The Centre has asked the Indian Banks' Association (IBA) to prepare a viability plan for Regional Rural Banks (RRBs) on the lines of the Enhanced Access and Service Excellence (EASE) initiative, aimed at institutionalising clean and smart banking at Public Sector Banks (PSBs).
If such a plan were to be executed, its aim will be to ensure digitization of the rural banking system through EASE, sources from IBA told Moneycontrol.
EASE was meant to create the backbone of smart banking in PSBs. The first edition - EASE 1.0 -- was launched in January 2018 and the latest-- EASE 5.0 - in June 2022 by Finance Minister Nirmala Sitharaman.
Over the years, various aspects of banking have been incorporated in EASE, starting with tackling non-performing assets in 2018 to introducing online availability of loans and deepening digitization and better governance at state-run banks.
EASE in PSBs
The basic objective of EASE is to institutionalize clean lending, better customer service, simplified and enhanced credit and robust governance and human resource practices.
The EASE Reforms Index tracks the progress of the PSBs against the PSB reforms agenda. Through the EASE Reforms Index, the performance of the PSBs is measured on 140 metrics against their respective benchmarks to chalk out a mechanism for continuous improvement.
"The latest EASE 5.0 is aimed at improving customers' digital experience and integrated and inclusive banking, with the focus on boosting small businesses and agriculture," said Rachit Chawla, CEO and founder of Finway FSC, an online loan marketplace.
The Ministry of Finance said at the launch of EASE 5.0 that PSBs will continue to invest in new-age capabilities and enhance their redressal systems to suit evolving customer needs and changing technologies.
EASE in rural banks
According to senior bankers, the application of EASE or an alternative in RRBs will be very different from that being implemented in PSBs.
Unlike PSBs, RRBs suffer from an absence of sufficient staff and workforce training.
"The capital structure needs to be upgraded along with upgrading the skill-sets of the employees," said BN Mishra, an ex-banker.
As and when EASE is implemented in RRBs, the major focus has to be on digitization, bankers said.
According to the latest data released by the Department of Financial Services, as of 31 March 2021, India had 43 RRBs sponsored by 12 commercial banks operating in 26 states (in all states except Sikkim and Goa) and three Union Territories (Jammu & Kashmir, Ladakh and Puducherry).
RRBs had a network of 21,856 branches covering 696 districts.
Their Consolidated Gross Non-Performing Assets (GNPAs) of RRBs declined in percentage terms from 10.4 percent to 9.4 percent during FY 2020-21, DFS data shows.
Operational, governance reforms
Experts said an EASE-like plan will bring in operational and governance reforms in RRBs that will complement the government's aim of restructuring rural banking.
Their achievements would be benchmarked to credit expansion, business diversification, reduction in bad loans, cost rationalization, technology adoption and improvement in corporate governance.
EASE will help RRBs to also maintain a proper database and be more customer-oriented."Most of the RRBs don't have very strong central tech processes. EASE will help the RRBs to build strong core banking. Moreover, it will also help the banks maintain the details of KYC (Know Your Customer) securely," said Amit Das, CEO and cofounder of Think360.ai, a data science and artificial intelligence-focused firm providing tech-driven solutions to financial organisations.