PUNE: The banking sector must know the needs of its customers and design its products accordingly to continue performing in the high risk business environment prevailing today, Reserve Bank of India (RBI) Deputy Governor Subir Gokarn said on Saturday. In this globally competitive and high risk environment, the banking sector needs to have a more broad-based approach, Gokarn said at the inauguration of a two-day conference on 'Emerging macro environment, regulatory changes and bank competitiveness,' organised by National Institute of Bank Management, Pune. “They have to move from KYC (know your customer) to really KYC. This means that knowing your customers' credentials are not just enough. Banks must also know what do their customers need, when do they need and how it can be fulfilled, then design the products accordingly," he said. Banks are poised for severe challenges in the current environment and will have to create new avenues of investment to run their operations profitably. It is important that banks have sound liquid assets, he added. “One also has to look at the market needs to survive. Like providing loan to the service sector is important, despite high collateral because of its contribution to the global and national gross domestic product (GDP)," the RBI Deputy Governor said. Gokarn also added that there is now a higher premium on risk assessment and also stressed on the need for following the international banking standards. He also said the emergence of specialised financial institutions like the venture capital firms have intensified the competition for banks. In such a scenario, evolving economic and demographic structures would help. Like, predominantly India is a young population, but there is also a good number of senior citizens and financial requirements for both the categories are different. This can be seen as an opportunity by the banking sector and tap this huge market, he explained.
Sakaal Times
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