c
c


The banking industry is such an industry where there are many regulation imposed by the
government. Also there are large number of Sellers (investors, depositors, lenders) and buyers
(borrowers). There is strong rivalry among the competitors as there are strong players in this
industry amongst the players.

1. argaining power of suppliers:

There is reasonable power of suppliers as their suppliers are the equity and
preference shareholders and the borrowers who provide finance to the industry as
this industry is very important from the economic point of view. There are
chances of bankruptcy due to capital deficiency.
2. argaining power of buyers:
a. The buyers have a reasonable power in this industry as all the factor in this industry is
policy determined.
b. All the forces in this industry are market driven, so buyers have no option to accept it.
c. There is a threat of Non Performing Assets (NPA) from the side of buyers as there are
chances of default by the borrowers.
d. The buyers have the right to switch-over to the rivals any time he likes.
3. Threat of new entrants
a. The banking industry is regulated by two regulatory bodies they are:
i. anking Regulation Act, 1949.
ii. Companies Act, 1956.
b. There are many provisions which restrict the entry to new entrants in this industry.
c. Also banks have to work or operate as per the guidelines of The Reserve ank of India.
4. Threat of substitutes
a. There is large number of substitutes available for products offered by banks.
b. There are many products like Mutual Funds, equity investment, post office deposits and
govt. bonds which are providing higher return or similar safety of investments that
substitute inflows of funds.
c. Also there are many products or moneylenders like NFCs, Micro and small Industry
lenders and chit funds which substitutes out flows of fund.
5. Rivalry among competitor
a. There are numbers of competitors playing in this industry they are classified according
to the type of industry are:
i. Private sector.
ii. Public sector.
iii. Cooperative society.
iv. Foreign banks or MNCs.
 b. There is a cut-through competition among the rivals as there are many established
players in the industry like ICICI ank SI etc.
c. Still banking industry is being centralized as there is large number of merger &
acquisitions taking place.