Banking sector refers to the industry or the section of the economy devoted to the proper

holding of financial assets and investing the same as a leveraged way to create more wealth. The
Indian banking sector is well capitalized and regulated as-

1. It is the most dominant segment of financial sector. Indian banks have continued to
build on their strengths and have emerged stronger.
2. It has made significant progress in parameters like- profitability, annual credit growth
and declining non-performing assets.
3. Growth has been further fueled by factors including lower defaulter ratio, growth in
Indian economy, regular intervention of the central bank and adjustments in monetary
policy.
4. The Indian banking system currently consists of 18 public sector banks, 22 private
sector banks, 46 foreign banks, 53 regional rural banks, 1,542 urban cooperative
banks and 94,384 rural cooperative banks.
5. The policy makers for the sector in India comprise of- Reserve Bank of India,
Ministry of Finance and various government related or financial sector regulatory
entities which have provided for improving the regulations.

Sub-Sectors in banking are as-

1. Central bank
2. Deposit-taking corporations other than Central bank
3. Money market funds
4. Investment funds, other than MMF
5. Other financial intermediaries except insurance corporations and pension funds
(ICPF)
6. Financial auxiliaries
7. Other financial institutions, except ICPF
8. Insurance companies
9. Pension funds

Challenges for banking sector include-

1. Rising bad loans.
2. Coping up with customer needs and expectations.
3. Increasing competition.
4. Compliance with regulatory requirements.
5. Optimizing online banking and payment systems.

Growth of banking sector-

1. The growth rate at present is nearly 8.5% and overall growth is at 15% per year.
2. Reforms pertaining to the monetary and macro-economic policies have influenced
the Indian economy.
 3. Opening up of the financial market via economic reforms further provided for the
growth of the sector.
4. Rise in financial products and services offering.
5. Growth in capital market, insurance capital and venture capital has also resulted
in significant growth for the sector.

Driving forces for banking industry are as-

1. Growing rate of Indian economy.

2. Rising per capita income.
3. Rise in mobile banking and payment solutions.
4. Adoption of financial inclusion programs.

Prominent players in Indian banking industry include-

1. HDFC Bank
2. ICICI Bank
3. State Bank of India
4. Axis Bank
5. Kotak Mahindra Bank
6. IndusInd Bank
7. Bank Of Baroda
8. Punjab National Bank,etc.

PESTEL Analysis (Factors affecting Banking Industry in India)-

1. Political Factors-
a. Intervention by government, thus making it susceptible to political influence.
b. Budget and Budgetary Measures
c. Varying degree of Foreign Direct Investment limits

2. Economic Factors-
a. Rising and declining interest rates on amount.
b. Prevalent inflation rate.
c. Overall national rate of savings and investments.

3. Socio-Cultural Factors-
a. Traditional Moneylenders
b. Changes in lifestyle of people, which has been more sedentary and
comfort seeking lately.
c. Rising Indian Population and prevalent overall literacy rate.
 4. Technological Factors-
a. Usage of Automated Teller Machines (ATM’s) for various banking and
money withdrawal purposes.
b. Credit and Debit card facility by banks to foster usage of plastic money.
c. Increase in IT services and mobile banking solutions.

5. Economic Factors-
a. Increasing focus on sustainability and environmental friendliness.
b. Shift towards paper-less transactions.
c. Introduction of solar powered ATM’s which use direct sunlight to recharge
the lithium-ion batteries.

6. Legal Factors-
a. Banking Regulation Act, which authorizes RBI (Reserve Bank of India) to
regulate, control and inspect banks in India.
b. Intervention by RBI to initiate sharp movements in Indian Rupee.

ABOUT THE FIRM (ICICI BANK)-

Industrial Credit and Investment Corporation of India or ICICI Bank Limited is an Indian
multinational banking and financial services company headquartered in Mumbai with its
registered office in Vadodara.

It is the second largest private bank and among the big four banks in India and has a network of
5,275 branches and 15,589 ATM’s across India and has a global presence in 17 countries. 

It offers a wide range of banking products and financial services for corporate and retail
customers through a variety of delivery channels in areas such as- investment banking, life and
non-life insurance, venture capital and asset management.

Business Model (ICICI Bank)-

1. Provide savings product.

2. Provide credit to support consumption and economic activities.
3. Facilitating payments and transactions.
4. Wealth creation and management.
5. Strategic long term investments providing for long term growth.

Revenue Model (ICICI Bank)-

Core Activities- 1.Servicing loans and opening accounts.

2. Processing cash deposits, withdrawals, payments and cheques.

3. Calculating interest and criteria for minimum balances.

Non-Core Activities- 1. Leased or unused asset such as land,etc.

2. Real Estate activities.

3. Investments in securities.

SWOT ANALYSIS-

Strengths- 1. First mover advantage being the second largest private bank.
2.  First bank in India to introduce complete mobile banking solutions and to attach lifestyle
benefits to banking services for exclusive purchases.
3. Marketing and advertising strategies of ICICI have a comparative good reach.
4. It has the longest additional services offering at its ATM’s.

Weakness- 1 Inadequacy of customer support in resolving complaints.

2. It has the most stringent policies in terms of recovering the debts and loans via third-party
agency, and credit payments.

3. Annoying credit payment reminders before deadlines to its customers.

4. High bank service charges and pressurized internal working environment for its employees.

Opportunities- 1.ICICI bank is expected to have 20% credit growth in future.

2. It has the minimum amount of non-performing assets.

3. Small and non-performing banks can be acquired because of its financial strength.

4. The degree of savings and investments is increasing.

Threats- 1. Foreign banks can invest upto 74% in Indian banks such as ICICI.

2. Government sector banks are modernizing their capacities to ensure minimum customers
switching.

3. Pressure posed by competitor banks such as- HDFC Bank, Axis Bank,etc.

4. Increase in unsatisfied customers switching to other banks.

5. Major share held by micro-financing banks in rural India.