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Complete SWOT Analysis of RBI – Bankers Bank Of India With Its History

by | Case Studies | 0 comments

In the previous article, we did a detailed SWOT analysis of TD Bank – one of the well-known banks in Canada. In this article, we’ll elaborate on the SWOT Analysis of RBI. 

The bank of banks – RBI is the central bank and regulator of the Indian financial system. The bank is the main issuer and supplier of Indian currency. The bank manages the main payment system of the country and reserves due right to make changes anytime in the favor of promoting its economic development. 

The marketing strategy of the RBI includes traditional as well as digital marketing. In today’s time, digital marketing is very important for reaching out to customers as everything is shifting towards digital. If you want to learn digital marketing and its scope, do check out Free Digital Marketing Masterclass by Karan Shah, the founder and CEO of IIDE.

Before we dive into the SWOT Analysis of RBI, let’s take a look at the company, its history, finances, products, and opponents.

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About RBI

SWOT Analysis of RBI - Shaktikanta Das - The Governor of RBI
(Shaktikanta Das – The Governor of RBI, Source: Indianexpress)

The Reserve Bank of India was formed in response to the Hilton Young Commission’s recommendations. The RBI Act, 1934 (II of 1934) sets up the legal framework for the Bank’s operations, which actually started on April 1, 1935.

RBI is the country’s central bank. Central banks are a relatively recent concept, with the bulk of central banks as we know them today having been established in the early twentieth century. The Bank began operations by taking control from the government. The bank was founded to govern the issuing of banknotes, maintain reserves in order to guarantee monetary stability and use the country’s credit and monetary system to its advantage.

With liberalization and globalization, the Bank’s focus has shifted ahead to core central banking functions which include Monetary Policy, Bank Monitoring and Supervision, and Payments System Regulation, along with financial market development. One of the specialised divisions of RBI is it mints Indian banknotes and coins.

Quick Stats on RBI
Founder British Raj
Year Founded 1935
Origin Mumbai, India
No. of Employees 12,811
Company Type Public
Market Cap N/A
Annual Revenue N/A
Net Income/ Profit Rs 1.3 Trillion (2021)

 

SWOT Analysis of RBI - What Does RBI Do
(What Does RBI Do?, Source: ComplyAdvantage)


Services By RBI

There are 31 branches of RBI throughout India. Whereas here are the services offered by RBI bank:

  • Monetary Authority
  • Regulatory and Supervisory
  • Foreign Exchange Management
  • Currency Issuer
  • Promotional functions to support national banking
  • Chief banker to all banks


Competitors of RBI
                                                  

Even being the RBI, and Banker’s Bank, RBI has quite a few following competitors in bank sectors: 

  • Bank of India
  • SBI Bank
  • HDFC Bank
  • Axis Bank
  • Central Bank of India


After understanding the core of the corporation, let us now proceed to the SWOT analysis of RBI. 


SWOT Analysis of RBI

A SWOT analysis is a strategic planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a project or a business venture. A good SWOT analysis can help you reach your online marketing goals or kick your business startup into high gear. 

To better understand the SWOT analysis of RBI, refer to the infographic below:

SWOT Analysis of RBI - SWOT Infographics of RBI 

Let’s proceed further with expanding on the strengths of the Bank of India from the SWOT analysis of RBI.

Strengths of RBI

  • Banker to the Banks: RBI directs all the non-banking finance companies in the country along with the commercial banks in India, and these banks maintain a certain amount of their reserves in the form of liquid cash with RBI.
  • Banker to the Government: Required banking needs of the government are managed by RBI, also it regulates & operates the government’s deposit accounts. At the World Bank and the International Monetary Fund (IMF), RBI represents itself as the Government’s Agent for India.
  • Controller of Credit: RBI controls credit through its monetary and credit policy, according to the monetary precedences of the government. RBI’s role in the Indian economy is essential.
  • Issue of Bank Notes: An important role of RBI among the other roles is, RBI’s right to issue bank notes, with the signature of the RBI’s Governor. 
  • Lender of Last Resort: The industrial banks reach out to the Reserve Bank in instances of emergency to tide over monetary difficulties, and the Reserve financial institution involves their rescue through rating a better fee of interest.
  • Custodian of Cash Reserves of Economic Banks: The business banks maintain deposits withinside the Reserve Bank and the latter has custody of the cash reserves of the economic banks.
  • Custodian of Country’s Foreign Currency Reserves: The Reserve Bank has custody of India’s reserves in global currency, and this permits the Reserve Bank to address disaster-related problems with unfavourable stability of bills position.


