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  • 1. AGLOBAL COUNTRY STUDY AND REPORT ON BANKING INDUSTRYSubmitted toC K SHAH VIJAPURWALA INSTITUTE OF MANAGEMENT IN PARTIAL FULFILLMENT OF THEREQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION Under Gujarat Technology University UNDER THE GUIDANCE OFMr. Nirav Majmudar(Asso.Professor, CKSVIM, Vadodara) Submitted by: Abhay Dhami- 73 Rashmi Nihalani- 74Vihangini Shah- 75Krutika Mohile- 76 Harshil Modi- 77Maulik Shah- 78M.B.A SEMESTER IVC K Shah Vijapurwala Institute of Management M.B.A PROGRAMMEAffiliated to Gujarat Technological UniversityAhmedabad April 2012

2. DECLARATION We, Abhay Dhami, Rashmi Nihalani, Vihangini Shah, KrutikaMohile, Harshil Shah, Maulik Shah hereby declare that the report for Global/Country Study Report entitled Banking Industry in South Korea andIndia is a result of our own work and our indebtedness to other workpublications, references, if any, have been duly acknowledged.Abhay Dhami -Rashmi Nihalani -Vihangini Shah -Krutika Mohile -Harshil Modi -Maulik Shah -Place :Date : 3. PREFACEOne cant swim only by reading a book on swimming. It must require apractice. Practice makes man perfect. Theory makes him thoughtful. Sotheoretical knowledge is only a half way in study network. If theoreticalknowledge aspects are planned in a better way give faithful results, sotheoretical knowledge should be supplemented by practical experience.The study of a country can give you a chance of learning the different aspectof the country which will be benefited to our learning about the country and itsfuture potential sector which can be benefited to start a new business or toexpand the existing business. And it will also benefit for a company to seeabout the future potential of their related area.The study of comparative analysis of the Banking industry between India andSouth Korea has considered different areas of the infrastructure industrywhich express the information about the facilities and recent trends in bankingindustry.In all it was great learning experience for us which will help us in our futurework areas. 4. 1) Economic Overview of the South KoreaCountry1.1 Demographic Profile of the South KoreaThe demographic features of the population of South Korea, includingpopulation density, ethnicity, education level, health of the populace, economicstatus, religious affiliations and other aspects of the population.BackgroundAlthough a variety of different Asian peoples had migrated to the KoreanPeninsula in past centuries, very few have remained permanently, so by 1990both South Korea and North Korea were among the worlds most ethnicallyhomogeneous nations. The number of indigenous minorities was negligible. InSouth Korea, people of foreign origin, including Chinese, Japanese, andWesterners, Southeast Asians, South Asians and others was a smallpercentage of the population whose residence was generally temporary.Koreans tend to equate nationality or citizenship with membership in a single,homogeneous ethnic group or "race" (minjok, in Korean). A common languageand culture also are viewed as important elements in Korean identity. Untilrecently, the idea of multiracial or multiethnic nations, like the United States orIndia, struck many Koreans as odd or even contradictory.LanguagesThe Korean language is spoken by the vast majority of the population. Englishis widely taught in primary school, middle school and high school, andcontinues to be taught in higher education. The Japanese language, a legacyof the Japanese colonial rule of Korea and an official language until 1945, isnot used but has given some loan words to the Korean language, especiallyfor the older generation. 5. Age structure014 years: 16.8% (male 4,278,581/female 3,887,516)1564 years: 72.3% (male 17,897,053/female 17,196,840)65 years and over: 10.8% (male 2,104,589/female 3,144,393) (2010 est.)GrowthBirth rate: 9.8 births/1,000 population (2011 est.)Total fertility rate: 1.28 children born/woman (2011 est.)Death rate: 5.4 deaths/1,000 population (2011 est.)Infant mortality rate: 4.24 deaths/1,000 live births (2010 est.)Net migration rate: 0 migrant(s)/1,000 populations (2010 est.)Sex ratioat birth: 1.07 male(s)/femaleunder 15 years: 1.075 male(s)/female1564 years: 1.038 male(s)/female65 years and over: 0.69 male(s)/femaleTotal population: 0.99 male(s)/female (2011 est.)Life expectancytotal population: 81 yearsmale: 75.56 yearsFemale: 82.28 years (2010 est.) 6. ReligionsNonreligious: 49.3%Other: 1.3%LiteracyDefinition: age 15 and over can read and writetotal population: 97.9%male: 99.2%female: 96.6% (2002) 7. 