PESTEL Analysis
1. Political factors
Focus on regulation of government
Budget and budget measures
Foreign Direct Investments limits
2. Economic factors
Monetary policy for example: Repo rates, C.R.R, Reverse repo rate
GDP
Interest rates
Inflation rate
Saving and Investment
3. Social factors
Traditional Mahajan Pratha
Change in life style
Population
Literacy rate
4. Technological factors
Auto Teller Machine
Credit card facility
Automatic Voice recorder
It services and Mobile banking
5. Environment factors
Indian economy has registered a high growth for last three years and is expected to
maintain robust growth rate as compared to developed and developing countries.
Banking industry is directly related to the growth of the economy. The Growth rate of
different industries were:
Agriculture: 18.5%
Industry Services: 26.3% : 55.2%
6. Legal factors
Banking regulation act
Intervention by RBI
Regulatory Framework
The Reserve Bank of India Act, 1934 (the RBI Act) and the Banking Regulation Act,
1949 (the BR Act) are the primary pieces of legislation governing the banking sector in India.
The RBI Act constituted the Reserve Bank of India (RBI), which is the central bank of India
and the primary regulatory authority for the banking sector. To implement regulatory policies
in India, the RBI Act and the BR Act empower the RBI to issue rules, regulations, directions
and guidelines on a wide range of issues relating to the banking and financial sector.
Transactions related to foreign exchange, current and capital account transactions are also
regulated by the RBI by virtue of the powers granted to it under the Foreign Exchange
Management Act, 1999 (FEMA).
There are also other supplementary pieces of legislation regulating the banking sector, such
as:
the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the RDDB
Act);
the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (the SARFAESI Act);
the Insolvency and Bankruptcy Code, 2016 (the 2016 Code); and
the Payment and Settlement Systems Act, 2007 (the PSS Act).
The Reserve Bank of India Act, 1934 (the RBI Act) and the Banking Regulation Act,
1949 (the BR Act) are the primary pieces of legislation governing the banking sector in India.
The RBI Act constituted the Reserve Bank of India (RBI), which is the central bank of India
and the primary regulatory authority for the banking sector. To implement regulatory policies
in India, the RBI Act and the BR Act empower the RBI to issue rules, regulations, directions
and guidelines on a wide range of issues relating to the banking and financial sector.
Transactions related to foreign exchange, current and capital account transactions are also
regulated by the RBI by virtue of the powers granted to it under the Foreign Exchange
Management Act, 1999 (FEMA).
There are also other supplementary pieces of legislation regulating the banking sector, such
as:
the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the RDDB
Act);
the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (the SARFAESI Act);
the Insolvency and Bankruptcy Code, 2016 (the 2016 Code); and
the Payment and Settlement Systems Act, 2007 (the PSS Act).
