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 EMIs 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 banks 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