How PSBs used tech-driven reforms to rake in big profits

PSBs have reported a profit of Rs 31,817 crore in FY21 as compared to a loss of Rs 26,016 crore in FY20. This is the first year when PSBs have reported profit after five years of losses, says the Ease 4.0 report.

Total gross non-performing assets stood at Rs 6.16 lakh crore as of March 2021, reduction of Rs 62,000 crore from March 2020 levels. Number frauds at PSBs have substantially come down to 2,903 in FY2020-21 compared to 3,704 in FY2018-19.

Credit@click was a flagship initiative under EASE 3.0. Top 7 PSBs (based on total business size as of 1st April 2020) have set up mechanisms for instantaneous and contactless access to credit through end-to-end digitalisation of key retail and MSME credit products. For unsecured personal loans (UPL), Rs 5,502 crore of fresh loans and for small credit loans, Rs 124 crore of fresh loans were disbursed end-to-end digitally in quarter ended March 2021 (2X growth in unsecured personal loans and 10 times growth in small credit loans compared to quarter ended March 2020). Nearly 4.4 lakh customers have been benefitted through such instantaneous and simplified credit access.

PSBs have setup mechanism for customers where they can register loan requests 24X7 through digital channels such as Mobile and Internet banking, SMS, missed call and call centre. In FY21, PSBs have collectively disbursed Rs 40,819 crore of fresh personal, home and vehicle loans through leads sourced from such digital channels. This accounts for approximately 10 per cent of overall disbursements in personal, home and vehicle loans in the above said period. The top 7 PSBs have built analytics capabilities through the setup of dedicated analytics teams and IT infrastructure to proactively offer loans to its existing customers. Such loan offers were generated using the existing customer transactions data within the banks. In FY21, Rs 49,777 crore of fresh retail loan disbursements were made by the top 7 PSBs based on these credit offers

PSBs have also extensively used external partnerships and dedicated marketing sales force network for the sourcing of retail segment and MSME segment loans. Sourcing from such channels has been 9.1 lakh loans in FY21.

The base of PSB customers which are active on mobile and internet banking channels has increased from 3.4 crore in quarter ended March 2021 to 7.6 crore in quarter ended March 2021. Nearly 72 per cent of financial transactions happening at PSBs are now, happening through digital channels. PSBs are now offering services across call centres, Internet banking, and Mobile banking in 14 regional languages such as Telugu, Marathi, Kannada, Tamil, Malayalam, Gujarati, Bengali, Odia, Kashmiri, Konkani, Hindi, Punjabi, and Assamese for the ease of customers.

A total of 96 per cent of PSB branches now have at least one officer fluent in conversing in local languages in Q4FY21. For continual improvement in coverage under financial inclusion initiatives, there was a 13 per cent growth in transactions provided by Bank Mitras in rural areas and 50 per cent growth in enrolments in Micro personal accident insurance in Q4FY21 compared to Q4FY20.

PSBs have adopted digital platforms such as online OTS, e-Bक्रय, e-DRT for expedited recovery. Nearly Rs 4,068 crore value of assets recovered via e-listing on e-Bkray platform in FY21. With the deployment IT-based Early Warning Signals (EWS) systems nearly complete by all PSBs in EASE 2.0, coverage under EWS has also increased significantly. Rs 33 lakh crores loan book covered under EWS at the end of March 2021.

Like in the previous years, progress made by PSBs was tracked quarterly through a published EASE Reforms Index leading up to the annual review. The Index measures the performance of each PSB on 135+ objective metrics across five themes. It provides all PSBs a comparative evaluation showing where banks stand vis-à-vis benchmarks and peers on the Reforms Agenda. 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 also by encouraging them to learn from each other.

The transformational measures have helped convert many of these Banks into financially resilient, self-sustaining entities that are now competing aggressively in the marketplace.

PSBs have recorded a phenomenal growth in their performance over four quarters since the launch of EASE 3.0 Reforms Agenda. The overall score of PSBs increased by 35 per cent between March-2020 and March-2021, with the average EASE index score improving from 44.2 to 59.7 out of 100. Significant progress is seen across six themes of the Reforms Agenda, with the highest improvement seen in the themes of 'Smart Lending' and 'Institutionalising Prudent Banking'.