Basic Statistical Returns system needs to be robust, open to change, says RBI deputy governor Michael Patra

Michael Patra

India’s Basic Statistical Returns (BSR) system needs to be robust, timely, comprehensive and open to change, Michael Patra, a deputy governor of the Reserve Bank of India (RBI), said on October 31.

The BSR system chronicles the giant leap in financial intermediation and financial inclusion in India since the nationalisation of banks in 1969. Given the need for more determined effort at systematising the reporting of comprehensive banking data with a minimum time lag, the
RBI constituted the Committee on Banking Statistics in April 1972 to look into various aspects of statistical reporting of data by banks and suggest appropriate steps.

The BSR Code is a seven-digit code that is provided to the registered banks by the RBI. The first three digits in the code identify the bank, while the following four digits identify the bank branch. This code helps banks to keep a clear record of every online payment made towards tax.

Patra, in the keynote address on ‘Fifty Years of Indian Banking through the Lens of Basic Statistical Returns', said that India – already the fifth largest economy in the world – prepares to be among the fastest growing economies and an engine of global growth. By 2025- 26, India will match Germany and become the fourth-largest economy in the world. By 2027, it will surpass Japan and emerge as the third-largest economy in the world, said Patra.

“India’s population will become the largest in the world next year and it’s the youngest. It will demand the world’s best financial intermediation services,” said Patra. “Banks will have a critical role in this transformation. Information will be the plumbing in this evolving architecture.”

The deputy governor also noted that the BSR system has endured the test of time as an exhaustive data collection system, which has continuously adapted and incorporated the structural changes in the economy and in the banking system.

In his speech, Patra acknowledged that the patterns of financial intermediation are shifting. Among this, the share of smaller loans -- of up to Rs 10 crore – in total loans has increased to 60 percent in 2022 from 45 percent in 2014, he said. This transformation has brought in its trail of associated changes in assessment, risk management and pricing of loans, he said.

Another feature that has impacted the banking system is the reduced role of term lending institutions and the emergence of corporate treasuries with new avenues for short-term financing.

This, according to Patra, has resulted in increased reliance on banks for long-term funds and a gradual reduction in the share of working capital in total loans. Banks’ asset portfolios have become elongated, with term loans accounting for 65 percent of total loans, Patra noted.