Organizations analyze the environment in order to understand the external forces so that it could help to develop effective responses to secure or improve their positions in the future. There existed a positive relation between environmental analysis and profits Of an organization. Top management looked at information in two ways: viewing and searching information. This information needed to be evaluated and disseminated to strategists within the organization and to help top management to make decisions that could create strategic advantage for the organization to succeed in a changing environment 1 .
There were research evidences that showed that environmental analysis was linked with improved organizational reference. Hence, it remained insufficient to assure performance, without aligning information with strategy. The main debate in strategy and environment was concerned with the primary importance of the environmental analysis in strategy formulation and implementation. 84 Reserve Bank of India The Reserve Bank of India is fully owned by the Government of India. Initially it was viewed to bring the greater coordination of the monetary, economic, and financial policies.
During fifties objectives of Reserve Bank of India underwent changes. It was recognized that Reserve Bank of India needs to aka on direct and much more active role, in developing machinery for financial development in order to ensure flow of finance in the country. Reserve Bank emerged as a regulatory and a growth promoting institution. In the beginning limited to the agricultural sector, the Bank later covered small- scale industries as well. The affairs of Reserve Bank of India are governed by the central board of directors. The board is appointed by the Government of India according to the Reserve Bank of India Act.
The preface of the Reserve Bank of India describes the basic functions of the Reserve Bank as: “to regulate the issue Of Bank Notes and keeping Of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage” 2. The Reserve Banks freedom may be viewed broadly to the areas like management including personnel matters, financial aspects, and to conduct polices. Managerial freedom refers to the procedures for appointment, term of office and dismissal procedures of top central bank officials and the governing board.
It also includes the extent and nature of representation of he Government in the governing body of the central bank. 85 Financial freedom relates to the freedom to decide the extent of Government expenditures directly or Indirectly financed by the central bankњs credits. Finally, policy freedom is related to the flexibility given in the formulation and execution of monetary policy, under a given authorization. Reserve Bank of India has over the years been responding to changing economic circumstances.
The Reserve Bank of India performs the function of financial supervisor under the guidance of Board for Financial Supervision. This board undertake consolidated supervision of the financial sector comprising of Commercial Banks, Financial Institutions, and Non-Banking Finance Companies. The key functions played by this board were restructuring of the system of Bank, introduction of off-site scrutiny, strengthening the role of legislative auditors, and strengthening the internal defenses of supervised institutions. Currently this board focus on supervision of financial institutions and legal issues in Banks.
Reserve Bank of India acts as a guard for Commercial Banks. Commercial Banks are required to keep a certain proportion of cash reserves with the Reserve Bank and Bank provide them various facilities like advancing loans, underwriting securities etc. Reserve Bank of India controls the volume Of reserves of Commercial Banks and thereby determines the deposits and credit creating ability of the Banks. Whenever Commercial Banks need funds they get it from the Reserve Bank of India. Apart from playing the role of Banker to the Banks, Reserve Bank of India also play promotional role.
The aim is to establish and assist the establishments of a number of financial intuitions for filling up of various financial institutional gaps in the rural and MME-urban areas. 86 Other roles played by Reserve Bank of India are: Reserve Bank stabilizes the external value Of the national currency. The Reserve Bank keeps gold and foreign currencies and manages foreign currency in accordance with the controls imposed by the government. Reserve Bank of India facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.
Reserve Bank has taken the responsibility of meeting directly or indirectly all legitimate demands of Commercial Banks under emergency conditions and to a certain extent Reserve Bank influence he credit policy of Scheduled Banks. The Reserve Bank has instrument of control in the form of the bank rate, which it publishes from time to time 3. A list of the Reserve Bank of India Committees from 1990- 2008 was prepared to get an impression about developments with respect to Banking Industry (Appendix- Ill).
The recommendations resulted into remarkable changes in products and policies of Banking Organizations. Indian Bank’s Association (BIB) Indian Bank]s Association is a leading service organization of Banking Industry in India. It aims to integrate Banking and finance system catering to al financial requirements of customers. It Was formed in 1 946 with 22 members. Today Indian Banks Association has more than 159 members comprising of Public Sector Banks, Private Sector Banks, Foreign Banks (having offices in India), and Urban Co-operative Banks.
