EASE 2.0 and PSBs
Recently the EASE 2.0 Index was released and the Union Minister of Finance & Corporate Affairs felicitated the best performing banks on EASE Banking Reforms Index.
• PSB Reforms EASE Agenda is a common reform agenda for PSBs aimed at institutionalizing clean and smart banking.
• It was launched in January 2018.
• As per EASE 1.0 report, significant development in PSB performance in resolution of Non-Performing Assets (NPAs) transparently was highlighted.
• In EASE 2.0, the government had proposed pushing liquidity in the public sector banks, reconstituting the management committee and possible mergers among the ideal partners in the Indian banking sector.
• In 2020, EASE 3.0, the Public Sector Bank (PSB) Reforms Agenda 2020-21 for smart, tech-enabled banking was also unveiled.
• 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.
Bank of Baroda, State Bank of India, and erstwhile Oriental Bank of Commerce were felicitated for being the top three (in that order) in the ‘Top Performing Banks’ category according to the EASE 2.0 Index Results.
Bank of Maharashtra, Central Bank of India &erstwhile Corporation Bank were awarded in the ‘Top Improvers’ category basis EASE 2.0 Index.
Punjab National Bank, Union Bank of India, and Canara Bank were also recognized for outstanding performance in select themes.
PSB’s performance on EASE 2.0 Index
The PSBs has followed the EASE Agenda which aimed at institutionalizing clean and smart banking.
It was launched in January 2018, and the subsequent edition of the program ― EASE 2.0 built on the foundation laid in EASE 1.0 and furthered the progress on reforms.
PSBs have shown a healthy trajectory in their performance over fourquarters since the launch of EASE 2.0 Reforms Agenda.
The overall score of PSBs increased by 37% 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’.
PSBs have adopted tech-enabled, smart banking in all areas, setting up retail and MSME Loan Management Systems for reduced loan turnaround time andPSBloansin59minutes.
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.
PSBs have not only cleaned up legacy stress and addressed underlying systemic weaknesses but have emerged stronger as a result of comprehensive and institutionalized EASE reforms.
It sets the agenda and roadmap for FY21 for their transformation into digital and data-driven NextGen Banking of the Future for an aspiring India.
It emphasizes on the use of digital, analytics & AI, FinTech partnerships across customer service, convenient banking, end-to-end digitalised processes for loan sourcing and processing, analytics-driven risk management as well as decision support systems for HR.
Key reforms in EASE 3.0 include:
Dial-a-loan: Digitally-enabled doorstep facilitation for initiation of retail and MSME loans.
Customer-need driven credit offers by larger PSBs to existing customers through analytics.
Partnerships with FinTechs and E-commerce companies for customer-need driven credit offers
Credit@click: End-to-end digitalised, time-bound retail and MSME lending by larger PSBs, leveraging Account Aggregators.
Cash-flow-based MSME credit by larger PSBs, using FinTech, Account Aggregator and other third-party data and transactions-based underwriting models
Tech-enabled agriculture lending
EASE Banking Outlets