Professional Documents
Culture Documents
ACKNOWLEDGEMENTS
It is my proud privilege to release the feelings of my gratitude to several
persons who helped me directly or indirectly to conduct this research project work. I express my
heart full indebtness and owe a deep sense of gratitude to my teacher and my faculty guide Mr
Narendra Manral, Mr Nimish Saxena, Shri Ramswaroop Memorial Group of Professional
Colleges, for their sincere guidance and inspiration in completing this project.
I am extremely thankful to the Prof BB Tiwari, Prof Pankaj Dhingra, Mr Nadeem
Qazilbash, and Mr Shayaan Zaidi and all faculties members of PGDM of Shri Ramswaroop
Memorial Group of Professional Colleges for their coordination and cooperation and for there
kind guidance and encouragement.
I also thank all my friends who have more or less contributed to the preparation
of this project report. I will be always indebted to them.
The study has indeed helped me to explore more knowledgeable avenues related to
my topic and I am sure it will help me in my future.
Mohammad Azam
PGDM 2nd year
PGDM 10007
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INTRODUCTION
Banking Industry in India
The Indian banking industry started taking shape after Indias independence in 1947. Though the
Indian banking industry can be traced as far back as 1806 with the establishment of Bank of
Bengal, the industry was in a state of turmoil.
Under the British influence, Calcutta witnessed a surge in trading activities, giving rise to a
number of banking establishments during the period. Several banks, set up in order to finance
trading, went out of business. For instance, Union bank, formed by Indian merchants, failed due
to economic recession during 1848-49 resulting in depositors losing money. Such events resulted
in shifting the reigns of the industry into the hands of Europeans till the early twentieth century.
From 1906 to1911, several banks were set up based on the principles of the Swadesi movement.
The movement inspired Indian businessmen and politicians to set up banks for the Indian
community and many new banks were launched to promote trade and finance in communal
groups. Some of the prominent ones among these are Bank of India, Corporation Bank, Bank of
Baroda, Indian bank, Canara Bank, and Central bank of India.
Bank of Bengal, along with its sister banks, Bank of Bombay and Bank of Madras, set up by
British East India Company, merged in 1921 to give birth to Imperial bank of India, now known
as State bank of India.
During 1914-1945, India went through several ups and downs politically and economically and
the effects were felt in the banking sector too. The World Wars disrupted banking activities of the
nation and almost 94 banks failed during this period. After 1947, however, banking activities
flourished.
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In its platinum jubilee year, the RBI, the central bank of the country, in a notification issued on
June 25, 2009, said that banks should link more branches to the National Electronic Clearing
Service (NECS). NECS was introduced in September 2008 for centralized processing of
repetitive and bulk payment instructions. Currently, a little over 26,000 branches of 114 banks
are enabled to participate in NECS.
Banking in India originated in the first decade of 18th century with The General Bank of India
coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are
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To find the recent happening in this industry and relate it to draw suitable inferences.
Bring out TOP 2 Banks of Indian Banking Industry on the basis of relevant parameters.
Analyze the financial statement of both the companies and discover the various region
where one overcomes the other and try to find reasons for that.
Analyze the Brand lines and try to explore the segmentation, targeting and positioning
policies of these TOP 2 players.
Evaluate the current scenario of the industry as well as estimating the chances of entry of
new players by the help of PORTER FIVE FORCE ANALYSIS.
Study the management, working style and other organizational parameters of the TOP 2
players.
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Currently, India has 81 scheduled commercial banks (SCBs) - 27 public sector banks
(that is with the Government of India holding a stake), 22 private banks (these do not
have government stake; they may be publicly listed and traded on stock exchanges) and
32 foreign banks.
WEAKNESS
PSBs need to fundamentally strengthen institutional skill levels especially in sales and
marketing, service operations, risk management and the overall organizational
Performance ethic & strengthen human capital.
Bank penetration is limited to only a few customer segments and geographies
Structural weaknesses such as a fragmented industry structure, restrictions on capital
availability and deployment, lack of institutional support infrastructure, restrictive
about laws, weak corporate governance and ineffective regulations beyond
Scheduled Commercial Banks (SCBs), unless industry utilities and service bureaus.
