banking analysis

1. INDUSTRIAL ANALYSIS ONINDUSTRIAL ANALYSIS ON
BANKING SECTOR IN INDIABANKING SECTOR IN INDIA
Presented By-Presented By-
Pooja GidwaniPooja Gidwani
MBA-Ist SemMBA-Ist Sem

2. INTRODUCTIONINTRODUCTION
 Heart of the economyHeart of the economy
 One of the strongest drivers of India’sOne of the strongest drivers of India’s
Economic GrowthEconomic Growth
 ““WE DON’T WANT SATISFIEDWE DON’T WANT SATISFIED
CUSTOMERS… WE WANTCUSTOMERS… WE WANT
DELIGHTED CUSTOMERS.”DELIGHTED CUSTOMERS.”… Is the… Is the
New Marketing Mantra and applies toNew Marketing Mantra and applies to
Banking Industry as well.Banking Industry as well.
 Retail and Rural Banking were onceRetail and Rural Banking were once
considered the taboos.considered the taboos.

3. Evolution of Indian Banking SectorEvolution of Indian Banking Sector
In IndiaIn India
PHASES
Phase-I Phase-II Phase-III

4. 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, Bank of1906-1913- Bank of India, Central Bank of India, Bank of
Baroda, Canara Bank, Indian Bank, Bank of MysoreBaroda, Canara Bank, Indian Bank, Bank of Mysore
 1920- Imperial Bank of India1920- Imperial Bank of India

5. 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’s1959- 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 crore.1980- Creation of 7 banks with deposits over 200 crore.

6. PHASE-IIIPHASE-III
 1991-1991- M Narasimham
Committee wasCommittee was
formed for theformed for the
liberalization ofliberalization of
banking practices.banking practices.
 Technology startedTechnology started
acting as a Catalystacting as a Catalyst

7. SWOT ANALYSISSWOT ANALYSIS
STRENGTHSSTRENGTHS
 Policy makers have made notable changesPolicy makers have made notable changes
in policy and regulation which includein policy and regulation which include
strengthening prudential norms, enhancingstrengthening prudential norms, enhancing
the payment systems and integratingthe payment systems and integrating
regulations between commercial and co-regulations between commercial and co-
operative banks.operative banks.
 Banks lending has been a significant driverBanks lending has been a significant driver
of GDP growth and employment.of GDP growth and employment.

8. CONT..CONT..
 Extensive Reach: the vast networking &Extensive Reach: the vast networking &
growing number of branches and ATMs.growing number of branches and ATMs.
 Indian banks have compared favorably onIndian banks have compared favorably on
growth, asset quality and profitability.growth, asset quality and profitability.

9. SWOT ANALYSISSWOT ANALYSIS
WEAKNESSESWEAKNESSES
 Old private sector banks and PSUs have theOld private sector banks and PSUs have the
need to fundamentally strengthen skill levels.need to fundamentally strengthen skill levels.
 The cost of intermediation is high and bankThe cost of intermediation is high and bank
penetration is limited to only a few customerspenetration is limited to only a few customers
and geographies.and geographies.

10. SWOT ANALYSISSWOT ANALYSIS
OPPURTUNITIESOPPURTUNITIES
 With increased in India, competition fromWith increased in India, competition from
foreign banks will intensify.foreign banks will intensify.
 New private banks could reach the nextNew private banks could reach the next
level of growth by continuing to innovate &level of growth by continuing to innovate &
develop differentiated business models todevelop differentiated business models to
profitably serve segments like rural, lowprofitably serve segments like rural, low
income.income.

11. SWOT ANALYSISSWOT ANALYSIS
THREATSTHREATS
 Failure of some weak banks has oftenFailure of some weak banks has often
threatened the stability of the system.threatened the stability of the system.
 Rise in inflation figures which leads toRise in inflation figures which leads to
increase in interest rates.increase in interest rates.
 Increase in the number of foreign playersIncrease in the number of foreign players
would pose a threat to PSUs as well as towould pose a threat to PSUs as well as to
the private players.the private players.

12. 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.

