Swot Analysis Of Banking Sector

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5. INDUSTRY ANALYSIS

Banking development in India since Independence is impressive. It reflects successful orientation of commercial banks to the growing needs and complexities of development.

The Indian banking sector has witnessed wide ranging changes under the influence of the financial sector reforms initiated during the early 1990s. The approach to such reforms in India has been one of gradual and non-disruptive progress through a consultative process. The emphasis has been on deregulation and opening up the banking sector to market forces. The Reserve Bank has been consistently working towards the establishment of an enabling regulatory framework with prompt and effective supervision as well as the development of technological and institutional
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The financial services industry has been around for hundreds of years, and just about everyone who needs banking services already has them. The various banks have competition within themselves which will come under intra banking competition but there are a few services which are provided by some of the banks as well as by the players of other industry

Like depository services, investment opportunities and lending facilities. These services are provided by banking sector as well as by other financial companies and also from unorganized sector. For example, a depositor can invest their money in banks in a way of deposit and they can also invest in other areas like post office saving deposits, mutual funds and other investment avenues. Due to high competition, banks must attempt to lure clients away from competitor banks and also from players of other industries. They do this by offering lower financing, preferred rates, and investment services. The banking sector is in a race to see who can offer the better and faster services, but this also causes banks to experience a lower ROA. They then have an incentive to take- on high risk projects. In the long run, we 're likely to see more consolidation in the banking industry. Larger banks would prefer to takeover or merge with another bank rather than spend the money to market and advertise to
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The presence of other investment opportunities besides depositing in bank and more focus on lending has affected the banking industry in terms of its deposits. As you can probably imagine, Banks offer a suite of services over and above taking deposits and lending money, but whether it is insurance, mutual funds, or fixed income securities, chances are that there is a non-banking financial services company who can offer similar services. In the lending side of the business, banks are seeing competition rise from unconventional companies. Sony, General Motors, and Microsoft all offer preferred financing to customers. For example, if car companies are offering 0% financing, nobody would want to get a car loan from the bank and pay 5-10% interest. One more thing has also been noticed that in the recent past, the credit has grown at the rate of 30 % while the rate of growth of deposit is only at the rate of 20 %. This is mainly due to the substitutes available to the investors and can have adverse effect in the
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