Impediments in sectoral reforms: Opposition from Left and resultant cautious
approach from the North Block in terms of approving merger of PSU banks may
hamper their growth prospects in the medium term.
OPPORTUNITY
Given the demographic shifts resulting from changes in age profile and household
income, consumers will increasingly demand enhanced institutional capabilities and
service levels from banks.
With the growth in the Indian economy expected to be strong for quite some time
especially in its services sector-the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong
Reach in rural India for the private sector and foreign banks.
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THREATS
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PEST analysis of any industry investigates the important factors that affect the industry
and influence the companies operating in the sector. PEST stands for Political, Economic,
Social and Technological analysis. The PEST Analysis is a tool to analyze the forces that
drive the industry y and how those factors can influence the industry.
POLITICAL FACTORS:
Government and RBI policies affect the banking sector. Sometimes looking into the
political advantage of a particular party, the Government declares some measures to their
benefits like waiver of short-term agricultural loans, to attract the farmers votes. By
doing so the profits of the bank get affected. Various banks in the cooperative sector are
open and run by the politicians. They exploit these banks for their benefits. Sometimes
the government appoints various chairmen of the banks. Various policies are framed by
the RBI looking at the present situation of the country for better control over the banks.
BUDGET MEASURES:
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Agriculture Credit
To get the best from their land, farmers need access to affordable credit. Banks have been
consistently meeting the targets set for agriculture credit flow in the past few years. For the year
2011-12, The target raised of credit flow to the farmers from `3,75,000 crore this year to
`4,75,000 crore in 2011-12. Banks have been asked to step up direct lending for agriculture and
credit to small and marginal farmers. (Budget 2011-2012 Speech of Pranab Mukherjee
Minister of Finance February 28, 2011)
FDI LIMIT
In the private banking sector of India, FDI is allowed up to a maximum limit of 74 % of the paidup capital of the bank.
Benefits of FDI in Banking Sector in India
ECONOMIC FACTORS :
Banking is as old as authentic history and the modern commercial banking are traceable to
ancient times. In India, banking has existed in one form or the other from time to time. The
present era in banking may be taken to have commenced with establishment of bank of Bengal in
1809 under the government charter and with government participation in share capital. Allahabad
bank was started in the year 1865 and Punjab national bank in 1895, and thus, others followed.
Every year RBI declares its 6 monthly policy and accordingly the various measures and rates are
implemented which has an impact on the banking sector. Also the Union budget affects the
banking sector to boost the economy by giving certain concessions or facilities. If in the Budget
savings are encouraged, then more deposits will be attracted towards the banks and in turn they
can lend more money to the agricultural sector and industrial sector, therefore, booming the
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Indian economy has registered a growth of more that 8.5 per cent for last three year and is
expected to maintain robust growth rate as compare to other developed and developing countries.
Banking Industry is directly related to the growth of the economy. The contributions of various
sectors in the Indian GDP for 2010-2011 are as follows: Agriculture: 17% Industry: 29% Service
Sector: 54% It is great news that today the service sector is contributing more than half of the
Indian GDP. It takes India one step closer to the developed economies of the world. Earlier it was
agriculture which mainly contributed to the Indian GDP. The Indian government is still looking
up to improve the GDP of the country and so several steps have been taken to boost the
economy. Policies of FDI, SEZs and NRI investment have been framed to give a push to the
economy and hence the GDP.
MONETARY POLICY :
Monetary Policy 20010-2011
Cash Reserve Ratio (CRR) 6.00% (w.e.f. 24/04/2010)
Increased from 5.00% to 5.50% wef 13/02/2010; and then again to 5.75% wef 27/02/2010; and
now to 6.00% wef 24/04/2010
Statutory Liquidity Ratio (SLR) 24%(w.e.f. 18/12/2010)
Decreased from 25% which was continuing since 07/11/2009
Repo Rate 8.50% (w.e.f.25/10/2011) Increased from 8.25% which was continuing since
16/09/2011
Reverse Repo Rate 7.50% (w.e.f. 25/10/2011) Increased from 7.25% which was continuing
since 16/09/2011.
