For decades, they were ignored by banks because they had little or no money to spare.
But now, bankers are looking at students for business, particularly over the long term. At least a dozen banks now have special schemes for students/youth.
“At the moment they may be young, but soon, they will be employees and can be potential customers,” says Pawan Kumar Garg, who heads the national banking division of Indian Overseas Bank (IOB).
IOB is keen on catching them young. Last week, in an internal circular, the bank said: “There is an urgent need to bring down the average age of our retail customers and our focus in future is to target this segment (of young customers in the age group of 10 to 28 years).”
Garg said officials have been going to colleges and offering students zero (minimum) balance accounts and free debit cards.
“This may not drive big business now. But we are investing in the future and also helping youngsters in the process.”
Students, too, seem to be happy. “I have been given a zero-balance account with a debit card by IOB officials who came to my college. I had been using an ATM card of my father’s account but now I can use my own card,” says R. Mishra, an 18-year-old studying accounting at Tapasya College. Focusing on young customers not only holds the promise of future business but also has other advantages, says Andhra Bank Chairman C.V.R. Rajendran. “Generally, no young customers will come to the bank for transactions as they prefer to use alternate channels. This reduces the cost of transactions for us.” It costs banks Rs 40 if the transaction is done through human interface, Rs 20 though an ATM and even less if it is through the Internet or mobile phone, he adds.
Students with savings bank accounts are also likely to seek loans from banks.
Rajendran says that customers in their 20s are increasingly taking retail loans, including home loans.
The Institute for Development and Research in Banking Technology has recommended that banks reach out to young customers through social media.
Some 20 million students study in colleges and if this trend continues over the next five years, banks will have 100 million potential customers, it noted in a study.
M. Bhagavantha Rao, Managing Director, State Bank of Hyderabad, says that recent initiatives by banks, such as launching e-lounges to facilitate automation of transactions, are also aimed at attracting youngsters.