ,Training
Tech. dev. Use of latest software for administrative work and security

Procurement Institution tie up, Marketing &Tie up with dealers.
Inbound Operations Outbound Marketing Services
Logistics Filling form logistics and Sales Training to employees

Promotion of
Verification Sending Customer relationship
Maintaining employee
documents management
file of each
Approval in from branch
customer Interest rate of
case of loans office to head
and clients loans and saving
office accounts
Bank
employee Transferring
records amount/cash
to customer
account


Group 3 idbi bank (strategy)

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to Group 3 idbi bank (strategy)

Similar to Group 3 idbi bank (strategy) (20)

More from Shreya Sinha

More from Shreya Sinha (14)

Recently uploaded

Recently uploaded (20)

Group 3 idbi bank (strategy)