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Attitude of people of India is changing. Now, younger generation wants to remain separate from
their parents after they get married. Joint families are breaking up. There are many reasons
behind that. But banking sector is positively affected by this trend. A family need home
consumer durables likefreeze, washing machine, television, bike, car, etc.. so, they demand for
these products and borrow from banks. Recently there is boost in housing finance and vehicle
loans. As they do not have money they go for installments. So, banks satisfy nuclear families
wants.
CHANGE IN LIFE STYLE:
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LITERACY RATE:
Literacy rate in India is very low compared to developed countries. Illiterate people hesitate to
transact with banks. So, this impacts negatively on banks. But there is positive side of this as
well i.e. illiterate people trust more on banks to deposit their money, they do not have market
information. Opportunities in stocks or mutual funds. So, they look bank as their sole and safe
alternative.
TECHNOLOGICAL FACTORS:
TECHNOLOGY IN BANKS
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Threat
competitors
Industry
Analysisof
of Banking
and comprehensive study of top two player
Large no of banks
High
market
It is the buzzword today and
every
bankgrowth
is tryingrate
to adopt it is the centralize banking platform
Low switching costs
through which a bank can control its entire operation the adoption of core banking solution will
Undifferentiated services
help bank to roll out new product
and services.
High fixed
cost
High exit barriers
Bargai
The nature of competition in the industry in large part determines the content of strategy,
especially business level strategy .based it is on the fundamental economics of the industry, the
very profit potential of an industry is determine by competition interaction. Where these
interactions are intense, profit tends to be whittled away by the activities of competing.
Porters model is based on the insight that a corporate strategy should meet the opportunities and
threats in the organizations external environment. Especially, competitive strategy should base on
and understanding of industry structures and the way they change. Porter has identified five
competitive forces that shape every industry and every market. These forces determine the
intensity of competition and hence the profitability and attractiveness of an industry. The
Barriers
entry
objective of corporate strategy should be to modify these competitive forces
in a waytothat
Barg
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ICICI bank
SELECTION CRITERIA
CASA or Deposits
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Investment
Advances
comparision chart
1200000
1000000
202017
181206
800000
Axis Title
600000
804116
400000
631914
285790
200000
0
120893
Deposits
Investments
Advances
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History of SBI
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Branches
The corporate center of SBI is located in Mumbai. In order to cater to different functions, there
are several other establishments in and outside Mumbai, apart from the corporate center. The
bank boasts of having as many as 14 local head offices and 57 Zonal Offices, located at major
cities throughout India. It is recorded that SBI has about 10000 branches, well networked to cater
to its customers throughout India.
ATM Services
SBI provides easy access to money to its customers through more than 8500 ATMs in India. The
Bank also facilitates the free transaction of money at the ATMs of State Bank Group, which
includes the ATMs of State Bank of India as well as the Associate Banks State Bank of Bikaner
& Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also transact money
through SBI Commercial and International Bank Ltd by using the State Bank ATM-cum-Debit
(Cash Plus) card.
Subsidiaries
The State Bank Group includes a network of eight banking subsidiaries and several non-banking
subsidiaries. Through the establishments, it offers various services including merchant banking
services, fund management, factoring services, primary dealership in government securities,
credit cards and insurance.
The eight banking subsidiaries are:
SEGMENTATION STRATEGY:
Demographics variables
Location
Occupation
Business person
Age
Senior citizens
Major
Minor
TARGETING STRATEGY:
Corporate banking market: This market targets the industries & fulfills their financial needs.
Capital market : This segment is targeted on the long term needs of the individual as well as of
industries.
Retail banking market : this segment is for retail investors & provide them short term financial
credit for their personal, house hold needs.
