BANKING INDUSTRY

MaloO BadlanI SomanI BanerjeE

Ashish Gazal

Ankit

Anushree

http://studygalaxy.com/

INDUSTRY ANALYSIS
Banking in India originated in the last decades of the

18th century
The first banks were THE GENERAL BANK OF INDIA,

which started in 1786

The oldest bank in existence in India is the STATE

BANK OF INDIA, which originated as the BANK OF CALCUTTA in June 1806

Industry Analysis Cont

The first fully Indian owned bank was the ALLAHABAD

BANK, established in 1865

The banking industry has grown at a compounded annual

rate of over 51 per cent since April 2001

Industry life cycle Growing stage

OVERVIEW OF THE INDUSTRY

88 Scheduled commercial banks 27 Public sector banks

Banking 31 Private banks 38 Foreign banks

INDUSTRY DATA

MARKET STRUCTURE

GROWTH RATE
Private Bank 50% Public sector bank 15% Private and Public Bank 35% Foreign 20%

RBI Reserve Bank of India

ESTABLISHED in 1935 Central bank of India

Function performs :I. II.

III.
IV.

Banker to Government Currency issuer Development role Manager of exchange control

MAJOR PLAYERS
State Bank of India ICICI HDFC

PNB
AXIS Bank

MAJOR MARKET SHARE

OTHERS 36% SBI 18%

ICICI 14%
PNB 10% HDFC 12%

AXIS 10%

DATA ANALYSIS
Bank Name SBI ICICI HDFC PNB Net sales 2009 177797 60896 40348 55055 Net profit 2009 24790 11011 8185 10113 Net sales 2008 180303 78361 44685 52947 Net profit 2008 24784 12721 6217 10058

AXIS

28837

6560

29848

5005

CHALLENGES FACED BY BANKING INDUSTRY IN INDIA

Deregulation
New rules Efficiency Diffused customer loyalty Misaligned mindset Competency gap

CUSTOMER SERVICE

RESOURCE MOBILISATION

INTERNET BANKING INNOVATIONS

CREDIT MANAGEMENT

SMART CARDS

ATMS

ASSET LIABILITY MANAGEMENT

KEY FINDINGS
Market Structure PERFECT COMPETITION
Many sellers and Many buyers Homogeneous product

Perfect knowledge of the market conditions

Free entry of firms

ELASTICITY ANALYSIS
CONSUMERS NOT ATTRACTED CONSUMERS ATTRACTED

LENDING RATE

SAVING RATE

CONSUMERS ATTRACTED

CONSUMERS NOT ATTRACTED

DEMAND AND SUPPLY ANALYSIS

REAL ESTATE Recession(2008) Holding back money

CRR rate increases

Affected whole banking industry

Survey Report
PUBLIC SECTOR PRIVATE SECTOR TOTAL

NO. OF BANKS

10

17

NO. OF RESPONDENTS

305

298

603

CONSUMER SATISFACTION
Consumer (The King ) Reaching at doorsteps Providing in a customized manner

Differentiating quality

(Education, Marriage, Status, Age, Income, etc.)

Behavior

Loyalty with the product

Herfindahl Index
Herfindahl Index
Market share of bank are:

SBI = 18% ICICI = 14% HDFC = 12% PNB =10% AXIS= 10% Others = 36%

Herfindahl Index of Banking Industry

= (0.180)2 + (0.140)2 + (0.120)2 + (0.100)2 + (0.100)2 + (0.360) 2 = .0324 + .0196 + .0144 + .01 + .01 + .1296 = .216 It means there is perfect competition in the banking industry