RRB under EASE Reform

RRB under EASE Reform

Subject : Science and Technology 

Context:

To provide credit to rural consumers, the government is planning to leverage the Regional Rural Banks (RRBs).

Details:

• The proposed mandate will require RRBs to go beyond their mainstay of agricultural loans to extending credit for education, housing and even small businesses in rural India.
• It  will be part of the Enhanced Access & Service Excellence (EASE) reforms being undertaken by the Centre.
  • Under the EASE program, RRBs will be guided towards becoming more competitive and business friendly, digitising operations and connecting RRBs with each other.
• Providing RRBs a new mandate may serve two purposes: 
  • It will help them expand their business by leveraging their huge rural network and local understanding,
  • It will enhance credit access to rural consumers for purposes such as education, housing and micro businesses.

Concept:

• The RRBs were established as per the recommendations of the Narasimham Committee to cater to the rural credit needs of the farming and other rural communities.
• The Prathama Grameen Bank was the first bank to be established on 02nd October 1975.
• The Syndicate Bank became the first commercial bank to sponsor the Prathama Grameen Bank RRB
• Regional Rural Banks were established under the provisions of an Ordinance passed on 26 September 1975 and the Regional Rural Banks Act, 1976  to provide sufficient banking and credit facilities for agriculture and other rural sectors.
• It  has a market share of 40 percent of the total banking business.
• Each RRB in the country has a PSB as its sponsor bank that owns 40 per cent in it – another 25 per cent is owned by the state government, 20 per cent by the government of India and the rest is with the RRB.   .
• Regional Rural Banks (RRBs) are government owned scheduled commercial banks of India that operate at regional level in different states of India.
• The area of operation is limited to the area notified by the government of India covering, and it covers one or more districts in the State.
  • They have been created with a view of serving primarily the rural areas of India with basic banking and financial services.
  • RRBs may have branches set up for urban operations and their area of operation may include urban areas too.
• RRBs perform various functions in following heads:
  • Providing banking facilities to rural and semi –urban areas.
  • Carrying out government operations like disbursement of wages of MGNREGA workers, distribution of pension etc.
  • Providing Para-Banking facilities like locker facilities, debit and credit cards, mobile banking, internet banking, UPI etc.

Enhanced Access & Service Excellence (EASE) reforms:

• It was launched in January 2018 jointly by the government and PSBs.
• It was commissioned through Indian Banks’ Association and authored by Boston Consulting Group.
• EASE aims to foster new-age reforms in Public Sector Banks (PSBs) to improve profitability, asset quality, customer service and digital capabilities.
• The EASE programme sets a common reforms agenda for public-sector banks every year.
• It stresses on data analytics, automation, and digitization.
  • EASE 1.0 report showed significant improvement in PSB performance in resolution of Non-Performing Assets (NPAs) transparently.
  • EASE 2.0 introduced new reform Action Points across six themes – Responsible Banking; Customer Responsiveness; Credit Off-take, PSBs as UdyamiMitra (SIDBI portal for credit management of MSMEs); Financial Inclusion & Digitalisation; Governance and Human Resource (HR).
  • Ease 3.0 seeks to enhance ease of banking in all customer experiences, using technology – Dial-a-loan and PSBloansin59 minutes.com. Partnerships with FinTechs and E-commerce companies, Tech-enabled agriculture lending.
  • EASE 4.0 commits PSBs to tech-enabled, simplified and collaborative banking to further the agenda of customer-centric digital transformation.
  • EASE 5.0 focus on driving an enhanced digital experience along with data-driven, integrated, and inclusive banking across all banks.