1. Why Were Reforms Needed? (Background)

Public Sector Banks (PSBs) were nationalised in 1969 & 1980 so that banking could reach:

Farmers
Rural areas
Poor households

But over time, PSBs faced serious problems:

Rising NPAs (bad loans)
Low profits
Government/political interference in lending
Outdated technology
Poor customer service

So major reforms became necessary.

2. Important Committees on Banking Reforms

🔹 Narasimham Committee I (1991) — First Big Reform

Reduce government control
Classify loans clearly (Standard/Sub-standard/Doubtful)
Allow private & foreign banks
Strengthen RBI
Set up DRTs (Debt Recovery Tribunals)

🔹 Narasimham Committee II (1998) — Follow-up

Merge strong banks → create large competitive banks
Narrow Banking for weak banks (avoid risky lending)
Professional bank boards
Strengthen capital requirements

🔹 P.J. Nayak Committee (2014) — Modern Reform Plan

Reduce Govt. stake in PSBs to below 50%
Create Bank Investment Company (BIC) to hold govt. shares
Empower bank boards
Set up Bank Boards Bureau (BBB)

3. Indradhanush Plan (2015): 7-Point Strategy for PSBs

Remember A–G:

Letter	Meaning
A	Appointments (professional leadership)
B	Bank Boards Bureau
C	Capitalisation (Govt. infusion)
D	De-stressing (reduce NPAs)
E	Empowerment of banks
F	Framework of Accountability
G	Governance reforms

4. The 4R Strategy (2015–19): Fixing NPAs & Strengthening Banks

A major turning point for PSBs.

Step	Meaning	What Was Done	Result
Recognition	Identify all NPAs honestly	Stopped evergreening of loans	NPAs increased on paper but books became clean
Resolution	Recover money from defaulters	IBC, asset sales, settlement	Recovery of ₹2.87 lakh crore
Recapitalisation	Fund banks	Govt. infused ₹3.14 lakh crore	Improved lending capacity
Reforms	Governance cleanup	Shell companies crackdown, FEO Act	Reduced frauds, better discipline

5. EASE Agenda (2018 onwards): Transforming PSBs

EASE = Enhanced Access & Service Excellence

A reform program to make PSBs:

Efficient
Transparent
Customer-friendly
Technology-driven
Safe

6 Key Focus Areas

Customer Responsiveness → 59-minute loans, UPI, e-KYC
Responsible Banking → Better risk checks
Credit to MSMEs → Udyami Mitra, PM Vishwakarma
Financial Inclusion → Jan Dhan, rural coverage
Digital Banking → Mobile banking, local language ATMs
Governance → EASE Index, role clarity

Impact

Faster loan approvals (25% faster)
Strong digital payments growth
₹6.28 lakh crore DBT transfers
Better credit discipline

6. Public Sector Banks – Current Status

Number of PSBs

Before mergers: 27
After mergers (2020): 12

List of 12 PSBs

SBI
PNB
Bank of Baroda
Canara Bank
Union Bank
Indian Bank
Bank of India
Central Bank of India
Indian Overseas Bank
UCO Bank
Bank of Maharashtra
Punjab & Sind Bank

Major Recent Mergers

Vijaya + Dena → Bank of Baroda
PNB + OBC + United Bank
Canara + Syndicate
Union + Andhra + Corporation
Indian Bank + Allahabad Bank

7. Public vs Private Sector Banks

Public Sector Banks (PSBs): Govt. holds >50% stake
Private Sector Banks: Majority owned by private shareholders

8. Key Achievements (2015–2019)

NPA recovery: ₹2.87 lakh crore via IBC
Jan Dhan accounts: 34+ crore
Rural banking coverage: 96% villages
DBT transfers: ₹6.28 lakh crore
Fraud control through Fugitive Economic Offenders Act

9. The Road Ahead

More digital banking (AI loan approvals, fraud detection)
Green and climate-friendly finance
Stronger, globally-competitive PSBs
Better governance and transparency

10. EASE – Simple Meaning

Launched in 2018 (implemented by IBA + Government of India)

EASE helps PSBs:

Improve service
Adopt technology
Reduce frauds
Improve lending
Strengthen staff performance

11. EASE Timeline & Key Themes

🟦 EASE 1.0 (2018–19): Basic Reforms

Clean & transparent banking
Digital payments
Better branch operations
Improved credit monitoring

🟩 EASE 2.0 (2019–20): Customer First

Dashboards for customer experience
Digital retail/MSME lending
Better HR systems
Data-driven decisions

🟧 EASE 3.0 (2020–21): Smart + COVID Response

24×7 digital services
Doorstep Banking
Zero-contact banking
AI-based risk management

🟪 EASE 4.0 (2021–22): Next-Gen Tech

Analytics-based lending
Seamless digital journeys
Cybersecurity
Staff training upgrades

🟥 EASE 5.0 (2022–23): Digital + Relationship Banking

Personalized products
Unified customer view
Fin-tech partnerships
Faster MSME loans

🟨 EASE 6.0 (2023–24): AI Banking

Chatbots
Predictive analytics
Real-time fraud detection
Paperless journeys

🟫 EASE 7.0 (2024–25): Deep Digital Banking

End-to-end digital processes
Strong cyber risk systems
Real-time monitoring
Digital KYC
Better grievance systems

12. EASE Components

1. Customer Responsiveness

Faster replies
Tracking complaints
Online grievance redressal

2. Responsible Banking

Ethical lending
Accurate reporting
Governance

3. Credit Monitoring

Early warning systems
Real-time monitoring
Reduce NPAs

4. PSB Empowerment

Training
Performance-linked rewards
Better HR policies

5. Financial Inclusion

Jan Dhan
Rural branches
Digital literacy

6. IT & Data-Driven Banking

AI and analytics
Fraud detection
Digital loan processing

13. Most Expected Exam Questions

Q1. EASE stands for?
Enhanced Access & Service Excellence

Q2. When was EASE launched?
2018

Q3. Who implements EASE?
Indian Banks’ Association (IBA) + Government of India

Q4. Key focus of EASE 4.0?
Analytics-based lending, cybersecurity

Q5. Doorstep Banking was introduced under?
EASE 3.0

Q6. What does the 4R Strategy include?
Recognition, Resolution, Recapitalisation, Reforms

Q7. What is Narrow Banking?
Weak banks invest only in safe assets and avoid risky lending

14. Quick Revision Notes

PSB Reforms needed due to NPAs and low profitability
Major Committees: Narasimham I & II, P.J. Nayak
Indradhanush: A–G (7 reforms)
4R Strategy: Recognise + Resolve + Recapitalise + Reform
EASE: Digital, customer-first, responsible banking
PSBs reduced to 12 after mergers

GyanDesk

Public Sector Banks Reforms: 4R Strategy, EASE Agenda & Key Wins