EASE 4.0 framework launched to modernize and strengthen PSBs

The framework will enable technology infusion, operational revamp, data exchange, and financial inclusion in rural regions

August 25, 2021

The implementation of best practices in banking, customer responsiveness, and credit offtake are priority areas.

A few PSUs have emerged from the Prompt Corrective Action (PCA) zone towards profitability as per the annual review.

Expansion into the Eastern and Northeastern states is key to enhance export capabilities and logistics potential.

Reforms targeting PSBs should tackle the burden of bad loans and enhance their funding potential.

Finance Minister Nirmala Sitharaman launched the Enhanced Access and Service Excellence (EASE) 4.0 reforms agenda today.  The reforms are expected to institutionalize smart banking for Public Sector Banks (PSBs) and put forth an ethical framework. The Finance Minister noted that the role of Public Sector Banks and the banking sector at large would be crucial in financing sunrise sectors including fintech. The EASE 4.0 framework is characterized by: 

  • Incentives to strengthen credit offtake, talent training, and customer responsiveness in addition to promoting best banking practices. 
  • 24/7 resilient banking capabilities and the streamlining of internal activities. 
  • Inclusion of technological implements such as AI and Data Analysis into the PSB ecosystem.
  • The inclusion of rural and semi-rural stakeholders in the banking ecosystem through agricultural loans and access to financial services. 
  • The exploration of data exchange opportunities with credible third parties. 

Additionally, Smt Sitharaman highlighted that it was imperative for PSBs to study both the avenues of financing for banks as well as sectors that are identifying sources of funding outside the banking ecosystem. 

While reviewing the performance of PSBs, Smt Sitharaman noted that the pandemic hadn’t slowed down the progress as a few banks had emerged from the  Prompt Corrective Action (PCA) zone into profitability. She also outlined a few immediate priority areas for the PSBs to take up given the recovery pattern exhibited: (i) Expansion into the Eastern states of India in order to boost credit flow, (ii) Increased engagement with the Federation of Indian Exporters Organisation to reduce unnecessary back-and-forth, (iii) Integrating an export promotion strategy in consultation with relevant stakeholders in the space, (iv) Focusing on the northeastern states to strengthen their export and logistics potential, (v) Collaborate with State governments to strengthen the ‘One district, One export’ strategy. 

Public Sector Banks in India are a valuable source of employment for the youth and funding for sectors of the economy. Experts observe that the sector faces multiple challenges owing to the volume of bad loans. Reform agendas like EASE 4.0 will help the sector resume its growth trajectory.