Presented By:

Fenal Shah PG12034

Nishad Patil PG12069
Hasnain Kanchwala PG12072
Gopal Dhage PG12073
Purva Kashikar PG12074
Priyanka Mahapadi PG12078
Keval Savla PG12118

The Indian Banking Industry

Group No: 7

Case Facts
Initial Years (Prior to 1950)
Indian joint stock banks
The Imperial Bank of India
Formation of RBI
Foundation Phase (1950 -69)
Emergence of development banks
Emergence of co-operative banks

Expansionary Phase (1969 85)

Consolidation & Diversification Phase

(1985 91)

Financial Reform Phase

(Post Liberalization 1991+)

The Narasimham Committee

External Constraints:
CRR
SLR
Regulation of Interest rates

Internal Constraints:
Prudential Norms
Reducing government stakes in banks to 33%
Conversion of weak banks into narrow banks

The Features of the Banking Industry

High growth potential
Deregulation
Sector being brought at par with international norms and
standards
Banks has to have a minimum equity base of Rs. 100
crores
Serves two types of customers; corporate and individuals

Defining Industry

Retail Banking
Corporate Banking

Overall Assessment (Retail Banking)

Attractiveness
Low

High

Barriers to entry

Rivalry among
Competitors

Barriers to exit

Power of buyers

Power of suppliers

Threat of substitutes

Overall attractiveness

Table-7

Overall Assessment (Corporate Banking)

Attractiveness
Low

High

Barriers to entry

Rivalry among
Competitors

Barriers to exit
Power of buyers

Power of suppliers

Threat of substitutes

Overall attractiveness

Table-14

Corporate Banking (Generic Strategies)

Cost leadership

Differentiation

Best Cost
Provider

Focus Cost
leadership

BOA

Indusind
Bank

HDFC
Bank

Focus
Differentiation

Retail Banking (Generic Strategies)

Cost leadership

Differentiation

HDFC
Bank

Indusind
Bank

Best Cost
Provider

Focus Cost
leadership

Focus
Differentiation

Competitor analysis of Corporation

Bank from the perspective of Citibank

Current Strategies- Corporation Bank

Providing unique and tailor-made products to its
customers
IT implementation

Assumption- Corporation bank

Implementation of IT will attract more
customers
Opening of economy will lead to growth of the
sector

Capabilities- Corporation Bank

Strength (Retail)
3 tier set-up
Tailor-made products
Government Protection
Weakness: (Retail)
Lacks global presence

Capabilities- Corporation Bank

Strength (Corporate)
3 tier set-up
Unique and tailor-made services
Faster realisation of receivables
Advisory services to importers and exporters
Weakness: (Corporate)
Lacks global presence

Future Goal- Corporation Bank

Focus equally on corporate banking

Competitor Analysis of Citibank

from the perspective of
Corporation Bank

Current Strategies: Citibank

More emphasis on relationships
Focus more on metros

Assumptions:Citibank
It can offer personal banking products on the
strength of relationships that it is competent at
building
Opening of economy will lead to high growth of
sector

Capabilities- Citibank
Strengths (Retail)
One of largest banks in the world in terms of
assets
Offers variety of services
Global presence
Weakness (Retail)
Operates only in the metros with 6 branches

Capabilities- Citibank
Strengths (Corporate)
One of largest banks in the world in terms of
assets
Global finance- Wholesale banking division
Global Relationships banking
Weakness (Corporate)
Operates only in the metros with 6 branches

Future Goals- Citibank

To widen the scope of consumer banking
services

Financial Comparison
Corporation

Citibank

96

97

98

96

97

98

Term Deposits

63%

61%

70%

84%

76%

80%

Term advances
Avg Return on
Advances

36%

40%

41%

56%

84%

84%

Avg Cost on Deposits

16.0% 16.6% 13.2%

6.4% 8.0% 7.8%

Interest spread

9.58

8.68

5.39

Credit deposit ratio

0.37

0.41

0.4

18.9% 20.6% 18.8%

6.2%

7.6%

7.5%

12.69 12.95

11.34

0.49

0.53

0.6

Structural Analysis Within

Industry

Step 1:
To characterize the
strategies of all significant
competitors along the
dimensions

