were unable to anticipate future downturns and build up suitable safeguards while giving loans. i do believe that the rising impaired assets is a “ governance ” issue as banks have forgotten the art of saying “ no ”, except, may be, to small borrowers. banks need to significantly improve their risk assessment capability and their ability to price risks, so that they take on only those risks that they understand and can effectively manage. i believe that this need is all the more pronounced in the case of public sector banks, which, at times, end up with assets that have been exited by private sector / foreign banks on account of inherent weaknesses. the ability to manage npas is important in order to preserve the strength of bank balance sheets and to retain the appetite to take on good risks. an attitude of complete risk aversion would not be appropriate as banks are in the business of taking risks, but with adequate safeguards. i note that npas are a recurrent theme in shri venugopal ’ s articles and hope that they do provide insights into how banks can manage this problem. another issue that i would like to bring up before you is the element of discrimination practiced by the banks in restructuring of loans. analysis of available data indicates that the larger borrowers have invariably received the benefit of restructuring of loans, while the restructuring in case of sme / agriculture loans has remained abysmally low. i believe that with timely intervention and support from the banks, this sector would have definitely shown much lower levels of impaired assets than it presently does. bis central bankers ’ speeches d ) financial inclusion despite several steps having been taken by the government and the reserve bank of india, the extent of exclusion in the indian financial system continues to be unacceptably high. the unbanked masses constitute a unique but important stakeholder group for banks, even though they may not be bank customers. meeting the expectations of this group through financial inclusion efforts presents a huge business opportunity for banks. while there is no “ one - size - fits - all ” approach to financial inclusion, it is important that banks recognize three important prerequisites for maximising the benefits of financial inclusion efforts. these are : • holistic approach to provision of financial services, not just credit or deposit alone • meeting the needs of small firms • focussing on segments of population excluded by gender or geographical remoteness banks need to focus on leveraging technology to create new business models and delivery channels that are customized

really wants or are we really able to describe what “ good ” customer service is? while the businesses including banks focus on expanding the customer base, we need to remember that customer retention is an equally important business objective. the customers of banks today are a very discerning lot and clearly distinguish between personalized service and material service. are we equipped to handle this transition? have we looked at change management from the customer service point of view? call centres, internet banking, customer relationship management tools and strategies, these are a part of the modern day jargon defining customer care or the approach to customer care. irrespective of the approach or the strategy, no one in the banking industry can lose sight of the service – profit chain. 6. we may not realize that increased emphasis on customer service may result in some banks gaining competitive advantage. customer is the foundation of business and keeps it in existence. management experts and authors on competitive strategy have opined that service driven organizations can grow twice as fast as an average corporation. within the financial services sector, banks are going to face increased competition from retailers, insurance companies, housing finance companies, nbfcs, mutual funds etc. so be vigilant and remember what the late prof. peter drucker wrote way back in 1954 and i quote “ there is only one valid definition of business purpose – to create a customer ”. if this is the case, then retaining the customer is even more important. 7. the benefits of a customer - centric banking organization are many. these banks are able to differentiate themselves from the competition and improve their image in the eyes of the customer. increased customer satisfaction results in higher customer retention enhancing the reputation of a bank that can be trusted for fair treatment of its customers. improving staff morale and productivity are two sides of the same coin. if the staff is properly trained, nurtured, motivated and rewarded, profitability through improved customer service is automatically ensured. bring about continuous improvement in the operations of banks is, therefore, central to quality customer care. 8. why does a customer choose a particular bank? there are many reasons for this. the main reasons can be divided into two broad groups as tangible and intangible factors. the tangible factors may concern performance, quality, reliability, cost of services and convenience. the intangible factors may be reputation, sense of caring, courtesy, willingness to help, problem solving ability of staff, etc. the tangible and the intangible factors primarily drive home