Weaknesses of RBI

Checking out the performance of the RBI, one can state with a feeling of pride that the RBI has considerably added to the development and stability of the economy. However, there have been sure disappointments of the Bank as well.

  • Lack of Adjustment in the Money Market: The Reserve bank was able to manage the organized sectors of money markets, but not the unorganized sectors. Little can be done to regulate or control the activities of local moneylenders and other indigenous bankers.
  • Lack of Uniformity in the Rate of Interest: Interest rate differentials continue to dominate due to a lack of control over various sectors of the money markets. Outside the organized sector of money markets, interest rates are ridiculously higher than those of banks. The Reserve Bank has miserably failed in this regard.
  • Lack of Bill Market: In 1952, RBI made a plan for the development of Bill Market. Yet till today, there is no independent and sorted bill market in India. 
  • Insufficient Availability of Agricultural Credit: Despite the fact that many steps have been taken by reserve banks to provide sufficient agricultural credit, farm credit is still dominated by local moneylenders and other indigenous bankers who impose very high-interest rates.
  • Share Scam: In 1992, the country witnessed a large-scale stock fraud involving hundreds of millions of rupees. It was a clear example of the RBI‘s bankruptcy.
  • Instability in the Internal Value of the Rupee: The instability of the Rupee’s intrinsic value was the biggest failure of the Reserve Bank. Prices are rising almost continuously as money circulation continues to grow. The value of the rupee has dropped to just 7 paisas in the last 47 years.


Opportunities for RBI

Opportunities enable a company to grow and become more profitable. Here are possible opportunities for RBI:

  • Provide Agricultural Credit: Indian farmers need credit to meet their short-term needs, such as buying seeds and fertilizers and paying employed workers after harvest, RBI can reclaim its reliability by introducing sufficient agricultural credits.
  • Stabilize Internal Value of the Rupee: Indian Rupee is said to be the worst-performing currency in Asia. RBI can stabilize an Internal Value of the Indian Rupee to stand in the global share market.
  • Establish Bill Market: Bringing up an established Bill Market will help to fulfil the financial requirements of Non-banking financial companies and the government.
  • Uniform Rate Interest: RBI can come up with uniform rate interest for all the commercial banks as interest rates directly affect the deposit multiplier as they affect the amount of new bank credit that circulates in the economy.


Threats to RBI

It’s necessary to avoid the external factors from creating a threat to the company. These concerns should be addressed as soon as possible so as not to harm the company. Here are a few threats that RBI may face:

  • Liquidity Risk: Liquidity risk is related to the bank’s ability to access cash to meet its funding obligations. Commitment includes allowing customers to withdraw their deposits. Failure to provide customers with timely cash can have a snowball effect.
  • Scam Risk: RBI went bankrupt in 1992. Once enough data is collected over a period of time, it will enable prevention, detection and reduction of fraudulent transactions in the financial system. RBI needs more secured systems.
  • Unencrypted Data: This is very basic, but an important part of good cybersecurity. All data stored in financial institutions and on online computers must be encrypted. If your data is stolen by a hacker, it cannot be used immediately if it is encrypted.
  • Pandemic: Along with the existence of credit and market risk, liquidity risk, the Pandemic became a new alert for banking sectors. Many Banks have called this ‘pandemic risk’ a strategic risk.

This ends our study on the SWOT analysis of RBI. Let us conclude our learning below.

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To Conclude,

Being the Banker’s bank and Banker to the government, RBI has evolved since its establishment and has reached a reputed name. Along with its strengths and opportunities, there’s a lot more scope for betterment, weaknesses can be strengthened, and threats can be nullified. 

With the advent of digital technology, where nearly everyone usually spends an hour of their day on their phones, appropriate digital marketing and online presence can be a fantastic approach to boost client relations.

With a huge increase in the service industry. There is a very high competition where marketing plays a crucial role-taking advantage of technology not merely in this industry in which every other company is focusing on digital marketing to rise ahead of each other.  If you have the curiosity to learn you may check out IIDE’s 3 Month Advanced Online Digital Marketing Course to know more.

We hope this blog on the SWOT analysis of RBI has given you a good insight into the company’s strengths, weaknesses, opportunities and threats.

If you enjoy in-depth company research just like the SWOT analysis of RBI, check out our IIDE Knowledge portal for more fascinating case studies.

Thank you for investing your valuable time to read this, and do share your thoughts on this case study of the SWOT analysis of RBI in the comments section below. 

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Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs......[Read full bio]

Aditya Shastri

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