Strategy Corporate Transformation Case Study

Indian Banking Industry and Bank of Baroda: The Need for Organisational Transformation

OR

Abstract:
Founded in 1908 by Maharaja Sayajirao Gaikwad III, Bank of Baroda has grown over the years to become one of the leading players in the Indian banking industry today. Nationalised in 1969 by the Government of India, the Bank continued its social banking initiative by establishing rural branches. With its constant profit and dividend payout record, the Bank maintained its key position among the Public Sector Banks (PSBs). However, the economic liberalisation begun in 1991-92, permitted foreign and private players to start their operations in the country, and these, with their cost-efficient technologies and value-added services backed by aggressive marketing, offered a stiff competition to PSBs by luring away customers from PSBs. As a result, along with other PSBs’, Bank of Baroda’s market share started declining giving a rude jolt to the Bank's management which felt forced to take steps to contain the slide-down. And thus started the re-branding initiative in mid-2005 – a major initiative in the history of PSBs in the Indian banking industry.

Pedagogical Objectives:

• To understand the Indian financial system and the evolution of the Indian banking industry
• To analyse the competitive scenario prevailing in the Indian banking industry before and after the liberalisation
• To understand the various reform initiatives taken by the Indian government in a bid to revitalise the banking industry and its effects
• To make out or oppose the case of consolidation in the Indian banking industry
• To understand the growth strategies adopted by Bank of Baroda with the changing competitive dynamics of the Indian banking industry
• To discuss the need for an organisational transformation for a public sector bank like Bank of Baroda despite its good financial performance and market standing

Keywords :  Indian Financial System; Reserve Bank of India Act; 1934; Banking Regulation Act; 1949; Scheduled and Non-scheduled Banks; Public Sector Banks and Private Sector Banks; Rangarajan Committee; Narasimham Committee; Impact of Nationalisation of Banks in India; Corporate Transformation Case Study; Liberalisation of Indian Banking Industry; Priority Sector Lending; CRR; SLR and CAR; Need for Rebranding; Non Performing Assets (NPAs); State Bank of India (SBI) and ICICI Bank; Consolidation in the Indian Banking Industry