Banking Sector Reforms
To strengthen banks and foster a culture of clean and responsible banking, the Government has followed a comprehensive 4 R’s approach of recognition, resolution, recapitalization and reforms.
Steps taken: Reforms, as per the public sector Banking reforms agenda adopted by PSBs:-
- increasing access to banking services from home and mobile through digital banking and enhanced customer ease,
- enabling easy accessibility to senior citizens and the differently-abled, through online update of pension life certificates, etc.
- instituting efficient practices for effective coordination in large consortium loans by restricting number of lenders in consortium and by adoption of standard operating procedures,
- strict segregation of pre- and post-sanction roles and responsibilities for enhanced accountability,
- ring-fencing of cash flows and use of technology and analytics for comprehensive diligence across data sources for prudent lending,
- institution of transparent and robust one-time settlement mechanism with automated escalation and monitoring
- monitoring of loans above ₹250 crore through specialised agencies for effective vigil,
- establishment of stressed asset management verticals in banks for focused recovery and timely and effective management of stressed accounts,
- institution and implementation of a risk appetite framework for a structured approach to manage, measure and control risk and check aggressive and imprudent lending,
- monetisation of non-core assets for strengthening capital base,
- enabling faster bill realisation for MSMEs through discounting by banks on the Trade Receivables electronic Discounting System (TReDS),
- enabling proactive reach-out to borrowers and stepping-up cluster-based financing to MSMEs,and
- developing human resources by rewarding top performers and enabling specialisation through job-families, and role based learning for executives.
- India’s Extant Guidelines on Priority Sector Lending, a target of 10 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE), whichever is higher, has been prescribed for lending to Weaker Sections.
- Reserve Bank monitors the performance of banks against the stipulated priority sector targets/ sub-targets on a quarterly as well as annual basis.