1.2 Economic overview of South KoreaSouth Korea is the 12th largest economy in the world, with a GDP (PPP) of1.459 trillion in 2010. South Korea is one of the fastest growing economiesfrom the 1960s to 1990s, and was termed as one of the Asian Tigers, alongwith Hong Kong, Singapore and Taiwan.South Koreas economic growth relied heavily on its exports, due to a lack ofnatural resources, and small domestic consumer market. This also makesthem the 7th largest exporter and 10th largest importer in the world. TheSouth Korean economy has also grown from one which is labor-intensive, toone which is more capital and technology-orientated.South Koreas growing economy is also one of the few countries whichavoided recession during the 2008 financial crisis. However, the countrysprogressive economic growth could be impeded by its continued tension withNorth Korea. Economic ties between North and South Korea were establishedin 1988, and trade volume rose to $1.82 billion in 2008, making South Koreathe second largest trading partner of North Korea, after China. But constantconflicts between the two nations have severed the economic ties betweenthem.South Korea is also a member of world organizations including the G-20,APEC, OECD and WTO. It has also signed free trade agreements with othercountries, with the most important free trade agreement signed with the US in2007, the Korea-US Free Trade Agreement (KORUS FTA) which removed alltrade and investment barriers between 2 countries. This also made US theirsecond largest export market. 8. Economic GeographySouth Korea has a land area of 96,920 square km, with 16.58 percent ofarable land. The countrys main agricultural crops are rice and barley. Otherproduct supplied by South Korea includes vegetables, fruits, root crops, cattle,pigs, chicken, milk, eggs and fish. South Korea also enjoys few naturalresources such as coal, tungsten, graphite, molybdenum, lead andhydropower potential.Asia has become the growth center of the world economy in recent years.Within the region, India and South Korea are the third and fourth largesteconomies after China and Japan. Though the Asian growth story mainlyrevolves around India and China, South Korea has remained a key player forthese countries as one of their major trading and investment partners. SouthKorea adopted outward-oriented economic policies with the beginning of itsfirst five-year economic development plan in 1962 which resulted in highgrowth and the integration of the Korean economy with the rest of the world.Subsequently, high and consistent economic growth made South Korea oneof the high-income economies in Asia. Korea is still growing at a faster ratecompared to other developed economies.India, on the other hand, adopted an import-substitution policy since itsindependence until the early 1990s. Since 1991, India has introduced wide-ranging economic policy reforms and is moving towards a market-driveneconomy. This has resulted 9oin consistent high economic growth over thelast one and a half decades, making India the 10th largest economy in theworld. At present, India is the second fastest growing economy in the world.Both India and Korea have been getting integrated with the world economy,enhancing their role in the international economic order.India and Korea have shared a close relationship since the establishment offormal diplomatic ties in 1973. The last three and a half decades have seenhigh-level exchanges and the signing of several crucial agreements leading toa continuous strengthening of bilateral economic relations. 9. 1.3 Overview different economic sector of SouthKoreaAs the worlds 12th largest economy with a GDP (PPP) of US$1.459 trillion in2010, South Korea has experienced huge economic growths from early 1960sto 1990s. Along with Hong Kong, Singapore and Taiwan, they are termed theAsian Tigers. Development in the industrial and manufacturing industriesattributes to the growth of South Koreas economy and is the major growthengine for its export-orientated economy.Over the years of economic progress, South Korea has transformed itseconomy from one which is labor intensive to one which is more capital andtechnology-orientated. Today, South Korea boasts as one of the top players inthe electronics, automobile, telecommunication and shipbuilding industries.South Koreas Industry SectorSouth Koreas agriculture contributes only 3 percent of the nations totalGDP in 2010 and employs 7.3 percent of the countrys workforce. Theagriculture in South Korea has shrunk significantly as the nation movestowards the urbanization and industrialization of the economy. Back in 1987,agricultural made up 12.3 percent of the nations total GDP, and employs 21percent of the workforce.Rice is the most important agriculture crop of South Korea. It made up 90percent of the total grain production, and supplies over 40 percent of thefarmers income. However, rising farmers wages and land values have maderice costly to produce. With 16.58 percent o arable land, South Koreasagriculture is also responsible for the production of crops such as barley,vegetables, fruits and production of cattle, pigs, chicken, milk, eggs and fish. 10. The industry of South Korea contributes 39.4 percent of the countrysGDP in 2010. The industry and manufacturing industries are the major growthengine for South Korea during its economic prog