Description
PEST ANALYSIS
PEST ANALYSIS PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro environmental factors used in the environmental scanning component of strategic management.
Political Analysis: The expected integration of various intermediaries in the financial system would require a strong regulatory framework, the report states. It would also require a number of legislative changes to enable the banking system to remain contemporary and competitive. Underscoring that there would be an increased need for self-regulation, the report states that development of best practices could evolve better through self-regulation rather than based on regulatory prescriptions. For instance, to enlist the confidence of the global investors and international market players, the banks will have to adopt the best global practices of financial accounting and reporting. It is expected that banks would migrate to global accounting standards smoothly, although it would mean greater disclosure and tighter norms, the report adds. Notwithstanding the limited time ahead, the expectations, suggestions and recommendations of the Banking Industry Vision report are well within the realm of realisation in part or whole. The first phase of banking reforms was born out of panic. The second phase can be implemented from a position of strength and confidence in a compressed time-frame.
Economic Analysis: THE INDIAN economy has shown tremendous growth over the past decade. This statement may seem odd to the economists who keep comparing the growth rates to that of China or the East Asian Tigers. These countries have definitely shown good economic growth, but India's is nothing to be scoffed at.
This assertion is not being made by comparing the GDP growth, FDI inflow, changes in per capita income and other economic criteria, but by looking at the increase in the availability of goods and services. A while ago, visiting foreign countries, one used to wonder when India would catch up. People walking around with mobile phones, shopping malls overflowing with goods, and even dozens of branded water. Coming from India, where water had to be boiled and filtered before consumption, these countries seemed like paradise. Now, a decade later, India seems to have caught up with some of these things at least. Take the cell phones and pagers. Hong Kong went through the pager phase for two or three years before going cell. In India, pagers did not take off, while cell phones clicked. The accelerated telecommunications revolution has made cell phone easily affordable. India is no longer the backwaters of for hitech products. An economist may argue that availability of cell phones and branded water does not indicate a developed economy. But even they have to agree that India seems to have changed from a country of shortages to one of plenty. And along with plentiful supplies, there is also variety. In the early 1990s, there were three varieties of car models/makers — Ambassador, Fiat and Maruti 800. Today there are apparently some 500 models from more than 10 manufacturers. Developmental economists may argue that plentiful supply of goods and services does not mean that India has become prosperous and that India has a long way to catch up with the developed economies. But one has to agree that the India has made much progress over the past decade. Western economies have grown partly because of consumption economics. Those economies produced large number of goods, employing more and more people to produce these goods. These employees in turn consumed the goods, creating a virtuous cycle. Maybe India is following this path. All the good are available in plenty. Now the living standards of people have to be improved so that they start consuming these goods. Maybe, that is why the new Finance Minister wants to put more money in the housewives' hand.
Social Analysis: All these developments need not mean banks will give the go-by to social banking. Rather than being seen as directed lending such lending would be business driven, the report predicts. Rural market comprises 74 per cent of the
population, 41 per cent of the middle-class, and 58 per cent of disposable income. Consumer growth is taking place at a fast pace in 17,000-odd villages with a population of more than 5,000. Of these, more than 50 per cent are concentrated in just seven states. Small-scale industries would remain important for banks. However, instead of the narrow definition of SSI based on the investment in fixed assets, the focus may shift to small and medium enterprises (SMEs) as a group. Changes could be expected in the delivery channel for small borrowers, agriculturists and unorganised sectors also. Technological Analysis: Technological developments would render flow of information and data faster leading to faster appraisal and decision-making. This would enable banks to make credit management more effective, besides leading to an appreciable reduction in transaction cost. To reduce investment costs in technology, banks are likely to resort more and more to sharing facilities such as ATM networks, the report says. Banks and financial institutions will join together to share facilities in the areas of payment and settlement, back-office processing, data warehousing, and so on. The advent of new technologies could see the emergence of new players doing financial intermediation. For example, according to the report, we could see utility service providers offering, say, bill payment services or supermarkets or retailers doing basic lending operations. The conventional definition of banking might undergo changes.
doc_454041668.docx
PEST ANALYSIS
PEST ANALYSIS PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro environmental factors used in the environmental scanning component of strategic management.
