v leeladhar : customer centricity and the reserve bank opening keynote address by mr v leeladhar, deputy governor of the reserve bank of india, at the seminar on “ balancing cost, profitability and customer experience ” organised by the asian banker, mumbai, 24 october 2007. * * * mr. daniel, professor king, mr. kapfer, mr. burt, ladies and gentlemen, i am delighted to be here this morning at the first session of the seminar on the theme of “ balancing cost, profitability and customer experience ” organised by the asian banker under its annual event “ the excellence in retail financial services, south asia ”. i am glad to be able to share my thoughts on this very topical subject of the cost - benefit analysis of the customer experience in the banking industry. i am thankful to the organisers for providing me this opportunity to address this august audience on a subject which has been so close to the reserve bank ’ s operations over the past several decades. as most of you might be aware, the reserve bank of india ( rbi ) has a fairly diverse functional mandate and one of the very important aspects of its operations in the banking sector has been the protection of the interests of the bank depositors. the fact that the rbi ’ s mandate for depositors ’ protection is enshrined in a statute dating as far back as 1949, is itself a tribute to the vision of the public policy makers who thought it appropriate to enact a highly customer - centric legislation and to entrust this onerous responsibility to the central bank of the country, which is a unique institution in every country of the world. what is interesting to note here is that this responsibility was assigned to the rbi in an era probably long long before the concepts like customer service, customer experience, customer satisfaction, customer delight and “ customer centricity ” found an entry into the lexicon of the banking or business world and became rather fashionable. the role of reserve bank the reserve bank, as the regulator of the banking sector, has been actively engaged, from the very beginning, in the review, examination and evaluation of customer service in the banks. it has been reviewing the progress periodically and has been continually nudging the indian banking industry to become more customer friendly and customer centric in its conduct and business practices. it has also put in place appropriate incentive framework, through a set of disclosure norms for the banks, to induce improvement in customer service, on an ongoing basis. at

state governments to facilitate the design and implementation of pro - poor and inclusive livelihood promotion strategies with focus on excluded groups such as women, schedule castes ( scs ), scheduled tribes ( sts ), minorities, below - poverty line and migrant households and involuntarily displaced people. it is indeed an opportune time for ficciundp to release the paper on “ a study on the progress of financial inclusion in india ” which aims to analyze the role played by banks in creating financial inclusion and the future strategy they need to adopt to make further progress. the important objectives under financial inclusion were aptly deliberated by the committee on financial inclusion and the committee on financial sector reforms headed by respected dr. rangarajan and dr. raghuram rajan. these reports have spelt out the imperative need to modify the credit and financial services delivery system to achieve greater inclusion. the full implementation of the recommendations made in these reports will definitely go a long way to modify particularly the credit delivery system of the banks and other related institutions to meet the credit requirements of marginal and sub - marginal farmers in the rural areas in a fuller measure. bis central bankers ’ speeches national focus on inclusive growth today, there is a national as well as global focus on inclusive growth. the financial stability and development council ( fsdc ) headed by the finance minister is mandated to focus on financial inclusion and financial literacy. all financial sector regulators including the reserve bank of india are committed to the mission. and, very publicly, so are banks and other financial sector entities. if we are advocating any kind of stability whether financial, economic, political or social and inclusive growth with stability, it is not possible to attain these goals without achieving financial inclusion. financial inclusion promotes thrift and develops culture of saving, improves access to credit both entrepreneurial and emergency and also enables efficient payment mechanism, thus strengthening the resource base of the financial institution which benefits the economy as resources become available for efficient payment mechanism and allocation. empirical evidence shows that countries with large proportion of population excluded from the formal financial system also show higher poverty ratios and higher inequality. thus, financial inclusion is no longer a policy choice today but a policy compulsion. and, banking is a key driver for financial inclusion / inclusive growth. role of banks but, it is well recognized that there are supply side and demand side factors driving inclusive growth. banks and other financial services players are largely expected to mitigate the supply side processes that prevent poor and disadvantaged social groups from gaining access to