🎯 The 4R Strategy: Fixing India’s Public Sector Banks
A 4-step plan to tackle bad loans (NPAs) and strengthen banks:
| Step | What It Means | Key Actions | Results |
|---|---|---|---|
| 1. Recognition 🔍 | Admit bad loans exist | – Stopped hiding NPAs as “restructured assets”. – Raised Provision Coverage Ratio (PCR) from 46% (2015) to 68.9% (2019). | NPAs rose to ₹3.93L cr (2019), but banks became more transparent. |
| 2. Resolution 💼 | Recover money from defaulters | – Used Insolvency Code (IBC) to take control of defaulters’ assets. – Recovered ₹98,493 cr in FY19 (100% growth!). | Record recovery of ₹2.87L cr (2015-19). |
| 3. Recapitalization 💰 | Inject funds into banks | – Govt pumped ₹3.14L cr (2015-19) via schemes like Indradhanush. | Boosted banks’ ability to lend. |
| 4. Reforms 🛠️ | Improve rules & governance | – Froze accounts of shell companies. – Enacted Fugitive Economic Offenders Act. | Reduced fraud and wilful defaults. |
🌟 EASE Agenda: Transforming PSBs (2018 Onwards)
6 focus areas to make banks customer-friendly, tech-savvy, and efficient:
| Focus Area | Key Initiatives | Impact |
|---|---|---|
| 1. Customer Responsiveness 📱 | – Launched psbloansin59minutes.com. – Added UPI, e-KYC, AePS. | Faster loans & digital access for all. |
| 2. Responsible Banking 🛡️ | – Stressed Asset Management Verticals (SAMVs) for NPAs. – Better credit checks. | Reduced bad loans and risks. |
| 3. Credit Flow to MSMEs 🏭 | – UdyamiMitra portal for MSME loans. – PM Vishwakarma Scheme (₹13,000 cr budget). | Easier loans for small businesses. |
| 4. Financial Inclusion 🌾 | – 34 crore Jan Dhan accounts. – 96% villages got banking access. | ₹6.28L cr transferred via DBT schemes. |
| 5. Digitalization & Skills 💻 | – Mobile banking, Braille ATMs. – Regional language support. | 25% faster loan processing (H1FY19). |
| 6. Governance 📊 | – EASE Reforms Index (140 metrics). – Separated CEO & Chairman roles. | Transparent, competitive PSBs. |
📈 Key Achievements (2015-2019)
- NPAs Recovery: ₹98,493 cr in FY19 (till Q3).
- Jan Dhan Accounts: 34 crore+ opened.
- Village Banking Access: 96% coverage.
- DBT Transfers: ₹6.28 lakh cr.
- Fugitive Offenders Act: Stopped defaulters fleeing abroad.
📝 Exam/Interview Cheat Sheet
FAQs
Q: What is the 4R Strategy?
A: Recognition, Resolution, Recapitalization, Reforms → Fix NPAs and strengthen banks.
Q: What is the EASE Index?
A: Tracks PSB performance on 140 metrics (e.g., digital adoption, customer satisfaction).
Q: How did IBC help?
A: Allowed banks to take control of defaulters’ assets and recover ₹2.87L cr (2015-19).
Key Terms
- NPA: Loans not repaid for 90+ days.
- IBC: Insolvency and Bankruptcy Code.
- DBT: Direct Benefit Transfer.
- SAMVs: Stressed Asset Management Verticals.
🚀 What’s Next?
- AI & Tech: PSBs adopting AI for fraud detection.
- Climate Risk: New frameworks for eco-friendly lending.
- Global Expansion: PSBs targeting international markets.