Public Sector Banks will collaborate together, create shared portals to improve working

Public Sector Banks (PSBs) in India are undertaking transformative measures as part of a government-led initiative to foster collaboration and improve overall business impact. These efforts, aligned with the Enhanced Access and Service Excellence (EASE) Reforms 7.0 for FY25, aim to enhance the efficiency, competitiveness, and profitability of PSBs while driving innovation and customer satisfaction.

Key Initiatives Identified for Collaboration

PSBs have outlined 30 critical business and functional areas for focused collaboration. Some of the significant initiatives include:

1. Common Portal for Consortium Lending:
   This platform will allow multiple banks involved in a consortium lending arrangement to streamline processes, reduce duplication, and share data more efficiently. It ensures better coordination among banks when extending large loans to borrowers, reducing processing time and enhancing transparency.
2. Shared Collections Utility:
   A unified system for managing collections will help reduce redundancies across banks, improve recovery rates, and lower operational costs. By pooling resources, PSBs can leverage economies of scale and adopt more advanced collection mechanisms.
3. Integrated Bad Loan Recovery Mechanism:
   This initiative will enable banks to collaborate on recovering bad loans, particularly non-performing assets (NPAs). By sharing strategies and resources, banks can improve recovery rates and reduce the burden of stressed assets on their balance sheets.
4. Common ESG (Environmental, Social, and Governance) Reporting Platform:
   With ESG becoming a vital part of banking and business strategies globally, a shared platform will allow PSBs to align their sustainability goals, monitor compliance, and report ESG metrics effectively.

Execution and Government Involvement

The government has been proactive in pushing PSBs to adopt collaborative approaches to scale up their performance. By creating shared utilities and applications, banks can reduce operational costs, optimize resource utilization, and improve service delivery. A senior government official mentioned that many of these initiatives are expected to roll out within the current fiscal year.

Role of PSB Alliance Private Limited (PSBA)

PSB Alliance Private Limited, established in 2010, will play a pivotal role in implementing some of these initiatives. The PSBA serves as a central entity for all public sector banks, tasked with developing and managing shared applications and platforms. For example:

• Doorstep Banking Services: Already operational, this service has improved accessibility for customers, especially senior citizens.
• eBkray Auction Platform: A common platform for auctioning assets, now mandated by the Insolvency and Bankruptcy Board of India (IBBI) to list unsold assets from liquidation cases. This move ensures transparency and maximizes asset recovery value.

Enhanced Access and Service Excellence (EASE) Reforms 7.0

The EASE 7.0 framework is central to the new initiatives, focusing on three core pillars:

1. Economic Development: Supporting India’s growth through better credit disbursement and financial inclusion.
2. Customer Delight: Improving the customer experience by introducing seamless digital solutions and enhancing service delivery.
3. Resilient Banking: Strengthening the financial health of banks through better risk management, enhanced governance, and operational efficiency.

Performance Highlights of PSBs in FY25

PSBs have already shown strong results in the first half of FY25, demonstrating the positive impact of reforms:

• Business Growth: Aggregate business grew by 11% year-on-year, reflecting robust lending activity and customer engagement.
• Profitability: Net profit surged by 25.6%, reaching ₹85,520 crore, showcasing improved efficiency, better management of NPAs, and higher revenue streams.

Impact of Reforms and Collaboration

These reforms and initiatives are expected to deliver the following benefits:

• Cost Efficiency: Shared platforms will reduce operational and technological costs, enabling PSBs to reinvest savings into customer-centric services.
• Streamlined Operations: Collaborative systems like shared collections and bad loan recovery mechanisms will improve process efficiency and ensure timely action on stressed assets.
• Revenue Boost: By optimizing resources and adopting innovative solutions, PSBs can enhance their revenue streams.
• Improved Competitiveness: The collaborative approach allows PSBs to compete more effectively with private sector banks by adopting advanced technology and offering better services.

Long-Term Goals

These initiatives are not just short-term fixes but are part of a long-term strategy to transform India’s banking sector. By leveraging shared infrastructure, integrating digital tools, and adopting sustainable practices, PSBs aim to create a robust financial ecosystem that supports India’s economic growth.

Conclusion

The government’s push for collaboration among public sector banks marks a significant step toward modernizing India’s banking industry. By focusing on shared utilities, innovative platforms, and sustainable growth, PSBs are poised to become more resilient, competitive, and customer-focused. The progress achieved in FY25 is a testament to the effectiveness of these reforms, and the roll-out of new initiatives is expected to further strengthen the sector in the coming years.