The main objectives of Indian Banks Association are: promoting and developing sound and progressive Banking principles and practices in order to assist Banks to develop and implement new ideas and innovative Banking services, operations and procedures; organizing co-ordination and co- operation on procedural, legal, technical, administrative or professional robbers and practices of Banks ; circulating statistical data, information, views and opinions on the Banking System; conducting Management Development Programs for Banks; promoting education and knowledge of the law and practices of Ban king Industry; to help in projecting good public image of Banking Industry ; and to promote harmonious relationships by devising ways and means for involving Banking personnel]s in the growth and development of Banking Industry. Indian Bank]s Association tries to achieve excellent service quality and customer care through its focused efforts to make each customers experience a pleasant one. Towards this end Indian Banks Association stressed on to build staff potential by each Bank to address customer challenges and asked Banks to design a performance management system, which focuses on rewarding the staff for delivering flawless customer service. In 2000, Indian Bank]s Association reviewed the charters of different Banks and brought out a Model Citizen Charters] explaining to the customers]s what they could expect from the Banks as a matter of right.
Apart from this Indian Bank]s Association brought bankers fair practices] in 2004 which was adopted by all Banks voluntarily. It also came out with fair practice code for credit card operations and model code for collection of dues and repossession of security with special concern to customer Ads voice about Banking practices 4. 88 Ministry of Finance Ministry of Enhance in India governs the entire fiscal system of the Government of India. The three departments headed by the Ministry of Finance in India include: economic affairs, expenditure, and revenue. Thus, it mainly centralizes around the economic and financial issues pertaining in India.
Ministry of Finance Government of India, Banking Division is managing Government policies related to the working of Banks and the term lending to financial institutions. This Division is headed by Secretary (Banking and Insurance) and operates through three subdivisions: Industrial Finance; Banking Operations; and Banking and Insurance. Each subdivision is headed by a Joint Secretary. The Banking Operations sub-division deals with legislative proposals described to Banks, non-banking financial companies, and other related matters like appointments of Chief Executives and Government nominee Directors and non-official directors on the boards of public Sector Banks.
In addition policy matters relating to Private Banks, Foreign Banks, and improvement of customers service in Banks and redressed of customers grievances are also dealt with this Banking Operations sub-division of Ministry of Finance. This sub-division also deals with vigilance matters and appoints Chief Vigilance Officers (C.V.]s) in the Public Sector Banks to enable the Public Sector Banks to meet the credit requirements for the productive sectors of the economy in proportion to the economic growth of the country. The Government is committed to infuse capital funds in Public Sector Banks as well 5. 89 Nature of Banking Industry Bank]s safeguard money and valuables and provide loans, credit, and payment services, such as checking accounts, money-orders, and cashiered checks.
Banks also offer investment and insurance products which they were once prohibited. There exists variety of models for cooperation and integration among finance industries some of these traditional distinctions between Banks, Insurance Companies, and Securities Firms has diminished. In spite of these changes, Banks continued to maintain and perform their primary role of accepting deposits and lending funds from these deposits. Banks securely save the money of depositors, provide checking services, and lend the funds raised from depositors to consumers. Banks today are in a wide range of sizes, from large Global Banks to Regional and Community Banks.
These Global Banks are involved in international lending and foreign currency trading, in addition to the more typical Banking services. Working Environment Employee[l’s in a typical branch work weekdays, whereas in few Banks sometimes Banks were opened until late evenings or were open on Saturday morning’s and in few even on Sundays. Supervisory and managerial employee’s, usually work substantially longer hours. Some Banks are expanding the working hours in their branches which are located at non- 90 traditional locations, such as shopping malls, which remain open on most evenings and weekends. Branch office jobs, particularly front-end positions, required continuous communication with customers. Some employees needed to work for longer hours in a confined space.
Loan officers might need to travel to meet clients, or work evenings for their clients. Loan officers also check loan applications, and solicit new business for Banks. Financial Service Sales Representatives might also have to visit clients in the evenings and on weekends to go wrought the client;s financial needs. To improve customer service and provide greater access to Bank personnel’s, Banks have staffed Customer Service Representatives. The remaining Bank employees, working at the headquarters or other administrative offices usually worked in comfortable surroundings and worked for a standard workweek. In general, Banks are considered relatively safer place to work with respect to injuries and illness.
Banks also encourage higher education and training for their employee’s as Banks require creative and talented people to compete in the market place so s to reach to more number of customers. The basic premise here is to Study the relevant data and derive some information related to the Strategic Environment pertaining to Indian Banking Industry, which may be used in due course in a broader context if not in specific context. Environmental factors influencing Banking Industry are: 91 Economic Factors Indian economy has registered impressive growth of over 9 percent for successive three financial years and experienced restraint in 2008-09. This restraint was caused due to the downturn in the global economy.