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| Adopt tech to cut transaction cost: Chakrabarty to banks |
| Press Trust of India / Mumbai Sep 03, 2010, 20:36 IST |
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The Reserve Bank of India Deputy Governor K C Chakrabarty today asked bankers to bring down the cost of their services through technology adoption, which in turn can speed up their growth and help achieve the central bank's goal of taking banking services to the unbanked sections.
"The cost of small value transactions should go down, and unless you do that we will not achieve penetration and that is possible only through technology," Chakrabarty told a a banking technology meet here today.
Sounding disappointed with the pace of technology adoption by banks, he said, "Technology has not contributed to the desired extent for our banking sector." However, he added that "I am not saying we have not benefited. ATMs and CBS (core banking solutions) are products of technology...But we have not grown the way we should have. Technology should bring phenomenal changes."
The problem, Chakrabarty said, is that technology initiatives by domestic banks are not customer-centric but prodded by the regulatory requirements.
Pointing out that ineffective use of technology has held back banking penetration, Chakrabarty said the country had 6.42 branches per one lakh population in 2001 which has only gone up to 6.6 now. Similarly, the operational cost per Rs 100 of business has come down marginally from Rs 2 to Rs 1.6, which should have gone down further, he said.
Urging banks to have an IT vision in place which is in tandem with their business plan, he said banks need to bring in standardisation and reduce the workload at branch level so that they can concentrate on serving the customer better.
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