Dimensions of Strategy
Dimensions

Public Sector
Banks

Private Sector
Banks

Foreign Banks

Number of branches

High

Medium

Low

Quality Of Service

Satisfactory

Good

Excellent

Range of Products

High

Low

Medium

Size of Fund Base

High

Medium

Low

Technology

Less
Computerized

Advanced
Technology

Advanced
Technology

Niche Marketing / Mass

Marketing

Mass

Niche, Mass

Niche

Skill of personnel

Low

High

High

Relation with Parent company NA

Medium

High

Operational efficiency

High

High

Low

Niche
Foreign
Bank
(Citibank,
BOA)

Marketing

Private
Sector
Bank
(HDFC,
Indusind
Bank)
Public sector
Bank ( SBI,
Corporation
Bank)

Mass

Low

High
No of Branches

Step 2:
To assess the height &
composition of the mobility
barriers protecting each group

Mobility Barriers of Public

Sector Banks vis--vis
other players in the
industry

Mobility Barriers of Foreign

Banks vis--vis other
players in the industry
BRAND
IDENTITY

SKILLED
EMPLOYEE
S

PRIVAT
E
SECTOR
(HDFC,
Indusin
d)

TECHNOLO
GY

Mobility Barriers of Private

Sector Banks vis--vis
other players in the
industry

Strategy as an Analytical Tool

Market Share of Assets
Medium
High

Public
Sector
Banks
Private
Sector
Banks

Low

Foreign
Banks
Low

Medium

High

Number of Branches

Marketing

Niche

Foreign
Banks
Private
Sector
Banks

Mass

Public
Sector
Banks

Less Advanced

Highly Advanced
Technology

Step 3:
To assess the relative bargaining power
of each strategic group in the industry
with its suppliers & buyers

Bargaining Power of Customers & Suppliers

Public Sector
Banks

Private Sector
Banks

Foreign Banks

No. of Retail
Customers

High

High

Low

No. of Corporate
Customers

High

Medium

Medium

No. of Suppliers

High

High

Medium

Step 4:
To assess the relative position
of each strategic group vis--vis
substitute products

Vulnerability with respect to Substitutes- NBFCs &

Money Lenders
Public Banks

Private Banks

Foreign Banks

Corporate(NBFCs)

Low

High

High

Commercial
Banking

Low

Low

Low

Cash
Management

Low

Low

Low

Treasury
Management

Low

Low

Low

Consumer
Banking

Medium

High

High

Corporate
Finance

Low

High

High

Retail (Moneylenders)

High

Low

Low

Vulnerability to Threat
From Substitutes

Step 5:
To assess the pattern of
market interdependence
among strategic groups &
their vulnerability to
warfare initiated by other
groups

High

Private
Sector
Banks
Public
Sector
Banks
Low

Customer Service

Rivalry among strategic Groups in Retail Industry

Mass

Niche
Customer Segment

Foreign
Sector
Banks

Public
Sector
Banks

Private
Sector
Banks

Low

Customer Service
High

Rivalry among strategic Groups in Corporate Industry

Mass

Niche
Customer Segment

Foreign
Banks

Firms Position within Strategic group

Degree of Competition within strategic group

Scale of Firm relative to others
Cost of Entry
Ability of firm to execute and implement its strategy

Indusland

HDFC

Private Sector Bank

SBI

Corporation Bank

Public Sector Bank

Are large firms more profitable than small firms?

BANKS

ROE

ROA

State Bank of India

21.17%

1.12%

Corporation Bank

30.17%

1.98%

Indusind Bank

23.01%

2.12%

HDFC Bank

23.87%

2.72%

Bank of America

34.42%

2.95%

Citibank

13.76%

1.17%

Thank You !