Group 3 idbi bank (strategy)


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Group 3 idbi bank (strategy)

  1. 1. REPORT ON STRATEGIES OF IDBI BANKSubmitted To Submitted ByDr. Deepak Singh Group # 3 Aarti Sharma PGFB1101 Abhishek Kapoor PGFB1102 Anuja Srivastava PGFB1106 Shreya PGFB1144 Siddharth Rai PGFB1146JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  2. 2. OVERVIEW OF BANKING SECTORRecently, the RBI took a few important steps to make the Indian Banking industry more robustand healthy. This includes de-regulation of savings rate, guidelines for new banking licenses andimplementation of Basel Norm III. Since March 2002, Bankex (Index tracking the performanceof leading banking sector stocks) has grown at a compounded annual rate of about 31%. After avery 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 sectorGrowth Drivers in Indian Banking Industry.High growth of Indian Economy: The growth of the banking industry is closely linked with thegrowth of the overall economy. India is one of the fastest growing economies in the world and isset to remain on that path for many years to come. This will be backed by the stellar growth ininfrastructure, industry, services and agriculture. This is expected to boost the corporate creditgrowth in the economy and provide opportunities to banks to lend to fulfill these requirements inthe 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 bankingafter ATMs, New channels used to offer banking services will drive the growth of bankingindustry exponentially in the future by increasing productivity and acquiring new customers.Financial Inclusion Program: Currently, in India, 41% of the adult population doesn’t havebank accounts, which indicates a large untapped market for banking players. Under the FinancialInclusion Program, RBI is trying to tap this untapped market and the growth potential in ruralmarkets by volume growth for banks.JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  3. 3. Future Outlook of the Banking IndustryCurrently, there are many challenges before Indian Banks such as improving capital adequacyrequirement, managing non-performing assets, enhancing branch sales & services, improvingorganization design; using innovative technology through new channels and working on leanoperations. Apart from this, frequent changes in policy rates to maintain economic stability,various regulatory requirements, etc. are additional key concerns. Despite these concerns, weexpect that the Indian banking industry will grow through leaps and bounds looking at the hugegrowth potential of Indian economy. High population base of India, mobile banking – offeringbanking 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 requireadditional banks and expansion of existing banks to meet its credit needs.Current SituationToday, 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 achallenge. In terms of quality of assets and capital adequacy, Indian banks are considered to haveclean, strong and transparent balance sheets relative to other banks in comparable economies inits region. The Reserve Bank of India is an autonomous body, with minimal pressure from thegovernment. The stated policy of the Bank on the Indian Rupee is to manage volatility butwithout any fixed exchange rate. Till now, there is hardly any deviation seen from this statedgoal which is again very encouraging.JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  4. 4. PROFILE OF IDBI BANKIDBI Bank Ltd. is today one of Indias largest commercial Banks. For over 40 years, IDBI Bankhas 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-servicecommercial Bank (October 1, 2004 onwards). As a DFI, the erstwhile IDBI stretched its canvasbeyond mere project financing to cover an array of services that contributed towards balancedgeographical spread of industries, development of identified backward areas, emergence of anew 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 IndiaLimited) to undertake the entire gamut of Banking activities while continuing to play its secularDFI role. Post the mergers of the erstwhile IDBI Bank with its parent company (IDBI Ltd.) onApril 2, 2005 (appointed date: October 1, 2004) and the subsequent merger of the erstwhileUnited Western Bank Ltd. with IDBI Bank on October 3, 2006, the tech-savvy, new generationBank with majority Government shareholding today touches the lives of millions of Indiansthrough 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, ahighly competent and dedicated workforce and a state-of-the-art information technologyplatform, to structure and deliver personalized and innovative Banking services and customizedfinancial 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 corebanking and project finance domain, has an established presence in associated financial sectorbusinesses 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 mostvalued financial conglomerate, besides generating wealth and value to all its stakeholders.JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  5. 5. 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 banksMajor competitors of IDBI bank are HDFC and ICICI bank in private sector and SBI in PublicSector.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.JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  6. 6. 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 inCould seek better customer deals. the industry.Fast-track career development Lack of infrastructure in rural areasopportunities 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”JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  7. 7. 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.JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  8. 8. 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 followoverall 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. Theycan not only tap the potential better but can also provide a safe and transparent insurancealternative 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 ofSale Merchant Acquisition, Advisory Services, structured products etc – each one of theseinitiatives 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 ATMs 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.JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  9. 9. Mission Statement of IDBI BankDelighting Customers with our excellent service and comprehensive suite of best-in-classfinancial solutions; Touching more people’s lives with our expanding retail footprint whilemaintaining our excellence in corporate and infrastructure financing; Continuing to act in anethical, transparent and responsible manner, becoming the role model for corporate governance;Deploying world class technology, systems and processes to improve business efficiency andexceed customer’s expectations; Encouraging a positive. Dynamic and performance-driven workculture 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 MatrixCOMPONENTS DESCRIPTIONCustomers YESProducts or services YESMarkets NOTechnology YESConcern for survival, growth, and profitability YESPhilosophy YESSelf-concept YESConcern for public image YESConcern for employees YESVisionTo be the most preferred and trusted bank enhancing value for all stakeholders.Objectives of IDBI BankObjectivesThe main objectives of IDBI are to serve as the apex institution for term finance for industry in India. Itincludes:(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 theirassistance.(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.JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  10. 10. 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. PESTELENVIRONMENTAL SOCIO CULTURALGovernment regulations Demographic of largelike subsidiaries population Changes in life style TECHNOLOGICAL Core banking solutions ATM E-banking M-banking JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  11. 11. 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 OFBargaining power of suppliers SUBSITUTES- Threat of substitutes HIGH o RBI rules o High threat from o Few alternatives available mutual funds, government securities etc JAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  12. 12. VRIN Analysis of IDBI BankTANGIBLE RESOURCES V R I NPhysical Resources:Land, Building, Branches, ATMs, Infrastructure xFinancial Resources:Deposits xEquity xLoans and Interest xInsurance x xMutual Funds x xTechnological Resources:Finacle Software xOrganizational Resources:KIOSK xNEFT/RTGS XINTANGIBLE RESOURCESHuman Assets and Intellectual Capital :Number of Employees xTraining x x x xExperience x x x xShare holders and Stake HoldersBrand, company image, reputational assets:Ranking x xAwards and Recognitions x x x xRelationships:Customer Relationship Management x x xCustomized Service x x x xCompany culture and incentive system:Employee Referral x xContract Hiring x x x xAppraisal System x x xJAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3
  13. 13. 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 accountJAIPURIA INSTITUTE OF MANAGEMENT, NOIDA GROUP-3