Finance Minister Nirmala Sitharaman has announced the results of Enhanced Access and Service Excellence (EASE 2.0) reforms index of public sector banks (PSBs).

Bank of Baroda, State Bank of India, and erstwhile Oriental Bank of Commerce were felicitated for being the top three in the ‘Top Performing Banks’ category according to the EASE 2.0 Index results.

Bank of Maharashtra, Central Bank of India and erstwhile Corporation Bank were awarded in the ‘Top Improvers’ category. Punjab National Bank, Union Bank of India and Canara Bank were also recognised for outstanding performance in select themes.

PSBs in India

Public Sector Banks (PSBs) are the mainstay of the Indian banking industry. PSBs and PSB-sponsored Regional Rural Banks (RRBs) have dominant market presence and constitute the major proportion of the bank network of Scheduled Commercial Banks (SCBs), particularly in rural and semi-urban areas. 

PSBs play an important role in fuelling investment needed for the country’s economic development, with a share of over 65 percent of SCBs’ deposits and 60 percent of their outstanding credit, as on December 31, 2019. 

In absolute terms, PSBs have a total deposit of Rs 88 lakh crore and total advances amounting to Rs 63.63 lakh crore, as on December 31, 2019.

Before 2017, the number of public sector banks in India was 27. Currently, there are 12 PSBs. 

They are: 

State Bank of India

Punjab National Bank

Bank of Baroda

Canara Bank

Union Bank of India

Indian Bank

Bank of India

Central Bank of India

Indian Overseas Bank

UCO Bank

Bank of Maharashtra

Punjab and Sind Bank.

EASE reforms for PSBs

A common reform agenda for PSBs, EASE agenda is aimed at institutionalising clean and smart banking.

It was launched in January 2018, and the subsequent edition of the programme — EASE 2.0 — built on the foundation laid in EASE 1.0 and furthered the progress on reforms.

Reform Action Points in EASE 2.0 are aimed at making the reforms journey irreversible, strengthening processes and systems, and driving outcomes.

The index measures the performance of each PSB on 120-plus objective metrics across six themes. 

• Customer Responsiveness: EASE for customer comfort.

• Responsible Banking: Financial stability, governance for ensuring outcomes, and EASE for clean & commercially prudent business.

• Credit Off-take: EASE for the borrower and proactive delivery of credit.

• PSBs as UdyamiMitra: EASE of nancing and bill discounting for MSMEs.

• Deepening Financial Inclusion & Digitalisation: EASE through near-home

banking, microinsurance and digitalisation.

• Ensuring outcomes – HR: Developing personnel for Brand PSB.

The index follows a fully transparent scoring methodology, which enables banks to identify precisely their strengths as well as areas for improvement. The goal is to continue driving change by spurring healthy competition among PSBs and by encouraging them to learn from each other.

PSBs have shown a healthy trajectory in their performance over four quarters since the launch of EASE 2.0 reforms. The overall score of PSBs increased by 37 per cent between March 2019 and March 2020, with the average EASE index score improving from 49.2 to 67.4 out of 100. 

Significant progress is seen across six themes of the reforms agenda, with the highest improvement seen in the themes of ‘Responsible Banking’, ‘Governance and HR’, ‘PSBs as Udyamimitra for MSMEs’, and ‘Credit off-take’.

Major achievements between March 2018 to March 2020

PSBs have adopted tech-enabled, smart banking in all areas, setting up retail and MSME loan management systems for reduced loan turnaround time. 

PSBs have instituted real-time visibility to retail and MSME customers on the status of their loans. 

Most branch-based services are now accessible from home and mobile, including in local languages.

EASE reforms index has equipped boards and leadership for effective governance, instituted risk appetite frameworks, created technology and data-driven risk assessment and prudential underwriting and pricing systems, introduced Early Warning Signals (EWS) systems and specialised monitoring for time-bound action in respect of stress, put in place focussed recovery arrangements, and established outcome-centric HR systems.

Most PSB customers now have access to over 35 services such as IMPS, NEFT, RTGS, intra-bank transfer, account statement, cheque book request on mobile/Internet banking.

The availability of services has nearly doubled over the last two years.

Nearly four crore active customers on mobile and internet banking with 140 per cent increase in financial transactions through mobile and internet banking channels and almost 50 per cent of financial transactions through digital channels.

Call centers now offer services in 13 regional languages including Telugu, Marathi, Kannada, Tamil, Malayalam, Gujarati, Bengali and Odia.

Complaint redressal average turnaround time reduced from the average of approximately nine days to five days.

23 branch-equivalent services such as account opening, cash deposit, cash withdrawal, fund transfer made available by PSBs through Bank Mitras.

PSBs have issued RuPay credit cards to nearly 23 crore basic savings account customers.

Significant improvement in customer outreach through dedicated marketing force and external partnerships. The number of dedicated marketing employees has increased from 8,920 to 18,053.

Sourcing of retail and MSME loans through the dedicated salesforce and marketing tie-ups has increased nearly five times from 1.5 lakh to 8.3 lakh loans.

Turnaround time for retail loans reduced by 67 per cent from the average of nearly 30 days to nearly 10 days. 

Slippage into non-performing assets (NPA) has reduced from 3.90 lakh crore in 12-months ending March-18 to 1.45 lakh crore in 11-months ending February-20.

Functioning of PSBs amid pandemic

PSBs have massively stepped up to support the nation during the COVID-19 crisis. 

From different modes of staffing to remote working, over 80,000 bank branches were operational during COVID-19. Additionally, there has been 90 per cent uptime of self-service machines during the COVID times and around three times increase in Aadhaar Enabled Payment System (AEPS) transactions through micro ATMs, and enhanced doorstep banking support by over 75,000 Bank Mitras. 

To further support the customers in these testing times, the banks have drastically increased the number of services being offered at the call centres, from 11 in March-19 to 23 as of June-20 in 13 regional languages. 

Way ahead

On the way forward for PSBs, a comprehensive agenda for smart, tech-enabled banking has been adopted for 2020-21. 

Under this, PSBs have initiated ‘eShishu Mudra’ for straight-through processing of loans to micro-enterprises and digital personal loans for customers. 

PSBs have started providing customer-need driven credit offers through analytics and partnerships with fintechs and e-commerce companies. 

Many PSBs have already started taking steps in line with the reform priorities. Progress of PSBs will continue to be tracked on metrics linked to Reform Action Points, and their progress will be published through a quarterly index. 

Launch of doorstep banking initiative

Sitharaman has launched a doorstep banking services initiative by public sector banks (PSBs) which will provide convenience to customers.

As part of the EASE reforms, the doorstep banking initiative is envisaged to provide convenience of banking services to customers at their doorstep through the universal touch points of call centre, web portal or mobile app.

The services will be rendered by the doorstep banking agents deployed by the selected service providers at 100 centres across the country. 

At present only non-financial services like pick up of negotiable instruments (cheque/demand draft/pay order etc), pick up of 15G/15H forms, pick up of IT/GST challan, request for account statement, delivery of term deposit receipt, among others, are available to customers.  

Financial services shall be made available from October 2020 and the services can be availed by customers of PSBs at nominal charges. 

The services shall benefit all customers, particularly senior citizens and divyangs (differently-abled).

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