Union Finance Minister Nirmala Sitharaman said PSBs have returned to profitability with sound financial health and institutionalised systems to prevent the recurrence of past weaknesses.
The improved financial health of PSBs reflected in many parameters such as the reduction in gross NPAs of Public Sector Banks from Rs 8.96 lakh crore in March-2018 to Rs 6.78 lakh crore in March-2020, she said.
PSBs financial health also reflected in the recovery of Rs 5,86,496 crore NPA over the last five financial years till FY19-FY20, Sitharaman said.
A sharp decline has also been recorded in fraud occurrence from 0.65 per cent of advances during FY10-FY14 to 0.06 per cent in FY19-20, due to fraud prevention reforms and proactive checking of legacy NPA, she said.
Moreover, asset quality also has improved significantly, with the net NPA ratio reducing from 7.97 per cent in March 2018 to 3.75 per cent in March 2020, Sitharaman said.
As per Reserve Bank of India (RBI) data on domestic operations, aggregate gross advances of PSBs have increased from Rs 16,96,051 crore as on March 31, 2008 to Rs 45,90,570 crore as on March 31, 2004, she said.
PSBs have shown a healthy trajectory in their performance over four quarters since the launch of EASE 2.0 Reforms Agenda, Sitharaman said.
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, she said.
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.comandTReDS for digital lending. 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, she said.
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, Sitharaman said.
A comprehensive agenda for smart, tech-enabled banking has been adopted for FY 2020-21, under which PSBs have initiated eShishu Mudra for straight-through processing of loans to micro-enterprises and digital personal loan for customers, she said.
PSBs have started providing customer-need driven credit offers through analytics and partnerships with FinTechs and e-commerce companies, she added.
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, Sitharaman said.
