PESTEL ANALYSIS- BANKING

SECTOR

ABHINAV SAINI
AKANKSHYA BISHWAL
BIPIN KUMAR
GAURAV SHARMA
PANKIT MAHENDRU
RISHIKA MAHESHWARI
WHAT IS PESTEL ANALYSIS
• Political- To what degree a government intervenes in the economy.
Ex- tax policy, labour law, environmental law, trade
restrictions, tariffs, and political stability
• Economic- Include economic growth, interest rates, exchange
rates and the inflation rate.
• Social- Cultural aspects and health consciousness, population
growth rate, age distribution, career attitudes and emphasis on
safety.
• Technological- include technological aspects such
as R&D activity, automation, technology incentives and the rate
of technological change
• Environmental- Ecological and environmental aspects such as
weather, climate, and climate change, which may especially affect
industries such as tourism, farming, and insurance.
• Legal factors include discrimination law, consumer law, antitrust
law, employment law, and health and safety law. These factors can
affect how a company operates, its costs, and the demand for its
products
POLITICAL FACTORS

• Government policy and monetary policies affect

banking sector
• Budget and budget measures
• FDI limits
1. Focus on regulation of government
• Indian banking sector is least affected as
compared to other developed countries- thanks
to robust policy framework of RBI, stricter
prudential regulations with respect to capital
and liquidity.
2. Monetary policy
Key Rates July 26th Sept 16th Oct 25th

CRR 6.oo 6.00 6.00

Repo rate 8.00 8.25 8.50

Reverse repo rate 7.00 7.25 7.50

SLR 24 24 24
3. FDI limit
• The move to increase Foreign Direct Investment
FDI limits to 49 percent from 20 percent during
the first quarter of this fiscal came as a welcome
announcement to foreign players wanting to get
a foot hold in the Indian Markets by investing in
willing Indian partners who are starved of net
worth to meet CAR norms. Ceiling for FII
investment in companies was also increased
from 24.0 percent to 49.0 percent and have been
included within the ambit of FDI investment
4. Budget measures
• Increase Farm Credit
• Subvention of 1% to be paid as incentive
to farmers
• Debt Waiver for Farmers
• Setting up of separate task force for those
not covered under the debt waiver
scheme
ECONOMIC FACTORS
• GDP
• MONSOON INFLATION
• SAVING AND ACCOUNT
• AGRICULTURAL CREDIT
• INTEREST RATES
• RISING LIVING STANDARD
• DISPOSABLE INCOME
• Every year RBI announces its 6 monthly policy
and accordingly the various measures and rates
are implemented which has an effect on banking
sector.
• Union govt. affects the banking sector to boost
the economy by giving certain concessions and
facilities
• If FDI limits are relaxed then more FDI are
brought in India through banking sector.
SOCIO-CULTURAL FACTORS
• Taboo
• Customs
• Traditions
• Tastes
• Preferences
• Buying and consumption habits of people
• Languages
• Beliefs and value
• Before the birth of the banks, people of India were
used to borrow money local moneylenders,
shahukars, shroffs. Banking sector still weak in
some areas of rural sector and this practice still
exists.
• Shift towards nuclear family
• Change in lifestyle- People are demanding high class
products, can fulfil such needs due to availability of
loans with reasonable rates and affordable EMI’s
• Literacy rate-Literacy rate in India is very low
compared to developed countries. Illiterate people
hesitate to transact with banks
TECHNOLOGY
Technology plays a very important role in bank’s
internal control mechanisms as well as services
offered by them. Through the use of technology
new products and service are introduced.

• ATM
• INTERNET
• I.T SERVICES
• MOBILE BANKING
ENVIRONMENTAL FACTORS
• INCREASE IN WORKING AGE POPULATION
LEGAL FACTORS
• RESERVE BANK OF INDIA
• BANKING REGULATION ACT