Pestel Analysis- Banking Sector

8/3/2019 Pestel Analysis- Banking Sector

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PESTEL ANALYSIS- BANKINGSECTOR

ABHINAV SAINI

AKANKSHYA BISHWALBIPIN KUMAR GAURAV SHARMA PANKIT MAHENDRURISHIKA MAHESHWARI



WHAT IS PESTEL ANALYSIS



• Political - To what degree a government intervenes in the economy.Ex- tax policy, labour law, environmental law, traderestrictions, tariffs, and political stability

• Economic - Include economic growth, interest rates, exchangerates and the inflation rate.

• Social - Cultural aspects and health consciousness, populationgrowth rate, age distribution, career attitudes and emphasis onsafety.

• Technological - include technological aspects suchas R&D activity, automation, technology incentives and the rateof technological change

• Environmental- Ecological and environmental aspects such as weather, climate, and climate change, which may especially affectindustries such as tourism, farming, and insurance.

• Legal factors include discrimination law, consumer law, antitrustlaw, employment law, and health and safety law. These factors canaffect how a company operates, its costs, and the demand for itsproducts



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- thanksto robust policy framework of RBI, stricterprudential regulations with respect to capitaland 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 duringthe first quarter of this fiscal came as a welcomeannouncement to foreign players wanting to geta foot hold in the Indian Markets by investing in willing Indian partners who are starved of net

worth to meet CAR norms. Ceiling for FIIinvestment in companies was also increasedfrom 24.0 percent to 49.0 percent and have beenincluded 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 waiverscheme



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 ratesare implemented which has an effect on bankingsector.

• Union govt. affects the banking sector to boost

the economy by giving certain concessions andfacilities• 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 wereused to borrow money local moneylenders,

shahukars, shroffs. Banking sector still weak insome areas of rural sector and this practice stillexists.

• 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 peoplehesitate to transact with banks



TECHNOLOGYTechnology plays a very important role in bank’sinternal control mechanisms as well as servicesoffered 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

Pestel Analysis- Banking Sector

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