RBI Wants Everyone To Grow, But Customer Will Always Be First: HDFC Bank's Parag Rao
In terms of the current regulatory environment, Rao said that RBI wants strong, mature and responsible growth of assets when it comes to banks.
The Reserve Bank of India doesn't have a problem with growth; they want everyone to grow but the customer will always be a priority, according to Parag Rao, group head of payments and consumer finance at HDFC Bank Ltd.
"In our interactions with the regulator, they are saying that everyone must grow but customers will always be first," he said during his inaugural address at the Zeta Democratising Credit event in Mumbai on Friday.
In terms of the current regulatory environment, Rao said that the RBI wants strong, mature and responsible growth of assets when it comes to banks. This is because they want to avoid bubbles, as they are not just harmful to the economy but also derail growth.
"...regulator doesn't want meteoric growth, meteoric fall... They want it to be fair and transparent for customers," he said.
Hence, it is important to work within the guidelines for the greater benefit of the economy, he said.
Addressing credit penetration in India, Rao said that impediments like quality of data, credit appetite of players and infrastructure exist.
"...kicker in an economy comes from credit penetration... EMI penetration in credit cards is 15-20% at present," he explained.
Hence, it is important to go beyond the physical and build a digital capability, Rao said.
In order to ensure betterment at this level, banks and fintechs must work together to build credit scorecards and for effective partnerships, he said.
While regulated entities bring their strengths like trust and reach, fintechs bring in innovation, among other things, he said.
On HDFC Bank's partnership with Zeta, Rao said that it has shown early success and they have plans to further build on it.
In 2021, HDFC Bank partnered with Zeta to upgrade its credit card offerings and make other technological improvements during the RBI's embargo on the company.
The idea, back then, was to set up a digital bank from scratch to service the bank's customer base. Zeta was in charge of processing transactions, managing the user interface and improving the improving the user experience of the product, as NDTV Profit previously reported.