Political Analysis: The expected integration of various intermediaries in the financial system would require a strong regulatory framework, the report states. It would also require a number of legislative changes to enable the banking system to remain contemporary and competitive. Underscoring that there would be an increased need for self-regulation, the report states that development of best practices could evolve better through self-regulation rather than based on regulatory prescriptions. For instance, to enlist the confidence of the global investors and international market players, the banks will have to adopt the best global practices of financial accounting and reporting. It is expected that banks would migrate to global accounting standards smoothly, although it would mean greater disclosure and tighter norms, the report adds. Notwithstanding the limited time ahead, the expectations, suggestions and recommendations of the Banking Industry Vision report are well within the realm of realisation in part or whole. The first phase of banking reforms was born out of panic. The second phase can be implemented from a position of strength and confidence in a compressed time-frame.
Economic Analysis: THE INDIAN economy has shown tremendous growth over the past decade. This statement may seem odd to the economists who keep comparing the growth rates to that of China or the East Asian Tigers. These countries have definitely shown good economic growth, but India's is nothing to be scoffed at.
This assertion is not being made by comparing the GDP growth, FDI inflow, changes in per capita income and other economic criteria, but by looking at the increase in the availability of goods and services. A while ago, visiting foreign countries, one used to wonder when India would catch up. People walking around with mobile phones, shopping malls overflowing with goods, and even dozens of branded water. Coming from India, where water had to be boiled and filtered before consumption, these countries seemed like paradise. Now, a decade later, India seems to have caught up with some of these things at least. Take the cell phones and pagers. Hong Kong went through the pager phase for two or three years before going cell. In India, pagers did not take off, while cell phones clicked. The accelerated telecommunications revolution has made cell phone easily affordable. India is no longer the backwaters of for hitech products. An economist may argue that availability of cell phones and branded water does not indicate a developed economy. But even they have to agree that India seems to have changed from a country of shortages to one of plenty. And along with plentiful supplies, there is also variety. In the early 1990s, there were three varieties of car models/makers — Ambassador, Fiat and Maruti 800. Today there are apparently some 500 models from more than 10 manufacturers. Developmental economists may argue that plentiful supply of goods and services does not mean that India has become prosperous and that India has a long way to catch up with the developed economies. But one has to agree that the India has made much progress over the past decade. Western economies have grown partly because of consumption economics. Those economies produced large number of goods, employing more and more people to produce these goods. These employees in turn consumed the goods, creating a virtuous cycle. Maybe India is following this path. All the good are available in plenty. Now the living standards of people have to be improved so that they start consuming these goods. Maybe, that is why the new Finance Minister wants to put more money in the housewives' hand.
Social Analysis: All these developments need not mean banks will give the go-by to social banking. Rather than being seen as directed lending such lending would be business driven, the report predicts. Rural market comprises 74 per cent of the
population, 41 per cent of the middle-class, and 58 per cent of disposable income. Consumer growth is taking place at a fast pace in 17,000-odd villages with a population of more than 5,000. Of these, more than 50 per cent are concentrated in just seven states. Small-scale industries would remain important for banks. However, instead of the narrow definition of SSI based on the investment in fixed assets, the focus may shift to small and medium enterprises (SMEs) as a group. Changes could be expected in the delivery channel for small borrowers, agriculturists and unorganised sectors also. Technological Analysis: Technological developments would render flow of information and data faster leading to faster appraisal and decision-making. This would enable banks to make credit management more effective, besides leading to an appreciable reduction in transaction cost. To reduce investment costs in technology, banks are likely to resort more and more to sharing facilities such as ATM networks, the report says. Banks and financial institutions will join together to share facilities in the areas of payment and settlement, back-office processing, data warehousing, and so on. The advent of new technologies could see the emergence of new players doing financial intermediation. For example, according to the report, we could see utility service providers offering, say, bill payment services or supermarkets or retailers doing basic lending operations. The conventional definition of banking might undergo changes.
doc_454041668.docx