13. PESTL ANALYSISPESTL ANALYSIS
ECONOMIC FACTORSECONOMIC FACTORS
 More of FDI in banking industry can help inMore of FDI in banking industry can help in
the growth in the banking sector which inthe growth in the banking sector which in
turn can give a boom to the economy.turn can give a boom to the economy.
 Every RBI declares its 6 monthly policies &Every RBI declares its 6 monthly policies &
accordingly the various measures & ratesaccordingly the various measures & rates
are implemented which has an impact onare implemented which has an impact on
the banking sector.the banking sector.

14. PESTL ANALYSISPESTL ANALYSIS
SOCIO- CULTURAL FACTORSSOCIO- CULTURAL FACTORS
 Traditional Mahajan PrathaTraditional Mahajan Pratha
 Change in LifestyleChange in Lifestyle
 PopulationPopulation
 Literacy RateLiteracy Rate

15. PESTL ANALYSISPESTL ANALYSIS
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

16. PESTL ANALYSISPESTL ANALYSIS
LEGAL FACTORSLEGAL FACTORS
 Banking Regulation Act (1949)Banking Regulation Act (1949)
 Intervention by RBIIntervention by RBI

17. 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

18. PORTER’S FIVE FORCESPORTER’S FIVE FORCES
BARGAINING POWER OF SUPPLIERSBARGAINING POWER OF SUPPLIERS
 Nature of suppliersNature of suppliers
 RBI Rules and regulationsRBI Rules and regulations
 Suppliers not concentratedSuppliers not concentrated

19. PORTER’S FIVE FORCESPORTER’S FIVE FORCES
POTETIAL ENTRY OF NEW COMPETITORSPOTETIAL ENTRY OF NEW COMPETITORS
 RBI has laid down stagnant rules andRBI has laid down stagnant rules and
regulations for new entrants.regulations for new entrants.
 More merger and acquisition in bankingMore merger and acquisition in banking
industry is expected in near future andindustry is expected in near future and
therefore less threat of entry of newtherefore less threat of entry of new
competitors.competitors.

20. PORTER’S FIVE FORCESPORTER’S FIVE FORCES
POTENTIAL DEVELOPMENT OFPOTENTIAL DEVELOPMENT OF
SUBSTITUTE PRODUCTSSUBSTITUTE PRODUCTS
 NBFCsNBFCs
 Post office productsPost office products
 Government bondsGovernment bonds
 Mutual fundsMutual funds
 Stock marketStock market
 DebenturesDebentures

21. Age distribution of respondentsAge distribution of respondents
in PSBsin PSBs

22. Age distribution of respondentsAge distribution of respondents
in Private Sector Banksin Private Sector Banks

23. PORTER’S FIVE FORCESPORTER’S FIVE FORCES
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 servicesUndifferentiated services

24. Gender profile of respondents inGender profile of respondents in
PSBsPSBs

25. Gender profile of respondents inGender profile of respondents in
Private Sector BanksPrivate Sector Banks

26. Education profile of respondentsEducation profile of respondents
in PSBsin PSBs

27. Education profile of respondentsEducation profile of respondents
in Private Sector Banksin Private Sector Banks

28. ROAD AHEADROAD AHEAD
 The impressive performance of Indian BanksThe impressive performance of Indian Banks
as compared to other large economies onas compared to other large economies on
almost all parameters-profitability, cost toalmost all parameters-profitability, cost to
income ratio, NPA levels, valuations netincome ratio, NPA levels, valuations net
interest margins- the industry is on the rightinterest margins- the industry is on the right
side of average among comparableside of average among comparable
economies.economies.
 Transition from class banking mass banking &Transition from class banking mass banking &
increased customer focus is drasticallyincreased customer focus is drastically
changing the landscape of Indian banking.changing the landscape of Indian banking.

29. CONT…CONT…
 New channels (like ATMs & mobile phones)New channels (like ATMs & mobile phones)
allow transactions at a fractional cost.allow transactions at a fractional cost.
 Consolidation in the banking industry hasConsolidation in the banking industry has
remained crucial to ensuring technologicalremained crucial to ensuring technological
progress, excess retention capacity,progress, excess retention capacity,
emerging opportunities & deregulation ofemerging opportunities & deregulation of
various functions and products.various functions and products.

30. THANK YOUTHANK YOU