Knowing customers will help banks to grow, said Dr Subir Gokarn, Deputy Governor, Reserve Bank of India, while delivering a special address at the Bancon 2011, held here on Saturday.
“If you really know your customer, you will be able to grow with your customers,” he said, adding that knowledge capital will enable banks to move from “KYC to GYC” (grow with your customer).
According to him, knowledge is key in understanding the market. KYC norms will thus help banks understand the demographics, income, etc which banks could use favourably in serving customers better and thus grow with their customers.
Dr Gokarn pointed out that it is the middle ground where there are many opportunities, and even as the banking system is dealing with its internal challenges, it is important for banks to come out with products and services targeting this opportunity.
Just as there is an opportunity in rural financial inclusion, urban financial inclusion also throws open lot of opportunities for banks, said Dr Gokarn. Banks should analyse the basic motivating factors for savings and borrowings, which will help them meet the needs of customers better.
INFORMAL SECTOR FOCUS
For all emergencies, the primary source of credit for the financially excluded in the rural and urban areas is the informal sector.
“Banks need to explore this opportunity and meet these needs, which mean lower cost of borrowings for these people,” he said.
Encashing the demographic dividend properly is not possible without knowing the customers better. Understanding the motivators for savings and borrowings is key to making financial inclusion a profitable venture.
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