Indian Public Sector Banks Turned Profit, Digitized Fast: Finance Ministry

Nirmala Sitharaman, Minister of Finance and Corporate Affairs. (Press Information Bureau)

MUMBAI, India — Indian Public Sector Banks (PSBs) have reported “healthy profits” and have got cracking on technology-driven reforms, according to the Ministry of Finance.

“PSBs have reported a profit of Rs 31,817 crore ($4.29 billion) in the financial year of 2020-21 as compared to a loss of INR 26,016 crores ($3.5 billion) in the financial year of 2019-2020,” the Finance Ministry said in an official release.

“This is the first year when PSBs has reported a profit after five years of losses. Total gross non-performing assets stood at INR 6.16 lakh crore ($83.09 billion) as of March 2021, a reduction of INR 62,000 crores ($8.36 billion) from March 2020 levels. Number frauds at PSBs have substantially come down to 2,903 in the financial year 2020-21 compared to 3,704 in the financial year 2018-19.” 

Nirmala Sitharaman, Minister of Finance and Corporate Affairs announced the numbers as she unveiled the fourth edition of the Public Sector Bank (PSB) Reforms Agenda’ EASE 4.0′ for 2021-22-tech-enabled, simplified, and collaborative banking’.

 She unveiled the annual report for the Public Sector Bank Reforms Agenda EASE 3.0 for 2020-21 and participated in the awards ceremony to felicitate best performing banks on the EASE 3.0 Banking Reforms Index.

“Smt @nsitharaman launches EASE 4.0 in Mumbai. EASE (Enhanced Access and Service Excellence) is a common reform agenda for Public Sector Banks aimed at institutionalizing clean and smart banking,” the office of the minister said in a tweet.

“Salient features of EASE 4.0 launched by Smt @nsitharaman in Mumbai–data-enabled agricultural credit; collaboration amongst financial ecosystem players; accelerated push of technology, HR and governance reforms.”

State Bank of India (SBI), Bank of Baroda (BoB), Union Bank of India won the top awards for Public Sector Bank Reforms EASE 3.0. These three banks won awards for best performing banks based on the ‘EASE’ index. Indian Bank won was felicitated for the best improvement from the baseline performance.

The State Bank of India, Bank of Baroda, the Union Bank of India, Punjab National Bank, and Canara Bank won the top awards in different themes of EASE 3.0.

Credit@click was a flagship initiative under EASE 3.0. The top seven public sector banks (based on the total business size as of April 1, 2020) have set up mechanisms for instantaneous and contactless access to credit through the end-to-end digitalization of key retail and Micro, Small, and Medium Enterprises’ credit products.

For unsecured personal loans (UPL), INR 5,502 crores ($742 million) of fresh loans and for small credit loans, INR 124 crores ($167 million) of fresh loans were disbursed end-to-end digitally in the quarter ended March 2021 (2X growth in unsecured personal loans and 10X growth in small credit loans compared to quarter ended March 2020). Nearly 440,000 customers have benefited through the simplified credit access, as per the release.

PSBs have set up a mechanism for customers through which they can register loan requests 24X7 through digital channels such as Mobile and Internet banking, short message service, missed calls, and call centers.

In the Financial Year 2021, PSBs have collectively disbursed INR 40,819 crores ($5.5 billion) of fresh personal, home, and vehicle loans through leads sourced from such digital channels. This accounts for approximately 10 percent of overall disbursements in personal, home, and vehicle loans in the above said period.

The top seven PSBs have built analytics capabilities through the setup of dedicated analytics teams and information technology infrastructure to proactively offer loans to their existing customers. Such loan offers were generated using the existing customer transactions data within the banks.

In Financial Year 21, INR 49,777 crore ($6.71 billion) of fresh retail loan disbursements were made by the top seven public banks based on these credit offers.

PSBs have also extensively used external partnerships and a dedicated marketing salesforce network for the sourcing of retail segment and Micro, Small, and Medium segment loans. Sourcing from such channels has been 910,000 loans in the previous financial year. 

(With inputs from ANI)

Edited by Vaibhav Pawar and Krishna Kakani

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