EASE Reforms

EASE Reforms
 

News: The government is looking to leverage the potential of Regional rural banks through the Enhanced access and service excellence (EASE) reforms as it looks to expand their portfolios by adding new segments.

Key Highlights:

o Rural banks will be asked to tap into segments such as loans for tractors, small businesses in rural areas and education and housing loans.
o The Center is working on a proposal to raise the guarantee limit for education loans from Rs 7.5 lakh to Rs 10 lakh to ensure banks restart lending to the education sector.
o The government’s plan is to continue to improve the profitability of RRBs.
 

How will it help?

o It will help RRBs expand their business by leveraging their huge rural network and local understanding, and also enhance credit access to rural consumers for purposes such as education, housing and micro businesses.
o Increased credit availability to the education, housing and small businesses.
o RRBs will be guided towards becoming more competitive and customer friendly.
o The EASE programme for RRBs will entail focus on digitizing operations and connecting RRBs with each other.
 

What are EASE reforms?

o Launched in January 2018 jointly by the government and PSBs.
o It was commissioned through Indian Banks’ Association and authored by Boston Consulting Group.
o It aims to foster new-age reforms in PSBs to improve profitability, asset quality, customer service and digital capabilities.
o So far 5 stages of EASE reforms have been undertaken with each stage contributing something unique.
o EASE 1.0 – It showed significant improvement in PSB performance in resolution of Non Performing Assets (NPAs).
o EASE 2.0 – Introduced new reform Action Points across six themes such as responsible banking, customer responsiveness, credit take-off, financial inclusion and digitalization, governance and HR, PSB’s as UdyamiMitra.
o EASE 3.0 – Providing user friendly and ease of banking operations. For example, Dial-a-loan,
PSBloansin59minutes, tech-enabled agricultural lending, credit@click.
o EASE 4.0 – Themes proposed under this were 24*7 banking, bad bank, focus on North-east, leveraging use of Fintech sector.
o EASE 5.0 – PSBs will continue to invest in new-age capabilities and deepen the ongoing reforms to respond to evolving customer needs, changing competition and the technology environment.