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POSITIONING STRATEGY:
SBI has positioned itself as a bank which gives higher standard of services through product
innovation for the diverse need of individual & corporate clients
Taglines: With you - all the way and Pure Banking. Nothing Else
LOANS
Savings Account
Home Loans
Current Account
Fixed Deposits
Personal Loans
Demat Account
Car Loan
Account
Two Wheeler
Security Deposits
Retail Asset
Recurring Deposits
Farmer Finance
Business Installment
Salary Account
Loans
Advantage Woman
Savings Account
Rural Savings Account
No frill account
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History Of ICICI
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ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution,
and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46%
through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs
listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an allstock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors
in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the
Government of India and representatives of Indian industry. The principal objective was to create
a development financial institution for providing medium-term and long-term project financing
to Indian businesses.
In the 1990s, ICICI transformed its business from a development financial institution offering
only project finance to a diversified financial services group offering a wide variety of products
and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank.
In 1999, ICICI become the first Indian company and the first bank or financial institution from
non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards universal banking, the
managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI
Bank would be the optimal strategic alternative for both entities, and would create the optimal
legal structure for the ICICI group's universal banking strategy. The merger would enhance value
for ICICI shareholders through the merged entity's access to low-cost deposits, greater
opportunities for earning fee-based income and the ability to participate in the payments system
and provide transaction-banking services. The merger would enhance value for ICICI Bank
shareholders through a large capital base and scale of operations, seamless access to ICICI's
strong corporate relationships built up over five decades, entry into new business segments,
higher market share in various business segments, particularly fee-based services, and access to
the vast talent pool of ICICI and its subsidiaries.
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Occupation
Income
Geographical
Senior citizens
Major
Minor
Age
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TARGETING STRATEGY:
Tailors its marketing campaigns to meet the needs of its target prospects.
POSITIONING STRATEGY:
Core proposition Hum hain na trust, credibility, total financial solution provider
(brought about through its cross selling effort)
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SAVINGS ACCOUNT
SALARY ACCOUNT
CURRENT ACCOUNT
REGULAR FD ACCOUNT
Home Loan
Personal Loan
Car Loan
P/E ratio: A valuation ratio of a company's current share price compared to its per-share
earnings.
Calculated as:
Market Value per Share
Earnings per Share (EPS)
EPS: The portion of a company's profit allocated to each outstanding share of common
stock. Earnings per share serve as an indicator of a company's profitability.
Calculated as:
PAT
Number of Shareholders
DEBT EQUITY RATIO:
A measure of a company's financial leverage calculated by dividing its
total liabilities by stockholders' equity. It indicates what proportion of equity and debt the
company is using to finance its assets.
Total
liabilities
Shareholders equity
Debt equity ratio basically tells about the composition of the capital structure that
how much is the ratio of equity to debt
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A high debt/equity ratio generally means that a company has been aggressive in
financing its growth with debt
CURRENT RATIO: A liquidity ratio that measures a company's ability to pay short-term
obligations.
The Current Ratio formula is:
Also known as "liquidity ratio", "cash asset ratio" and "cash ratio".
The higher the current ratio, the more capable the company is of paying its
obligations.
BOOK VALUE: A company's common stock equity as it appears on a balance sheet, equal to
total assets minus liabilities, preferred stock, and intangible assets such as goodwill. This is how
much the company would have left over in assets if it went out of business immediately.
DIVIDEND YIELD:
A financial ratio that shows how much a company pays out in dividends
each year relative to its share price.In the absence of any capital gains, the dividend yield is the
return on investment for a stock. Dividend yield is calculated as follows:
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Ratio
SBI
ICICI BANK
P/E ratio
17.01
17.27
EPS
116.07
Dividend yield
1.55%
Book Value
1,023.40
Current Ratio
0.04
14.37
49.68
1.63%
478.08
0.11
4.10
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BIBLIOGRAPHY
http://www.moneycontrol.com
http://www.nirmalbang.com
articles.economictimes.indiatimes.com)
business.mapsofindia.com
www.allbankingsolutions.com/DATA.htm
www.rbi.org.in/
www.statebankofindia.com/
www.icicibank.com/
Budget 2011-2012 Speech of Pranab Mukherjee Minister of Finance February 28,
2011
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